Bipartisanship Puts Bay State's Budget Back in the Black

IT has not been politics as usual for the last year in Massachusetts. There's a new act on stage, which could be called "Fiscal Stabilization."

The actors and actresses are both Democrats and Republicans, and they say that the old show - featuring political irresponsibility and budget deficits - is being replaced by apolitical cooperation.

"The state budget was out of control for over three years - until last year. The public had lost trust in the legislature. Advice from all sides said stability had to return," says Democrat Patricia McGovern, chairman of the Senate Ways and Means Committee for the past five years.

Democrat Thomas M. Finneran, chairman of the House Ways and Means Committee, says: "The bond-rating agencies probably got together after visits to Massachusetts and said, 'They have acted so irresponsibly, let's give them a third world rating'."

In June, 1989, Moody's Investors Service in fact dropped the state's bond rating from a very respectable Aa to A, then to Baa1 in Nov. 1989, then down further to Baa in March 1990.

This latter status carries the description, "Not highly protected."

Republican Gov. William Weld was elected in November 1990 on a platform of fiscal reform.

In office for a year and a half, Governor Weld has already gained national attention by squaring spending with revenue. He lowered spending in fiscal year 1992 with no tax cuts.

The Massachusetts constitution requires the legislature to pass a balanced budget, which is really a planning instrument. After that, a lot of deficit spending can proceed that is technically legal. For example, deficits were racked up for four years running, beginning in 1987. And as the bond ratings dropped, the cost to the state of borrowing went up.

Weld's fiscal 1993 budget, now before the legislature, proposes $50 million in tax credits for business and $140 million in tax cuts for individuals through a lowering of tax rates.

At the heart of the new cooperation is a fiscal troika: Senator McGovern, Representative Finneran, and Peter Nessen, secretary of the Executive Office for Administration and Finance (A&F). Mr. Nessen, who earlier had experience as head of an investment banking firm, is a Democrat. He had worked in A&F under Gov. Gov. Michael Dukakis, but in a lesser position. He was fired by Dukakis for remarking to the press that the state's deficit was "a black hole."

Weld brought Nessen back in 1991 as A&F Secretary with one basic assignment: work with the Democratic legislature to restore fiscal stability.

The key to doing this, Nessen said in an interview, involved several steps. First, the troika worked out a conservative estimate of what the state's revenues would be for fiscal 1992 and then agreed that "no one can play with this number." A pact was made among the three and other legislative leaders that state spending would not exceed revenue. Weld was to veto any legislation that threatened to breach the fiscal dike. And with enough Republican votes in the Senate to uphold such vetoes, the spending-v eto plan has worked.

McGovern, Nessen, and Finneran all said in interviews that action by the bond rating agencies to degrade Massachusetts bonds was a key to forcing steps to halt the fiscal instability that had threatened the state.

Troika members meet every Thursday morning to monitor the state's fiscal situation. They also prepare an agenda for a "summit" meeting that takes place every Monday afternoon, attended by Weld, Lt. Gov. Paul Celluci, and the top Republicans and Democrats in the legislature.

Ronald K. Snell, fiscal program director for the National Conference of State Legislatures in Denver, said: "Organizations like ours, which watch the fiscal health of states, have followed Massachusetts closely. If he continues to be successful, Weld will have an impact on other states, especially those in New England."