May 4, 2009 9:19 pm US/Eastern
Keller: State's Fiscal Health Takes Turn For Worse
BOSTON (WBZ) ―
Gov. Deval Patrick was grim-faced as he arrived for the meeting with House Speaker Robert DeLeo and Senate Pres. Therese Murray. And with good reason: The state's fiscal health has taken a nasty turn for the worse.
Beyond the red ink in the current budget, state leaders had predicted they'd have $19.5 billion to spend on the 2010 budget that kicks in July 1, but new estimates and worsening trends have slashed that amount to $18.5 billion -- $1 billion below the figure they'd been using for planning. And this is the fourth time in the last year they've had to revise their expectation downward, as the state's tax take continues to freefall.
"Will you have to revisit your revenue proposals in light of these new numbers?" asked WBZ's Jon Keller.
"No, I don't think so," Patrick answered. "I think we'll have to revisit the spending plan, that has to be part of it, and that's been a part of our strategy all along – some cuts, some new revenue and some reforms."
"The April revenues demonstrate that there was an even greater-than-predicted impact to capital gains revenue," said Secretary of Administration and Finance Eslie Kirwan. "We lost about a billion dollars."
"Building a budget on capital gains is like building a house on a sandbar in Chatham, isn't it?" asked Keller.
"Well, that's increasingly a problem that the state's had," answered Kirwan.
That answer is an eyebrow raiser, because capital gains taxes, on things like home sales and stock profits, have been on a boom and bust cycle for years. The fact that Beacon Hill was still expecting that money to keep flowing as recently as six months ago does not inspire confidence.
What impact could all this have on the debate over new taxes? Patrick says his promise still stands to veto the sales tax hike passed by the House, unless he sees progress on reforms.
Murray wasn't talking about new taxes in the Senate budget which comes out next. Your taxes are going up, where and by how much remains a work in progress.
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