State financial outlook for 2012 and beyond

Yesterday, the legislature held its annual revenue estimate hearings.

Here are some of the highlights:

  • We are coming out of the recession — revenue is running above expectations in the current fiscal year (2011) and will continue to rise next fiscal year (2012).
  • Health care spending in the Medicaid program — is also rising dramatically and will consume most of the gains in the current fiscal year.
  • Revenue growth in FY2012 is not sufficient to close the gap opened by (a) loss of federal stimulus funding; (b) continued cost increases.
  • The budget gap is in FY2012 is expected to be $2 billion — large enough on an already depleted state budget of $30 billion, that cuts will feel substantial.
  • From a long term perspective, although there will be further revenue recovery in 2013 and beyond, the trend line has fallen to a lower level — we cannot expect to return services to their pre-recession levels.

For good resources on these issues see:

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

4 replies on “State financial outlook for 2012 and beyond”

  1. “we cannot expect to return services to their pre-recession levels.”

    This is known as an “austerity” program. It seems to me that in times of crisis, sacrifices should be broadly shared. However, Massachusetts’ response — similar to most states — is to have the most vulnerable residents make the greatest sacrifice — losing services that were not adequate at peak funding levels. While our wealthiest residents, have had enormous tax breaks for the last 10 years. The Commonwealth needs to figure out a way to hold those living lives of excessive luxury — Tiffany reported earnings up 27 percent in the last quarter — to act responsibly and share the sacrifice. Shelter, food, health care, education are necessities that government is charged with ensuring. It takes revenue to do that. Today, the gap between the wealthiest, highest income people (the top 1%) and the bottom 60% is at its highest since 1928. Epidemiologists Richard Wilkinson and Kate Pickett, in their book “The Spirit Level” document the broad range of societal problems that correlate with economic inequality. Government rules (e.g., tax laws) and policies (e.g., spending decisions) drive inequality. Changing the rules can address the gap; it was done in the 1930s under the New Deal; it was done in the 1960s under the programs of the Great Society; we need a similar program for the second decade of the 21st century.

    1. Thanks, Steve.

      I agree sacrifice needs to be shared broadly, and that we are cutting services for the most vulnerable. Nonetheless, for a combination of reasons, some good, there appears to be broad sentiment against tax increases. So, for now, my focus, in seeking to protect the vulnerable, is on abuses within government — politicians taking care of people who are already doing fine.

  2. Will-Has there ever been a more relavant time to require zero based budgeting for the Commonwealth?

    Before one cent is cut-a top to bottom review of how Government delivers its services should be conducted. Do nothing jobs and duplication eliminated. I would love to see an audit of the MA Highway/MTA merger and the savings that resulted…perhaps newly elected Auditor, Suzanne Bump could be encouraged to undertake a nonpartisan look…I have my doubts but suggest nonetheless.

    Steve, I’ll pick up a copy of the book you reference and try and keep an open mind. It should be clear from my postings that I disagree with much of the class warfare rhetoric. I expect the Patrick administration will soon begin its typical screed about “cutting to the bone”. Utter nonsense. Those of us in private industry get a laugh at the suggestion that 5-10% of any budget can’t be cut without the sky falling. How about we start by freezing the pay of all state workers? Will, what are your thoughts?

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