Legislative budget leaders await September tax revenue totals

by Daniel J. Fitzgibbons, Chronicle staff

luctuating state tax revenues are adding a new wrinkle to legislative budget negotiations as top lawmakers wait to see how much money the state takes in this month before nailing down a Fiscal 2002 spending plan.

     That means that a final budget plan - already 12 weeks late - is not likely to emerge from the Legislature until October.

     According to the Department of Revenue, July's tax receipts dipped $38 million from last year and the August total was down $35 million from a year ago. The two-month decline was only the second in the state since 1992.

     Calling the numbers "troubling," Sen. Mark C. Montigny (D-New Bed-ford), who chairs the Senate Ways and Means Committee, said September's tax totals will give lawmakers a broader economic picture before they move towards a final state budget.

     Both the House and Senate have approved budget proposals calling for $22.9 billion in state spending, but the two sides differ on priorities. If tax revenues continue to drop, legislators could cut spending before adopting a final package.

     September is an important revenue month because businesses and some individuals send in quarterly tax payments. Continued declines could signal a worsening economic trend that could throw the budget off by as much as $900 million, according to the Massachusetts Taxpayers Foundation.

     Foundation officials blame the revenue slowdown on the weakening national economy and a voter-approved state income tax rollback. The drop could be exacerbated if last week's terrorist attacks undermine consumer confidence, said foundation president Michael J. Widmer.

     According to The Boston Globe, Swift administration officials, who previously criticized the legislative calculations as overly optimistic, are now quietly backing the Legislature's cautious assessment of the current economic climate.

     "The right way to do the budget is to do the budget on time," Stephen P. Crosby, secretary for Administration and Finance, told the paper. "But since the Legislature has chosen not to give us a budget, I'm pleased that they're taking into consideration the critical issues that we've raised for the past several months."

     Budget talks were suspended after last week's attacks, but are expected to resume soon, said Montigny.

     Without a final budget in place, state operations are being funded through interim budgets pegged to last year's spending levels.