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The state’s tax revenue in September was better than expected

Massachusetts Governor Charlie Baker.AP/File/Associated Press

Massachusetts’ tax revenue in September was slightly better than expected and could lessen the severity of cuts the Legislature expects Governor Charlie Baker to make later this month. But the numbers, released late Wednesday by the Department of Revenue, also may hint at more foreboding economic trends.

Last month’s revenue was 1 percent better than formally anticipated by policy makers, and 7.4 percent more than September 2015. But after accounting for the fact that the state skipped its annual sales tax holiday this year, sales tax revenue in recent months has been about flat, which some experts say could be a sign of a softening economy.


The numbers come on the heels of several months of weak tax revenue.

Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation, said in an e-mail that while last month’s numbers are an improvement, revenue collection over the past half year is still “well below projections.”

She said it’s important for the Baker administration to “get out in front of this budget problem now to maximize options.”

McAnneny added that the “sluggish sales tax revenue for six straight months is particularly notable” and bears watching closely.

State law requires a balanced budget. So if revenue doesn’t match authorized spending, Baker, a Republican, has the authority to make cuts. He is expected to make a call on cuts later in October. That could mean anything from lawmakers’ local pet projects to the gas budget of the State Police.

For months, members of the Democratic-controlled Legislature — which overrode more than $200 million in spending vetoes from Baker this summer — have been girding for the governor to chop favored programs.

And even though the September numbers are relatively good, that doesn’t mean cuts will be avoided, analysts say.

“The revenue numbers have finally bounced up to where one would expect given the economic data trickling out over the summer,” said Paul Bachman, director of research at the Beacon Hill Institute, seen as conservative leaning. He said revenue is now looking more in line with other economic data, like job growth to household income during the past few months.


Still, Bachman said, given that the money the state has brought in this fiscal year is below what policy makers expected, he suspects Baker administration officials “are going to go ahead and be cautious and make some cuts.”

There is debate about what the sales tax revenue numbers mean.

Alan Clayton-Matthews, associate professor of economics and public policy at Northeastern University, said he doesn’t think the lack of growth in that type of taxes is a big deal.

“The flattening in sales taxes that we’re seeing, I think, is temporary,” he said. Sales tax revenue was very strong in 2015, he said, so the fact that this year’s is not growing over last year’s is not as grim as it looks.

“They are not as weak as they seem on the surface,” he said.

Despite a growing economy, Massachusetts has Ping-Ponged from one budget squeeze to another over the last few years.

Liberals say tax cuts in the early 2000s robbed the state of enough money to provide sufficient services, which is why the state so often faces a money pinch. Conservatives say state spending is out of control and must be cut to get the budget back in line.


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.