Caution flag on budget
Two years in a row Massachusetts had to write down its revenue forecast late in the fiscal year, throwing the state budget into chaos — and dragging out the fiscal pain that occurs when spending plans don’t align with available revenues.
So has Beacon Hill learned its lesson?
Not bloody likely.
Sure, as budget writers at the State House prepare to set the revenue figure on which the fiscal 2019 budget will be built — a mandatory annual task — there is the usual talk of being cautious and the vicissitudes of fortune that the commonwealth can anticipate next year. There are the uncertainties of federal tax reform, ballot questions with a direct impact on tax revenue and the lingering effects of slow wage growth.
“As we prepare for the upcoming budget cycle, it’s important to recognize recent trends of slow revenue growth,” Senate Ways and Means Chairman Karen Spilka (D-Ashland) said at a State House revenue hearing last week.
But Spilka was the one leading the charge on the Senate floor these last few years to override most if not all of Gov. Charlie Baker’s budget vetoes — spending reductions that, had they been allowed to stand, could have helped the commonwealth ride out the most recent choppy seas. Take her calls for prudence in that context.
And we suspect lawmakers will take recent good news on revenues — they’re up $204 million over projections five months into this fiscal year — and run with them, which could perpetuate the vicious cycle.
Of course revenue forecasting is not an exact science. And the Democrats who control the Legislature haven’t really insisted on wildly unrealistic revenue expectations these last couple of years. It’s usually their behavior
the “consensus revenue” figure is determined that creates the biggest set of problems. They fail to set realistic spending levels —underfunding certain accounts, for example, which gives them enough wiggle room to fund their own priorities and pet projects, all while hoping that a wave of higher tax revenues will lift all boats. And when it doesn’t, well, that happens in the middle of the year when the governor is the one who has to make the unpleasant choices to bring the budget back into balance.
Legislative Democrats thus avoid the heat — and the fallout.
And so the discipline really needs to come
— with a very conservative revenue forecast, and realistic budget proposals that dispense with the flotsam and jetsam. Hope springs eternal.