Gov. Charlie Baker Reviewing Options As State Budget Woes Deepen

Republican Gov. Charlie Baker's administration said it is "reviewing all options" after a disappointing April revenue report left an even deeper hole in the state's budget.

The Department of Revenue said late Wednesday that tax collections in April missed forecasts by $241 million, falling nearly eight percent below expectations.

April is the biggest month for tax collections, accounting for about 12 percent of total annual revenues.

Ten months into the 2017 fiscal year ending June 30, the state is running $462 million below its benchmark for the year.

Revenue Commissioner Michael Heffernan said that while revenue is continuing to grow - it's not growing fast enough in some categories to meet estimates.

"These results make it unlikely that the commonwealth will meet its FY17 revenue target with less than 20 percent of expected collections remaining in the final two months in the fiscal year," Heffernan said in a statement.

"We will also need to take a look at FY18 projections," he added.

Secretary of Administration and Finance Kristen Lepore said the administration was carefully reviewing options for maintaining the state's fiscal stability.

"April's revenues are part of a long recovery period of modest revenue growth that the entire nation is experiencing, and while we are seeing positive revenue growth for the year (1.1 percent) it is not the level of growth that economists projected or upon which we based our budget assumptions," Lepore said in a statement.

One option could be further spending reductions on top of the nearly $100 million Baker cut from the budget in December.

One big dip came in income tax collections for April which fell $275 million - or 11.7 percent - below the monthly benchmark and $126 million - or 5.7 percent - below last April's haul.

Lepore noted that April's reported revenue doesn't include 70,000 yet-to-be-opened paper returns received by the revenue department. Those returns should be processed this week.

Lepore said processing tax returns has been slower this year due in part to new anti-fraud security measures.

The drop in tax collections come despite all outward signs of a booming economy in much of Massachusetts, with an unemployment rate of less than 4 percent.

The sluggish revenues are not unique to Massachusetts. Lepore said overall revenue growth has slowed in many other states that already have reported April revenues, including Connecticut, Pennsylvania and California.

The decline comes despite the fact that Massachusetts has twice lowered its expectation of how much the economy would grow in the 2017 fiscal year.

The original revenue forecast of 4.3 percent growth for the fiscal year was set in January 2016. It was dropped to 3.7 percent last June and down again to 3.1 percent last October.

Copyright AP - Associated Press
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