HOWEVER TOUGH social services have had it so far, no one expects newly elected governor Mitt Romney to act as a kind of white knight for the poor and disadvantaged in the upcoming fiscal 2004 budget debate. Signs have already surfaced that Romney is prepared to seek further spending cuts and agency consolidations, despite his campaign promise to balance the $23 billion state budget without raising taxes or slashing services. In recent weeks, Romney’s budget chief, Eric Kriss, has publicly proclaimed that the new administration will implement funding reductions across the board — including in health and human services. At a December 4 speech to the Greater Boston Chamber of Commerce, Kriss acknowledged that the cuts could take a toll on those who depend upon government for such fundamentals as food, shelter, and medical care. "Obviously," Kriss told the crowd, "this will be difficult for many."

Meanwhile, Charles Baker, the president of Harvard Pilgrim Health Care and the head of Romney’s transition team on health matters, has trumpeted the overhaul of the 15 agencies that make up the Executive Office of Health and Human Services (EOHHS). Through the Pioneer Institute, a conservative Boston think tank, Baker released a December 2002 proposal called "Rationalizing Health and Human Services," in which he argues for a top-to-bottom restructuring of the EOHHS. He has proposed shrinking the number of EOHHS agencies from 15 to seven and organizing them by administrative function, rather than by clientele. So instead of a DMR and a DMH, the state would have, say, a Department of Case Management and a Department of Licensing. Since Baker drafted his plan before he knew that Romney would be the next governor, his streamlined vision for the EOHHS cannot be seen as the Romney proposal. Still, it’s reasonable to assume that the governor-elect will recommend merging health and human services — indeed, Kriss has stated publicly that the new administration intends to "fundamentally reshape" EOHHS into a "one-stop portal" for those in need. At this point, it’s hard to know what the actual implications of this largely undefined consolidation plan would be. But many State House observers worry that "consolidation" could turn out to be code for "elimination of services."

To be sure, human-services advocates welcome any savings that Romney might generate through a government overhaul. Yet they doubt that the new administration can solve the looming $2 billion deficit simply by firing the 10 or so EOHHS press secretaries (a proposal that Romney has estimated could save anywhere from $400,000 to $800,000 annually). Besides, "more efficient" does not necessarily mean "cheaper." Baker’s proposal, for instance, calls for an integrated data system to track the 1.2 million people who receive services from existing EOHHS agencies. Clearly, such a system would carry a hefty price tag. Steve Collins, of the Massachusetts Human Services Coalition (MHSC), anticipates that Romney’s proposed fiscal 2004 budget — which will be released in February — is certain to make "all sorts of claims about huge savings" that stem from a restructured EOHHS. But even if Romney does succeed in saving money, Collins says, "There is no way that the governor-elect can consolidate himself out of a $2 billion deficit. You cannot solve this problem that way."

Indeed. When grappling with a multi-billion-dollar deficit, budget-makers have only three options at their disposal — reduce spending, raise taxes, or both. Given that Romney and House Speaker Finneran have yet to waver from their no-new-taxes pledges, the first FY ’04 proposed budgets will have to rely on substantial cuts to services. Medicaid, of course, will remain a favorite target among Beacon Hill politicians. Most pols view the $6 billion program as a budget buster. Finneran himself is known for his belief that legislators can find fat in Medicaid. So expect to see proposals that try to alter eligibility requirements so fewer residents can receive Medicaid coverage, or proposals that seek to end some Medicaid programs altogether. But the Medicaid budget does not have much fat to trim. Almost 80 percent of its expenses stem from long-term medical care for the elderly — and what pol in his or her right mind would champion balancing the budget on the backs of little old ladies in nursing homes? All legislators can do, as the MBPC’s Jim St. George puts it, "is tinker around the edges." After all, it’s hard to argue that Massachusetts spends too much on Medicaid when it’s already denying prosthetics to people who have lost arms or legs.

What the ballooning deficit ultimately calls for are big cuts. And so, for the first time since the fiscal crisis hit in 2001, prognosticators forecast that the FY ’04 budget will include reductions in funding for local aid and education — the so-called sacred cows that politicians traditionally protect at all costs. Both accounts equal close to $5 billion, and have remained largely unscathed in the budget debates thus far. Today, though, the landscape has changed: local aid and education represent the only areas where lawmakers can actually find the money needed to make the big cuts. The powers that be have certainly hinted as much. Just two weeks ago, State Representative John Rogers (D-Norwood), who chairs the House Ways and Means Committee, warned cities and towns to prepare for whacks in local aid of up to 20 percent — which, in turn, prompted mayors to warn that firefighters, teachers, and police officers could face massive layoffs next year. The City of Boston recently cancelled its class of police recruits in anticipation of the deep budget cuts. Even so, Massachusetts, as Rogers has stated, "can no longer afford to look the other way when it comes to cities and towns."

