Rosenberg sees $200 million gap in Massachusetts budget

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BOSTON >> Unlike Gov. Charlie Baker and House leaders, Massachusetts Senate leaders preparing their annual fiscal 2017 spending bill have the benefit of updated tax collection data, and the latest numbers are not promising.

The Department of Revenue last week reported that tax collections in April, the biggest month of the year for receipts, were down by $92 million or 3 percent compared to April 2015. The decline left tax receipts $261 million below fiscal 2016 budget benchmarks that were raised by Gov. Baker's team in January. The April tax haul alone missed the monthly benchmark by $172 million.

"I would say crisis is a strong word," Senate President Stanley Rosenberg told 980 AM WCAP Tuesday morning, when pressed about budget woes. "I would say that we definitely are concerned. And we do under the constitution have to balance our budget. This is a national trend at the moment as best we can tell. Connecticut's having a revenue collection problem as is California and some other states."

State revenue department officials are analyzing the numbers.

"We're off on capital gains I believe," said Rosenberg, a former chairman of the Senate Ways and Means Committee. "We're still strong on sales. We're weak on collections for certain taxes that relate to employment, so there's some cyclical problems that occur. There's some weakness. We've built an extremely strong and resilient economy here in Massachusetts. We used to be the first into recession and among the last out. Now we're among the last into recession and among the first out of recession. We have a pretty strong economy, but it doesn't mean that every month every year is going to be smooth sailing."

Baker's budget chief, Administration and Finance Secretary Kristen Lepore, declined last week to quantify a budget gap with two months left in fiscal 2016, but Rosenberg did put a number on it.

"Right now the gap is a little over $200 million .... " Rosenberg said. "Not easy to close any deficit when you're in the fourth quarter of any fiscal year, whether you're a business or a government. But that is not a huge number from the point of view of a budget that's about $39 billion. So the governor will have to take some measures. They will have to squeeze agencies. But I'm feeling pretty confident based on everything I've heard in the last few days that we will be able to do it and we may in fact see revenue rebound because May and June are two of the highest revenue months."

Rosenberg identified rising health care costs, which account for the largest area of state spending, as the "biggest problem" in the state budget. "We're going to keep working on that and trying to get that under control," he said.

Faced with the tax revenue numbers, Baker has asked state managers not to spend their total appropriations in the coming weeks. The governor has ruled out using the rainy day fund to plug any budget gap and Lepore says layoffs and unilateral budget cuts are off the table.


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