Massachusetts budget writers gathered last week and determined they must certify the $650 million revenue shortfall or revise this year's tax forecast by next Wednesday, Oct. 15. The deficit stems from federal law changes that were not anticipated when the state budget was signed. And now the federal government is shut down, and that's halting key economic reports. State House News Service reporter Sam Drysdale explains how the missing federal data could impact state lawmakers ability to make adjustments.
Sam Drysdale, SHNS: Yeah, the U.S. Department of Labor did not release a national jobs report that was expected last Friday. That includes key economic data that state leaders rely on to understand the economy, to understand its revenue sources. As you said, the Secretary of Administration and Finance, Matthew Gorkiewicz, has until October 15th to decide whether to revise these revenue forecasts mid-year.
They found out that they have this $650 million budget gap, and that represents about 1.5% of what the state expects to collect all year. So, with the federal government shutdown, that jobs report isn't directly tied to the state's revenue collections, but it does provide key information about the state economy going into making these really important budget decisions.
Carrie Healy, NEPM: Has anyone said, or is there any sense that this could send the Commonwealth into a recession?
You know, we're always looking at that and watching that. Officials have raised concerns about how federal pressures, specifically target areas that the Massachusetts economy relies on, like higher education and scientific research. These are jobs that fuel the Massachusetts economy. And when federal funding gets cut for them, it really hurts Massachusetts workers. At this point, it doesn't seem like officials are willing to declare that a recession is coming, but it's kind of always there on everyone's lips.
Governor Maura Healey signed the annual budget back in the summer after six months of legislative work. But, you know, back in July, alongside the budget, Healey introduced a plan to give her administration more authority to cut costs if needed. So do Healey, and state leaders, currently have the tools to manage these unexpected fiscal pressures from the Trump administration?
So, the governor does have some tools right now. Existing state law gives her the power to cut spending partway through the year known as 9C cuts. But those cuts are limited under state law to only what is covered under the Executive Branch. That's about 55 to 60% of the budget.
What she was looking for from lawmakers, was the ability to cut [from] the entire budget for fiscal year 2026. And specifically, if revenue collections fall below $400 million of what was projected for the year.
And given what we know now about the $650 million shortfall, it seems like we would be in that situation. Lawmakers, however, are pretty hesitant to give her that power, and local officials also have raised some red flags about it. They have not acted on that request, and it doesn't seem like at this point they're planning to.
That doesn't mean that they don't have any tools, though. They have a stabilization fund they could tap into. They have some other resources if they need to respond to the fiscal pressures from the federal government. But it doesn't seem like they're willing at this point to give the governor unilateral power to cut the budget.
We've turned the page on September and state lawmakers under joint legislative rules, are staring down a deadline for formal legislative business during the third week of November. That will mark the end of major work until early 2026. Are there time sensitive matters still pending before the legislature?
That's a great question. Lawmakers don't really seem to be in a rush before that deadline. We asked Senate President Karen Spilka last week about that deadline and what she was in a rush to tackle before then. She pointed to health care reform, which has been a priority of hers, but has been a priority of hers for the ten months since her inaugural address at the start of the session in January. So, no new real fire there.
We pressed her on when she would take up the House's bill to reform the Cannabis Control Commission. She simply said, ‘When we're ready.’ So, I don't think that they see that deadline as a huge cut off to their work, but just simply a continuation into the next year.
