EagleTribune.com, North Andover, MA

Latest News

November 13, 2012

Fed cuts could slash $1B in FY '14 tax receipts

BOSTON — Already facing the “strong likelihood” of midyear budget cuts due to slow economic growth, Gov. Deval Patrick’s budget chief told local leaders yesterday that a failure by Congress to avert the “fiscal cliff” would cost the state up to $300 million this fiscal year and $1 billion over the next full fiscal year.

Secretary of Administration and Finance Jay Gonzalez provided the projection to town and city officials at a meeting of the Local Government Advisory Commission, advising them that hundreds of millions of dollars in grants that flow through the state to municipalities could be at risk, as well as almost $1.5 billion in defense and health spending.

“The consequences of this are pretty dire. I think we’ve seen some positive statements coming out of Washington about a commitment to try to address this in a responsible way before January,” Gonzalez said.

Following a dismal month for tax collections in October that saw the state fall to $256 million below revenue projections for the year, Gonzalez said no final decisions have been made, but reported a “strong likelihood” that the administration would revise downward its revenue projections and announce mid-year budget cuts soon.

“I’m sorry to not have better news,” Gonzalez said. While the economic growth rate of 1.9 percent in the third quarter was slower than anticipated due, in part, to uncertainty over federal deficit negotiations and economic turmoil in Europe, Gonzalez said the failure to address the fiscal cliff could have a further chilling effect on growth.

Come January a number of federal tax breaks are due to expire and $1.2 trillion in budget cuts spread over nine years will go into effect unless the lame-duck Congress can find common ground on an alternative approach to deficit reduction.

Gonzalez said economic forecasters have estimated that the economy across the country, including in Massachusetts, could slow by another 1 percent to 1.5 percent if sequestration cuts are allowed to go into effect. The Department of Revenue estimates tax collections in Massachusetts would decline up to $300 million over the second half of fiscal 2013 and the first quarter of fiscal 2014, and could total $1 billion in reduced revenue over the next full calendar year, according to Gonzalez.

Text Only | Photo Reprints
Latest News

AP Video
US Mission to Rescue Hostages in Syria Failed Manfred, Torre and MLB Take Ice Bucket Challenge Bank of America Reaches Record $17B Settlement Holder Reassures Ferguson Community With Visit GlobalPost CEO Remembers Foley As a Brave Man Seth Meyers Rolls Out Emmy Red Carpet Obama: World Is Appalled by Murder of Journalist Israel, Militants Trade Fire After Talks Fail Pres. George W. Bush Takes Ice Bucket Challenge Pierce Brosnan's Call to Join the Expendables Changes Coming to No-Fly List Raw: IDF Footage Said to Show Airstrikes Police: Ferguson More Peaceful Raw: Aftermath of Airstrike in Gaza Raw: Thousands March on Pakistani Parliament Raw: World's Oldest Man Lives in Japan Fire Crews Tame Yosemite Fire Raw: Police Weapon Drawn Near Protesters, Media Raw: Explosions in Gaza As Airstrikes Resume Charter Schools Alter Post-Katrina Landscape
Photos of the Week