Talking Points

talking points

Gloomy outlook for state finances

WASHINGTON, DC - DECEMBER 12: U.S. Speaker of the House Paul Ryan (R-WI) speaks during a news conference on Capitol Hill December 12, 2017 in Washington, DC. Speaker Ryan spoke about progress in the tax reform legislation. (Photo by Al Drago/Getty Images)
Al Drago/Getty Images
Speaker of the House Paul Ryan.

Republicans on Capitol Hill might celebrate as a tax deal falls into place. But if you believe the Massachusetts Taxpayers Foundation, there’s no reason to party on Beacon Hill.

The business-backed organization has made a cottage industry out of dire predictions. Its grim fiscal forecast for state lawmakers last week, entitled “Batten Down the Hatches,” was true to form.

You can’t blame Eileen McAnneny, MTF’s president, for being a spoilsport. The GOP tax cuts could total $1.5 trillion over 10 years. It’s a no-brainer, McAnneny says, that Massachusetts will receive less from D.C. going forward as a result. (Federal funds support more than a quarter of the state’s budget.) The fact we have an all-Democratic delegation doesn’t help.

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Sure, there could be a big bump in capital gains taxes, if investors race to cash in on the newfound certainty about tax policy. But even with a $450 million spike in this fiscal year as a result, state revenue growth would remain below 5 percent. And this would be a one-time high, not something to be counted on for recurring expenses.

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Then there’s the proposed ballot question in 2018 that would reduce the sales tax, which could cost at least $650 million in the next fiscal year alone. The millionaires tax -- also up for a vote, if it survives a legal challenge -- might offset it, but that cash would need to be spent on education and transportation.

MTF’s bottom line: Lawmakers should hope for the best and prepare for the worst, by setting aside $500 million in the state’s rainy day fund. Tax cuts could be good for business. But they don’t come cheap.

Jon Chesto is a Globe reporter. Reach him at jon.chesto@globe.com and follow him on Twitter @jonchesto.