The Governor’s Power to Cut State Funding: You Haven’t Heard the Half of It

With the recent unwelcome news that state tax revenues are continuing to fall short of projections, Governor Baker is “reviewing all options” to balance the budget.

One of the most familiar of those options is for the Governor to cut funds that the Legislature appropriated at the beginning of the fiscal year last July (these reductions are known as “9C cuts,” named after the provision of the General Laws that gives the Governor this unilateral power).  Back in December, the Governor cut the budget by $98 million via 9C cuts, an unpopular move that lawmakers protested as unnecessary at the time, but which has since been proven to be insufficient.

A lesser known budget-cutting tactic, which the Governor also used in December, is known as a “trust sweep.”  Some state monies are deposited into trust funds to be used only for specific purposes.  One example is the Housing Preservation and Stabilization Trust Fund, which the Legislature established a couple years ago exclusively for grants to provide “affordable housing for low-income families and individuals in the commonwealth, particularly those most at risk of becoming homeless.”

But facing the pressure of the budget shortfall in December, the Governor not only cut $98 million in appropriated funds, he also used trust sweeps to close the gap, informing the Legislature that various trust fund balances were “unneeded” and were therefore available for budget-balancing purposes.  Surely the Governor did not mean that additional money for affordable housing was “not needed” — he simply regarded other needs as more pressing.

Included in the trust sweeps, apparently, was some or all of the $4 million in the housing trust fund.  I say “apparently” because the administration was not inclined to disclose many details. State House News learned that 12 trust funds were under consideration for sweeping, the largest being the Commonwealth Care Trust Fund, which is intended to be used to increase health care coverage and which had a balance of $53 million at the time it attracted the Governor’s attention. Another target was the $7 million in a fund dedicated to assisting persons with mental illness or developmental disabilities.  The trust funds eyed for sweeping in December had balances totaling $145 million, more than the $98 million in 9C budget cuts that received press coverage.

Of course, the Legislature could have stopped the trust fund sweeps by passing legislation prohibiting them, but that would not have solved the budget shortfall.

This is not a huge amount of money in the context of a $40 billion budget. But I’m sure that advocates for homeless people, people with mental illness and people with developmental disabilities would have suggestions that more closely follow the purposes for which the funds were established. And a reminder, when you’re contemplating our current budget hole, that various piggy banks the Legislature established for various important uses have already been raided.

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