MassFiscal Statement on Governor Baker’s Proposed Budget

Massachusetts Fiscal Alliance made the following statement today in response to Governor Charlie Baker’s $45.5 billion-dollar revised state budget, which calls for more spending than his pre-COVID budget released in January. 

Despite the increase in spending, the new budget anticipates less tax money being collected by the state than in January. To cover this gap, the Governor’s budget spends approximately $1.35 billion of the state’s $3.5 billion “rainy-day” fund, leaving the balance at around $2.2 billion at the end of the year.

“Governor Baker was right to propose the state draw on the ‘rainy day’ fund to pay for state spending during a once in a generation crisis. However, without reducing state spending, the state continues heading in the wrong direction. Taxpayers would be more willing to see their savings be spent if it included a reduction in state government spending,” stated Paul Diego Craney, spokesman of the Massachusetts Fiscal Alliance.

Massachusetts remains operating under pandemic-related executive orders, originally promulgated in March, that have shut down or limited economic activity around the state. After setting records for highest unemployment in the country over the summer, the Commonwealth continues to be among the states with the highest unemployment and its economy remains severely distressed.

Despite this, the Baker administration proposed raising taxes on popular services like Uber and Lyft, and further squeeze struggling businesses by implementing an immediate collection of the sales tax and increased the level of state government spending.

“In this pandemic, few industries have been hit harder than ride sharing services and retail businesses. To then decide that their pain can be best addressed with a tax increase, and accelerated tax collections, shows a tone deafness that only could live in the narrow confines of our statehouse. The Governor’s approach will only exacerbate the state budget problem while hurting small businesses,” stated Craney.

“Whatever budget is approved by the Governor and State House leaders, they need to keep in mind that in January, new state mandates will go into effect that will drive up the cost of doing business. This budget must be viewed in the context of what is coming down the road with more expensive costs of doing business and more economic uncertainty,” concluded Craney.

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