ICYMI: Financial Analysts Praise Baker Administration's Fiscally Responsible Budgeting

BOSTON - The Baker Administration's fiscally responsible approach to the state budget received praise this week from independent analysts:  

"'This is an executive government that has the ability to make midyear cuts, and not only has the ability, but this particular administration has really shown a willingness to make those cuts and make sure that the budget does end up in substantial balance at the end of the year,' Nolan said. 'And that's really what got us to the moderate score.'"

Analyst: Mass. government “moderately prepared” to weather recession
STATE HOUSE NEWS SERVICE
By Kate Lannan
12/7/16


After a slow economic recovery, state government in Massachusetts is "moderately prepared" to weather a recession, a credit analyst said Wednesday, attributing that status in part to the Baker administration's willingness to make spending cuts if necessary.

Speaking at a conference for investors in state bonds, Moody's Investors Service vice president and senior analyst Genevieve Nolan said that Massachusetts is not "immune" from the revenue slowdowns being felt across the nation, a fact highlighted by an October downgrade of tax revenue estimates.

Nolan offered praise for this year's $39.25 billion budget, saying its 1.3 percent spending growth "compares very favorably" to a national average of around 2.5 percent growth in expenditures.

"While the commonwealth is still pulling in revenue growth and meeting its benchmarks, it's also conservatively projecting and budgeting for expenditure growth going forward, which we think is a really fantastic combo," she said.

Gov. Charlie Baker on Tuesday announced $98 million in midyear cuts to the fiscal 2017 budget in an attempt to bring spending in line with sluggish revenue growth. Baker slashed programs favored by Democrats and wiped out line items for projects in their districts, angering some legislators.

Budget writers in January expected revenues to climb 4.3 percent to $26.9 billion this year, but actual collections have faltered, leading to reductions in that estimate. In October, Administration and Finance Secretary Kristen Lepore dropped the revenue estimate to $26.058 billion, reflecting a 3.1 percent growth.
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"My belief is we are not only obligated, but the people of Massachusetts expect us to live within our means, and we believe these reductions will make it possible for us to do that," Baker told reporters after speaking at the conference.

Nolan pointed to Baker's statutory authority to make such cuts as one factor that would help the state respond to a potential economic downturn in the future, while saying relatively high fixed costs could be "a bit of a hindrance" to budget adjustments in a recession.

"This is an executive government that has the ability to make midyear cuts, and not only has the ability, but this particular administration has really shown a willingness to make those cuts and make sure that the budget does end up in substantial balance at the end of the year," Nolan said. "And that's really what got us to the moderate score."
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