Massachusetts revenues have fallen substantially below budget projections in September, with estimates that the gap could be as high as $200 million. Final figures for the month are not complete, but the figures in hand have set off alarm bells in Boston. The Governor will likely need to submit revised revenue estimates in October, which could lead to a fresh round of mid-stream budget cutting. Local aid accounts could be cut in that process, although Governor Patrick has said that it is to early to tell if local aid will be slashed. Michael Widmer talked of another $500 million dollar gap in this budget. From the Globe:
“Oh, Lordy,’’ said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, when told of the estimates. “Numbers like this for September suggest [the state’s revenue estimates] could be $500 million or more too high for the year.’’
While we will have to wait for final numbers and do the requisite analysis it appears that state budget folks may have overestimated the revenue from the increased sales tax. Sales data appears to be showing steep declines in retail sales on the Massachusetts side of the border, with a corresponding increase in sales on the New Hampshire side. Customers are voting with their feet, adding millions of dollars in sales for New Hampshire merchants. Nancy Kyle, President of the New Hampshire Retailers Association, summed it up.
“It’s definitely more than usual – the number of out-of-state residents shopping here in recent weeks,’’ Kyle said. “It’s wonderful for New Hampshire retailers. We are ecstatic.’’
And so the revenue news continues to jolt the State, where reserves have plunged and federal stimulus money will be gone soon. Some hard choices are dead ahead.