Amid gains, state remains in tax slump
BOSTON — A great predictor of the ups and downs of state tax collections, Springfield’s own Dr. Seuss once wrote, “When you’re in a slump, you’re not in for much fun. Un-slumping yourself is not easily done.”
Massachusetts seemed to pick itself up a little last week, ending the downward spiral of the longest streak of below-benchmark revenue months in more than 20 years.
But as the late great Seuss implied — un-slumping yourself, well that may take some time.
Even with March tax collections outpacing March 2023 receipts by $182 million and coming in 3.3% above the monthly benchmark, Gov. Maura Healey, who has inside connections at the Department of Revenue, still felt the need to take new steps last week to balance the budget that she and the Legislature agreed to last summer. Some critics say it is too little, too late.
“One month isn’t a trend,” House Minority Leader Brad Jones said. “Over the aggregate, we’re still behind, so I think we still have a long way to go before there should be any sense of optimism.”
Acknowledging the possibility that tax revenues could sink further, and by a lot, over the last three months of the budget year, Healey imposed tighter controls on state government hiring on Wednesday.
The governor is moving ahead with “hiring controls,” with Cabinet secretaries and agency heads told in a memo to “immediately pause their hiring processes, including scheduling any new interviews or extending offers” through June. To be clear, some jobs are exempted from the hiring restrictions, from correction officers and mental health workers, to epidemiologists, food and drug inspectors and power plant engineers.
“The Healey-Driscoll administration is implementing hiring controls within the executive branch for the remainder of the fiscal year as one tool at our disposal to responsibly manage spending over the next three months. These hiring controls, while temporary, will help ensure that the administration can balance the budget at the end of the year and preserve critical funding for core programs and services,” Administration and Finance Secretary Matthew Gorzkowicz said in a statement.
But as Seuss warns in “Oh, the Places You’ll Go!” when you’re in a slump, you’re not in for much fun.
Negotiators sat down last week for the not-so-fun task of hammering out a deal to spend hundreds of millions of dollars more on a shelter crisis that been a financial headache for the state as it faces down a nogrowth tax revenue climate and an unsatiated appetite to continue spending at the heights of the last four years.
The House version of the fiscal 2024 spending bill (H 4466 / S 2711) directs $245 million toward the shelter system, while the Senate bill would authorize the Healey
administration to pull from an $863 million state savings account called the transitional escrow fund across both fiscal 2024 and 2025.
Negotiators are likely to spend a while discussing reserve funds, since they’ll need them unless tax growth starts to pick up.
The state’s primary reserve fund has ballooned over the past few years, from $2 billion in fiscal 2018 to $8.3 billion at this point as of February. And Massachusetts, the 16th most populous state in the country, has the third largest reserve fund in the U.S.
Without any indication, at least publicly, of how many more migrants may arrive and start calling Massachusetts home, the Emergency Assistance family shelter system already has a $1 billion estimated price tag both this and next fiscal year.
At the same time as lawmakers are weighing whether to drain reserves, the same negotiators, Rep. Aaron Michlewitz and Sen. Michael Rodrigues, are leading talks on another bill that would skim dollars off the top of the $8 billion-plus rainy day fund.
While they try to balance the dueling priorities of saving and spending, officials are letting the early spring days tick by without renewing streamlined outdoor dining permitting and permission for restaurants to sell takeout alcoholic drinks.
The popular pandemic-era policies had a March 31 expiration date, and their renewal is included in — and therefore held up by — the supplemental budget that negotiators are still talking through. The sluggish pace has left some restaurants unable to seat patrons outside and will keep all Bay Staters from picking up premade drinks for the time being.
Good thing for the dismal weather we’ve been having, with soaking rains last week followed by an earthquake Friday that led to “shaking across the commonwealth” but no reported damage or injuries.
The Massachusetts Convention Center Authority may also be considering dueling priorities as the debate over whether Boston really needs two convention centers — and at what cost — seems to be picking up again.
Alongside the authority’s decision to abandon a lengthy attempt to pursue a big-budget development of land in South Boston, the authority’s interim executive director is seeking answers on current and projected industry trends and what they mean for the Boston Convention and Exhibition Center, the Hynes in Boston’s Back Bay and the MassMutual Center in Springfield.
The board is facing $100 million in maintenance costs and work to bring the Hynes up to current code compliance. The deferred maintenance led former Gov. Charlie Baker to propose selling the Hynes in 2019 to generate money to pay for an expansion of the BCEC. The Legislature didn’t bite on selling the Hynes but is still on record for a BCEC expansion that Baker put on ice.
Some MCCA board are raising questions about continuing to pour money into the Hynes as the convention sector evolves.
“We need to carefully consider with just the right consulting approach, how we can retain but improve our competitive position, what we can do in terms of economic benefits and host committees, but also broader to the commonwealth as a whole,” interim director Gloria Larson said of the request for proposals the Executive Office of Administration and Finance released to analyze the convention centers. “We’ll be looking at studies of revenues, expenses, capital asset maintenance, just as we’re doing with the Hynes, modernization requirements, and of course, the economic impact broadly.”
Legislators are also still actively weighing an idea with major impacts on the Boston region’s economy, a proposed Everett soccer stadium.
Both the House and Senate have each previously endorsed language aimed at facilitating construction of a future home for Robert Kraft’s New England Revolution in Greater Boston, but the capital city flew some red flags during Tuesday’s hearing.
Sen. Sal DiDomenico of Everett’s bill attempts to clear a path for a 43-acre parcel, situated partly in Boston and Everett and hosting an old power plant, to convert it into a stadium and waterfront park.
The stadium’s capacity would exceed TD Garden by over 5,000 seats, and it would become a competitor for events such as concerts hosted at a venue that sits only about 2.5 miles away.
Boston City Councilor Sharon Durkan, whose district includes Fenway Park and TD Garden, raised concerns about the parking plan, warning the foot traffic to the Everett stadium would be most heavily felt in Boston. The project would require additional investment from the MBTA, since the closest train stop is about a mile away in Sullivan Square, she said.