MTF frequently issues a variety of shorter publications on state fiscal and economic issues, including bulletins, news releases, white papers, legislative testimony and presentations. These publications provide concise analyses of current policy issues and MTF's views on the key choices facing the Commonwealth's decision makers. Each year, a special series of bulletins offer analysis and commentary on the state budget for the coming fiscal year at each step in the process.

MTF's most recent bulletins, releases and other publications are described below. They may be viewed by clicking the link following each summary.

The publications are in Portable Document Format (PDF). Viewing them requires Adobe Acrobat Reader, which can be downloaded free of charge from Adobe's website.

Tax revenues will grow somewhat better than expected in fiscal 2008 but increase only marginally in 2009, according to a forecast released today by the Massachusetts Taxpayers Foundation.

How long will the luck hold?

For the past three fiscal years the Legislature has passed budgets which depended on reserves to achieve balance. In each case tax revenues came in better than forecast, largely because of capital gains, eliminating the need to actually deplete the reserves.

This scenario is playing out once again in the House-Senate conference committee deliberating the fiscal 2008 state budget. The House budget plans to draw on almost $700 million in reserves and the Senate $500 million. The Senate includes more optimistic assumptions about non-tax revenues so its spending total is only $65 million less than the House despite the $200 million smaller dependence on reserves.

The Commonwealth received some good news in May with tax collections through 11 months now almost $250 million above the most recent fiscal 2007 benchmark of $19.3 billion. Should June collections meet expectations, the state would enter fiscal 2008 with higher-than-expected baseline revenues, which would reduce next year's projected draw on reserves.

Nevertheless, unlike 42 states which are experiencing cash surpluses, Massachusetts is debating how much to dip into reserves during an economic recovery. The state's job growth has been anemic, and Massachusetts actually lost 1,600 jobs in April and May.

Under these circumstances it is critical for the conference committee to reach agreement on a bottom line that is closer to the Ways and Means budgets than the spending added during floor debate. The House added $204 million and the Senate $35 million during budget debate, but the Senate Ways and Means budget was already $100 million higher than House Ways and Means.

Both the House and Senate have taken the wise course of rejecting the Governor's package of corporate tax increases, which would further undercut the creation of jobs and thus exacerbate the state's long-term fiscal problems. Furthermore, it is doubtful that these tax changes would produce the hundreds of millions of dollars claimed by the administration.

The larger challenge facing the state is to create the jobs which will produce the tax revenues to fund investments in education, health care, transportation and other critical areas.

The fiscal 2008 state budget debate turns to the Senate this week at a particularly delicate time for state finances.

The final tally shows that the House added $204 million in spending during floor debate, a net increase of $171.6 million in state spending after adjusting for $32.35 million in federal Medicaid reimbursements. While most of those additions were for deserving programs, the House budget's bottom line of $29.37 billion clearly is not affordable over the long-term.

The House budget depends on almost $700 million in reserves (including the suspension of the $100 million annual deposit to the stabilization fund), an amount too large in the midst of an economic recovery. In both fiscal 2006 and 2007 the Legislature passed budgets that included major draws on the state's reserve funds, betting that tax revenues would come in higher than expected, and thus not require an actual use of reserves. That bet was won in 2006 and may be in 2007 as well, but it is not at all clear that revenue growth will cover proposed spending in 2008. Revenue growth has slowed substantially and April tax collections were disappointing, falling $115 million below the benchmark for the month.

The Foundation recommends that fiscal 2008 spending be held to the approximately $29.2 billion in the Governor's and House Ways and Means budgets.

In one significant area the House budget is a distinct improvement over the Governor's – the decision not to include some $300 million in new corporate taxes. The Governor's package of corporate tax increases would be the fourth in five years and result in a 75 percent increase in corporate income taxes during this period. These large tax increases will undercut the creation of jobs and thus exacerbate the state's long-term fiscal problems. Furthermore, it is highly unlikely that these tax changes would produce the hundreds of millions of dollars claimed by the administration.

