May 7, 2017

On Beacon Hill: Budget forecast is cloudy with a chance of pain

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Sam Doran / State House News Service

Former longtime mayor and U.S. Ambassador to the Vatican Ray Flynn gave a wave to Gov. Charlie Baker during a ceremony last week dedicating the South Boston cruise terminal as the Flynn Cruiseport. The speaking lineup also included House Speaker Robert DeLeo, state Rep. Nick Collins and Sen. Linda Dorcena Forry. Former Senate President William Bulger took part in the ribbon-cutting.

Recap and analysis of the week in state, and federal, government
from State House News Service

April showers are supposed to bring May flowers, but very little was coming up roses last week for state budgeteers who saw their hopes of avoiding another scramble to balance state finances washed away in a torrent of economic floodwaters.

Tax collections in April, when millions of Bay Staters file their returns, were, if all went according to plan, supposed to put the budget back on track.

The $220 million shortfall in revenue through March — again, if all went according to plan — would become much more manageable when the cash came pouring in during the largest month for tax collections in the year.

Not only did that not happen, but the opposite occurred.

New reports showed an economy contracting in the first quarter, business confidence on the decline and a revenue gap that more than doubled to $462 million when April revenues not only failed to live up to expectations, but dropped $83 million from last year.

“It’s hard for us to really figure out what’s happening because our unemployment rate is low, the economy is very well in Massachusetts [and] the jobs are there. We’re sitting back saying, ‘What is stymieing our benchmark figures?’ ” said state Rep. Paul Donato, D-Medford, the second assistant House majority leader.

Antonio Caban / State House News Service

Top state leaders, including Lt. Gov. Polito, Speaker DeLeo, Gov. Baker and Senate President Rosenberg have plenty to think about as budget season swings into high gear.

Gov. Charlie Baker does not seem to have hit the panic button yet, and suggested he and his budget team have been preparing for the possibility of a shortfall for some time.

The governor said he was working on a solution to preserve local aid and critical services for taxpayers, and House and Senate lawmakers were in agreement on one thing — keeping their hands off the “rainy day” fund.

But Massachusetts Revenue Commissioner Michael Heffernan said the numbers should give state leaders pause. Heffernan said that not only will revenue this fiscal year fall short of projections, but he recommended rethinking the 3.9 percent growth lawmakers are counting on for fiscal 2018.

The House has already passed its budget plan for next year, and with the Senate preparing to take its turn this month, House Speaker Robert DeLeo, D-Winthrop, said he wasn’t ready to junk the work of the House quite yet.

“The assumptions for FY18, I think, were based upon conservative estimates,” he said, “so I’m hopeful we won’t have to come back and do the exercises we had to do this year.”

Except that’s exactly what he and others said last year, only to find themselves in the very same predicament.

— Matt Murphy


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