Massachusetts state government is on track to spend more money than it may take in, possibly leaving state leaders forced to make up a $1 billion dollar budget deficit next year if revenue continues to come in under expectations.
Lawmakers are negotiating a $40 billion budget based on the assumption that the state will take in enough revenue to cover its expenses. But those revenues haven't been coming in nearly as high as expected throughout this year, meaning Beacon Hill will have to make cuts or find money in other accounts to balance this year's budget.
"It really is the equivalent of the state looking under the couch cushions for any revenue that it can find in various accounts where there's a balance and sweeping that money to make up the deficit," Massachusetts Taxpayers Foundation President Eileen McAnneny said, adding that fixing a budget gap at the end of the fiscal year will be hard because much of the state's money has always been spent.
If the low revenue keeps up, Baker may be forced to reset spending projections for next year, forcing lawmakers to start from scratch on their budget in order to bring it closer into balance with the resources the state will have to spend.
Veteran budget expert Michael Widmer told WGBH News the state could face a $1 billion dollar shortfall next fiscal year if revenue intake continues to flail.
"We don't really know what this means for next year because different indicators are pointing in different directions," said MassBudget president Noah Berger. Berger said recent withholding tax revenue was strong in April, but sales taxes have continued to flag.
In a report laying out the problem, Baker's administration admitted that the current fiscal year budget may be out of balance by as much as $575 million and that Baker's team is ready to "implement measures, including reducing allotments, maintaining payroll caps and other hiring limitations and otherwise imposing spending controls, as necessary to ensure that the Commonwealth’s budget for fiscal 2017 will achieve statutory balance."
Baker's team wrote in the report that budget writers "will be evaluating fiscal 2018 tax revenue estimates in light of the below-benchmark revenue performance in fiscal 2017, and anticipate that tax revenue projections for fiscal 2018 will be reduced by an amount yet to be determined."
Top lawmakers on the Legislature's' budget-writing committees also say they're ready to address any shortfalls.
"As we have previously demonstrated, we will work with our partners in the Senate and the Baker-Polito Administration to take appropriate actions, as needed to ensure a balanced budget.” Rep. Brian Dempsey (D-Haverhill), the House Ways and Means Committee chairman, wrote in a statement.
Baker's political opponents are taking the opportunity to tie the state's budget woes to the corner office's effectiveness.
"It's clear that Governor Baker is scrambling yet again to get control of the state budget. If he spent as much time on the fiscal health of the state as he does on the fiscal health of his re-election campaign, perhaps we wouldn't be in this position. " Jay Gonzalez, a former Gov. Deval Patrick budget chief running for governor, told WGBH News.
Newton Mayor Setti Warren, also running in the Democratic primary for a shot to take on Baker, told WGBH News that "the budget's a mess right now," but isn't laying the blame solely on Baker's feet.
"Beacon Hill across the board needs to change the way it does business," Warren said, including the Democratic Legislature in part of the problem for relying on one-time budget solutions and not showing willingness to raise revenues and taxes to keep up with spending.
"When all is said and done, I know and I think many people know, that we're going to have to raise revenue and we have to have that honest, transparent conversation with the people of the Commonwealth," Warren said.
