The next time the economy goes bad, Massachusetts will feel the pain — maybe more than it should. That’s because until recently, the legislature had raided the rainy day fund to pay for programs taxpayers are now on the hook for.
The pool of cash that helps lubricate bad times is called the rainy day fund.
“Having that rainy day fund is a godsend,” said Senate President Stan Rosenberg. “It really does help delay the deepest of cuts.”
In theory, when recessions hit, the rainy day fund eases the pain. The problem is the rainy day fund now sits at $1.25 billion. That sounds like a lot, but it’s only about half of what experts say we should have.
The state needs to pump that fund back up as quickly as possible. The next time the economy goes bad, Massachusetts may feel more pain than it should. That’s because until recently, the Legislature has raided the rainy day fund to pay for programs taxpayers are now on the hook for.
That doesn’t necessarily mean a tax hike. Gov. Charlie Baker’s budget secretary, Kristen Lepore, says we need to do a better job controlling spending.
“It’s not a tax problem,” Lepore said. “We’re spending more money than we’re bringing in. We’re spending a lot more than what we’re bringing in. We don’t have a revenue problem, we have a spending problem.”
What’s driving the spending? The answer is simple: health care. The state’s trying to keep pace with still-increasing health-care costs. Over a quarter of state spending goes to health care for state workers, retirees, and citizens covered by our taxpayer-subsidized universal care plans.
Tapping into the rainy day fund is procedurally easy. No bells and whistles go off. It’s just a matter of routine budgeting.
So it’s not like Beacon Hill is off spending like a drunken sailor. Many programs — closer to most — haven’t recovered from the Great Recession of seven years ago.
“If you look at the state budget, the number of things that have been cut 50 percent or more that haven’t really been restored to the levels they’re at, it’s really phenomenal,” said Ben Forman, a researcher from the think tank MassINC.
The bottom line: If another economic downturn hits sooner rather than later, Massachusetts will be high and dry. The rainy day fund won’t be up to the task. There will be little Beacon Hill could do but cut services even more.
A tax increase could theoretically help. But that’s a political no-no.
Keep your fingers crossed.
