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State revenue growth is slower than expected

State budget cuts from Governor Charlie Baker are probably coming soon to Massachusetts.

The Department of Revenue announced Tuesday that state revenue grew only one-half of 1 percent from August 2015 to August 2016 — a surprisingly tiny amount.

Overall, in July and August, the first two months of the state’s fiscal year, Massachusetts took in just 1.3 percent more than in the same period a year before. Policy makers crafted a state budget based on the expectation that revenue would grow just under 4 percent this fiscal year, which runs through June 2017.

Despite signs of a healthy economy, from strong employment to new construction, the weak revenue numbers could also be the earliest sign of an economic slowdown.


“These August numbers now reflect five consecutive months of softening revenue, indicating more of problematic trend than an aberration,” said Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation.

She emphasized that many states are struggling with similar trends. And she said the newly released data underscore the fact that economic health is not the same as fiscal health.

McAnneny said they call into question “whether this revenue slowdown, despite the healthy job-creation numbers, could be symptomatic of a broader economic slowdown.”

But other analysts said the new numbers could be a passing blip.

“We think that this might be a little bit transitory, and we think the numbers might improve,” said Frank Conte of the Beacon Hill Institute, which is seen as conservative leaning.

“Revenue data does fluctuate quite a bit from month to month, so you don’t want to put too much emphasis on any one month or few months,” said Alan Clayton-Matthews, associate professor of economics and public policy at Northeastern University. “But there aren’t any huge red flags I see in the revenue numbers.”


State law requires a balanced budget. So if revenue doesn’t match authorized spending, Baker, a Republican, has the authority to make cuts.

For weeks, members of the Democratic-controlled Legislature have been girding for the governor to chop favored programs.

He is expected to take action by mid-October.

Joshua Miller can be reached at joshua.miller@globe.com. Follow him on Twitter @jm_bos and subscribe to his weekday e-mail update on politics at bostonglobe.com/politicalhappyhour.