Healey says revenue shortfall ‘accounted for’ as some fear budget cuts

Governor Maura Healey.Craig F. Walker/Globe Staff

Governor Maura Healey tried to calm fiscal fears from progressives and budget hawks alike in a television appearance Sunday, insisting recent news of a $2 billion revenue shortfall was expected and won’t change her plans.

“It’s not something that we didn’t anticipate — and in fact, my budget and my tax proposal accounted for that,” Healey said speaking on WCVB’s “On the Record” weekly Sunday morning politics show.

While Healey acknowledged $2 billion is “a big number,” she said it’s “going to be covered and accounted for.”

For the past several days, Healey has reiterated that all systems are still go on her parallel proposals for a $55.6 billion fiscal 2024 state budget that includes sizable hikes for environmental and educational initiatives and $1-billion-a-year tax-cut package that included cuts for capital gains and relief for families with children.

Revenue data released Wednesday showed that the state collected significantly less in taxes in April than anticipated: a drop of $2.163 billion or 31.2 percent from the same month last year and $1.435 billion or 23.1 percent below the most recent monthly benchmark projection.

The steep decline has forced a reexamination of the affordability of pending spending measures and tax relief proposals, and may force Healey’s team to come up with a package to balance the state budget over the last eight weeks of fiscal year 2023.

The situation has proved to be something of a Rorschach test for advocates, as those on both the left and right are using it as proof for their priorities in the balance of tax breaks versus spending on services.

In recent statements, left-leaning Rise Up Massachusetts and right-leaning Massachusetts Fiscal Alliance both have urged that this type of revenue volatility should be addressed with caution.

But that means something different to each side.

Mass. Fiscal argued that the budget is full of “earmarks and pet projects” that can be trimmed while the governor should simultaneously forge ahead with her planned tax cuts. But Rise Up said the state should instead be focused on making sure it doesn’t have to cut government programs for the poor, as shortfalls that follow tax breaks “could threaten critical programs that millions of people depend on.”

Asked about progressive groups’ chatter that the economic uncertainty and tax breaks will mean spending cuts, Healey said on Sunday, “They may make noise — not going to happen.”

“We have the money” to make it all work, she told WCVB.

Even though the state has collected $703 million less this year than forecasted, Healey said she’s confident her administration will “work that through,” citing the strong overall employment numbers and surplus cash.

“What we’ve learned is that some of that is attributable to capital gains and people delaying in their tax filings this year,” said Healey, who is in her fifth month in office.

Senate Democrats plan to roll out their own version of a budget on Tuesday and have avoided committing to a timeline for a tax relief debate.

Also on the Sunday show, Healey pointedly responded to progressive criticism of her tax cuts.

“I want to be clear to my progressive friends,” Healey began in response to a question. “The reason I propose that tax package is because Massachusetts, while a wonderful place to live — we will remain a place that protects reproductive freedom, access to health care, maintains high education, cares about the environment — we’re also a place that’s an outlier when it comes to competing for workforce talent and business and we cannot afford people leaving our state.”

Material from the State House News Service was used in this story.