Fiscal Policies Championed by Tom Finneran Helped See Us Through the Great Recession

As 2011 becomes history, there are definite signs the economy of Massachusetts is moving in a better direction. For example:

- Some 5,000 new jobs were created in November, (the second straight month of employment gains), pushing the state's unemployment rate down to 7%.
- On Jan. 1, the Massachusetts income tax rate will drop from 5.3% to 5.25%, a change that will put an extra $110 to $115 million in taxpayers' pockets next year. (Income taxes are coming down because tax receipts rose in 2011 at a sufficient pace to trigger a mandated decrease that went on the books in November, 2000, when voters passed a tax cut ballot referendum. If our economy had not improved, the rate would have stayed at 5.3%.)

So maybe this is a good time to recognize one of the unsung heroes of the Bay State turnaround: Tom Finneran, former Speaker of the Massachusetts House of Representatives. How, you rightly ask, did someone who left office in 2004 help our state rebound from an economic crisis that began in 2008 and quickly led to the worst economic conditions our nation has experienced since the Great Depression? The answer is found in three words: Rainy Day Fund.

During the 1990s, and particularly in the second half of the decade, the Massachusetts economy was booming. Revenue flowed into the state treasury like a surging river in springtime. Every year seemed to produce surpluses in the hundreds of millions of dollars in the budget of the Commonwealth. As tax revenue proliferated, so did the ideas for spending that windfall -- every penny of it -- in the legislature.

However, Finneran, who had mastered the intricacies of the budget as House Chairman of Ways and Means before being elected Speaker in 1996, always insisted that a truly significant portion of those surpluses be set aside in the Stabilization Fund, or Rainy Day Fund, as it is more commonly known. His strong and principled voice on this matter, coupled with the formidable powers of the speakership, which Finneran showed a knack for making progressively more formidable, were enough to carry the argument year after year. Eventually, the idea that Massachusetts should have the largest possible Rainy Day Fund became Beacon Hill orthodoxy, to the point that the fund topped $3 billion by the time Finneran left office.

At the end of Fiscal Year 2008, (July 1, 2007-June 30, 2008), as the Great Recession was just starting, the Rainy Day Fund stood at $2.3 billion. Over the next three years, the state spent that account down to $700 million as it made up for recession-driven revenue declines and dealt with a host of problems related to the poor economy.

Had the state not had $1.6 billion available to deal with the Great Recession, conditions in Massachusetts would have been far worse than they actually were, which were quite bad enough as they were. Cuts to vital programs, such as Medicaid, would have been devastating, and employment in the public sector would have been slashed much deeper than it actually was. There are literally thousands of teachers, social workers, police officers and firefighters who kept their jobs, and thus their ability to care for their families, because Massachusetts had a big Rainy Day Fund when the economy tanked in 2008-09.

Since Tom Finneran was more responsible than any other elected governmental leader for embedding the Rainy Day ethos in modern state fiscal policy, it is no stretch to credit him with helping to save the state from economic ruin and to make it possible for the state to set a course toward economic recovery, whose signs we discern at the dawn of 2012.

Finneran was never a really popular statewide figure. There are many who consider him to have been an ironfisted, autocratic and needlessly pugnacious. And there are some who relished his fall from grace in the years after his speakership, considering it his just desserts. But there is no critic who can take an ounce of credit from him for having been right in a huge way on how to build a budget and plan for the future. No critic can diminish the satisfaction he is entitled to for having created the circumstances that allowed so many citizens of Massachusetts to dodge the worst blows of the Great Recession.

As Michael Cahill, the former rep from Beverly who served in the House with Finneran, puts it, "He (Finneran), more than anyone else, deserves the credit for enforcing on us the right things -- so many of the right things -- we did on the budget in the 1990s and the early-2000s. You cannot overstate the positive impact Tom Finneran had on the fiscal health of Massachusetts."

So if you and your family are breathing a little easier, feeling a little more confident about the future, this New Year's Eve, consider raising a glass to Tom Finneran.