The State of Massachusetts, after making a big round of budget cuts because of rapidly declining tax revenue, is faced with a new shortfall, as revenue continues to plunge below even the new, lower estimates put out two months ago. From the Boston Globe:

State forecasters said yesterday that tax revenues will plunge by up to $750 million more, making it extremely likely that Governor Deval Patrick will be forced to cut state services again to balance the budget.

As the Governor prepares for a new round of cuts the fiscal calamity engulfing the State is moving into sharper focus:

The fiscal year 2009 state budget was initially built on estimates that $21.4 billion would come in. On Oct. 15, after national economic woes began hammering Massachusetts, top lawmakers and administration officials revised that figure to $20.3 billion. Yesterday was the first time state officials said the revenue estimate would go lower.

During an annual hearing yesterday to devise new revenue estimates, the Department of Revenue estimated that the state would take in $648 million to $749 million less than lawmakers had anticipated just two months ago. State officials are operating on two different tracks on the budget: trying to solve shortfalls for the current budget year, and creating revenue estimates to begin crafting the budget for fiscal year 2010.

Local aid was spared in the first round of cuts, but it is not likely to be spared if the Governor goes to round two. A mid year cut would be devastating, and lead to a decimation of local services throughout Massachusetts. If indeed that is to be the case then reform is needed now to give local mayors and managers the ability to deal with these fiscal issues decisively and quickly. The State needs to take the handcuffs off of local officials, and let us drive down our cost structure to match what we anticipate for revenue. More on that in a separate post later. January should be an interesting time for public policy in Massachusetts.