May 5, 2009 6:54 pm US/Eastern
Senate's New Budget Crisis Called A 'Catastrophe'
BOSTON (WBZ) ―
As the state Senate writes its budget, lawmakers have a new, giant math problem to deal with.
The number they've been using for planning just dropped $1 billion.
Before the April revenue figures came in, state leaders believed they would have $19.5 billion to spend for the 2010 budget.
That's the number the governor and the House used in their planning.
But revised estimates and trends have drastically lowered that figure to $18.5 billion.
Michael Widmer of the Mass. Taxpayers Foundation calls the situation a disaster.
He says from fiscal year 2008-2009, we are seeing the largest one-year drop in tax revenues ever, based on percentage.
"It's fair to say it's a catastrophe. That's not an overstatement," he said.
"Massachusetts has never experienced this type of freefall from the economy even since the Great Depression," said Senate President Therese Murray.
"I think the cuts are going to be real now," said Sen. Steven Panagiotakos. "We've been able to bandage a lot of it this fiscal year, but that's not going to be the case. There will be significant cuts everywhere."
Widmer's concern is that the state is quickly depleting its reserves and its stimulus money.
"By the time 2009 is through, we will have used more than $3 billion in one-time money."
Widmer predicts a four-year fiscal crisis, starting with the 2009 fiscal year, which ends in June.
No area will be safe from cuts.
"Government doesn't want to decimate our educational system. That's why people come to Massachusetts -- to set up business because we have an educated workforce," Murray said. "So this is going to be difficult on all of us. All human services and education programs are going to be cut. There's not way around that."
"The goal of covering every individual in the state may not be doable in this environment," said State Treasurer Tim Cahill. "We'll probably have to cut local aid."
But, economists with the Beacon Hill Institute paint a rosier picture with regard to the tax revenues.
They also expect the economy will bottom out during the third quarter of this year.
They also offered some solutions. Instead of a sales tax, the Beacon Hill Institute wants a 5 percent across the board wage cut for state and local employees, estimating the state would save $1 billion.
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