How quickly should rainy day fund be tapped?
It’s raining. But is it pouring?
Literal weather-wise, it’s still dry, with a critical drought declared Friday in the southeastern part of the state and significant drought levels elsewhere. On the fiscal front, though, it’s time for budget managers to figure out just how much the climate has dampened since Gov. Charlie Baker filed a $44.6 billion spending plan in January, way back when the anticipated 2.8% growth was considered modest after a couple years that ended with surpluses.
By the time Ways and Means Chairs Rep. Aaron Michlewitz and Sen. Michael Rodrigues and Administration and Finance Secretary Michael Heffernan convened economic experts on Wednesday — their third such huddle of this budget cycle (December, April and October) — any expectation for the $31.15 in revenue collections that Baker built his budget around had evaporated.
Instead, the revenue projections that were described as “optimistic” during the summit were those that, if you were more a glass half-empty type, could also be called “least bleak.”
That includes the $29.6 billion estimate put forth by Tufts University’s Center for State Policy Analysis, and the $29.2 billion offered by the Beacon Hill Institute. The Beacon Hill Institute’s number, representing a decline over last year’s tax haul, could perhaps only be deemed optimistic in comparison to the forecasts already shared earlier in the day — $27.27 billion from the Massachusetts Taxpayers Foundation, and a range of $25.9 billion to $28.37 billion from the state Department of Revenue.
However big the gap is, it’ll be up to Michlewitz and Rodrigues to figure out how to plug it in the budget proposals
they ultimately put forward for their respective branches to vote on. Whenever that ends up happening.
Their main choices: cutting spending to match available revenues, raising taxes — an idea Heffernan threw cold water on, saying the administration doesn’t see a need for tax hikes right now — or dipping into the state’s $3.5 billion rainy day fund.
Evan Horowitz, from the Center for State Policy Analysis, said the $1.6 billion hole he was projecting was small enough to “comfortably be filled” with money from the stabilization fund, buying time until the relatively sunnier days he envisions in fiscal 2022.
Treasurer Deb Goldberg, though, suggested some caution around tapping the rainy day fund as a first resort. Credit rating agencies, Goldberg said, want to see other steps taken before the umbrellas come out.
“Clearly, we’re in a rainy day. However, we do not know how long that rainy day is going to last,” she said. “And so, consequently, the way that the rating agencies look at that is, yes, it is quite possible that spending from the rainy day fund will be appropriate. However, simultaneously, they want to see other budget considerations on the spending side. So if one were to not do any cuts or adjustments on the spending side and solely spend from the rainy day fund, then that would be viewed very adversely.”
Technically, whatever tool budget-writers ultimately deploy, it won’t be their first move. The initial strategy of waiting to see definitive aid numbers from the federal government hasn’t so far borne fruit, and the end-of-month expiration date for the state’s current temporary budget is inching closer.
But, when it comes to stimulus talks in Washington, D.C. lately, negotiations can restart as quickly as they’re called off, and stall as suddenly as they pick up speed.
President Donald Trump, back in the White House after being hospitalized last weekend with COVID-19 and still infected with the virus, said in a Tuesday tweet that he’d “instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.”
By Thursday, he told Fox Business host Maria Bartiromo that talks were now “starting to work out” and becoming “very productive.” Speaking to the same cable news channel Friday, White House economic adviser Larry Kudlow said the president had signed off on a “revised” stimulus package and “would like to do a deal.”
The sides do appear getting closer to a number in the middle, but what happens next is anyone’s bet.
If roulette is more your game, you’re in luck. The Gaming Commission on Thursday gave MGM Springfield and Encore Boston Harbor the green light to reopen their wheels, with plexiglass partitions, chip-sanitizing and other precautions.
Elsewhere in the category of “new normal”: candy bars on cookie sheets at the end of driveways, virtual costume contests, and a protective face mask accompanying one of those more traditional monster ones.
Those are among the tips Baker and the Department of Public Health gave out this week for ways to safely celebrate Halloween this year, in lieu of the haunted houses, festive hayrides and bustling trick-or-treat routes that could give the highly contagious coronavirus ample opportunity to spread. And don’t even think about bobbing for apples.
Appearing from the Witch City Tuesday, Baker said he’d leave it up to local officials to decide how to handle the spooky holiday. Salem Mayor Kim Driscoll said she’s working with municipal health officials on guidance for pandemicera Halloween celebrations in a city famous for its haunted happenings.
“We’re purists,” she said. “Folks are probably going to go out.”
If he canceled Halloween altogether, the governor said that would create the risk of what he considers a scary sight: a spree of indoor parties, like those that have previously sparked COVID-19 outbreaks in a handful of Massachusetts communities.
“The reason we’re not canceling Halloween is because that would have turned into thousands of indoor Halloween parties, which would have been a heck of a lot worse for public safety and for the spread of the virus than outdoor organized and supervised trick-or-treating,” Baker said.
Local-level decisions about trick-or-treating — like those around schools, business reopenings and so much more — will perhaps be most fraught in the communities that land on the DPH’s high-risk list for COVID-19 transmission.
On Wednesday, the number of cities and towns placed into that high-risk red category on the department’s color-coded metric — those with an average daily incidence rate of more than eight cases per 100,000 residents — swelled to 40, up from 23 a week earlier.
Statewide, the incident rate rose to 7.3 cases per 100,000 residents in this week’s report, from 5.7 last week.
In Boston, shaded red on the DPH map for the second week in a row, the percent of tests coming back positive crossed the 4.0 mark, triggering a retreat from plans to bring more students into schools for hybrid learning.
The Oct. 15 date to start welcoming kindergarteners into classrooms was pushed back to Oct. 22, as the city looks to see if the spike in its average positive test rate is, in the words of health and human services chief Marty Martinez, “a trend or a bump in the road.”
High-needs students, including those who have disabilities, are learning English or are homeless, had already returned to school buildings on an optin basis, and Mayor Marty Walsh said the reopening pause would not send those kids home.
The Boston Teachers Union filed suit Thursday over the district’s expectation that some teachers still report to school, arguing the move is contrary to an agreement that requires a transition to full remote learning — with an option for teachers to work remotely — if the citywide positive rate surpasses 4%.
Walsh, in a Friday interview on GBH’s “Boston Public Radio,” pointed to the next sentence in that agreement, which says the union’s members will be expected to return to buildings when the Boston Public Health Commission or other city or state authorities determine the district can reopen.
At the college level, school leaders testified this week before lawmakers on the Higher Education Committee about the financial squeeze arising from the combination of less revenue with fewer students on campus and the many new costs of adapting to a pandemic.
Wellesley College President Dr. Paula Johnson described a “grave time” for a number of institutions, and UMass President Marty Meehan warned some New England colleges and universities won’t survive the long-term challenges.
One of the many issues the committee sought to dive into at that hearing was how Massachusetts colleges are handling testing among their student populations. Dr. Deborah Birx, the White House coronavirus response coordinator, is apparently interested in the same topic. After visiting Boston University’s clinical testing lab Friday, Birx swung by the State House for a closeddoor meeting with Gov. Charlie Baker.
STORY OF THE WEEK: With even the most optimistic of new projections trailing original revenue estimates, tough budget decisions lie ahead.