#2023-2 January 13, 2023

Governor Healey’s First State Revenue Hearing Set for January 24

In under two weeks, legislative budget managers and Governor Maura Healey’s (D- Boston) new administration and finance secretary will huddle with economists and budget analysts to try to pin down an agreement on a tax revenue estimate for the budget year that starts July 1.

The January 24 session will be the first consensus revenue hearing for Administration and Finance Secretary Matthew Gorzkowicz, who must strike an agreement with House Ways and Means Chairman Aaron Michlewitz (D- Boston) and presumed Senate Ways and Means Chairman Michael Rodrigues (D- Westport) by January 31.  The hearing will begin at 11 a.m.  in a State House hearing room and will be livestreamed on the Legislature’s website.

Not only will the hearing with outside analysts serve as a starting point for the fiscal year 2024 budgets that the governor, House and Senate will produce this winter and spring, but it is also expected to inform House Speaker Ronald Mariano (D- Quincy) and Governor Maura Healey’s thoughts on permanent tax reform and relief.  State officials have significantly underestimated tax collections in each of the last two budget cycles, leading to huge budget surpluses and effectively preventing substantial debate around how to allocate the state’s flood of cash between additional spending and relief for taxpayers.

With the announcement of a fiscal year 2024 estimate, the Healey administration could also revise the fiscal year 2023 tax estimate of $39.618 billion.  If the fiscal year 2023 revenue estimate remains at $39.618 billion, it would represent a drop of almost 4 percent from the $41.105 billion that was hauled in during fiscal year 2022, a year in which state tax revenue surged so high compared to wage growth that it triggered a long-forgotten tax relief law.

Halfway through fiscal 2023, Massachusetts has collected $1.087 billion or 6.5 percent more than the year-to-date benchmark that is based on that $39.618 billion estimate.

Governor Healey Cabinet A Work in Progress

In the first week of her term, Governor Maura Healey is operating with a Cabinet that’s in flux, with holdovers from Governor Charlie Baker’s team paired up with six of Healey’s own sworn Cabinet picks.

Healey is eyeing an eventual 12-person Cabinet, and her own picks are in place at Administration and Finance (Matthew Gorzkowicz), Education (Patrick Tutwiler), Energy and Environmental Affairs (Rebecca Tepper), Labor and Workforce Development (Lauren Jones), Public Safety and Security (Terrence Reidy) and a new, Cabinet-level role of climate chief (Melissa Hoffer).

Healey has also appointed a transportation secretary, technology services and security secretary and economic development secretary, but her picks for those positions have not yet been sworn in.  Spokesperson Karissa Hand said transportation appointee Gina Fiandaca, tech services appointee Jason Snyder and economic development appointee Yvonne Hao would be sworn in later this month to give them time to transition out of their current jobs.

Baker’s Transportation Secretary Jamey Tesler will continue stay on during this interim period and Matthew Moran, an assistant secretary at the Executive Office of Technology Services and Security, will be acting technology services and security secretary.  Jennifer Maddox, undersecretary at the Department of Housing and Community Development under Baker, is acting economic development secretary until Hao is sworn in on January 17.

While her exact plan has not been unveiled, Healey intends to split the housing and economic development secretariat into two in a bid to better address the “housing crisis” in Massachusetts.  Though she ran on this idea, Healey has not yet said who she hopes will help her lead her housing efforts.  Until the secretariat is divided, Maddox, and Hao after she is sworn in, will serve as housing and economic development secretary, Hand said.

Healey also has not yet named her own veterans’ service secretary -- a role that will rise to a Cabinet level position on March 1 under a law passed last year.  For the time being, Baker’s secretary Cheryl Lussier Poppe continues to serve in the role. 

AIM Index: Recession Fears Push Biz Confidence Lower

Confidence among Massachusetts businesses ended 2022 on a down note, with the chief concern among employers shifting from rising prices to slowing economic growth and the threat of a long-discussed recession.

Earlier in the week, Associated Industries of Massachusetts (AIM) reported that its business confidence index shed 4.7 points in December to finish the year at 54 on its 0-100 scale, with readings above 50 considered positive territory.  The index ended the year 2.7 points lower than its level of December 2021 and AIM cited worries that central bank efforts to tame inflation by boosting interest rates will tip the economy into a recession.

The index draws its readings from a survey of more than 140 Massachusetts employers, and AIM said that many businesses continue to struggle to hire and retain employees.  The labor crunch comes as Massachusetts finds itself trying to retain its residents and workers, including people moving to lower cost states.