MA Budget Deficit Could Be Near $8 Billion: Spilka

FRAMINGHAM, MA — State Senate President Karen Spilka gave details about the severity of the state's coronavirus-related budget crisis Tuesday night, estimating a deficit in the billions of dollars. She also explained the type of aid cities and towns can expect from the state when fiscal year 2021 begins July 1.

Spilka, a Democrat from Ashland, told a joint meeting of the Framingham City Council and School Committee Tuesday night that the state budget deficit could be between $5 billion and $8 billion. That estimate is in line with the $6 billion revenue gap forecast by the Massachusetts Taxpayers Association earlier this week.

The $44.6 billion budget released by Gov. Charlie Baker in January can at this point be forgotten about, she said.

"Do not use the governor's January number when he came out with his budget; it's simply not relevant anymore," Spilka said.

The state and local governments have lost billions in revenue due to coronavirus-related closures. About 826,000 state residents filed for unemployment as of May 14. Baker revealed his plan for reopening the state economy Monday, but it's unclear how long the economy slowdown will last.

Spilka could not give a clear estimate of when a state budget might be complete. Cities and towns across the state are clamoring for details about what type of state aid will come in fiscal 2021. Without that information, municipalities are having difficulty budgeting for next year.

"Like you and cities and towns across the state, we are not certain what we can do in fiscal 2021," Spilka said.

Framingham, for example, has begun laying of city workers. In Natick, officials are talking about closing a school and slashing other parts of the school budget.

Spilka reminded Framingham officials about the budget crisis in 2009 and 2010 amid the post-housing crash recession. Massachusetts had a similar budget deficit then, and state aid ended up getting cut 28 percent. Chapter 70 education aid, however, was kept level.

Municipalities may see some relief from a new federal stimulus bill, Spilka said. The HEROES Act passed the U.S. House on May 12 and included about $10 billion for Massachusetts cities and towns. The CARES Act stimulus passed in April includes money for cities and towns, but it can't be used to make up for lost revenue related to the coronavirus downturn.

However, the HEROES Act faces uncertainty in the Republican-controlled U.S. Senate. Senate Majority Leader Mitch McConnell said in April he would "in favor of allowing states to use the bankruptcy route" rather than provide them with a federal bailout.

In a typical year, the Senate would be debating the state budget this week. She hopes the House and Senate will soon come out with a budget that can go right into conference committee, essentially skipping floor debates in the Legislature. The state may move forward with several smaller budgets rather than one big one, Spilka said.

"We're committed to providing certainty ASAP," she said.