State budget numbers are bad
The Patrick administration today lowered its revenue forecast for this fiscal year by a whopping $952 million and concluded there would be little or no budgetary improvement in the coming year.
The forecasts mean Patrick is facing a budget shortfall of $1.1 billion this fiscal year and will have to hold spending at the new reduced level next year. The budget picture is likely to dominate Beacon Hill for the foreseeable future and preclude any new spending initiatives.
The dismal numbers represent a stunning and rapid fall in state tax revenue, precipitated by the sharp economic downturn nationally and the state's heavy reliance on capital gains taxes.
Next year is unlikely to see much improvement. Kirwan and legislative leaders said they believe tax revenues will rise by only $80 million in fiscal 2010 to $19.53 billion. The officials say they plan to base their budgets for fiscal 2010 on that consensus revenue estimate.
"It is likely the Commonwealth will continue to experience a downturn through FY10 and possibly longer," Kirwan and the legislative leaders said in a statement. "The dramatic loss of capital gains taxes, due in large part to the ongoing foreclosure crisis and weak home sales, is a key contributing factor to the drop in revenue."
The forecasts both for this fiscal year and next year are on the low end of what the state's Revenue Department was forecasting in mid-December, indicating the state's economic situation is continuing to deteriorate.