It’s a tight budget and we’ll have to watch closely to see whether its assumptions hold up.
Today the financial leadership of the House, the Senate and the Governor’s office held their annual “consensus revenue hearing”. In short, the outlook is fair — a continuing moderate budget squeeze with some warning flags about long-term issues. But those long-term issues — health care, pensions, and financial reserves — mean that the budgetary choices over the next few months won’t be easy.
I was heartened by Governor Baker’s effort to budget honestly for the costs that are hard to control in the state budget.
Unlike previous economic recoveries, revenues aren’t growing as fast as the state has budgeted. For the next couple of years, this will have an impact both on state spending–we have to work very hard to stretch available dollars–and on how revenues are estimated when state budgets are built.
Incoming Senate President Stan Rosenberg recently organized a briefing for Senators on the state’s economic and fiscal outlook. The presentations (which are attached below with permission of the authors and Senator Rosenberg) were sobering.
Wall Street has applauded our state-level efforts to manage long-term liabilities — the rating agencies are giving the Commonwealth its highest ever bond ratings. But we should consider carefully whether …