IF 40 PAGES of statistics, tables, graphs, and economic analysis could generate any buzz at all, the state’s release of its report on long-term fiscal policy would have garnered front-page headlines. Indeed, it should have, for this may be the first time ever a governor has asked for a five-year budget plan anticipating future revenues and expenditures. We can be proud of the fact that the leaders of the state have been excellent fiscal stewards through the most difficult economic period since the Great Depression, implementing difficult budget cuts and improving our bond ratings to their highest levels in history. But we are hardly out of the fiscal woods.
The good news, according to the report, is that the Great Recession will be over and the economy will be growing at a healthy clip. This will mean that the “cyclical” deficits the state has faced due to a weak national economy will be behind us. The report also makes a persuasive case that the Commonwealth has successfully eliminated “structural” budget deficits for the first time since before the boom years leading up to the recession. A structural deficit occurs when a government “spends beyond sustainable levels of revenue.”