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Slumping revenue may trigger more state cuts, layoffs

E-mail|Link|Comments () October 2, 2009 11:12 AM

By Matt Viser, Globe Staff

Governor Deval Patrick announced this morning that September revenues came in $243 million below expectations, a shortfall that may trigger more state cutbacks and layoffs.

Governor Deval Patrick

The slumping revenue came after several tax hikes and will force state officials over the next two weeks to downgrade revenue estimates for the remainder of the fiscal year. That process will likely cause deeper cuts, forcing the state to further reduce the local aid it sends to cities and towns.

"It's certainly on the table," Patrick said at a press conference this morning after meeting with his Cabinet at the State House. "Because it's unavoidable."

At the same time, Patrick pointed to positive signs in the private sector, noting that Massachusetts was doing well compared to other states. As the private economy bounces back, tax revenues often lag behind, he said.

Overall revenues for the first quarter of the current fiscal year came in $212 million below expectations. The governor, working with legislative leaders, has until Oct. 15 to revise the revenue estimates for the next nine months. A lower revenue estimate would probably trigger cuts to the budget, to keep it balanced.

The lagging revenues, despite increased taxes this year and signs of life in the state economy, could hurt Patrick politically as he heads into a reelection campaign next year. His opponents, running on themes of fiscal responsibility, argue that they would be better than Patrick at guiding the state out of its economic doldrums.

Patrick made today's announcement as news came from Washington that the national unemployment rate rose to 9.8 percent in September, the highest since June 1983, as employers cut far more jobs than expected. The report from the Labor Department underscores that the worst recession since the 1930s is still inflicting widespread pain.