With Revenue Projected To Slow, Mass. Lawmakers Enter Budget Season

Dec 10, 2018

It's full speed ahead for budget writers in Massachusetts, despite a projected revenue slowdown. 

The Joint Committee on Ways and Means kicked off the budget-writing process for the next fiscal year with a hearing at the Massachusetts Statehouse. Matt Murphy of the State House News Service joins us to break it down.

Carrie Healy, NEPR: What were some of the key factors state lawmakers heard as they begin the budget work?

Matt Murphy, State House News Service: This is the first step in a multi-step process to build the budget for the year starting July 1. This is really important time for lawmakers to gauge where the state economy is, and where it's going, most importantly.

Despite the low unemployment rate in Massachusetts, and revenues really soaring — tax collections so far in fiscal 2019 are nearly $450 million above what budget writers had expected last year when they wrote this document — but economists are warning that the boom times could be coming to an end.

They're expecting these tax collections to start to slow over the second half of fiscal 2019 and into 2020. They're still projecting growth, but much more slowly, more in the range of 2 to 3, maybe 3.5 percent, rather than the 6 or 6.5 percent we've seen over the past year and a half to two years.

This comes on the heels of that measure to tax millionaires, which was killed by the Supreme Judicial Court. Are any new revenue-raising methods in the works?

There's gonna be a lot of pressure put on them, even in these seemingly good economic times. They're gonna want to start building the rainy day fund even more if they're preparing for a recession. Anything close to what we saw in 2008-2009, they're going to need to sock away money to deal with that.

The millionaire surtax, which they were counting on to produce new revenue: we expect to see a revived push to put that back on the ballot, but it would not go before voters for another four years. So they're going to have to think of more near-term revenue solutions.

Testimony from the Massachusetts Taxpayers Foundation was titled, "Are The Good Times Already Over?" That rainy day fund has about $2 billion, but according to the state treasurer, that's nowhere near enough.

That's the result of some work done by the legislature in cooperation with the governor to build that back up after the last recession. The surpluses the state has seen in the past two years, they've been able to put some money in there to get it just over $2 billion.

But as the treasurer told these budget writers, and even some of the economists, a better figure is roughly 10 percent of your budget. In a $40 billion state budget, that would be $4 billion squirreled away for the bad times — which if they are anything like the last recession, they're going to need all of that money and more.

If you remember, Deval Patrick was governor, and the legislature kind of got through the Great Recession with a mix of what was a $2 billion rainy day fund at that time, and a mix of the stimulus money that the Obama White House gave to states.

State Treasurer Deb Goldberg predicted flat lottery profits for the year ahead unless the lottery is allowed to shift to online betting. Those lottery profits now fund local aid to cities and towns. Is there any question that lawmakers wouldn't support that kind of expanded internet gaming?

There are concerns with the idea of online lottery. There's questions about how you would have people pay for it. Convenience stores are also really concerned about lottery games moving online, because they depend on that foot traffic to get people into their stores, and when they're there to buy lottery tickets, they end up buying other goods.

Lawmakers do have some concerns about what this would mean. But Deb Goldberg has been very clear for some time now that lottery revenue is flat. It's hovering just under the $1 billion mark, and she is not expecting it to grow, especially with competition coming in from casinos.

The casino in Springfield is now open, and with one in Everett state lawmakers hope to see open by next summer, and the Plainville slot parlor — these are all competing for gaming dollars.

This, I think, is something the legislature is going to have to take a close look at in the coming session, along with sports betting, which is rapidly becoming legal in a number of states.

Keep up here with Beacon Hill In 5.