BOSTON (AP) — Republican Gov. Charlie Baker and the Democratic-controlled Legislature have their work cut out for them as they seek to balance the state’s budget while holding taxes in line and making targeted increases in spending, according to a pair of independent budget monitors.
Baker is slated to file his budget blueprint for the July 1 fiscal year with lawmakers on Wednesday.
The Massachusetts Taxpayers Foundation said in a briefing paper this week that the state faces a fiscal 2017 structural deficit of between $700 million and $900 million.
The Massachusetts Budget and Policy Center, in a separate analysis, projected the gap to be $684 million.
The pessimism comes despite a forecast of 4.3 percent growth in tax revenues, and an overall healthy state economy with relatively low unemployment. But the analysts say revenues are failing to keep pace with the state’s ever-growing financial obligations.
“The state appears to have entered a new fiscal pattern since the 2008 fiscal crisis marked by slow to modest revenue growth that has not kept pace with increased state spending,” the foundation, a business-backed organization, said in its report.
The state relied on several one-time solutions to balance the $38 billion budget in the current fiscal year, including early retirement for state workers, a tax amnesty program, and the shifting of some Medicaid expenses to the next fiscal year. Such solutions “are either unavailable this year or come with substantial fiscal risk,” the group said.
Baker recently ordered $50 million cut from the current budget due in part to lower than expected non-tax revenue sources.
The center, which advocates for more investment in such areas as education, health care and transportation, argued in its report that the state’s chronic budget gaps can be traced back to $3 billion in tax cuts between 1998 and 2002, and said the trend was unlikely to change.
“It is even more unlikely that we will see a budget that will raise new revenue to investments in the future of our Commonwealth: like making higher education affordable again and modernizing our roads and bridges and public transportation systems,” the group said.
Baker and House leaders, including Democratic Speaker Robert DeLeo, have ruled out increases in broad-based taxes.
The governor, meanwhile, has pledged modest hikes in local aid to cities and towns and school districts, and to replenish some of the funds withdrawn in recent years from the state’s reserve, or “rainy day” fund.
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