Al Franken delcared the Winner

Remarkably enough, Al Franken was actually declared the winner of the second Minnesota Senate seat by the Minnesota Supreme Court. How about that? Took long enough. For those of you interested in the details, you can read the MN Supreme Court decision by clicking on this link.

Patrick hints at an Increase in the Gas Tax

Governor Patrick is indicating this morning that after signing a budget with $1 billion in tax increases, he still thinks there may need to be an increase in the Gas tax to put the state financial system on "sounder financial footing." See Matt Viser's story in the Boston Globe.

While I applaud Patrick's desire to put the transportation system on a sounder financial footing, I fear this might very well raise the spectre of "Taxachusetts" once again. If you've just finished wiht a significant increase to the sales tax -- an increase that I predict may become even more unpopular than previous increases to the income tax -- then suggesting that a gas tax increase needs to be piled on top of that will, I believe, generate significant political opposition.

Continued Budget Sleight-of-Hand

I keep being amazed that this budget is referred to as a $27 billion budget, and that it's allegedly $400 million less than the House or Senate budgets. See, for example, Matt Viser's piece in the Boston Globe today, relative to Gov. Patrick signing the budget. Unfortunately, those numbers are simply not correct.

Let's review: this is a $27.4 billion budget if you count only the direct appropriations and retained revenue and leave out chargebacks and federal grants. In other words, if you only count section 2, and not sections 2B and 2D. Unfortunately for the spin-meisters, sections 2B and 2D are part of the budget.

So why are they engaging in this sleight of hand? They don't want people to know how much they're really spending. Here are the real numbers:

Direct Appropriations.......$26,907,008,724

Retained Revenue...............$499,891,667

Chargebacks....................$391,745,702

Federal Grants...............$2,484,750,685

Grand Total.................$30,283,396,778

So, how does this compare with the previous budgets. It turns out that the legislature is proposing to spend more in FY10 then they spent in FY09. Here are the real numbers, incuding direct appropriations, retained revenue, chargebacks AND federal grants:

FY09 Enacted................$29,729,332,117

FY09 after 9c Cuts..........$27,604,356,138

FY10 Governor...............$30,870,923,459

FY10 House..................$29,826,460,083

FY10 Senate.................$30,021,874,638

FY10 Conference.............$30,283,396,778

So in effect, with the increase to a 6.25% sales tax, the legislature is really proposing to increase the spending for FY09 from $27.6 billion to almost $30.3 billion.

Now, I'm not unsympathetic to the Legislature's desire stabilize spending on the budget and restore some of last year's 9C cuts. The voters tied their hands pretty good with their repeated insistence that the income tax rate should be only 5%, and previously, with their approval of Proposition 2½. Consequently, the Legislature turned to the one broad-based tax that they thought was still available to them, the sales tax. In addition, they enacted pension reform, transportation reform and ethics reform, in part to blunt Governor Patrick's threat to veto the sales tax and in part, one hopes, because it was the right thing to do.

But now they should do the right thing on budget transparency. They should admit that this is not a $27.4 billion budget but a $32.3 billion budget, and that is an increase over the FY09 budget. That increase is driven, at least in large measure, by the unexpected success of the Universal Health Law, and the continued increase in overall health care costs (an issue that most private businesses are intimatley familiar with.)

Turnpoke rescinds Toll Increase

Well, there's one piece of good news out there, which is that the Turnpike did finally rescind the manifestly unfair toll increase that they had proposed earlier this year. With Patrick signing the budget that basically diverts a portion of sales tax revenue to bail out the Turnpike for the next three months, the toll increase is obviouly not needed. See Noah Bierman's story on the Turnpike Tolls in the Boston Globe.

There were some snippy remarks by readers relative to the Turnpike toll rescissions -- my favorite was, "Shouldn't the headline read 'Soon-to-be private citizens at soon-to-be defunct authority make gratuitous gesture'" -- but I don't think it's a gratuitous gesture. The elimination of the Turnpike doesn't necessarily mean the elimination of Turnpike tolls, as their are still oodles of Turnpike bonds that need to be reissued in some way.

