Coronavirus leaves economists uncertain: 8 takes on COVID-19’s final toll on Massachusetts

The state will need to tap into its rainy day fund and should also reconsider some tax breaks and work to ensure it receives as much federal relief money as possible, Massachusetts Budget and Policy Center President Marie-Frances Rivera said.

The economic ramifications of the pandemic have left many people out of work and struggling to afford housing and other basic needs, Rivera said. She said the state must make sure it continues to fund key services and that systems people rely on — like transit, education and unemployment insurance — remain operational.

“Now is not the time to switch into austerity mode, so we have to utilize all the tools that we have in our toolbox,” Rivera said.

If patterns from past recessions hold, Rivera said, fiscal 2020 tax collections would fall somewhere between $4.2 billion and $4.9 billion below fiscal 2019 collections, and, with limited growth, collections in fiscal 2021 could land between $5 billion and $5.7 billion shy of the estimates budget writers agreed to in January.

Rivera said state officials should identify ways to limit near-term tax losses “so we can invest in people now and into the future.” MassBudget’s written testimony said the “best, first option” for doing so would be “to delay, down-size or eliminate several of the largest and most wasteful tax breaks and tax loopholes in our state tax code.”

Specific tax policies Rivera flagged for reconsideration included the film tax credit, the “single sales factor tax break,” and a not-yet-implemented new state charitable deduction.

She thanked budget writers for building up the state’s rainy day fund in recent years. “Our recommendation would be — it’s pouring,” Rivera said. “We need to use it to make sure we have vital services covered. These dollars must be accessed.”

https://www.masslive.com/coronavirus/2020/04/coronavirus-leaves-economists-uncertain-5-takes-on-covid-19s-final-toll-on-massachusetts.html

MassLive
Colin A. Young, Chris Lisinski and Katie Lannan | State House News Service

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