There are storm warnings flying on Beacon Hill these days as dark economic times threaten the state's ability to conduct business as usual. And this time the problem won't by solved by borrowing more money, raising taxes, erecting more toll booths, or — the latest scheme — legalizing casino gambling.

State Treasurer Timothy Cahill laid out the only realistic response at a meeting with editors at The Eagle-Tribune this week: "We've got to get spending under control."

The fact this comes from a member of the Democratic Party — whose leaders at the Statehouse have historically viewed the Massachusetts taxpayer as a money tree always ripe for the plucking — shows just how bad things are.

But the fact is that the state's per-capita debt is the highest in the country and there is little appetite among lawmakers for a tax increase of any kind. Indeed, members of our Great and General Court, who enjoy among the highest retention rates in the nation, know that the one thing that could jeopardize their re-election chances is another money grab.

People are sick of having their taxes raised only to see the money go not for improved services, but to enhance salaries and benefits for the favored few on the public payroll. And the more enlightened members of the Legislature realize that anything that adds to the already high cost of living here will simply encourage the outflow of jobs and people from Massachusetts.

As Greg Torres, president of the nonpartisan think tank MassINC observed recently, in other states "new workers and new businesses provide revenue that insulates the effects of a budget out of balance. Massachusetts will have a tougher time growing out of this problem (the recession) because our cost of living and anemic job growth continues to cause out-migration from the state."

Cahill, the commonwealth's chief money manager, delivered his grim fiscal forecast this week in separate meetings with Gov. Deval Patrick, Senate President Therese Murray and House Speaker Salvatore DiMasi. His message, according to what he told editors, is essentially this: "We can't 'financially engineer' — which is another word for borrowing — our way out of this recession."

And there's more bad news: Income and sales tax receipts are expected to decline as a result of people earning less money and being more careful in spending what they have. And capital gains taxes, which according to a MassINC report last week fueled much of the state's revenue growth between 2002 and 2006, could evaporate in the fallout from the subprime mortgage crisis.

"Pegged to the whims of Wall Street," a release accompanying the report noted, "capital gains tax revenues plummet during recessions, endangering the state's ability to cope with the impact of a struggling economy on revenue collections and the demand for state services." The report, by the way, bears the ominous title, "Point of Reckoning."

Former House speaker Tom Finneran once proposed that due to the volatility of this particular revenue source, money derived from capital gains taxes be reserved for building projects and other one-time expenses rather than used to fund the state's operating budget. That didn't happen, and with revenues from that source plummeting, the state now finds itself looking to gamblers and smokers to bail it out of its fiscal crisis.

But with the casino bill dead and Lottery revenues flat, even if the Legislature raises the tobacco tax by $1 — making it the second highest in the country — as has been proposed, cigarette sales are going to have to skyrocket to make up the deficit the state is facing.

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