Chickens coming home?
But when the borrowing comes early, in a larger than expected amount and triggered to a continued drop in lottery revenues, there are clear signs that the chickens are preparing to roost after the Legislature's failure to take up taxes as part of the fiscal 2008 budget.
And the fact that the shortfall triggering this concern comes from lottery sales suggests a new form of gambling may not be the answer.
As usual, the Statehouse News Service has the best handle on the gathering storm clouds. But since you can see it without a subscription, allow me to share:
The state is turning to short-term borrowing for cash flow purposes earlier in the fiscal year than usual, tax collections in October were down compared to October 2006, growth in Lottery revenues has slowed and fallen far shy of budget projections, and tax refunds this fall are up, raising warning signs that capital gains taxes are not filtering in at the same clip as previous years.Throw in a sluggish state and national economy, the House's unwillingness to countenance any revenue proposals this year -- from gambling to closing corporate tax loopholes -- and you are talking about what Mass. Taxpayers Foundation President Mike Widmer is estimating will be a $300 million to $700 million dip into the rainy day fund this year and a $1.5 billion shortfall to start fiscal 2009 planning.
The warning signs, outlined to the News Service by sources familiar with an updated cash flow statement marked for release Friday, come as budget writers in the Legislature and the Patrick administration contemplate a series of billion-dollar capital spending requests, while concerns increase about the affordability of last year’s health insurance expansion law, and policymakers continue to disagree on potential new revenues, including potential funds from legalizing casinos.
And let's not forget that the hare-brained scheme to abolish the income tax is likely to be on the ballot next year -- blowing what could be a $10 billion hole into the resources available to pay for "unnecessary frills" like school and public safety.
Enjoy the Christmas break legislators. It's going to get ugly in January.