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A new report is warning lawmakers over what it says is excessive spending — about $2.2 billion between fiscal year 2013 and 2015 — from Massachusetts' so-called "rainy day fund" to pay for operating expenses.
The Massachusetts Taxpayers Foundation, the independent fiscal watchdog group behind the report, says the state's draining of the fund is eroding financial security necessary to weather a recession. The group is calling for lawmakers on Beacon Hill to work toward doubling the size of the fund.
"It's the first time that the 'rainy day fund' balance has gone down during an economic recovery period," Foundation President Eileen McAnneny told WBUR's Newscast Unit. "And that's why we're sounding the alarm, because this is a new problematic trend."
McAnneny said the group is concerned the state is "living beyond its means."
The stabilization fund's current balance is $1.5 billion, which the foundation's report says "falls short of the approximately $2.5 billion to $3 billion the state would likely need to help mitigate the impact of the next downturn."
"The state needs to be saving a little bit more money so that we're able to weather the economic downturn, much like families want to save and have a nest egg in case someone gets laid off," McAnneny added. "It's the same fiscal discipline."
A spokesman for Gov. Charlie Baker said the governor is looking into the report's findings.
Here are the report's recommendations:
-- Increase the stabilization fund balance to 10 percent of annual state tax revenues within five years and then maintain the fund balance at the level thereafter. To meet this standard for FY 2016 would require attaining a balance of approximately $2.5 billion.
-- Dedicate a minimum of one percent of annual budgeted tax revenues each year to the stabilization fund as a pre-budget transfer. This transfer may be backed by capital gains tax revenues above the threshold, settlement revenues in excess of $10 million, and if those sources are insufficient, by general fund revenues.
With reporting by WBUR's Rachel Paiste and Lisa Creamer
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