Metro

Budget watchdog warns of ‘precarious financial position’

Massachusetts State House.

Pat Greenhouse/Globe Staff

Massachusetts State House.

A top nonpartisan Beacon Hill watchdog says the $39.1 billion budget enacted by Massachusetts lawmakers Thursday will “leave the state in a precarious financial position” in part because of low-balling how many poor people will use taxpayer-funded programs such as welfare and Medicaid.

The Massachusetts Taxpayers Foundation praised House and Senate negotiators for quickly crafting a compromise budget for the fiscal year that begins Friday after tax revenue projections dropped sharply. But the business-backed group said the way lawmakers slimmed down the budget by $750 million might not actually close the gap between anticipated revenue and authorized spending.

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“The Legislature and the administration deserve credit for a bona fide attempt at solving the budget gap for the fiscal year that begins Friday,” said Eileen McAnneny, the foundation’s president. “But we’re not out of the woods yet due to uncertainty with revenue, the global economy, and reliability of some of the solutions.”

Among those solutions were changing assumptions about how many people would use taxpayer-funded programs such as Massachusetts’ massive Medicaid health program for the poor and disabled; counting on $100 million in efficiencies in government procurement; assuming the state’s automatic income tax rollback, which is premised on strong economic activity, doesn’t take place; and paying some Medicaid bills in the subsequent fiscal year.

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Administration and legislative officials euphemize that common kick-the-can budget tactic as “cash management.”

To close a budget hole Governor Charlie Baker faced when he first came into office in 2015, his administration used a lot of “cash management” as well.

Asked Thursday whether paying bills later as a tool to avoid cuts is the right move, even though it could burden future policymakers with even more difficult fiscal decisions, Health and Human Services Secretary Marylou Sudders indicated the tactic is fine if not used overzealously.

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“Short-term cash management is not a bad strategy,” she said. But “it can’t be a long-term solution. So if it helps us get through a short-term revenue bump, that’s not unreasonable.”

Another independent budget group, the left-leaning Massachusetts Budget and Policy Center, also issued a note of caution about the spending plan approved by the Legislature. It said several areas, such as housing for homeless families, public defenders, and sheriffs, “are funded significantly below the levels of known costs.”

Noah Berger, the group’s president, said that means the Legislature will probably have to supplement those areas with new money in coming months.

“These funding levels don’t appear to reflect an expectation of lower costs,” he said, “but rather a decision to postpone funding until later in the year.”

Asked to respond to criticism that the budget would put the state in a tight fiscal spot, the House’s top budget-writer said through a spokesman that the spending is balanced and indicated that lawmakers would take action to shore up the budget should the state’s fiscal picture change.

Representative Brian S. Dempsey, a Democrat, said the bill “presents a balanced solution to the revenue shortfall.”

“Budgeting is an ongoing process that utilizes projections and the best information we have at the time,” he said. “We will continue to monitor the situation and act as needed to ensure a balanced budget.”

Baker has 10 days to act on the budget.

Joshua Miller can be reached at joshua.miller@globe.com.
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