The state’s high college student population can actually be a hindrance when dealing with the biggest issue on this year’s agenda for the Massachusetts state legislature, according to Charles Rasmussen, spokesman for Speaker of the House of Representatives Thomas Finneran.
The state budget, entering its third year as a topic of controversy and debate, now faces a more than $2 billion deficit, with the legislature and governor-elect at arms over a solution.
With such a high number of area colleges, Massachusetts receives less income from students, since most do not work full-time and own homes, Rasmussen said. Though they contribute to the state economy through consumption, they don’t generate much revenue through income and property taxes.
‘In general, while they’re not high-maintenance in terms of the number of services they demand, they still demand services that are probably greater than the revenues they bring back to those locales,’ he said.
Boston University Professor of Mass Communication Tobe Berkovitz disagreed, saying college students actually tend to be not as ‘draining’ on the economy as other parts of the population.
‘That’s not true,’ Berkovitz said. ‘The higher education system and its workers, the students [and] the research that’s part of it is an incredible economic engine for Boston and the Commonwealth.’
Despite its potential for economic stimulus, state leaders agree that higher education, as well as other publicly funded services, are heading for more cuts.
‘Education has been fairly seriously affected [by the budget crunch],’ Rasmussen said, ‘and is certainly on the line to take some more cuts.’
Michael Widmer, president of the Massachusetts Taxpayers Association, agreed.
‘Education and local aid one-quarter of the state budget I think inevitably will be a target of cuts, given the size of the problem,’ he said.
The state’s financial crisis, of particular debate this past election year, has been escalating since Sept. 11. Up until July of 2001, state revenue had been on the rise, but has decreased every month since then, Rasmussen said.
Finneran’s Feb. 6 2002 ‘Speaker’s Address to the Citizens of the Commonwealth’ called for ‘decisive actions’ on the part of the legislature to handle its fiscal predicament in 2002. Looking back, Rasmussen said the legislature achieved some success by ‘protecting the gains of the 90s,’ the positive influx in services supplied by the booming economy and high revenues of the decade. But these advances will be harder to support in the upcoming year, he said.
‘The challenge is going to be greater this year because we had a certain leeway last year that we don’t have this year,’ he said. ‘[Finneran’s] goal is going to be to provide a balanced budget that is fiscally responsible and guarantee to protect as many essential services as possible.’
In last year’s similar financial distress, the Speaker asked members to choose which programs to protect, and the Conference Committee assessed the responses to balance against political decisions, according to Rasmussen.
The committee was able to generate $650 million in cuts from that process alone. Rasmussen said this year’s proceedings will depend on the revenue figures. He predicted, however, that each member will meet individually with both the Speaker and the Ways and Means Committee to voice his or her opinion on the statewide issues affecting the budget.
Eric Kriss, Romney’s newly appointed administration and finance secretary, said maintaining stable funding will not be so easy with the bleak financial outlook, in a Dec. 5 Boston Globe article.
‘The most serious fiscal crisis in 60 years deserves the most far-reaching reforms in 60 years,’ he said in the article.
Though nobody from the Romney administration could be reached, Romney continues to insist he will not raise taxes or cut essential services to close the budget gap.
Rasmussen challenged Romney’s claims.
‘That might go back to how you define essential services,’ he said.
At a political forum on Nov. 22, Finneran defended tax increases of the previous year. He said that though the added revenue boosted services, it might not be enough because ‘the fiscal urgency has not subsided.’
‘There is no way to sustain the programs we have raised without that revenue [from taxes],’ he said.
Berkovitz said a lack of tax increases is possible, but would be ‘devastating to the Commonwealth’ since it would rely only on cuts to services. He said combining dramatic program cuts with additional fees and taxes would be the most effective way to close the gap.
Current topics of funding controversy include Medicaid, the costs of which have been drastically increasing by 12 percent per year. Legislators are also debating the use of funds from the $5.6 billion tobacco settlement, as well as the state lottery and gambling revenues.
The budget will be the first test of Romney’s honesty in campaign promises, according to Rasmussen. If he can follow his assurances of a balanced budget from primarily administrative moves and cuts, he will prove himself to the Commonwealth, he said.
But the inherent partisan conflict could also detract from the issues at hand.
‘A lot of oxes are going to be gored,’ Berkovitz said, ‘and each side has different priorities.’
Rasmussen cited ‘old, tried and failed Republican methods’ of patching budget gaps as a potential cop-out solution for Romney. He said attempts to raise capital by cutting state employee benefits and retirement liabilities have been futile in the past and would only exacerbate the problem.
Finneran said the attitude of the Republican governor and Democratic legislature will be key to meet halfway on the issue of the budget.
‘Are we going to be receptive, and are we willing to patiently listen and attempt to learn,’ he asked, ‘and also share whatever insights, information and concerns we have to bring to this challenge?’
Experts agree that the inauguration of a corporate leader comes at a pivotal time for the state economy. Finneran said Romney could bring valuable insight from the private sector to the legislative world.
‘He has an extraordinary record; his education is first-rate, [and] his record of achievement in the business community is absolutely first-rate,’ he said. ‘We’ve never had a person in state government with this type of pedigree.’
Berkovitz agreed.
‘He’s a bottom-line guy,’ he said. ‘Even though the primary role of government is not just economic, at this point it’s one of the key issues, so understanding a spreadsheet is a good thing.’
Other upcoming issues facing the state include the 2004 Democratic National Convention, being held at Boston’s FleetCenter. Though the city is committed to financing the convention, the state has not yet evaluated its costs or made any commitments.
Its positive outcomes are foreseeable for the state, however, including the budget. It should bring back tax revenues through both sales tax and income tax from added employment, according to Rasmussen.
The convention will bring 30,000 to 40,000 decision-makers from across the nation to Massachusetts, and it is hoped to generate future tourist dollars, he said.
The budget is currently the number one issue for the state and presents a great challenge to legislators attempting to balance it amidst economic turmoil, Rasmussen said.
‘We have to have a balanced budget,’ he said. ‘Everybody has a list of what the essential services are that we have to continue to offer, and nobody wants to fall below certain benchmarks.’
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