Another month, another round of bad news for the Massachusetts budget.
Weeks after officials downgraded the state’s tax revenue forecast, collections in January lagged $263 million behind even those dimmer projections, Governor Maura Healey’s administration said Monday, with collections on income, corporation, and sales taxes all slumping below expectations.
The development immediately sets the state behind its new benchmark by about 1 percent and marks the seventh successive month that tax revenues fell below projections.
It adds new pressure on state coffers just weeks after Healey, citing lower-than-expected tax revenue collections, slashed $375 million in spending, cutting hundreds of millions from programs that provide outreach for seniors, behavioral health supports, homeless shelters, and other services.
At the same time, her budget office also downgraded the amount of tax revenue it expected to collect this fiscal year by $1 billion. Revenues at the time were running $769 million, or about 4 percent, behind the state’s original projections midway through the current fiscal year.
That, in turn, shifted expectations for January, which revenue officials consider a “significant” month because many personal income taxpayers are required to make quarterly estimated payments. Instead of collecting $4.12 billion, as it originally projected, the state said then that it expected nearly $3.86 billion to flow in during the month.
That didn’t happen either. The $3.59 billion the state reported in collections fell not just below current expectations, but also south of what it took in during January 2023, officials said.
Officials on Beacon Hill closely monitor the monthly revenue figures, particularly as the House and Senate prepare to craft their budget plans for the next fiscal year in the coming months.
Last month, Healey unveiled her budget bill, proposing a $58 billion plan that would pour tens of millions of additional funding into the beleaguered MBTA and new money into child care. Her proposal would increase spending by about $2 billion over the current budget, or about 3.7 percent. That’s below growth in past years, which Healey called evidence that officials were “tightening our belts” after a period of soaring revenues during the pandemic.
Her plan relies on about roughly $200 million less in revenue than is forecast for the current fiscal year, and her administration is also seeking ways to cover nearly $1 billion in projected costs for the state’s overwhelmed emergency shelter system.
Healey has said she would not pursue tax or fee increases to fund her plans. Instead, her administration said it included about $450 million in cuts to various line items. In other places, officials said they trimmed roughly $500 million from what otherwise would have been even bigger spending jumps.
Whether lawmakers pursue the same approach remains to be seen. The House is expected to release its budget proposal in April, followed by the Senate in May. The chambers will then have to reconcile any differences, with the goal of sending a final version to Healey during the summer.