The looming cuts to local aid — which, in essence, translate into further cuts in social services — have galvanized some at the State House to push for tax increases. State Representative Balser, for one, says that she would "rather that everyone in the Commonwealth chip in, because that’s what taxes are," than watch government-funded health and human services put on the chopping block. She is one of about a dozen rank-and-file legislators who intend to make taxes a topic for debate in the 2003-’04 legislative season — regardless of Finneran’s vow to keep it "off the table." She has filed two bills that would examine corporate taxes specifically. The first measure would require Massachusetts companies that sell products in states where profits aren’t subject to tariffs to pay taxes on those profits in this state instead. The second bill would repeal the infamous tax breaks handed out to mutual-fund companies like Fidelity in 1995. "Some of us believe that it’s time to take those tax breaks back so corporations pay their fair share in this state," Balser explains.

Representative Story, who has filed her own corporate-tax-related measure, agrees: "We have no choice but to look at ways to increase revenues. You don’t completely erode the state infrastructure and the quality of life for the most vulnerable" without considering all options first.

In many ways, tax increases, along with spending cuts, seem to be the inevitable solution to the deficit conundrum. After all, the state’s fiscal crisis comes down to a long-term, structural problem. Tax revenues have failed to keep pace with the state’s spending requirements — not because Massachusetts spends too much, but because it does not collect enough. Legislators spent the flush years of the 1990s chipping away at the state’s tax base by $5 billion through corporate and income tax breaks. They spent just one budget season, in 2002, raising taxes by $1.2 billion. In short, they refilled 20 percent of the $5 billion gap they created. Now, if legislators were to rescind some of the corporate breaks dished out during the ’90s boom, they could fill the gap by almost half. If they do not, they will likely have to justify their actions to an angry public, upset over slashes to their hometown fire, police, and school departments.

EVEN IF LEGISLATORS do wind up raising taxes, human-services advocates anticipate a tough year ahead where nothing will be spared. Although they’re gearing up for a fight — building a coalition of community groups from Boston to Lowell to Holyoke — many of them admit that they’ve lowered their expectations this time. They’re no longer thinking about restoring cuts that have occurred to date. They’re just trying to hold the line against further cuts. And from what they’ve seen in these two fiscal years, they know that health and human services remain in jeopardy. Explains Collins, of the MHSC, "We’re in a purely defensive posture at this point. Next year’s budget debate will be like neighborhood-to-neighborhood warfare. We’ll be seeking to defend one building, or one program, at a time."

In the end, it’s hard to say exactly how the FY ’04 budget debate will shake out. For one thing, many of the debate’s players have just stepped onto the field. Senator Robert Travaglini (D–East Boston) is expected to succeed former senator Tom Birmingham as the new Senate president on January 1. But because the veteran legislator has said little about his stance on raising taxes or sparing social services, he represents something of a wild card. Whether human-services advocates can count on him, as they did on Birmingham, to stand up to Finneran in budget negotiations and salvage programs for the poor and disadvantaged is anybody’s guess. For his part, the House Speaker may be playing the tough-on-taxes role today, but he could easily relinquish his pledge under fire. This is, lest we forget, the same legislator who led the charge on passing the $1.2 billion tax package to help balance the FY ’03 budget. If the Speaker instructs the House Ways and Means Committee to draft a budget proposal based on no new tax revenues — one that’s sure to gut local aid — the public might not be willing to stand for such cuts. With the general public and legislators clamoring to find ways to maintain services, Finneran could cede to their demands and raise taxes.

As for the governor-elect, Romney may have gotten elected on a platform opposed to taxes. But he also got elected on a platform committed to protecting vital services. To say that both are possible given the current fiscal climate is a lie. But who knows? Maybe Romney will admit the truth once he assumes the State House’s corner office. He has begun to make public acknowledgments about the state’s severe budget crisis — something he refused to do during the campaign. So maybe in several months’ time, as he confronts the hard fiscal picture, he, too, may revisit the revenue question. After all, what politically savvy governor would embrace closing down homeless shelters as a way to balance the fiscal 2004 budget?

As the MBPC’s St. George puts it: "I don’t doubt that Romney would veto a tax increase. But I also don’t doubt that he would [not] relish being the governor of a state that cuts education spending by 20 percent. Or that forces the elderly out of nursing homes." That, it seems, is a choice that Romney and state budget-makers will have to face.

Kristen Lombardi can be reached at klombardi[a]phx.com