Governor Deval Patrick's Budget Recommendation - House 1 Fiscal Year 2010

Governor's Budget Recommendation FY 2010

Transfer of State Personnel from the Capital Budget to Operating Budget

For a number of years personnel and other goods (paper, utilities) have been charged to capital accounts - resulting in millions of additional dollars in interest payments while reducing the amount of money available for statewide construction projects. The practice of shifting operating costs to the capital budget was born years ago during tough economic times like those we are currently experiencing.

In 2008, the Legislature authorized (Chapter 304 of the Acts of 2008) the borrowing of $50 million a year to fund the acquisition of equipment on the capital budget instead of the operating budget. This was part of Governor's Patrick's no-cost mechanism for taking hundreds of employees and other budgetary expenses off of the capital budget with the goal of significantly scaling back the fiscally imprudent practice of funding these expenses with debt.

However, to fully implement the Governor's proposal the Administration needed to have the authority to transfer money between line items in the operating budget. If a line-item funded the acquisition of durable equipment, the Executive Office for Administration and Finance would transfer that amount to another line-item to fund the cost of personnel that would have otherwise been funded from the capital budget. Line item transferability was not approved by the Legislature.

Graphical representation of FTEs on capital budget

Section 34 of the Governor's Fiscal Year 2010 budget completes the reforms started in 2008 by reauthorizing this no-cost mechanism for taking hundreds of employees and other budgetary expenses off of the capital budget. The Administration is committed to monitoring transfers to ensure their appropriateness, while also looking for fiscally responsible ways to bring proper costs back onto the operating budget. The total amount of such transfers cannot exceed $50 million, and A&F will be required to give the Senate and House Committee on Ways and Means a schedule of all such transfers. Outside section 34 is required to implement the proposed transfer of personnel from the capital budget to the operating budget. With line item transferability, the Governor can ensure that the initiative is cost neutral.

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