State Revenue Commissioner Navjeet Bal said at a public hearing last Thursday that she may recommend the Patrick administration lower its projections for the year by $400 million to $600 million.
The warning came after tax collections in September fell $243 million below projections but before an Oct. 15 deadline for an official, revised revenue figure for the fiscal year that began on July 1.
Depending on how much revenue estimates get reduced, Gov. Deval Patrick may go back to lawmakers to ask for the power to make mid-year cuts to the budget.
Patrick was forced to take similar action last fiscal year as revenues plummeted throughout the year.
Part of the reason for the sluggish return to growth are gun-shy consumers who are less than willing to part with their cash than before the recession hit.
“Consumers clearly are being cautious,’’ Boston Federal Reserve economist Yolanda Kodrzycki said during the hearing at the Massachusetts Statehouse.
Kodrzycki said the recession “has turned out worse than expected,’’ making it hard to develop budgets earlier this year.
The picture for the 2011 fiscal year that begins next July isn’t much rosier.
The Massachusetts Budget and Policy Center released a report this week. It said the state was able in part to close the budget gap with spending cuts combined with fee and tax increases — but it wasn’t enough. Those measures accounted for just 60 percent of the solution.
The report said the situation would have been far worse without federal stimulus dollars and the state’s own rainy day fund, which accounted for the other 40 percent.
“The state will have limited resources available to it as it crafts the FY 2011 budget,’’ the report said.
“One option is to continue to dip into the temporary sources that are still available,’’ the report added. “A second is that Congress passes another fiscal relief bill; and the third is to lower spending, or raise taxes, or both.’’
Budget woes have plagued the nation and Massachusetts is not immune. Gov. Deval Patrick and the State Legislature have been at odds over how to close the budget shortfalls. More »
"I would suggest to you there are some victories in this document, and there's certainly some losses," state Rep. Charles Murphy, chairman of the House Ways and Means Committee, said. "But I would suggest it sets us up to be in a position to move forward in the future when things do come back - and they will." More »