Introduction
The Governor’s budget proposal (House 2) continues budget cuts from the prior two years and recommends further cuts in several areas. It also generates revenue by reducing three business tax breaks and by extending sales taxes to cover soda, candy, cigars and smokeless tobacco. In addition it relies on continued significant federal assistance and on other temporary revenues including a modest withdrawal from the state stabilization fund. This MassBudget Preliminary Analysis describes some of the major cuts and other initiatives used to balance the budget.
If the federal government fails to provide additional state fiscal relief it would force Massachusetts and other states to implement significantly larger budget cuts and tax increases. It has been estimated that if the federal government fails to provide needed state fiscal relief and states are forced to close their entire budget gaps with spending cuts and tax increases, that could cause the loss of 900,000 jobs nationally1 -- at exactly the time when job creation is particularly needed. For that reason legislation approved by the US House and pending in the Senate would extend federal assistance to the states to protect jobs by reducing state budget cuts.
MassBudget will publish a complete Budget Monitor late next week. In the following pages we provide a preliminary analysis of some of the more significant funding choices in each section of the budget.
Staff
