office, Romney found that the emergency spending cuts and tax increase that the legislature had enacted under his predecessor, Jane Swift, months earlier had proven insufficient. He faced an immediate budget shortfall for the current fiscal year estimated to be between $450 million and $650 million, and a deficit for the following year initially projected to be $3 billion, although outside analysts and the state Department of Revenue said that that projection was too high, as it was based, they said, on faulty revenue predictions. Emergency budget cuts Massachusetts law required that all state budgets be balanced, and the current fiscal year was already more than halfway over when Romney assumed office (Massachusetts' fiscal year begins July 1 of the preceding calendar year). To close the deficit, he asked for, and was granted by the state legislature, emergency powers (under the existing Section "9C" authority in state law) to make unilateral cuts in the fiscal year 2003 budget. Romney's initial emergency budget proposal for the fiscal year 2003 called for $343 million in immediate funding cuts, necessitating layoffs of state employees and cuts in aid to cities and towns for public safety and education. He explained in a televised address, "There's no time to restructure state government or remake state programs. On such an emergency timetable, there's just time for cuts." He also proposed cuts in state expenditures for Medicaid, the government program providing health care for the poorest state residents. The cuts included caps in payments to medical providers (one example being through limiting payments for hospital stays to 20 days, no matter how sick the patient), increased stringency of the criteria for Medicaid eligibility, and rationing of access to higher-priced medications for Medicaid patients. Some 36,000 Massachusetts residents lost their Medicaid eligibility. The 2003 emergency budget revision proposal also included funding cuts affecting public colleges and universities, treatment for schizophrenic and other mentally ill patients, and various other social services. Cuts in funding to local communities Romney's austerity budget for the fiscal year 2004, unveiled just weeks later, included even more substantial cuts in state funding for cities and towns. The final budget passed by the legislature (after overriding Romney's attempt to make still further cuts using line-item vetoes), cut funding for local aid to many communities by as much as 20 percent. Already struggling to absorb funding cuts from the prior year's budget, communities across the state