Surprise: Massachusetts' fiscal cupboard is bare once again
BAY State lawmakers are often like small children in a candy store. Every penny they have must be spent, even if it isn't really theirs. It took Gov. Michael S. Dukakis and legislators just a few months to empty Massachusetts coffers of the $540 million surplus left from fiscal 1986. While it would be unfair to suggest that the excess revenue was frittered away, there was little penny-pinching in evidence.
And with the state's economic growth slowing considerably, spending restraints may be required, if even a modest tax hike is to be averted.
This has to concern not only the Dukakis administration but also to individual senators and representatives who have been spoiled by having plenty to spend.
State tax collections, which grew by more than $1 billion, or 16.7 percent, in fiscal 1986, had been expected to climb by at least 7 percent in fiscal '87, which began in July. But Dukakis aides have scaled down this growth to 5 percent. Even that projection may be optimistic, since state income thus far is running less than 3 percent above last year's level.
Unless the situation improves markedly, lawmakers could find themselves having to hold the budget line in the face of continuing pressures for more money to fund a broad range of special interests.
Particularly challenging could be coming up with the money to fund the public-employee pay raises already agreed to.
Also to be reckoned with are impending deficits in several state agencies that have been using up their appropriations faster than expected since the record $9.84 billion fiscal 1987 budget was approved last summer.
Obviously the state cannot spend money it does not have.
Unless the legislature or the Dukakis administration can find a lot more uncommitted dollars soon, they are going to have to make some tough decisions in shaping next year's budget.
The sharp decline in state revenue growth could hardly come at a more awkward time for the governor, on the eve of a new term and when he is being mentioned as a possible 1988 candidate for the Democratic presidential nomination.
Among items that may be in jeopardy are programs for state takeover of county correctional institutions, cleanup of toxic waste, and affordable home ownership for low- and middle-income families.
The decline in state revenue growth almost certainly will mean little or no additional state aid for the cities and towns. The state had been expected to make up substantially for the loss in federal revenue sharing. The legislature may be hard pressed to meet that commitment, which amounts to some $60 million. And it is not a matter of coming up with the money just once. Having filled that municipal government revenue void in 1987, it would be hard not to continue it.
Contributing to what may be the smallest state revenue growth in at least five years is the repeal of the 7.5 percent income tax surcharge. That represents an estimated $135 million yearly that Massachusetts will not have. It is something the Bay State should be able to afford. Nobody, not even lawmakers who must adjust to the loss of that surcharge revenue, is suggesting otherwise.
There is no certainty that somewhere down the fiscal road there will not be a tax boost. But as long as revenues from existing levies are increasing at close to the rate of the state's economy, such a move is unlikely.
The administration and the legislature are going to have to get along on what money comes in and do the best they can with it, as painful as that may be.
This is a time for all concerned to step back and reorder the priorities of state government. It could mean saying ``no'' more often and louder to those outside forces who think there is plenty of money lying around ready to be spent.
A gesture of frugality might include salting away more money for a rainy day. Massachusetts may not always be in the economic ``Sunbelt.''