There is no doubt that Massachusetts will have a budget hole to dig itself out of, but state budget overseers still have plenty of work to do to determine how deep that hole will be and what the best strategies are for climbing out of it.
Wednesday’s hearing with economic experts was meant to give the three chief budget managers – Ways and Means Committee chairmen Rep. Aaron Michlewitz and Sen. Michael Rodrigues, and Secretary of Administration and Finance Michael Heffernan – another chance to get their arms around the scope of the state’s budget problems and to set them on a path towards budgeting in a time of widespread uncertainty.
They heard a wide range of forecasts for the expected revenue decline in fiscal year 2021 – generally in the $2 billion to $5 billion range. The nearly four-hour hearing set the table for difficult decisions on Beacon Hill around the possibilities of raising taxes, slashing state spending and tapping into the state’s reserve account to plug the gap – and revealed a potential rift on taxes between the administration and Legislature.
Though Heffernan, Michlewitz and Rodrigues heard an array of possible outcomes, the Department of Revenue’s projection for fiscal 2021 was perhaps the most meaningful since it represents the current thinking of the executive branch and Gov. Charlie Baker’s administration.
Revenue Commissioner Geoffrey Snyder told budget managers Wednesday morning that DOR now expects fiscal year 2021 tax revenues will total between $25.918 billion and $28.387 billion – between $2.76 billion and $5.23 billion below the assumption agreed to before the pandemic upended the economy
The range Snyder provided would represent a drop of between 4 percent and 12 percent from final fiscal year 2020 collections of $29.596 billion, and the commissioner added that he leans toward the optimistic end of DOR’s range.
“The first quarter of the fiscal year has given us some indication of where our economy has stayed steady and what portions have fallen off. This information is proving to be very important for all of us as we plan out the rest of the fiscal year,” Michlewitz said Wednesday morning.
