Baker to raid trust funds to balance last year’s budget
By Andy Metzger and Michael P. Norton, State House News Service
Posted Jul 7, 2017 at 8:01 PM
Updated Jul 7, 2017 at 9:26 PM
BOSTON - The Baker administration, which has refused to disclose
specifics about its budget-balancing efforts for the fiscal year that
ended a week ago, notified lawmakers last week that it plans to raid
scores of trust funds to collect nearly $140 million.
Sweeps of more than two dozen trust funds, which the administration plans to execute no sooner than mid-August, will sap funds set aside for distressed hospitals and water supply protection and divert funds set aside for special purposes to the state’s General Fund.
Baker has spent much of his two-plus years in office arguing against tax increases and maintaining the state does not have revenue problems. The trust fund sweeps show both that there are still major pockets of revenue available within state government and that state officials are hungry for revenue to balance the budget, since tax collections are trickling rather than pouring in despite a low unemployment rate.
According to a letter obtained by the News Service, the administration intends to sweep up to $23.5 million out of the Distressed Hospital Trust Fund, $3 million out of the Regional Tourism Councils Trust, and $320,903 out of the Racing Stabilization Trust Fund.
“This list of accounts has been shared with state agencies to ensure that they are aware of my office’s intent to sweep these trusts,” Administration and Finance Secretary Kristen Lepore wrote to lawmakers last Friday, the last day of fiscal 2017.
According to the administration, the trust-fund exercise is still in development until the fiscal 2017 books are closed this fall.
State law enables the secretary to direct the comptroller to carry out trust fund sweeps, requiring a report to the House and Senate Ways and Means committees 45 days before the transfer.
The law states, “The request shall certify that the secretary, in consultation with the comptroller, has determined that the balance, or a specified part of the balance, is not necessary for the purposes for which it was made available.”
The proposed sweeps total $139,258,319. Usually set up for a specific purpose with dedicated revenue streams, trust funds sometimes serve as piggy banks for state officials to crack open when in need of some cash.
In 2012, the Patrick administration softened the blow of MBTA fare
hikes by sweeping $51 million from the motor vehicle inspection trust
fund into the transit agency.
Baker has been laconic about his efforts to manage the roughly $40 billion fiscal 2017 budget as revenues dribbled in $439 million below expectations through May, describing his budget-balancing efforts as “nipping and tucking.”
The governor imposed hiring restrictions last July. An April memo from Lepore informed Cabinet secretaries and other state officials that she was “once again suspending spending for nonessential goods and services.”
A list of 34 trust funds and the maximum amount that may be transferred to the general fund includes lesser known accounts, identified by Lepore as the Upland Sandpiper Expendable Trust Sweep, the Abandoned Vessel Trust Sweep and the Route 3 Design/Build Trust.
The Massachusetts Taxpayers Foundation in June predicted that trust fund balances might be eyed to plug holes in the state budget.
"About $200 million in trust fund sweeps were used to closeout FY 2016 and will likely be part of the approach to end FY 2017 in balance; however, because trust revenues have been relied upon so heavily in recent years it means that fewer are available for use in FY 2018,” the foundation reported.
Sweeps of more than two dozen trust funds, which the administration plans to execute no sooner than mid-August, will sap funds set aside for distressed hospitals and water supply protection and divert funds set aside for special purposes to the state’s General Fund.
Baker has spent much of his two-plus years in office arguing against tax increases and maintaining the state does not have revenue problems. The trust fund sweeps show both that there are still major pockets of revenue available within state government and that state officials are hungry for revenue to balance the budget, since tax collections are trickling rather than pouring in despite a low unemployment rate.
According to a letter obtained by the News Service, the administration intends to sweep up to $23.5 million out of the Distressed Hospital Trust Fund, $3 million out of the Regional Tourism Councils Trust, and $320,903 out of the Racing Stabilization Trust Fund.
“This list of accounts has been shared with state agencies to ensure that they are aware of my office’s intent to sweep these trusts,” Administration and Finance Secretary Kristen Lepore wrote to lawmakers last Friday, the last day of fiscal 2017.
According to the administration, the trust-fund exercise is still in development until the fiscal 2017 books are closed this fall.
State law enables the secretary to direct the comptroller to carry out trust fund sweeps, requiring a report to the House and Senate Ways and Means committees 45 days before the transfer.
The law states, “The request shall certify that the secretary, in consultation with the comptroller, has determined that the balance, or a specified part of the balance, is not necessary for the purposes for which it was made available.”
The proposed sweeps total $139,258,319. Usually set up for a specific purpose with dedicated revenue streams, trust funds sometimes serve as piggy banks for state officials to crack open when in need of some cash.
Baker has been laconic about his efforts to manage the roughly $40 billion fiscal 2017 budget as revenues dribbled in $439 million below expectations through May, describing his budget-balancing efforts as “nipping and tucking.”
The governor imposed hiring restrictions last July. An April memo from Lepore informed Cabinet secretaries and other state officials that she was “once again suspending spending for nonessential goods and services.”
A list of 34 trust funds and the maximum amount that may be transferred to the general fund includes lesser known accounts, identified by Lepore as the Upland Sandpiper Expendable Trust Sweep, the Abandoned Vessel Trust Sweep and the Route 3 Design/Build Trust.
The Massachusetts Taxpayers Foundation in June predicted that trust fund balances might be eyed to plug holes in the state budget.
"About $200 million in trust fund sweeps were used to closeout FY 2016 and will likely be part of the approach to end FY 2017 in balance; however, because trust revenues have been relied upon so heavily in recent years it means that fewer are available for use in FY 2018,” the foundation reported.
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