The Commonwealth of Massachusetts Executive Office
State House l, Room 360
Boston, MA 02133
Jane Swift, Governor
November 30, 2001
Dear State Employee:
As we are finally approaching the last phase of developing a budget for Fiscal Year 2002, I wanted to take the opportunity to share with you some of my thoughts about how my Administration is approaching this budget and solicit your support for some of its key elements.
As you know, the spending level for FY02 that I had originally envisioned in House 1 and that the Legislature initially increased in the Conference Committee is not viable under today’s circumstances. In the first place, it is virtually certain that this year we will not have extra revenue for underfunded accounts, such as snow and ice removal, Medicaid, and collective bargaining. To make matters much worse, our best economic advice tells us that we will be at least $750 million short of even our conservative revenue projection. We were probably already in a recession prior to the events of September 11th, and those tragic events have had a dramatically negative effect on the condition of the Massachusetts economy and therefore on our tax collections. The total impact of the changing economy is a reduction in available funds of about $1.35 billion. I believe we should take no more than about $650 million of this deficit from our cash reserves, and then balance the budget with about $700 million in spending cuts.
You have no doubt read or heard in the media that I do not believe that we can meet our targeted spending objectives without a reduction in the state workforce of about 5,000 employees from the total of 73,000. There are several important points for you to understand about my position on personnel costs:
1. Collective Bargaining Agreements
Even in these difficult economic times, I believe that the Commonwealth has an obligation to honor the collective bargaining agreements, which have been negotiated with our unions in good faith. There are 11 such agreements, which have been in the Legislature since last fiscal year, others that have been filed this fiscal year, and 23 more that I filed recently. I have planned in my budget to absorb the costs of all of these agreements in Fiscal ’02 and Fiscal ’03. However, they cannot be implemented unless we can push the Legislature to fund them. I hope that you will work with me, and your bargaining unit leadership, to ensure that these collective bargaining agreements are ratified and funded by the Legislature.2. Health Insurance Contribution Rates
You should know that I have decided not to pursue an increase in our employee health insurance contribution rates from 15% to 25%. I met last week with the heads of most of your collective bargaining units, and I was impressed by the strength of their opposition to this change and by the compelling point that such a change inequitably affects lower paid employees.3. Voluntary Layoffs and Retirement
Before any other means of personnel reductions are used, I propose to make available a number of voluntary actions, including incentive-based retirement and layoffs. (We will first negotiate with your collective bargaining representative where appropriate.) We are still working on the details of these plans and will announce them to you shortly.4. Early Retirement Incentive Program
I have said many times that I hope to keep the use of layoffs to a minimum by using a voluntary early retirement plan which was very effective in the last economic crisis. I have filed with the Legislature an Early Retirement Incentive Program (ERIP) which would give state employees the option of taking an additional five years of service or age as part of an early retirement program. At this point, this bill (House 4767) is still awaiting Legislative approval. We hope that you will urge your Representatives and Senators, and particularly the legislative leadership, to pass this bill immediately. Without it, the Administration will be forced to use layoffs as the principal means of reducing personnel costs.These are not easy times for any of us. I have been working with my Cabinet and staff to try to make my proposed budget cuts as fair and painless as possible, although I know that we cannot make changes of this magnitude without some very real sacrifices. I would be very appreciative of any suggestions you may have of how we can improve this process, and how to design responsible spending levels for FY03. E-mail me at goffice@state.ma.us with any suggestions.
I particularly appreciate the tremendous participation that many of you offered to our Managing for Results Initiative. I hope you will work with us again to assure passage of all collective bargaining agreements and the Early Retirement Incentive Program.
Jane Swift
P.S. Please distribute a copy of this e-mail to other state employees who do not have e-mail. Thank you.