May 31, 2017

State leaders expect potential budget-crippling $575M tax revenue shortfall, documents show

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Sam Doran / State House News Service

State finance chief Kristen Lepore

The Baker administration has been tight-lipped about the scope of the state’s immediate budget problems, but the potential depth of the revenue struggle that’s unfolded over the first 10 months of the fiscal year is laid bare in new financial disclosure statements.

After marking down expected state tax collections last October by $175 million, the governor’s budget staff now expects tax collections for fiscal 2017, which ends June 30, to fall between $375 million and $575 million below their revised projection, according to the statements signed by Administration and Finance Secretary Kristen Lepore and state Treasurer Deborah Goldberg.

The statements do not specify how Gov. Charlie Baker’s team is dealing with the revenue problem, saying only that it “expects to implement measures, including reducing allotments, maintaining payroll caps and other hiring limitations and otherwise imposing spending controls” to balance the budget.

Baker has ruled out taking money out of the state savings account to plug the budget hole, and the impact of new spending cuts is limited since there’s only about a month remaining in a fiscal year that has already featured efforts to trim the state workforce and nearly $100 million in emergency spending cuts.

Tax collections through April were up just 1.1 percent. Receipts 10 months into the fiscal year are running $462 million below estimates, about midway between the latest estimates of diminished revenue levels. State officials are also seeing less revenue from large tax settlements. Revenue officials in early June will release data detailing tax collections in May.

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