All eyes on September's revenues as state tax rolls still $36 million behind projections
BOSTON >> With tax revenues $36 million behind projections two months into the fiscal year, Gov. Charlie Baker on Monday said his administration will know better next month if mid-year budget cuts are necessary.
Under state law, Administration and Finance Secretary Kristen Lepore must submit revised tax revenue estimates for the 2017 fiscal year by Oct. 15, unless she believes there have been no significant changes since the last estimate.
Baker said that deadline has historically been when an administration "makes a conclusion about whether or not the revenue that's available is adequate to support the level of spending that's currently been appropriated, and that's the path that we plan to take."
"We're going to prepare for and plan for a whole variety of possible scenarios — positive ones and not so positive ones — but the message we got from everybody is you guys should really wait and see what September has to say before you draw any conclusions about this," the governor told reporters after meeting with legislative leaders. "But from a timing point of view, it would probably be a process that would take place toward the second or third week of October."
The state Department of Revenue announced last week that tax revenue collections of $1.7 billion in August fell $42 million shy of monthly estimates used to build the state's $38.9 billion fiscal 2017 budget. July's tax collections were $7 million above the benchmark, marking the first time since March that receipts beat benchmarks.
"As everybody knows, for the past four or five months, revenues have fallen below benchmarks, and in fact, we and the folks in the House and the Senate both went through a revenue adjustment for the end of last year as well as to set up the beginning of this year, which is concerning, OK," Baker said. "But on the flipside of that, we have more people working in Massachusetts than we've had at any point in the last 20 years, and generally speaking — we were talking about this today — when we're all out and about and talking to people, for the most part, the vibe that we get is pretty positive."
Baker said he has been told by economists that September is "frankly a much bigger deal than July and August."
When signing the fiscal 2017 budget in July, Baker vetoed $256 million in spending, leaving a plan he said at the time would still "fund increases to important state services without drawing down the stabilization fund or raising taxes."
Lawmakers voted to override $231.6 million of Baker's vetoes, leaving what the Massachusetts Taxpayers Foundation pegged as an early $240 million gap in the budget.
Asked Monday if he regretted restoring the spending given the current revenue picture, House Speaker Robert DeLeo said, "No."
"I think that based upon what we knew then, based upon the fact that we made cuts in our budget while we were in conference, you know, I think we acted properly," he told reporters. "It does not mean that we may have to come back and make further cuts, but at the time that the decision was made, I think it was the proper one."
DeLeo said he looked forward to speaking with economists, and believes September revenue numbers will "tell us an awful lot."
"If that comes in below what we expect, then obviously three, four, five months, I see more of a trend then a little bit of a blip, and certain decisions would have to be made," he said.
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