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April state revenues dip $456m below expectations

E-mail|Link|Comments () May 4, 2009 05:01 PM

By Matt Viser, Globe Staff

State tax revenues last month fell $456 million below expectations, further alarming state officials who are trying to figure out how to close a midyear budget gap with only eight weeks left in the fiscal year.

The drop-off is below even the most pessimistic projections made late last week, indicating that state residents did not pay nearly the amount expected during what is normally a health collection month in April. State officials last week pegged the April shortfall at about $365 million, but said today that every possible tax fell greater than expected.

“Very somber,” was how Senate President Therese Murray described an afternoon meeting with Governor Deval Patrick and House Speaker Robert A. DeLeo.

The deficit for the last three months of this fiscal year are now expected to drop $953 million below expectations, administration officials said, causing a further hole even after a deficit of more than $3 billion that has already been closed in this fiscal year’s budget.

But with only eight weeks left in the fiscal year, the state’s options are limited. The state only has about $1.3 billion remaining in its reserve account, which means that further cuts are almost certain, possibly to a local aid payment scheduled to go out June 30.

Patrick said he is planning to announce solutions later this week. Secretary of Administration and Finance Leslie Kirwan did not immediately rule out additional cuts to local aid.

“We haven’t put out our plan, and I’m not going to comment,” she said, when asked whether cutting down on local aid this year was a possibility.

A Patrick administration spokesman later said they had ruled out any further cuts to local aid, which is a lifeblood for most cities and towns.

“We are not cutting local aid," said the spokesman, Joseph Landolfi. "We’re just not. It’s not on the table.”

The tumbling revenues will put even greater pressure on Patrick and the Legislature to cut programs or raise taxes. The discussions are bound to raise tensions among Democrats on Beacon Hill, who have disagreed over which taxes to raise and how much to raise them.

The House last week approved an increase in the state sales tax from 5 percent to 6.25 percent. Patrick has threatened to veto it unless lawmakers also approve a series of ethics, pension, and transportation overhauls.

Many Democratic lawmakers accused Patrick of launching his re-election campaign by using the Legislature as a punching bag.

Murray said the topic of last week’s tension did not come up during the meeting today, the first time the three leaders met face to face.

“I’m not going to respond to any of that,” Murray said. “We have such a fiscal crisis in front of us that it’s imperative that we all work together to resolve this.”

Matt Viser can be reached at maviser@globe.com.