Massachusetts millstone: Dukakis's budget battle drags on

AS hard as Gov. Michael Dukakis and his staff try, Massachusetts' budget woes just won't go away. The $11.62 billion fiscal 1989 budget signed into law by the governor minutes before leaving for the Democratic National Convention seems about as well balanced as a three-legged piano bench.

Much could hinge on whether Mr. Dukakis's revenue projections for the year that began July 1 are on target and whether the state can live within its means.

The $138 million in line-item vetoes that Mr. Dukakis made in the budget that cleared the legislature July 5 may hardly be enough.

Among those voicing concern is one who should know - Senate Ways and Means chairman Patricia McGovern. The Lawrence Democrat can hardly be considered a Dukakis foe.

The real dispute is between Senator McGovern and Frank Keefe, the state secretary for administration and finance. Mr. Keefe's revenue projections have frequently proved too optimistic. Clearly he helped guide the governor's hand in the budget-balancing effort.

Municipal officials across the state are particularly displeased, since Dukakis's budget trims include $91 million in direct local aid they had counted on.

If the Senate and House were to restore this funding or override other Dukakis appropriations vetoes, there is little doubt the 1989 state budget would be out of balance, perhaps substantially.

The governor and lawmakers would then have to come up with significant reductions in other spending accounts, and possibly trample on certain special interests. That's something legislators would hope to avoid, especially in an election year.

For this reason if veto overrides are attempted, it might not be until after the Sept. 15 primary, when most incumbent lawmakers will face their greatest, if not their only, challenge.

Under the Massachusetts constitution there is no deadline on trying to override a veto as long as the legislature has not adjourned, which it has not. But House Speaker George Keverian says he has no plans to call the House back.

Even with the governor's local aid trims, the cities and towns will still receive from the state $2.85 billion in direct assistance this year. That is over $100 million more than in fiscal 1988.

Since the amounts municipalities can raise through property taxes were first restricted under Proposition 2 seven years ago, direct local aid has nearly doubled.

But the governor's local-aid cutbacks could mean increased moves in some municipalities to authorize added property taxes beyond what Proposition 2 allows. The override process involves approval by the local governing body, plus majority approval by local voters.

While the budget imbalance may not be as great as some Dukakis critics suggest, the longer it goes without correction, the more drastic additional pruning or tax increases may have to be.

But barring a major fund crisis over the next couple of months, which hardly seems likely, there is little doubt that whatever is eventually done won't be until after the November presidential election in which Governor Dukakis is the Democratic nominee.

What the state least needs is another series of stopgap moves. Instead, the next few months might be better used to chart long-term solutions.

A ceiling on spending keyed substantially to what is being taken in might be worth considering. If revenues were to fall off dramatically, temporary cuts in spending for all but essential services could be made automatically, instead of doing nothing until near the end of the fiscal year when the shortfall may have reached whopping proportions.

Costly short-term borrowing or dipping into public-employee pension reserves or using ``rainy day'' funds when the overall state financial weather conditions might not be all that inclement, makes little sense.

And it is unfair to hold off in paying bills or delaying benefits to the needy, elderly, or disabled.

Since Dukakis will be focusing on his presidential campaign, the charting of a new fiscal course could be tackled by others. Lt. Gov. Evelyn Murphy, who moves into the state executive chair if Mr. Dukakis wins the White House, could put together the financial crisis-prevention team.

The panel could include some of the administration's budget strategists, legislators from both parties, and financial specialists from the private sector, among them representatives from organized labor and the business community.

This would give Miss Murphy more experience in the fiscal side of state government, something she could be substantially involved in come January.