The House budget, like the Governor's, counts on approximately $300 million of savings in the Medicaid program in order to hold the program's rate of growth below 5 percent. With Medicaid expenditures having seen average increases close to 7 percent annually since 2001, this is an ambitious target that relies in part on the Commonwealth reducing or eliminating expected rate increases to a variety of health care providers.

Regardless of their merits, the many additional spending proposals – and the resulting inflated fiscal 2008 budget – ignore the state's fiscal realities. Barring a dramatic economic recovery and an accompanying sharp increase in revenues, the state simply cannot afford the level of spending that is being proposed. The state's leaders need to choose among the long list of competing needs.

The House Ways and Means fiscal 2008 budget, which will be debated by the full House beginning April 23, has a bottom line that is very similar to the Governor's budget proposal but rejects most of his specific initiatives.

The House proposes to spend $29.16 billion in fiscal 2008, an increase of 3.7 percent or slightly more than $1 billion over 2007, compared to an increase of 3.8 percent in the Governor's budget, $26.5 million more than the House (View Budget Summary).

On the other hand, the House rejected many of the Governor's specific initiatives, including $300 million in new corporate taxes, the funding formula for Chapter 70 school aid distribution, the collapsing of line items for the courts and public colleges, the elimination of most earmarks, funding for 250 new police officers, a special $25 million emergency fund, and expanded spending for a variety of public health programs.

From a fiscal point of view, the main difference between the two budgets is the House's larger planned draw on reserves – approximately $500 million compared to $225 million by the Governor. Despite the Governor's smaller use of reserves, the House has adopted the better approach.

That is because the administration's budget depends on a large increase in corporate taxes, the fourth such increase in five years and a virtual doubling of the corporate income tax during this period. The creation of jobs is the only way out of the state's fiscal dilemma. These large tax increases will undercut job creation and exacerbate the state's long-term fiscal problems. Drawing on reserves during an economic recovery – even a weak one – is not ideal, but it has none of the negative consequences of the tax proposals.

Furthermore, it is highly unlikely that these tax changes would produce the hundreds of millions of dollars claimed by the administration. So the proposed tax increases would harm the economy, worsen the state's fiscal problems, and not even produce a balanced fiscal 2008 budget.

But if the House Ways and Means Committee has taken a wiser approach, it is critical that House leaders hold the line on additional spending during floor debate and not add to the dependence on reserves.

Almost half of the $1.04 billion increase in the House Ways and Means budget goes for Medicaid and pension and health care benefits for state employees. Even so, both the Governor and House limit Medicaid growth to less than 4 percent, an ambitious and perhaps unrealistic target.

While the House increases overall spending by only 3.7 percent, the larger question is whether the state can afford even that level of spending given the state's sluggish economy.

Governor Patrick's fiscal 2008 state budget includes a proposed spending increase of 3.8 percent. Tables 1 and 2 summarize his recommendations by category and track spending from 2001 to 2008. After adjusting for inflation, proposed 2008 spending is less than 2001 for almost all categories except for Medicaid and employee benefits.

Tax revenues will grow much more slowly in 2007 and 2008 than they did the past two years, according to a forecast released today by the Massachusetts Taxpayers Foundation.

In recent testimony (August 8) before the Division of Health Care Finance and Policy, MTF President Michael J. Widmer said that the proposed regulation issued by the Division fairly reflects the compromise agreement reached by the legislative leadership on the purpose of the fair share assessment under health care reform. Mr. Widmer testified that the clear intent of the agreement was to equalize the employer burden of paying for free care in the Commonwealth and was never meant to impose a mandate on employers to provide a minimum level of health coverage.

“The agreement drew a bright line between companies who provide some health coverage, and thus already contribute to the costs of free care, and those companies who provide no coverage and would thereby be subject to the assessment,” said Mr. Widmer, adding that the proposed regulation honors this agreement and should be adopted.

In a new analysis of the Commonwealth's financial situation, the Foundation focuses on a mounting appetite for new initiatives that threatens to overwhelm the state's ongoing fiscal capacity.

