Slow revenue blamed for $1B funding gap
Massachusetts Gov. Maura Healey announced $375 million in budget cuts for the current fiscal year Monday as the administration seeks to close an expected $1 billion shortfall with monthly revenues coming in at a slower pace than expected.
The biggest cut will be to MassHealth, the state’s Medicaid program, but it won't impact anyone's eligibility to apply to the health insurance system.
The rest of the anticipated $1 billion shortfall will be covered by $625 million in what administration officials describe as opportunities to increase revenue without the need for tax increases.
TEMPORARY MIGRANT SHELTER FUNDING PACKAGE CLEARS MASSACHUSETTS HOUSE
The spending cuts outlined Monday can be made unilaterally by the governor and don't need the approval of state lawmakers.
Healey's top budget official, Matthew Gorzkowicz, said the administration opted not to dip into the state's "rainy day fund" — now over $8 billion — because that money is for more extreme budget crises.
An interpreter signs, as Massachusetts Governor Maura Healey speaks, Boston, June 14, 2023. (Pat Greenhouse/The Boston Globe via Getty Images)
"We see this as sort of a 12-18-month condition where we have to do some belt-tightening, but overall we don't see this as a recessionary environment and believe the economy will continue to grow in 2025," Gorzkowicz told reporters.
He said the cuts amounted to less than 1% of the state budget and no layoffs were used to close the funding gap.
Gorzkowicz also said that the state's struggle to find emergency shelter for migrants and other homeless families was not a factor in the budget cuts.
"None of the budget reductions are the result of the recent emergency shelter crisis," he said.
In a letter to lawmakers explaining the cuts, Healey said the state can't wait until the start of the new fiscal year in July to address the budget shortfall. December was the sixth month in a row in which revenues fell below predictions, she said.
"In crafting spending reductions, we have done our best to protect investments that are critical to Massachusetts's future," including protecting local aid funding to cities and towns and school funding, the Democrat wrote.
Also Monday, Healey administration officials and Massachusetts House and Senate leaders unveiled a new estimated state revenue figure for the 2025 fiscal year of $40.2 billion — about $208 million less than what was used to build the current budget, officials said.
