Rosenberg: Tax revenue shortfall may be larger than disclosed

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BOSTON >> Revised revenue projections that have forced the Baker administration and legislative leaders to reconsider spending priorities in the weeks before the start of the new budget year may not be pessimistic enough, Senate President Stanley Rosenberg said on Monday.

Rosenberg, in remarks to a non-profit group and later elaborated upon to the News Service, said the Baker administration's disclosure earlier this month of a $450 million to $750 million shortfall in projected tax revenues used by the House and Senate this spring to craft their fiscal 2017 budgets "could get higher."

The Senate leader said his comments were based on conversations late last week between the Department of Revenue, the Executive Office of Administration and Finance and House and Senate Ways and Means officials.

"They think the number may eke up a little bit," Rosenberg said.

Gov. Charlie Baker, House Speaker Robert DeLeo and Rosenberg plan to meet Monday afternoon for their usual sit-down where the ongoing budget negotiations will be a topic of conversation.

DeLeo told the News Service that he had yet to speak with House Ways and Means Chairman Brian Dempsey on Monday, but had been on the phone with him throughout the weekend monitoring the progress of talks.

The new fiscal year begins Friday, and time is running down on the Legislature's window to produce a balanced, one-time budget.

Baker on Monday signed a $5.3 billion interim budget to keep government operating through July in the absence of an approved annual spending bill.

"Whether July first is feasible, I'm not so sure. As you know throughout my time as Ways and Means chair and speaker it was always important to me to try to get it done by that time, but this year I'm not quite certain," DeLeo said.

The speaker again referenced the volume of policy unrelated to the budget that was tacked on by senators during debate over their annual bill as a point of contention. "It's probably going to make things a little more difficult," he said.

According to the Senate President's office, the Senate budget bill included 266 outside sections compared to the 153 added by the House. The totals are slightly higher than in fiscal 2016 when the House also adopted 153 outside sections, while the Senate approved 241 riders to the budget.

"The Senate always has more than the House does, and part of that is because the frustration of members of the Senate that they can't get their bills out of committee early enough to get them debated and fairly considered during the process, but if you look at the actual numbers, they're fairly comparable. This is not an unusual year," Rosenberg said.

Rosenberg said "a lot of progress" was made over the weekend in budget talks between the House and Senate, but he called fiscal 2017 an "unusual" year given the late revelation of declining revenue estimates that have been attributed to an underperforming stock market eating into investment-related tax collections.

The vote last week by Great Britain to exit the European Union has only added to the uncertainty of revenue and volatility in the stock market that could further erode revenue collections into next year.

"I want to make sure we have enough time to do it right," Rosenberg said about the prospects for an on-time budget.

Legislative budget writers on June 10 began meeting to iron out differences between conflicting House and Senate budgets for the full 2017 fiscal year, both with bottom lines of around $39.5 billion. Four days later, the Baker administration disclosed that next year's revenues could fall $450 million to $750 million below expectations, pushing lawmakers and the administration to find ways to address the gap.


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