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Table of Contents
- MASSBUDGET BRIEF: FISCAL YEAR 2011 BUDGET PREVIEW
Table of Contents
- MASSBUDGET BRIEF: FISCAL YEAR 2011 BUDGET PREVIEW
In crafting the Fiscal Year 2010 (FY 2010) budget, the state faced a gap of approximately $5 billion.1 To close the gap, the state relied on three sets of strategies (approximate amount in parentheses after each item):
- Savings from budget cuts and other spending reductions ($2.22 billion).
- Increased fees and taxes ($795 million).
- The use of federal and state temporary revenue sources ($1.95 billion).
With the recently announced further declines in tax revenue for FY 2010 indicating that the Commonwealth is currently $212 million below benchmark for the first quarter of FY 2010,2 it is likely that additional cuts, revenues, or reserves will be required to keep the budget balanced throughout FY 2010.3
The picture for FY 2011 is just as challenging. While the state made some very difficult choices to impose deep cuts and raise new revenue, these strategies account for about 60 percent of the budget gap. The rest of the gap – $1.95 billion – was closed using temporary revenue sources. This Brief examines the FY 2011 budget gap and the challenges the state will face in filling that gap.
It is important to note, as difficult as these challenges are, the state’s fiscal situation would be far worse if the federal government were not providing $1.62 billion in stimulus funding this year and up to $812 million in FY 2011. While this temporary assistance doesn’t solve the state’s long-term structural problems, it did reduce by more than a billion and a half dollars in FY 2010 (and about half that in FY 2011) the amount that the state would have been forced to raise in taxes or cut in spending during the recession. Without the federal assistance in FY 2010 the state either would have had to cut hundreds of million dollars more from local aid, education, health care, human services, and the other major areas of the state budget, or would have had to raise taxes by more than twice as much as the increase that was enacted – or both.
1 See the Overview in MassBudget’s Budget Monitor: The Legislature’s Fiscal Year 2010 Budget with the Governor’s Vetoes and Amendments for a discussion of the $5 billion deficit projected for FY 2010, available at: http://massbudget.org/doc/681.
2Massachusetts Department of Revenue announcement on revenue collections, available at: http://www.mass.gov/?pageID=dorterminal&L=5&L0=Home&L1=Tax+Professionals&L2=News+and+Reports&L3=DOR+Press+ Releases&L4=2009+Press+Releases&sid=Ador& b=terminalcontent&f=dor_news_pressreleases_2009_Sept09_revenues&csid=Ador.
3On Oct. 15, 2009, the state will announce the final revenue shortfall for FY 2010 and within the following two weeks the Governor will use his 9C authority to announce the cuts necessary to balance the budget.
Table of Contents
- MASSBUDGET BRIEF: FISCAL YEAR 2011 BUDGET PREVIEW
