Sep 20, 2008 4:03 pm US/Eastern
Patrick Ponders Major Cuts As Revenues Fall
BOSTON (AP) ―
Gov. Deval Patrick is considering emergency cuts to the state budget after tax collections fell more than $200 million short of projections in the first two weeks of September.
The state anticipated it would collect about $1.1 billion during that period, but instead collected about $889 million. That was an 18.4 percent drop from the previous year.
Officials also expect the situation to worsen because of the nationwide economic turmoil.
Secretary of Administration and Finance Leslie Kirwan told The Boston Globe that she expected emergency cuts would be needed, and Patrick would make them throughout the executive branch next month.
But she said it's impossible right now to know the size and focus of the cuts.
"We're going to take a hard look at everything," she said.
If revenues continue to decline, Patrick would seek expanded powers to spread the cuts across state government, which could affect accounts for everything from the judiciary to services in cities and towns.
Patrick must get approval from the state Legislature to make cuts outside the executive branch.
The last time lawmakers granted that broad power to the governor was 2003, when former governor Mitt Romney enacted sweeping mid-year cuts amid a growing deficit.
A state Revenue Department report attributed this month's drop in collections to anemic revenues from corporate business taxes and weak collections from payroll taxes, which were down $73 million.
The report indicated collections could rebound in late September because most revenue is processed at the end of the month. But Kirwan said she still expects the emergency cuts will be needed.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, called the state's September numbers "sobering," but said it could get worse. He said numbers in the revenue report don't include capital gains taxes, which are expected to fall because of market turbulence.
"The big hit is yet to strike," he said.
Another looming issue is the federal government's reimbursement for state healthcare programs. The state planned to receive $3.5 billion this fiscal year, but negotiations have dragged past a June 30 deadline, and the state could face additional budget cuts if federal aid falls short.
Meanwhile, Senate President Therese Murray, D-Plymouth, has called for a meeting Monday to examine the state's finances. Kirwan, state Treasurer Timothy P. Cahill, and budget leaders in the House and Senate are expected to attend.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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