The Legislature and the administration of Gov. Deval Patrick yesterday set the consensus revenue figure for FY12 at $20.525 billion. This revenue figure will now be the starting point for budget proposals that will come from the Governor, House and Senate.
The Governor's proposal, to be released later this month, will deal with a structural deficit of approximately $1.5 billion created largely by the absence of federal stimulus funds, limited state reserves, case load pressures and inflationary growth, particularly in health care related programs. As he indicated in his inaugural address, Gov. Patrick's proposed budget is expected to highlight investments in education, health care and in job creation, as well as to propose government reforms.
The setting of the revenue number came little more than a month after a Consensus Revenue Hearing was held at the State House. Since that time, revenues have continued to climb, with the result that DOR's FY12 revenue estimate from the December hearing was slightly increased.
In a statement, Administration and Finance Secretary Jay Gonzalez said that "halfway through FY11, we are seeing encouraging signs when it comes to economic news." He noted that revenue collections through the first half of FY11 were $755 million over benchmark, while announcing that as a result, the FY11 benchmark has been raised from $19.078 billion to $19.784 billion.
"Massachusetts' fiscal position is relatively strong when compared to other states, however, we continue to face unprecedented fiscal challenges in FY12. We will have to make tough decisions to balance our budget in FY12 and be smarter about the way state government does business and delivers services," Gonzalez said.
The $20.525 billion FY12 revenue estimate is 7.6 percent more than the state originally projected, and is 3.7 percent higher than the revised FY11 revenue estimate of $19.784 billion.
Now, some perspective. Before the economic crash that became manifest in the fall of 2008, the state had collected a record $20.888 billion for the fiscal year ending June 30, 2008. The following year, collections dropped to $18.259 billion in FY09. The climb back since then has been steady, and recently picking up, but not spectacularly so. Presumably, in FY13, revenue collections will nudge past those that were recorded five years previous.