Economists issue gloomy forecast for state budget

October 7, 2008 07:08 PM Email| Comments (0)| Text size – +

By Matt Viser, Globe Staff

Governor Deval Patrick and the Legislature should brace themselves for an extended period of declining or tepid tax revenues and smaller state budgets that will define the State House agenda for up to three years, a group of economists and public policy specialists warned lawmakers today.

Lawmakers emerging from an hourlong meeting highlighted by the gloomy prognosis immediately promised serious belt-tightening.

"We heard some very difficult news," said Representative Robert DeLeo, chairman of the House Committee on Ways and Means, who summoned eight economists to his office for the forecasting session.

Beyond the immediate impact on state residents, the rapid-fire economic developments spell difficult choices for Patrick as he gets ready to begin the second half of his four-year term. Patrick won election in 2006 on promises to lower property taxes, hire new police officers, and restructure the education system. Now those goals seem increasingly elusive.

“The economy is going to get worse, not better. ... We don't know how bad it is going to get. ” said Alan Clayton-Matthews, a professor of public policy at the University of Massachusetts at Boston.

House and Senate lawmakers are waiting to see what concrete steps Patrick will offer next week to cut the budget. The governor has been meeting this week with Cabinet members, but so far he has not publicly discussed details.

But in an indication of how dire the state's circumstances are becoming, state lawmakers for the first time today signaled that state financial aid to local communities may be at risk.

“Municipalities across Massachusetts should be concerned," House Speaker Salvatore F. DiMasi said. Although he said local cuts would be a ``last resort,'' he said, "I think they should be prepared.''

Local officials are already fretting over that possibility. In Boston, the City Council is planning to call Wednesday for a hearing on the city's financial state.

"Government has to find a way to make do with less or find a way to make more," said Stephen J. Murphy, chairman of the City Council's Ways and Means Committee, who predicted the city eventually will have to consider layoffs or a hiring freeze. "It all kind of flows downhill, and we're the bottom of the hill."

John C. Drake of the Globe Staff contributed to this report. Matt Viser can be reached at maviser@globe.com.