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Massachusetts Liberal

Observations on politics, the media and life in Massachusetts and beyond from the left side of the road.

Tuesday, May 05, 2009

Look out below

To say the bottom has fallen out of state finances would be an understatement.

Let's put it another way: Massachusetts collected nearly a half-billion dollars less than expected in April. In one month. And the collapse was pretty much across the board:
April 2009 withholding taxes totaled $665 million, down $20 million or 3.0 percent from a year ago, $28 million below the benchmark. Income tax payments with returns and bills totaled $864 million, down $681 million or 44.1 percent from a year ago and $292 million below the benchmark. Income tax estimated payments were $169 million, down $125 million or 42.4 percent from a year ago and $35 million below benchmark.
With the April 15 tax filing deadline, the month should be one of the more lucrative -- you don't wait until the last minute to claim a refund, after all. So the impact of a 44 percent drop in income tax collections and a $2 percent drop in estimated taxes shows just how deep the drop in employment.

That will bring the total budget shortfall, since last July, to an unworldly $4 billion on what started at around $28 billion. Wall Street is not the only thing that crashed.

The alternatives are not pretty in closing a $1 billion gap with less than 60 days left in the fiscal year. The state is likely to come up short with the cash it needs to pay bills -- like local aid to cities and towns.

No matter how much Deval Patrick and legislative leaders say they want to protect cities and towns, there isn't enough cash available to avoid -- unless they pretty much zero out the rainy day fund.

And with downpours expected next year, that doesn't seem like a grand idea.

It doesn't get uglier than this. Even the crash in the late 1980s looks like a walk in the park. And Michael Dukakis' name is still taken in vain after that one.

I bet Patrick is hoping for a Supreme Court nomination right about now.

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