In this updated analysis, the Foundation concludes that despite the improving economy and declarations of budget surpluses, the state is still confronting a large and growing structural deficit. Even with tax revenues on track to exceed budget benchmarks again this year, the state is still relying heavily on drawing down its reserves and other one-time resources to finance its budget, resulting in an estimated structural deficit of approximately $750 million in fiscal 2005 that will carry over into 2006. With unavoidable spending increases in obligatory accounts outpacing revenue growth, the Commonwealth's structural budget gap is projected to reach $900 million in 2006. Given these fiscal realities, the Commonwealth can afford neither major tax cuts nor significant restorations of the budget cuts that have been made over the last three years.
Commonwealth Faces Large and Growing Structural Deficits
In this updated analysis, the Foundation concludes that despite the improving economy and declarations of budget surpluses, the state is still confronting a large and growing structural deficit. Even with tax revenues on track to exceed budget benchmarks again this year, the state is still relying heavily on drawing down its reserves and other one-time resources to finance its budget, resulting in an estimated structural deficit of approximately $750 million in fiscal 2005 that will carry over into 2006. With unavoidable spending increases in obligatory accounts outpacing revenue growth, the Commonwealth's structural budget gap is projected to reach $900 million in 2006. Given these fiscal realities, the Commonwealth can afford neither major tax cuts nor significant restorations of the budget cuts that have been made over the last three years.
