Modesty’s in order
Beacon Hill has handled the first part of the annual budget writing exercise reasonably well. What happens next will bear close watching by taxpayers who, as usual, need to keep their guard up.
Yes, as budget season begins House and Senate leaders and the Baker administration have agreed on a tax revenue forecast for fiscal 2019, which begins July 1, that hews slightly to the conservative side of expert predictions. The top players have settled on a forecast of 3.5 percent tax revenue growth next year — almost $1 billion more than they expect to collect in the current year.
That is good news for taxpayers, in that it is expected to trigger a slight reduction in the income tax rate in 2019 — part of the (slow-as-molasses) effort to bring the rate back down to 5 percent. Revenues fell short of triggering the incremental reductions this year and last, but at this rate maybe we’ll actually get there by 2020 — just in time for the 20th anniversary of when Massachusetts voters first it.
Meanwhile, as part of the “consensus revenue” exercise Beacon Hill also agreed to adjust revenue estimates for the current fiscal year upward, by $157 million — a refreshing change from the last two years, when lagging revenues forced downward adjustments and painful mid-year fixes.
But no one should be tossing confetti at this early stage.
We have little doubt the spendthrifts on Beacon Hill will be eager to “invest” all of that “extra” revenue from this year’s budget, for example. The Massachusetts Taxpayers Foundation has recommended, sensibly, setting aside that above-benchmark revenue to guard against changes in the tax structure next year, when two controversial questions related to taxes will be on the ballot. MTF also calls for a “sizable” deposit in the state’s rainy-day fund.
And when it comes to drafting next year’s budget, once again the challenge for Democrats will be to restrain their wildest spending dreams.
True, the signs for fiscal 2019 are hopeful. But it’s too early to declare a banner year. A little modesty goes a long way and budget-writers need to act in that spirit.