State House News – As the start of the fiscal year 2022 budget-crafting cycle approaches before the Legislature has even dealt with the fiscal year 2021 budget, the Baker administration and legislative budget managers are planning to call economists to Beacon Hill next month for an update on the state’s fiscal health.
Secretary of Administration and Finance Michael Heffernan, Senate Ways and Means Committee Chair Michael Rodrigues and House Ways and Means Committee Chair Aaron Michlewitz announced Tuesday they will hold a virtual economic roundtable Oct. 7 to “discuss the economic impacts and fiscal implications of the coronavirus (COVID-19) pandemic.”
Since budget managers expect to gather information for a fiscal 2021 budget at the Oct. 7 roundtable, the announcement Tuesday almost certainly means there will be no plan for the rest of the fiscal year that started July 1 until mid-October at the earliest, and lawmakers will be focused for much of next month on elections.
The three budget managers held a similar roundtable in April, when economists predicted sharp revenue drops and soaring unemployment rates and said the pace and strength of an economic recovery was still up in the air.
“A second economic roundtable will provide valuable insight at a critical point in time as we consider how to best move forward with the remainder of the fiscal year 2021 budget, begin planning for fiscal year 2022, while navigating the challenges brought on by the COVID-19 pandemic,” Rodrigues said.
Fiscal year 2021 started July 1 and Massachusetts state government has been operating on a pair of temporary budgets, which don’t include the same kind of spending directives that characterize a typical line-item-filled state budget. The latest interim budget is expected to run out at the end of October.
Rodrigues last week told business leaders he expects a $5 billion revenue tumble this fiscal year and said lawmakers will need to dip “deeply” into state reserves unless new federal aid arrives from Washington. He said the Senate’s goal is to have the fiscal year 2021 budget passed by the end of October.
Not only will lawmakers have to come up with a plan for the rest of fiscal year 2021, but they also have to soon start working on the fiscal year 2022 budget. In a normal year, with the current year budget in the rearview mirror, Heffernan and the Ways and Means Committee chairmen would hold a hearing in early December to begin the process of setting a state revenue assumption for the next budget year by January.
“The economic roundtable that was held in April helped us get a better grasp on the current and future fiscal health of the Commonwealth. Now, as we make our way through the remainder of fiscal year 2021 and look towards fiscal year 2022, it is crucial that we have as clear of a picture as possible before we make any significant budgetary decisions,” Michlewitz said.
The Legislature and governor must also close the books on fiscal year 2020, which ended June 30. The Department of Revenue was still collecting millions of dollars of fiscal 2020 revenue into August and the revenue shortfall for the year is thought to be in the neighborhood of $700 million.
The joint announcement of the Oct. 7 economic roundtable, which was sent by Michlewitz’s office, did not say which organizations or people would be invited to testify. The 10 a.m. roundtable will be held in a State House hearing room but the event, like the State House itself, will not be open to the public. Instead, the event will be livestreamed on the Legislature’s website.
The April economic roundtable featured remarks from Mass. Taxpayers Foundation, Beacon Hill Institute, Mass. Budget and Policy Center, MassBenchmarks editors Michael Goodman and Alan Clayton-Matthews, Tufts University Center for State Policy Analysis, Standard & Poor’s, and Moody’s Analytics.
Early in September, DOR reported that state tax collections are running $124 million or more than 3 percent ahead of their pace one year ago, a potentially promising sign given predictions that receipts could collapse this fiscal year.
The News Service reported Monday on an updated projection from the Center for State Policy Analysis at Tufts University, which suggests a nearly $1.6 billion reduction in anticipated tax revenues in fiscal 2021. Center director Evan Horowitz said its model relies on U.S. gross domestic product projections and was used to project a $700 million fiscal 2020 revenue gap, a figure that appears to roughly match the latest estimates.