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Healey to announce spending cuts amid underwhelming tax revenue
The Healey administration is reportedly preparing to announce $375 million in cuts that will impact local earmarks.
Massachusetts Gov. Maura Healey is reportedly planning to announce $375 million in spending cuts Monday, after the state collected less than expected in tax revenue for six straight months.
Multiple lawmakers told The Boston Globe about the planned cuts Sunday after they were contacted by officials within the Healey administration. The budget for a variety of local earmarks will be cut by 50%, impacting things like funding for nonprofits and economic development programs. State programs, such as ones dealing with health and human services, could also be affected.
Last month, Healey said she was not considering budget cuts when asked about the topic by State House News Service. She acknowledged that revenues were down in recent months, but said her administration would “manage the situation.”
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Last week, it was reported that the Department of Revenue brought in $3.776 billion in December, $138 million or 3.5% below the monthly revenue benchmark estimate. It is also $82 million less than what was collected in December 2022, SHNS reported.
The cuts set to be announced by Healey are known as “9C cuts.” The last time such cuts were made in Massachusetts was by former Gov. Charlie Baker in 2016, per Politico.
Administration and Finance Secretary Matthew Gorzkowicz said in a statement to the outlet Sunday that Healey had told him to “evaluate any and all necessary steps” to balance the budget. He also promised another update in “short order.”
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State Sen. Jamie Eldridge told the Globe that he was concerned about the potential cuts to local earmarks in the wake of last year’s $1 billion tax bill that benefited businesses, heirs of large estates, and investors.
“At the end of the day, earmarks are not going to cover this budget deficit … I am very troubled that we just passed a tax reform package where over a third of the tax cuts went to the wealthy. I think that’s extremely concerning,” Eldridge, who voted “no” on the tax bill, told the Globe.
The state has collected $769 million or 4.1% less than projections so far halfway through fiscal year 2024. Tax revenue has increased $60 million or 0.3 percent compared to the same time a year ago, SHNS reported, but this is not enough to cover all the necessary costs.
Some of those costs are being exacerbated by the ongoing emergency shelter crisis in the state. The shelter system reached capacity in November, and more than 400 families were on a waitlist, hoping for placement in a shelter or hotel as of last week. Efforts to connect migrants in shelters with legal services and help them get work authorizations have been successful so far, but the flow of families into the system is not expected to subside anytime soon.
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A report released by the Healey administration last month showed that the state will need to spend an estimated $932 million in fiscal year 2024 and about $915 million in fiscal year 2025 to keep the system operational. The current length of stay for a family in the shelter system averages more than a year, meaning officials must look at solutions that span two fiscal years. A $700 million state escrow account is being eyed to offset a portion of the expenses.
There appears to be some pushback to that idea already, with Senate Ways and Means Chair Michael Rodrigues telling reporters “we protect our reserve funds,” when asked about it last week, according to Politico.
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