Public Finance

"All the evidence shows that this is a very costly tax credit with minimal economic impact, and the failure to limit it will require deeper cuts in other state programs, including aid to cities and towns,'' said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded watchdog group.

Patrick's desire to level-fund local aid may be the best case scenario with some state legislators and the Massachusetts Taxpayers Foundation predicting that local aid will be cut by 5, 10, or as much as 15 percent for fiscal year 2011, he said.

Massachusetts Taxpayers Foundation President Michael Widmer recommended leaving the "rainy day" fund untouched next year. He also suggested that $160 million in anticipated federal Medicaid reimbursements and $300 million to be saved by restructuring some debt under Patrick's proposal be put back into reserves instead of spending it immediately.