In short, I think it's good news, and worth celebrating as a modest victory. (Click here to see a PDF of the vote and the Turnpike's current budget.)

Three Reform Bills

In a remarkable flurry of productive activity, the House and Senate have each passed transportation, pension and ethics reform. It looks like the Governor is going to get what he wants -- he won't have to veto the sales tax increase after all -- which may or may not be good news for the Governor. In any case, here is what we now have:

• HB 4133 - Ethics Reform (47 pages)
• SB 2079 - Pension Reform (8 pages)
• SB 2087 - Transportation Reform (175 pages)

In the succeeding weeks, we will look in a little more detail at what these bills actually do. In the meantime, we have to make do with the section-by-section summaries posted on the legislative home page, which have provided us with the following:

• Ethics Reform section-by-section
• Transportation Reform section-by-section (House version)

It's now Clear how they got to $27.4 Billion

I don't why it took me so long to grasp this, but what's now apparent that the way the legislature got to the "$27.4" billion budget is by only counting the direct appropriations and retained revenues, but not the chargebacks or federal grants. In other words, they only counted what was in section 2, and not what was in section 2B and 2D. That, however is -- and how do we put this? -- "disingenuous." The chargebacks and federal grants, whether they like it or not, are part of the budget. So, wouldn't be better to be honest about the true costs here?

Title                                  House          Senate         Conference   Sec
========================================================================================
Total for Direct Appropriations
          and Retained Revenue  $28,126,227,842  $27,326,828,832   $27,414,241,896   2  
Totals for Chargebacks             $401,402,034     $398,991,853      $390,982,830   2B 
Total Federal Grants             $2,366,949,242   $2,286,543,697    $2,485,936,271   2D 
Totals for All Types            $30,894,579,118  $30,012,364,382   $30,291,160,997   All 

More Proof this is no $27.4 Billion Budget

A couple of days ago I reported that this budget is actually more like a $30.3 billion budget than the $27.4 billion budget reported in the media. Now I have more proof from the Governor himself. The Governor has been updating his own website with not only his revised budget -- revised in light of the declining revenues -- but has also been keeping up a spreadsheet that compares the appropriation amounts from the various versions of the budget. This spreadsheet -- "fy10compare" -- documents the fact that even without the federal grants, the Conference report is actually $27.8 billion and not $27.4 billion. If you add in the 447 federal grants, the budget total, as previously reported, is actually just shy of $30.3 billion.

Click here to see a list of the 447 federal grants included in the Conference Report.

Conference Committee Report, Take 2

In case you hadn't noticed, the House and Senate have posted a new version of the Conference Committee Budget, since the version that they had originally posted on Friday morning had so many formatting errors in the revenue and local aid tables. As far as I can tell they have not revised any of the numbers or language -- that would be truly feckless, even for the Legislature -- but they have cleaned up the tables and the formatting.

• Click here for the first version of the Conference Committee report, released on Friday morning, June 19.
• Click here for the second version of the Conference Committee report, released on Monday, June 22.

Comparison of House, Senate, Conference Appropriations

We've completed our analysis of the House, Senate and Conference budgets, and the numbers don't add up to what was reported in the news with respect to how much the budget actually costs. Below is our spreadsheet that compares the House, Senate and Conference numbers:

The press reported that this is a $27.4 billion budget, but our numbers indicate that it's a $27.8 billion budget, and then only if you don't include the federal grants. However, the problem with that is that the federal grants are appropriated for, and they are part of the regular budget. Our numbers indicate that the conference committee actually approved a $30.3 billion budget (as can be seen below).

