Abstract
Through much of the 1980s, a vigorous economy enabled state government in Massachusetts to expand its activities rapidly. For the most part, the state spent revenues in an appropriate fashion on activities that most voters have generally supported. Some of the areas most closely associated with waste and abuse turn out not to be major contributors to the current budget problem. The preeminent budget burden is Medicaid because of escalating health care costs. This is such an important expenditure area that the state must continue to look for new approaches to controlling costs. Reorganizing the delivery of social services might achieve savings and also improve the quality of service. An important issue in the current crisis is that the state has not made a convincing case to the voters that it is spending its money effectively. The 2nd major problem is that the state has ceded much control over its finances to other levels of government.