In its new analysis of Governor Romney’s proposed 2007 budget, the Foundation highlights the budget’s focus on restoring local aid to cities and towns and providing financial support for health care reform. At the same time, however, the more than $1 billion of new expenditures recommended by the Governor would use up essentially all of the fiscal flexibility provided by the recent strong growth in tax revenues, raising concerns about the budget’s impact in future years.

February 10, 2006.

The state’s public colleges would gain millions of dollars in new revenue if undocumented immigrants were allowed to attend these schools at in-state tuition rates, according to an analysis released today by the Foundation.

January 5, 2006.

Tax revenues will increase roughly five percent per year in 2006 and 2007—down from the almost seven percent average pace of the last two years—as the state’s workforce continues to expand at less than half the national rate, according to a forecast released today by the Massachusetts Taxpayers Foundation.

In a new analysis, the Foundation predicts a modest structural surplus in the state budget for fiscal year 2005 while sounding a warning on 2006 finances.

With the final Senate version of the fiscal 2006 budget $358 million higher than the House, the members of the 2006 budget conference committee will face the challenge of reducing the reliance on one-time revenues to pay for additional spending, according to a recently released analysis by the Foundation.

According to a new Foundation analysis, the fiscal 2006 budget recently adopted by the House takes a straightforward and constructive approach to the Commonwealth’s finances over the coming year, with limited spending growth—only 2.5 percent over 2005—and a conscious focus on budget-making rather than unrelated policy initiatives.

Governor Romney has proposed minimal spending growth in his state budget for fiscal 2006, reflecting the reality that the Commonwealth will face tight budgets for the foreseeable future. However, fiscal balance in the proposed budget—which would also cut the income tax by $450 million over two fiscal years—relies on hundreds of millions of dollars of questionable Medicaid cost shifting and on business tax increases that threaten to undo the progress Massachusetts made during the 1990s in improving its tax climate.

February 17, 2005.

As part of the Academy for New State Legislators held at UMass Amherst, MTF President Michael J. Widmer provided incoming representatives and senators with an overview of key state and local financial issues. The presentation traces the impacts of the Commonwealth’s ongoing fiscal crisis and emphasizes that the state still faces a structural deficit and a long list of looming funding obligations. The impacts of local aid cuts on municipal finances and the large funding shortfalls for state capital investments are also reviewed in the presentation.

December 6, 2004.

In this updated analysis, the Foundation concludes that despite the improving economy and declarations of budget surpluses, the state is still confronting a large and growing structural deficit. Even with tax revenues on track to exceed budget benchmarks again this year, the state is still relying heavily on drawing down its reserves and other one-time resources to finance its budget, resulting in an estimated structural deficit of approximately $750 million in fiscal 2005 that will carry over into 2006.

With unavoidable spending increases in obligatory accounts outpacing revenue growth, the Commonwealth’s structural budget gap is projected to reach $900 million in 2006. Given these fiscal realities, the Commonwealth can afford neither major tax cuts nor significant restorations of the budget cuts that have been made over the last three years.

In a recently released analysis, MTF concludes that the burden of taxes and fees in Massachusetts relative to other states has fallen substantially since the mid-1990s and now ranks in the bottom tier of states. The tax comparison updates a key part of the Foundation’s February 2003 business cost analysis prepared in collaboration with Associated Industries of Massachusetts and the Greater Boston Chamber of Commerce, Fragile Progress: Reining in Massachusetts’ High Business Costs. View 2003 Business Costs Report

The crisis in the state’s finances has entered a new and challenging phase. While improved revenues have led some to conclude that the crisis is over, the reality is much less certain.

The 2005 budget moved one step closer to its final form last week with Governor Romney’s exercise of his veto power under the Massachusetts Constitution. With the Legislature scheduled to conclude formal sessions for the year before the end of July, lawmakers have less than a month to override—by means of two-thirds votes in both the House and the Senate—any vetoes that they find objectionable.

In a recent news release, the Foundation called on the Legislature to enact a major overhaul of the state’s transportation agencies. Both the full Senate and the Joint Transportation Committee have put forth comprehensive and thoughtful proposals to strengthen the Commonwealth’s ability to finance, build and maintain its transportation assets and to integrate the state’s array of fractured transportation agencies and authorities. The two proposals have more features in common than differences. With an effective transportation system critical to Massachusetts’ economic competitiveness, the Legislature should bolster the state’s capacity for addressing its enormous transportation needs by enacting one or a combination of the Senate and Transportation Committee plans.