     Type                       House           Senate          Conference
     =======================================================================
     Direct Appropriation  $26,564,903,856  $26,827,416,172  $26,907,008,724
     Chargeback               $400,189,124     $391,745,702     $391,745,702
     Retained Revenue         $467,318,771     $503,056,162     $499,891,667
     Subotal               $27,432,411,751  $27,722,218,036  $27,798,646,093
     Federal Grants         $2,394,648,332   $2,300,842,188   $2,485,936,271
     =======================================================================
     Grand Total           $29,827,060,083  $30,023,060,224  $30,284,582,364

Click here to see a spreadsheet that compares all the House, Senate and Conference Report Appropriations.

Am I wrong? Show me where. I'm using the numbers that the House and Senate reported in their respective budgets and in the Conference committee reports.

Joint Rule 11A Conference Reports

Under the requirements of Joint Rule 11A, the Conference Committee has also put out several reports that note the resolution of the various items in conference. There are three of these reports posted on the State, dealing consecutively with:

• Differences in Section 2 (direct appropriations) between House and Senate engrossed budgets.
• Differences in Section 2B (chargebacks) between House and Senate engrossed budgets.
• Differences in Outside Sections between the House and Senate engrossed budgets.

Budget Conference Report Released

The House and Senate have released their conference report on the Budget. The Conference Bill number is House 4129, and this behemoth was printed at 1:25 a.m. last night and released to the web at 6:15 a.m. this morning (notwithstanding that the budget was allegedly "released" last night). It appears that the printing was a bit of a rush job as the tables for revenues and local aid are basically . . . how does one put this politely? . . . all screwed up.

Budget Monitor Review of new House Budget

The Massachusetts Budget and Policy Center has compiled a new Budget Monitor report, which looks at the Governor's revised budget and compares it to the budgets engrossed by the House and Senate. This is a detailed 26 report that divides the budget up into the various topica parts of government, such as educaiton, health care, human services, transportation, public safety, etc.

Governor Patrick's Revised FY 2010 Budget.

This may have escaped your notice, but at the end of last week, the Governor put out a revised FY 2010 budget. What's the point, given that the House and Senate have already engrossed their own budgets and are already at Conference?

Beats me.

My guess is that the Governor feels the need to weigh in politically, given the dramatically reduced (and predictable) revenue estimates. In any case, the Governor published a press-release on the matter.

According to the Governor's website, the difference in aggregate numbers from what he had recommended before and what he is recommending now is as follows:

Sales Tax Increase a Certainty

The Boston Globe reports today that Massachusetts business advocates and Republican lawmakers are resigned to the certainty of a sales tax increase. Given that the 5% to 6.25% increase is in both engrossed budgets, I'd say they're pretty much dead on. The two constituencies still battling are package store operators and satellilte TV companies, who opposed specific tax increases added to the Senate budget that impact their particular industries.

Three for Three on Speaker Indictments

Well, I trust that by now most of you know that we're now three-for-three on indictments of former speakers. To wit:

• First there was Charlie Flaherty, who pled guilty to tax evasion and ethics violations.
• Then, there was Tom Finneran, who pled guilty to obstruction of justice and was placed on 18 months probation.
• Now we have Sal DiMasi, indicted on seven counts of mail and wire fraud and five counts of criminal conspiracy, all to help Cognos software win two state contracts.  In return,  Salutatorian Sal got $57,000 in cash.

For risking 20 years in prison, you would have thought Sal would have done something bolder, made more money.

Conspicuously absent from this list, by the way, is former Senate President Billy Bulger who, his brother notwithstanding, has never been indicted for anything.  Of course, he did make a nice pension haul and failed to cooperate in the search for his brother, but he's had the good sense never to do anything indictable.  And trust me, if he had, they would have indicted him.

Set forth below is a copy of the actual indictment against  Sal DiMasi and associates Joseph Lally, Richard McDonough and Richard Vitaly:

House vs. Senate Inside Language

Well, we're back from a blessed week off and away from budget stuff.  Hope we weren't unduly missed.  In any case, to get back on-track, set forth below is an extensive redline version of the inside language from the House (HB 4101) and Senate (SB 2060) engrossed budgets: