Gov. Dukakis' Administration Irked By $509 Million State Budget Surplus

While the nation's legislators struggle with a budget deficit, Governor Michael S. Dukakis has discovered that a budget surplus carries its own difficulties.

The Dukakis administration became embroiled in controversy last week when a new budget estimate, predicting a surplus of $509 million, was announced in a bond prospectus, a document that normally receives little attention.

The new estimate including tax revenues from December and January, revealed that the earlier budget estimate the Governor announced in January, predicting a $209 million surplus, drastically underestimated tax revenue.

Moreover, the Governor appeared to be unaware of the new budget estimate. When questioned by Boston Globe State House bureau chief Joan Vennochi about the increase in the estimate, Dukakis said he had not seen the report.

The Boston Phoenix claimed that Frank Keefe, the Secretary of Administration and Finance, leaked the figure to the news against the will of Chief of Staff John Sasso. Sasso reportedly planned to let the new estimate be announced by Chairman of the Massachusetts House Ways and Means Commitee Richard Voke.

In so doing, Sasso allegedly hoped to avoid any demands for the surplus' expenditure. Dukakis has already endorsed the House version of next year's budget, under which the surplus would be allocated automatically.

The Governor has come under fire for his ignorance of the new estimate. The office of House Republican leader William Robinson said, "It shows a clear case of mismanagement or misinformation. Dukakis, Keefe tout themselves as top management, and Dukakis doesn't know what his own budget surplus is. There is something drastically wrong and dishonest when the budget surplus doubles and the Governor doesn't know about it."

The underestimation of the revenues is especially crucial because of Dukais' promise to return 40 percent of the Massachusetts growth revenues to direct local aid. The local aid is calculated on the January revenue estimate, not the much larger one released last week.

Keefe denied in media reports that there was any dispute within the Dukakis administration about releasing the new estimate or that he leaked the new estimate. He claimed that he had neglected to inform the governor of the new estmiate."

Keefe spokesman Patrick Lee explained that the change in estimates was due to record tax revenues in December and January. Lee said "The revenues were much greater than expected. Sales tax, taxes on automobiles and so on are coming in at a far greater rate."

The Dukakis-endorsed Voke budget would spend the surplus in large part on a tax cap, a 10 percent increase in Aid for Families with Dependent Children (AFDC) and General Relief accounts, and a refunding of the $11 billion pension program.

Robinson, according to spokesman Mark Smith, calls for a more restrictive tax cap, tax cuts for renters or the underprivileged, and local aid awards based on 40 percent of the final surplus.