Dukakis plays a more somber budget tune. Massachusetts governor cuts 300 state jobs and empties `rainy day' fund

There may be more hand-wringers than bell-ringers this holiday season on Beacon Hill, where Massachusetts' continuing fiscal woes are finally forcing state officials to face the music. Gov. Michael Dukakis, who was the epitome of optimism during his presidential campaign, saying all was well with the state, has changed his tune slightly.

While he is unwilling to press a panic button, the governor acknowledges that the Bay State has a serious money problem. He also concedes that a lot more than wishful thinking is needed to solve it.

But his recommendations for bringing the state's fiscal 1989 budget into balance could be too little and too late and could jeopardize the state credit rating.

Contributing mightily to the high marks that Moody's Investor Service and Standard and Poor's, the leading bond rating experts, have given Massachusetts has been the presence of a so-called ``rainy day'' fund. Those reserves, built up over the past couple of years, will be drained under the Dukakis fiscal stopgap plan.

While the governor must have been reluctant to use this emergency fund to make up part of the revenue shortfall, there are few alternatives - at least politically viable ones. The current budget imbalance certainly amounts to a ``rainy day.'' But having emptied this special reserve, Massachusetts will have nothing to fall back on if a similar, or more serious, crisis arises later on.

A more appropriate response to this fiscal problem might be a substantial reduction in the state's payroll. This would include the much criticized use of consultants for various functions.

The Dukakis program, announced Dec. 7, calls for lightening the personnel rolls by 300 people. This would be achieved mostly through attrition or by moving workers from one job to another.

If the governor were to suggest bigger trims among the state's nearly 86,000 workers, which he may yet do, he would almost certainly encounter stiff opposition.

Clearly the governor's plan hinges on the assumption that December revenues will be up considerably and that overall income for the year will meet projections.

Mr. Dukakis's fiscal advisers, after looking at the state revenue picture from July through November, scaled down their 12-month income forecast by $308 million. And further lowering of the state's revenue sights may be in the offing if, by spring, tax collections continue to run below predictions.

Dukakis has no intention of balancing the fiscal 1989 budget at the expense of the needy. The $105 million in cuts being made in human-services appear hardly excessive and are to come largely through administrative economies.

Although declining to speculate what further course of action he might pursue should the latest moves fail to close the budget gap, Dukakis could have little choice but to cut some programs, or to raise taxes.

But the longer such decisions are delayed, the greater the effect might be.

The later in the fiscal year the ax swings, the more jobs will have to be wiped out to effect the same savings, for instance.

Even if the Dukakis belt-tightening program hits its $506 million cost-cutting target, that could be as much $130 million short of what's needed, if the $525 million budget-gap estimates of the House Ways and Means Committee are accurate.

The continuing uncertainty has cast a shadow not only over fiscal 1989 but also over fiscal 1990. Dukakis's budget proposals for that year are due in hardly more than a month.