Home 
Local Aid and Finance Patrick administration: $1.1B deficit remains for FY09
Administration and Finance Secretary Leslie Kirwan announced yesterday that the state is facing a $1.1 billion deficit for the remainder of fiscal 2009 due to plummeting state tax revenues and other budget pressures.
The state now projects a further revenue decline of $952 million this year, along with $150 million in other spending and non-tax revenue exposures. The economic downturn has eroded capital gains revenues, income tax collections, and sales tax collections.
Kirwan has officially notified the governor of the $1.1 billion deficit, triggering a 15-day period for the administration to develop plans to closing the shortfall. That deadline will fall on Jan. 28, the day that the governor must also submit his fiscal 2010 budget.
The announcement means that state tax revenues have fallen $2 billion below the original fiscal 2009 prediction (from $21.4 billion to $19.45 billion). In addition, the Patrick administration and legislative leaders announced yesterday that their consensus revenue estimate for fiscal 2010 is $19.53 billion – or virtually no growth at all over the current year – creating a structural budget deficit for the Commonwealth of between $2.5 billion to $3 billion next year.
The governor has petitioned the Legislature to grant him “expanded 9C” budget-cutting authority, which would allow him to make mid-year reductions in fiscal 2009 funding levels beyond the executive agencies under his control, including local aid accounts. The Legislature was expected to enact the measure quickly, quite possibly today.
Gov. Deval Patrick is scheduled to deliver his State of the State Address tomorrow, Jan. 15. The governor is not expected to announce any specific action this week or next, as he has until the end of the month before he must outline his plans.
The MMA is calling on state leaders and the public to recognize that local aid cuts would have a deep, painful and immediate impact on cities and towns, triggering reductions in vital services that are important to our economy. Education, public safety and public works would all suffer immediate cuts, and this would lengthen and deepen the recession here in Massachusetts.
The MMA is pressing for major reforms to give cities and towns the tools and resources to navigate the recession, protect services, and reduce reliance on the property tax. Those tools include local-option meals and lodging revenues, closing the telecommunications property tax loopholes, giving municipalities control over health insurance plan design and other personnel matters, and fixing the flawed charter school funding system. None of those tools, however, would be available to offset mid-year local aid cuts, which is why the state should avoid such cuts if at all possible.
To close the $1.1 billion state budget deficit, state officials are actively considering a combination of four possible actions:
1. A second round of very deep mid-year cuts
2. Increased withdrawals from the state’s rainy day fund
3. Use of federal budget assistance that may be included in an economic stimulus package being developed by President-elect Obama and Congress, although delays in Washington would complicate this option
4. The outside possibility of a significant increase in the gas tax (larger than what is necessitated to address the Turnpike Authority deficit
The governor has stated that budget cuts will likely dominate this mix.
Local Aid and Finance Patrick administration: $1.1B deficit remains for FY09
Patrick administration: $1.1B deficit remains for FY09
Administration and Finance Secretary Leslie Kirwan announced yesterday that the state is facing a $1.1 billion deficit for the remainder of fiscal 2009 due to plummeting state tax revenues and other budget pressures.
The state now projects a further revenue decline of $952 million this year, along with $150 million in other spending and non-tax revenue exposures. The economic downturn has eroded capital gains revenues, income tax collections, and sales tax collections.
Kirwan has officially notified the governor of the $1.1 billion deficit, triggering a 15-day period for the administration to develop plans to closing the shortfall. That deadline will fall on Jan. 28, the day that the governor must also submit his fiscal 2010 budget.
The announcement means that state tax revenues have fallen $2 billion below the original fiscal 2009 prediction (from $21.4 billion to $19.45 billion). In addition, the Patrick administration and legislative leaders announced yesterday that their consensus revenue estimate for fiscal 2010 is $19.53 billion – or virtually no growth at all over the current year – creating a structural budget deficit for the Commonwealth of between $2.5 billion to $3 billion next year.
The governor has petitioned the Legislature to grant him “expanded 9C” budget-cutting authority, which would allow him to make mid-year reductions in fiscal 2009 funding levels beyond the executive agencies under his control, including local aid accounts. The Legislature was expected to enact the measure quickly, quite possibly today.
Gov. Deval Patrick is scheduled to deliver his State of the State Address tomorrow, Jan. 15. The governor is not expected to announce any specific action this week or next, as he has until the end of the month before he must outline his plans.
The MMA is calling on state leaders and the public to recognize that local aid cuts would have a deep, painful and immediate impact on cities and towns, triggering reductions in vital services that are important to our economy. Education, public safety and public works would all suffer immediate cuts, and this would lengthen and deepen the recession here in Massachusetts.
The MMA is pressing for major reforms to give cities and towns the tools and resources to navigate the recession, protect services, and reduce reliance on the property tax. Those tools include local-option meals and lodging revenues, closing the telecommunications property tax loopholes, giving municipalities control over health insurance plan design and other personnel matters, and fixing the flawed charter school funding system. None of those tools, however, would be available to offset mid-year local aid cuts, which is why the state should avoid such cuts if at all possible.
To close the $1.1 billion state budget deficit, state officials are actively considering a combination of four possible actions:
1. A second round of very deep mid-year cuts
2. Increased withdrawals from the state’s rainy day fund
3. Use of federal budget assistance that may be included in an economic stimulus package being developed by President-elect Obama and Congress, although delays in Washington would complicate this option
4. The outside possibility of a significant increase in the gas tax (larger than what is necessitated to address the Turnpike Authority deficit
The governor has stated that budget cuts will likely dominate this mix.
Written by MMA Executive Director Geoff Beckwith
