State revenue projections dropped by $1 billion, funding cut for dozens of programs

The state’s revenue growth is flat and projections for the rest of 2024 will need to be adjusted down by a full $1 billion, the Healey Administration has announced..

After December’s tax takings continued a trend seen since the start of the fiscal year and fell far short of projections — the state’s coffers gained just $3.776 billion despite forecasts predicting nearly $3.9 billion in tax takings — it became clear the Commonwealth would need to act proactively to avoid a year-end shortfall, according to Secretary of Administration and Finance Matthew Gorzkowicz.

The result, he told the State House press corps on Monday, will be $375 million in net spending reductions at Executive Branch agencies and a planned infusion of $625 million in “non-tax revenue” to the fiscal 2024 spending plan, leading to a new $39.41 billion revenue projection for fiscal year 2024. Earmarked spending at select state agencies will be cut by 50%, he said.

The takeaway for Bay State taxpayers, Gorzkowicz said, is that the state is “on top of the situation” and proactively responding to uncertain economic conditions.

“We’re making the necessary responsible budget reductions to ensure fiscal responsibility, to make sure that we are not in a situation where we have to dip into our state’s rainy day fund, which are reserved for those really extraordinary circumstances where we do have a recession and have to make tough choices,” he said.

According to a letter penned by Gov. Maura Healey and due to be sent to the Legislature, the cuts were tailored to cause as little impact to the state’s population as possible.

“In crafting spending reductions we have done our very best to protect investments that are critical to Massachusetts’ future, limit impacts to programs and services and to avoid negative impacts to the most vulnerable of our residents,” she wrote.

The conservative Massachusetts Fiscal Alliance responded to the news by claiming the revenue downturn was the result of fiscal policy, not economic conditions.

“This is the end result of the many poor economic decisions made by Beacon Hill leaders over the last year, beginning with the implementation of the income surtax amendment which they all supported, continuing with the ballooning our state budget past the rate of inflation, and culminating with the tepid tax relief package that did very little to actually make our state economy more competitive,” spokesman Paul Craney said.

Gorzkowicz also released the state’s revenue forecast for 2025 on Monday, which he said reflects the reality of the nation’s economic climate — which is still adjusting to the Federal Reserve’s efforts to tamp down inflation — and the revised revenue figures for 2024.

“This Fiscal year 2025 consensus revenue forecast responsibly considers the many external pressures that have led to a slowdown in revenue growth over past months and put significant pressure on state spending. While acknowledging the challenges ahead, we are confident this agreement will allow us to construct a budget for FY25 that continues to invest in key priorities,” he said.

The state is projecting $40.202 billion in revenue next fiscal year, an increase of 2% from the state’s downward-revised 2024 revenue figures.

This story is developing and will be updated.

from Boston Herald https://ift.tt/blqx8D9