While the strong revenue performance of recent months is welcome news, the state's budgetary difficulties are far from over. Even with the improving revenue picture, 2005 revenues will barely be sufficient to support ongoing spending in state programs.

Reflecting the reality of the state’s ongoing fiscal crisis, Governor Romney’s 2005 budget proposes the fourth straight year of spending cuts. While education is the budget’s primary area of emphasis, the modest increases in local school aid and higher education funding recommended for 2005 do not come close to offsetting the reductions of the previous three years.

At the annual consensus revenue hearing on Beacon Hill, the Massachusetts Taxpayers Foundation predicted state tax revenue growth of slightly more than four percent in both fiscal 2004 and 2005, based on conservative assumptions about the pace of growth in both the national and state economies.

The forecast assumes that the recent strong gains in the national economy will slow, and that the Massachusetts economy will grow even more slowly. However, if U.S. economic performance remains on its present strong track, state tax revenues in fiscal 2005 (but not in 2004) would be substantially higher than the Foundation's projections.

In a striking outcome of the deliberations on this year's budget, the state in 2004 will for the first time in decades spend more on prisons and jails than on public higher education. While this change in budgetary priorities has occurred during a severe fiscal crisis, it reflects trends in state funding for these two crucial, albeit very different, programs that stretch back for many years. For both areas, the huge structural deficit in the state budget—and the certainty of limited resources in the years ahead—raise critical questions about their future course.

Three years after its enactment, the success of forward funding of the MBTA -- one of the most important fiscal reforms of the last decade -- is increasingly uncertain. Despite major steps taken by the T to implement the reforms and live within its new fiscal constraints, the costs of system expansion and difficulty building ridership are undercutting the ability of forward funding to improve the quality of transit services and put the T on a sound financial footing.

The Commonwealth’s vast system for purchasing human services needs major reform, according to a major new report prepared by MTF in collaboration with the Massachusetts Council of Human Service Providers and with major funding from The Boston Foundation. The study concludes that the burden of the system’s flaws falls on the clients – who too often do not receive the quality services they need – and the taxpayers, who are not getting a fair return on the $2 billion spent annually on services purchased from private providers. The report recommends a series of reforms designed to refocus the system on meeting the needs of clients, to create incentives for high performance, and to eliminate unnecessary and costly administrative requirements.

The Foundation's newly released analysis of the $23.1 billion state budget notes the great strides that the Commonwealth has made in closing a potential shortfall of $2.5 billion, but also underscores the failure to eliminate fully the structural gap in state's finances. Even with a rebound in the state economy, the state is facing a $1 to $2 billion shortfall in 2005, due the reliance on $400 million of one-time resources in 2004, the continued rapid growth in health care costs, and the need to address other major obligations.

The Legislature's $23.1 billion budget for fiscal 2004 goes a long way toward closing an estimated $2.5 billion structural deficit, while taking meaningful steps toward governmental reform. However, the budget's reliance on $400 million of one-time revenues will make the job of balancing the state's finances in 2005 -- with fixed costs expected to increase by $1.5 billion and uncertain prospects for revenue growth -- even more challenging.

Budget conferees face a two-fold challenge as they hash out the differences between the House and Senate versions of the fiscal 2004 budget: minimizing the $300 to $500 million gap between proposed spending and on-going revenues in the two budgets; and preserving the impetus for reform of government operations by adopting the strongest of the reform proposals advanced by each branch.

According to a new analysis, the proposed 2004 budget recently adopted by the House -- like the Governor's budget -- fails to fully close the structural hole in the state's finances. Following almost $2 billion of spending reductions over the last two years, the deep cuts recommended in both budgets will require the layoff of thousands of state and local workers and significant reductions in services.

The Foundation's updated analysis of spending changes over the past two fiscal years concludes that the state has reduced expenditures by $1.9 billion in a host of programs -- not including the additional spending cuts that will be needed to address the large budget gap in fiscal 2004.

