Massachusetts Gov. Deval Patrick Thursday said fiscal 2010 tax revenue will come in $600 million below prior estimates, and that he would potentially eliminate nearly 2,000 positions and implement spending reductions to offset the state’s underperforming tax receipts.
In addition to addressing sluggish revenues this fiscal year, the governor warned that the state could face a nearly $3 billion budget deficit in fiscal 2011.
“The challenge facing us in the next fiscal year is just as serious if we maintain spending next year at levels necessary to deliver the same level of service that we deliver this year,” Patrick said during a press conference on the fiscal 2010 budget. “Budget watch-dog groups have estimated that we will face a further shortfall of between $2 billion and $3 billion. Again, painful as it is, we have to adjust.”
Patrick outlined a five-point plan to address the lagging revenues in fiscal 2010. The announcement follows first-quarter revenue collections that came in $212 million below earlier projections, due in part to a decrease in corporate and business tax receipts. Sales tax and personal income tax revenues are also underperforming. Fiscal 2010 began July 1.
The state government earlier this year reduced its payroll by 1,400 positions. Patrick on Thursday called for departments and agencies to implement a second round of furloughs of executive branch managers for up to nine days, depending upon salary level, to help reduce the need for layoffs and preserve jobs. He also asked union workers and government officials to find savings in mutual contract agreements by the end of the month.
“For the same reasons, I’m also calling on state workers and their unions to work with the secretary of administration and finance and the secretary of labor and workforce development on contract revisions and other ways to share in the sacrifice,” Patrick said. “If we can reach an agreement on a savings plan by Oct. 30, we can avoid or reduce the number of layoffs. If we cannot, then we will have no choice but to proceed with those layoffs.”
The furloughs and/or layoffs would help the administration find $600 million of savings this fiscal year. Other expenditure reduction plans include suspending programs or asking quasi-public agencies, the private sector, and charitable organizations to take on certain programs, consolidating agencies, and reducing energy costs.
“We have to find cheaper ways to get the job done,” Patrick said.
In looking at reducing energy costs, the governor said he would seek to make government buildings as energy-efficient as possible and have various agencies and departments buy energy collectively.
“Today agencies buy their energy independently and at widely varying rates,” he said. “By pooling the state’s purchasing power we can maximize savings.”