Romney's cuts harm business expansion
Gov. Mitt Romney’s $425 million November budget cuts, coming just after the election and almost midway through the state’s fiscal year, caught many of the affected state agencies and organizations hit by the cuts by surprise. He drew on his power to act from Section 9c of state finance law, which permits the governor to reduce spending if he or she determines that revenue is insufficient to pay for expenditures.
The state treasurer’s recent borrowing to cover seasonal cash flow gaps not withstanding, state tax revenue is generally strong. Tax receipts and job creation are both up. The governor maintains he’s cutting the budget because of the good results, in a response to the Legislature’s request of a transfer of $450 million from the state’s rainy day fund to cover the funding gap. Some state lawmakers say that anticipated robust tax receipts will replenish fund by the end of the fiscal year, June 30. Romney counters that rainy day fund money shouldn’t be used in good times to support a level of spending he calls unsustainable. We agree with this kind of fiscally conservative approach, but disagree that some of the programs deserved to fall under the budget knife.
When the legislature reconvenes in January, it will have the opportunity to re-examine the budget cuts on the table. It can and should handle the situation. We don’t think it needs to be left to an incoming governor to reinstate these cuts. We must work through our Legislature to send a more consistent message to the outside world.
Shortly after the cuts were announced, protest from the state’s human services community resulted in the reinstitution of $41million for mental health services. But there’s been little indication of any other such actions.
One program cut that should be restored is the $1,566,666 hit taken by the Massachusetts Manufacturing Extension Partnership. MassMEP works with smaller, second- and third-tier manufacturers to help them sell to the larger OEM market more efficiently. With MassMEP’s help, these companies have created and retained almost 3,000 jobs and generated almost $50 million in tax and non-tax revenue at the state and local levels between 2000 and 2005. Romney wants MassMEP to become self-sustaining by increasing fees. But MassMEP’s small businesses clients, don’t have the capital resources to pay market rates for consultant help. If the cuts stand, MassMEP will have to let go about 50 of its 200 clients statewide, and will lose $2.3 million in federal funding.
Other program cuts that strike at the heart of new business development and job creation include an $8.3 million cut from Workforce Development Grants, $525,000 to Massachusetts Biomedical Initiatives, and $2.5 million to the Massachusetts Technology Development Corp.
These cuts send a weak economic development message. Economic development experts preach that companies doing business with the state want a consistent approach from year to year to enable them to make long-range plans. For businesses, enrolling in a state-led program designed to improve company operations, that suddenly can’t serve its client base because of lack of funds, makes no sense, and is a disincentive to doing business in the Bay State. Job growth, especially in the manufacturing sector is essential to the vitality of the state’s economy. The MassMEP program is recognized as well run and effective in helping that growth happen. It is truly penny wise and pound foolish to put such a big chunk of the program out in the cold.
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