March revenues in Mass. end streak of sagging numbers

Year-to-date collections for fiscal year 2024 total just over $25 billion, which is still $145 million below year-to-date projections entering April — typically the most consequential month for revenue collections in the fiscal year.

“I don’t think the hiring freeze is a sign of crisis, nor do I think vaguely positive March revenues are a sign that happy days are here again,” said Doug Howgate, president of the business-backed Massachusetts Taxpayers Foundation.

Lieutenant Governor Kim Driscoll said the freeze is “somewhat normal behavior” for the often volatile final quarter of the fiscal year. Last April, for example, revenue fell nearly $2.2 billion below what the state collected in the previous period a year earlier, upending the revenue picture at the time.

“We hope for the best and plan for the worst,” Driscoll said Wednesday at an unrelated event. “This is just one way for us to make sure we’re managing our resources the best way we can.”

Prior to March, state tax collections ran below projections for eight straight months. Even after the Healey administration downgraded the tax forecast at the start of the calendar year, revenue collections through February were still $275 million below even those lowered projections.

Senate budget chief Michael J. Rodrigues, who is working to craft a fiscal year 2025 budget of his own, described Healey’s hiring freeze on a range of positions as “a responsible and prudent move” given the financial climate.

Some details of the freeze still remained unclear Wednesday, including how many positions will be affected and how much money the Healey administration expects to save. Aides to Healey declined to answer those questions when asked, saying the total will be highly variable given the number of positions that will be exempt from the freeze and waivers the administration can grant on a case-by-case basis.

Driscoll said the savings are “not insignificant.”

The state budget office said certain positions, including those in direct care and public safety, will be exempt from the freeze. So are contract workers, seasonal hires, positions that have to be filled due to a court order or settlement, returns from leave, and new hires who received offer letters before April 3. All other hiring will be subject to approval by Healey’s budget office, officials said, adding that the administration is not considering additional spending cuts “at this time.”

The policy applies only to executive branch agencies, so agencies such as the MBTA or the Trial Court are not affected.

Budget watchers said they consider the state’s recent revenue trouble to be a short-term problem, even though the state’s move last year to ease the tax burden on residents may be creating some indigestion on Beacon Hill. Last fall, Healey signed a sweeping $1 billion tax package that beefed up tax credits for caregivers, renters, and seniors, fulfilling a campaign promise that pleased the business community as well.

”I hope there’s some remorse. I thought the package was too big,” said Evan Horowitz, executive director at Tufts University’s Center for State Policy Analysis. Still, he said, it’s difficult to draw a straight line between the tax cut package and the state’s recent troubles, including in sales tax collections.

”It made us more vulnerable,” Horowitz said of the tax cuts, “but I don’t think it’s strongly tied to what we’re seeing right now.”

Alan Clayton-Matthews, a Northeastern University economist, said the better-than-expected tax collections for March surprised him, particularly in light of the Healey administration’s freeze plans. A major indicator will come in a month, when the state sizes up collections from April.

”I don’t think we’re in a long-term problem,” he said. “They [state officials] are being very careful.”

Peter Enrich, a former law professor at Northeastern who served as general counsel to the state’s Executive Office for Administration and Finance, agreed that done carefully, limiting hiring “is not an imprudent thing to do.”

“I wouldn’t fault them for doing that as a cautionary measure,” he said.

He added it would not be the first time an administration paused hiring to address a budget hole. Enrich said officials used similar freezes under Governor Michael Dukakis.

In 2015, then-governor Charlie Baker implemented a state hiring freeze for nonessential workers just over 24 hours after he was sworn in. At the time, Baker’s administration proudly announced it would save an estimated $6.5 million over nearly six months, framing it as evidence of the fiscal restraint he campaigned on.

However, Enrich said he remains “dismayed” the Healey administration pushed an expensive tax package “at a time when we knew revenue was declining.” In January, she also slashed hundreds of millions from programs that provide outreach for seniors, behavioral health supports, homeless shelters, and others.

“To do it at a time when there are such dramatic needs, such demand for better funding for housing, for early education, for K-12 schools . . . the things that got cut are a bunch of things for people who really need the government assistance,” he said.

Representative Erika Uyterhoeven agreed. The Somerville Democrat, one of three House Democrats who voted against the tax package at the time, said the state is now “seeing the consequences of that.” She said that some sectors such as transportation and the foster care system are in desperate need of workers, and that the state should have beefed up public services before giving money back to taxpayers.

“To me, the damage of the tax cuts is really unfortunate,” Uyterhoeven said. “I think it was just bad policy.”

Driscoll said the administration has no regrets in pursuing the tax package.

“Not in the least,” she said. “Massachusetts needs to be more affordable . . . and more competitive and more equitable, and those tax cuts were a key piece of that.”

Samantha J. Gross can be reached at [email protected]. Follow her @samanthajgross. Matt Stout can be reached at [email protected]. Follow him @mattpstout.

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