Governor Romney’s 2004 budget proposes comprehensive and long-overdue reforms of state government. However, these reforms will produce minimal savings in the short term. Governor Romney’s budget seeks to close a projected $3 billion gap in fiscal 2004 using the only realistic means possible – a combination of new revenues and spending cuts across state government.

MTF calls on state policy makers to take advantage of the need for extraordinary solutions to the fiscal crisis and seize the best opportunity in years to undertake important reforms of state government. The bulletin highlights a number of issues that should be at the top of the agenda: revamping the education local aid formula, redesigning the system for purchasing human services, restructuring the management of the courts, revising sentencing guidelines, ending pension abuses, encouraging competition to provide state services, and eliminating unnecessary mandates and restrictions that add to state costs. Although not nearly enough to solve the state’s budget shortfall, the opportunities for savings in the long term are significant. Such reforms would improve the quality and equity of services, make better use of taxpayers' dollars, and help restore public confidence in state government.

Because of the continuing weakness of the state and national economy -- and the uncertainty about future economic growth -- state tax revenues will fall short in fiscal 2003 and grow at an anemic pace in 2004, according to a forecast presented by MTF to members of the House and Senate Ways and Means Committees at their annual revenue hearing.

MTF and three other business organizations have joined together to defeat Question 1, the Libertarian Party’s reckless proposal to abolish the state income tax. If adopted, this extreme measure would throw the finances of state and local governments into chaos and inevitably lead to major increases in property and sales taxes. View MTF's Case Against Question 1.

The Massachusetts Taxpayers Foundation announced today it has received two prestigious national awards from the Governmental Research Association for the Foundation's work on the state fiscal crisis and capital spending at the MBTA.

In a new analysis, the Foundation credits the state's leaders for their efforts to address the Commonwealth's fiscal crisis through a realistic combination of spending cuts and tax increases in 2003. However, MTF warns that a remaining large structural deficit will require further painful choices in 2004.

As a result of recent tax revenue shortfalls, the House and Senate versions of the state budget for fiscal 2003 are at least $650 million out of balance. With more than $1 billion of additional tax revenues already included in the legislative budgets and almost $2 billion of the state's $3 billion of reserves already committed to filling the 2002 deficit, further spending cuts are needed to bring the 2003 budget into balance. The Foundation calls on lawmakers to meet part of this challenge by curbing longstanding spending abuses and inefficiencies that have not been addressed in either the House or Senate budgets. Despite reductions in a variety of programs, total spending in the House budget is up roughly $700 million, and the Senate budget grows even more, by almost $1 billion, largely the result of staggering increases in Medicaid and other health care expenditures.

As the state struggles with a more than $2 billion budget gap in fiscal 2003, its leaders have an opportunity -- and a responsibility -- to correct spending abuses and eliminate inefficiencies that have been tolerated in the recent good times, especially when programs are being cut and taxes raised. The reforms identified by the Foundation, which range from eliminating abuses in incentive pay for higher education for local police to reforming the Chapter 70 education aid formula, would help ease the state's fiscal problems while making better use of taxpayers' dollars.

While the state's leaders have agreed on a plan to fill the huge revenue shortfall in 2002, even larger deficits in 2003 and beyond remain unaddressed. Almost $1.3 billion will be drawn from reserves in 2002, and another $134 million of "savings" will come from unwisely reducing the contribution to the state's massive unfunded pension liability. In contrast, only $400 million of spending will be cut from the state's $23 billion budget in 2002, including $100 million of one-time reductions and other yet-to-be-identified savings. The failure to reach agreement on more significant spending cuts and other structural solutions in 2002 will make it much more difficult to achieve a balanced budget in 2003.

News Release: After plummeting more than $1.8 billion in fiscal 2002, state tax revenues will remain flat in 2003 as gains from a projected mild recovery are offset by the impact of prior tax cuts, according to a forecast presented by MTF to members of the House and Senate Ways and Means Committees at their annual revenue hearing. The Foundation estimates that state tax revenues will total $14.25 billion in fiscal 2003 as projected tax growth of 3.5 percent is offset by the continuing phase-in of Question 4 and other tax cuts.

