Mass. Budget Watchdog Warns Of Possible $1B Shortfall

A fiscal watchdog group in Massachusetts is warning of a budget gap of up to $1 billion in the next fiscal year.

The head of the Massachusetts Taxpayers Foundation blames the projected budget shortfall on increasing health care costs, as well as the state's recent reliance on one-time sources of funding, such as federal funds, the sale of property and dipping in to the so-called rainy day fund.

Foundation President Eileen McAnneny told WBUR's Newscast Unit that while the state has faced similar gaps before, its options — particularly in tapping into such one-time resources — are now limited.

"We know we have to replenish our rainy day — our stabilization — fund," she said. "In years past, we've been able to divert money from that, and this year, that really shouldn't be an option."

The group released a report in November calling upon state lawmakers to work toward doubling the size of the rainy day fund. The group said excessive spending, to the tune of roughly $2.2 billion, depleted the funds to its current $1.5 billion balance.

The group said the spending took place between fiscal years 2013 and 2015 to pay for operating expenses and now leaves the state vulnerable and unlikely to weather a future recession.

"We're in the midst of an economic recovery," McAnneny said. "We shouldn't be using our rainy day fund. We should be using this time where jobs are growing and revenue is growing to build it up, and we're not."

The group previously said the state should attempt to amass approximately $2.5 billion to $3 billion in the stabilization fund.

Officials in the Baker administration agree the outlook is not rosy and the state will need to tighten its budgetary belt — though they did not specifically endorse the foundation's up-to-$1 billion estimate.

But, in a WBUR interview, Gov. Charlie Baker said he's confident the budget gap will be closed. Baker has promised not to raise taxes or fees.

"The speaker of the House used to be a Ways and Means chairman, the Senate president used to be a Ways and Means chairman, and they both have very strong deputies who can work with us and with whom we have good working relationships to find our way through it," Baker said.

The full interview with Baker airs on Morning Edition Thursday.