We’re still a month away from the start of calendar year 2012 – but the Commonwealth of Massachusetts is close to putting out its financial plan for Fiscal Year 2013.

Governor Patrick’s version of the 2013 state budget is scheduled for release in late January. Indications so far are that it will be a very lean document.

In mid-November, Secretary of Administration and Finance Jay Gonzalez told a meeting of local officials that next year will be a “challenging” time. He foresees what he called a “mismatch” in terms of the amount of money the state will be able to spend and the amount people would like to see spent on all kinds of programs.

The “Rainy Day” fund is the third highest of any state in the nation – which is really impressive when you consider that Massachusetts ranks fourteenth among the 50 states in population. The state has added about 50thousand jobs since January.

State tax revenues have been improving steadily but they generally haven’t been as robust as officials were estimating and hoping earlier in the year.  That’s all good news – but the problem is the constant increase in the cost of health care.

Secretary Gonzalez estimates that in the coming year 40% of everything the state spends will go for health care in one form or another. That includes the price of public employee and retirees health insurance and the expensive Health Care Reform plan put into effect in 2006. That plan basically requiring everyone to have health insurance has cost more than almost everyone expected in part because the downtown in the economy knocked a lot of people off employer-based health plans.

Bottom line is get ready for a tough budget season in the legislature in 2012. As always we’ll be watching that debate on Connecting Point.