While acknowledging that the Commonwealth faces a $2 billion fiscal shortfall in fiscal 2003, in attempting to close that gap the administration’s budget proposal relies on overly optimistic revenue growth projections, excessive use of reserves, an unwise reduction in pension funding and other problematic proposals and assumptions that total more than $1 billion. The $23.6 billion spending plan does include several positive elements, most notably a reasonable estimate of Medicaid cost growth and increased funding for local school aid and special education.

In this succinct analysis, the Foundation examines the impact of the Governor's vetoes and proposed supplemental funding requests on the fiscal 2002 budget approved by the Legislature. While the budget would rely less on "rainy day" reserves to achieve balance under the Governor's proposals, it would be $150 million out of balance -- $50 million more out of balance than the legislative budget -- and unwisely reduce pension funding by over $200 million.

Bulletin: Despite significant efforts to close a more than $1.35 billion budget gap in fiscal 2002, the state's financial leaders have failed to produce a balanced budget or to adequately address the multi-billion dollar financial problems that the state will face over the next several years. With only $600 million in spending cuts, the woefully late budget adopted by lawmakers relies too heavily on the state's rainy day reserves and fails to provide fully for underfunding of legally-mandated spending. While the Governor has proposed deeper cuts, her budget is also out of balance and includes such unwise initiatives as shifting over $100 million of pension costs to future generations.

News Release: Massachusetts will face escalating multi-billion dollar state budget deficits over the next several years unless state leaders make major spending reductions in the fiscal 2002 budget, according to a new analysis by the Massachusetts Taxpayers Foundation. While large spending reductions are the critical first step, the analysis suggests that the state may need to take other measures to address the long-term problem.

On November 6, voters in eight Massachusetts communities -- including Boston, Malden and Waltham -- rejected a ballot measure that would have raised property taxes by up to three percent to fund affordable housing, historic preservation and open space initiatives. The Community Preservation Act was approved by five communities -- most notably Cambridge and Newton -- joining 31 other municipalities that have already adopted the CPA assessment, making them eligible for state matching funds in 2003. MTF’s recent analysis of the measure showed that businesses would have paid for the majority of the tax increase in most of the larger communities voting on the measure this fall. As it now stands, businesses will pay for most of the tax increase in only three municipalities -- Ayer, Bedford and Cambridge. Residential property owners will pay for 69 percent of the CPA assessments in the 36 cities and towns that have so far approved the measure.

Legislative Testimony: Citing the recommendations of the Foundation's joint study with the United Way of Massachusetts Bay, MTF President Michael J. Widmer testified before the Human Services Committee to fully incorporate education and training into the work requirement for welfare recipients. Mr. Widmer emphasized that the Governor's proposal, House 4141, does not go far enough to support the study's overriding principal: the goal of welfare reform should be to help recipients achieve long-term economic independence and self-sufficiency. Self-sufficiency not only serves the interests of welfare families but also employers and taxpayers, as recipients no longer rely upon the state for benefits but instead become contributing taxpayers themselves.

Bulletin: MTF warns that the state could face a $900 million revenue shortfall in 2002 if the trend of declining revenues in the first two months of the fiscal year continues. At the same time, not only is legislative approval of the fiscal 2002 budget woefully overdue, both the House and Senate version of this year's spending plan are out of balance even before factoring in the latest bad revenue news. Meanwhile, lawmakers have not taken the actions needed to close out fiscal 2001, leaving the use of a surplus of more than $500 million in limbo and jeopardizing the state's ability to meet key financial reporting deadlines.

News Release: With the state struggling to pay the cost of its current health care programs, the Foundation called on the Legislature to dedicate any new revenues from the proposed 50-cent increase in the tobacco tax to meet the Commonwealth’s long list of underfunded health care obligations before further expanding the Medicaid rolls.

Presentation to seminar sponsored by the West Springfield Chamber of Commerce. Provides an overview of the disproportionate impact of property tax classification on the tax burden of Massachusetts businesses, with updated numbers for fiscal 2000.