Tax revenues will grow by $1.1 billion, or 4.5 percent, to $25.5 billion in fiscal 2016, continuing the trend of modest growth yet still below that of previous economic recoveries, according to a new forecast released today by the Massachusetts Taxpayers Foundation.
“It’s alarming that even with employment gains and a healthier economic climate, the state faces a monumental budget shortfall in fiscal 2015 and substantial challenges in 2016,” Bagley said.
In December, Patrick's secretary of administration and finance, Glen Shor, disputed an analysis by the Massachusetts Taxpayers Foundation alleging a deficit significantly larger than the $329 million problem flagged by Patrick's team right after the November elections.
But the additional revenue does not mean budget writers will have an easy job. Andrew Bagley, director of research and public affairs for the Massachusetts Taxpayers Foundation, warned that increases in spending for Medicaid, pensions and retiree health care, along with spending for debt owed through the MBTA and School Building Authority "will consume most, if not all, of the $1.1 billion in new tax revenues."
Baker said he expects the deficit, while pegged at roughly $330 million by the Patrick administration, to be “certainly north of $500 million.” Other analysts, including the Massachusetts Taxpayers Foundation, have estimated it could go as high as $750 million.
Worse, the Massachusetts Taxpayers Foundation says the budget gap could rise still more – $500 to 600 million more – by July. Local aid to cities and town would take a devastating $25.5 hit which would likely require cuts to police and fire, snow removal, and administrative resources.
Michael J. Widmer, president of the Taxpayers Foundation, who helped campaign against the repeal, said the vote could have serious long-term consequences for transportation funding that was given a boost last year.