The Massachusetts Taxpayers Foundation, following the consensus revenue hearings on Beacon Hill, has released a primer on the outlook for the next fiscal cycle in Massachusetts, with the forecast looking less than rosy. The outlook is cloudy despite a pretty good growth rate in state revenue of almost $1 billion dollars. With the loss of federal stimulus, the drop in the rainy day fund to about $600 million, and a massive increase in medicaid spending gobbling up that billion and more, it looks like a bleak year for Massachusetts, with local aid cuts on the horizon again. From the MTF Report:
“Despite almost a billion dollars in revenue growth, the state faces a fiscal 2012 shortfall of approximately $2 billion with no federal stimulus dollars and limited state reserves,” Mr.
Widmer said. “The 2012 budget will require yet another round of cuts in local aid, human
services, higher education, and almost all other state programs.”
The estimated $2 billion structural gap in 2012 is driven by the use of $2.1 billion of one-time
funds in the 2011 budget and at least $1 billion in increased spending on obligatory accounts
such as Medicaid, pensions and debt service. The improving revenue picture in fiscal 2011 will
not make a meaningful dent in the 2012 deficit because the higher tax collections will be needed
to make up for shortfalls in non-tax revenues and to fund deficiencies, principally in Medicaid, in
the 2011 budget.
I have submitted, and City Council has approved, the tax classification factor for Methuen. I will do a separate post on that, but Rep. Linda Campbell came to the hearing and warned of those impending state aid cuts. I have attached the Mass Taxpayers document below.