January 19, 2006

Mass. Gov: spend surplus on tax cuts, healthcare

By Amanda Cooper

NEW YORK (Reuters) - Massachusetts Gov. Mitt Romney on
Wednesday said he will set aside $200 million for healthcare
reform while cutting income taxes and raising state education
aid to its highest level ever.

In his "State of the Commonwealth" address, the Republican
governor said the regional economy remained "resilient, robust
and strong."

Romney said revenues for 2006 were expected to come in $1.0
billion above the budget and flagged health care, education,
job creation and local aid as areas for investment.

He said he planned to radically reform the health care
system in order to provide "market-based" health insurance for
the half a million citizens that had no coverage.

"Health insurance for all our citizens does not require new
taxes," Romney said.

"Some of you have doubts about that, I know that the
uncertainty could stall our progress, or even end it. For this
reason, in my new budget, I put aside $200 million in a reserve
account to fund our healthcare initiative," he said.

Romney did not reveal how much he planned to increase
spending in the state's new fiscal year, which starts on July
1. He is scheduled to unveil the fiscal 2007 budget on January
25. Massachusetts' current fiscal 2006 budget amounted to $26.9

The Commonwealth ended fiscal 2005 with a surplus of $1.5
billion, marking a turn-around from the $3.0 billion budget gap
recorded three years ago.

Romney also proposed lowering the income tax rate over the
next two years by cutting it to 5.15 percent in the first year
and then to 5.0 percent in the second year from 5.3 percent

With the Commonwealth's books now showing a healthy
surplus, Romney proposed increasing local aid by devoting all
lottery revenues to cities and towns. This would bring local
aid to its highest in the state's history, he said.

He also said his budget would raise state education aid to
its highest level.

Romney proposed overhauling the state employee pension
program and creating a "long-range" state energy plan that
included conservation, generation of environmentally-friendly
energy and sites for new facilities.

Moody's Investors Services in September 2005 rated
Massachusett's outstanding general obligation debt "Aa2," just
two rungs below the coveted top-notch "Aaa" rating, based on
the state's tough budget management and rising revenue