Massachusetts Lawmakers Warn Of Possible Depression

BOSTON — Massachusetts lawmakers and officials expect the state economy to go into a "deep recession" and could slip into a depression if the coronavirus shutdown of nonessential businesses extends past May.

Chairs of the state senate and house ways and means committees hosted a virtual economic round table Tuesday morning to assess the impact the new coronavirus will have on the state budget. The conference had been postponed after organizers ran into tech glitches last week.

State officials are expecting huge revenue shortfalls in April and possibly longer at a time when the state is facing record-breaking unemployment claims and other expenses related to the new coronavirus emergency. Tuesday's hearing was the first step to not only write a new budget for the fiscal year beginning July 1, but also must find ways to plug revenue gaps in the current fiscal year.

Marie-Frances Rivera, president of MassBudget, said her think tank is estimating state tax collections could fall $5.0 billion to $5.7 billion in the current fiscal year, which ends June 30. The analysis is based on the two prior recessions, in which state tax collections were 16.1 percent and 13.8 percent below projections.

"These are large numbers. And while I stress again that we are not saying this pattern necessarily will occur again now, we are noting that such declines are by no means out of the question," Rivera said in prepared testimony. "Such sharp and persistent declines in tax collections have occurred in each of the last two recessions and very well could again."

Rivera also noted estimates that nearly 500,000 Massachusetts workers will be laid off or furloughed by July. That equates to a 14 percent drop in employment in just five months. By comparison, during the worst five-month stretch of the Great Recession, employment declined by 78,000, or 2.4 percent.

"This is not a drill. This is a stormy time," Rivera said. "We are in an unprecedented moment – a public health crisis that has catapulted us into an economic crisis."

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On the plus side, the state's rainy day fund has $3.48 billion on hand. Rivera said that, coupled with increased calls for more federal aid, could help Massachusetts wade through the economic downturn.

Earlier this month, the Massachusetts Taxpayers Foundation warned that the state will likely fall $300 million to $500 million short of revenue projections for the current fiscal year, while the Center for State Policy Analysis said it could be as high as $750 million. Both groups warned revenue shortfalls could be as high as $2 billion for the fiscal year beginning July 1.

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Dave Copeland writes for Patch and can be reached at dave.copeland@patch.com or by calling 617-433-7851. Follow him on Twitter (@CopeWrites) and Facebook (/copewrites).