His Excellency Deval L. Patrick, Governor
Executive Office
State House, Room 360
Boston, Massachusetts 02133

Dear Governor Patrick:

Pursuant to the provisions of Section 9C of Chapter 29 of the Massachusetts General Laws, I hereby notify you that available revenues for Fiscal Year 2009 are projected to be insufficient to meet authorized expenditures. The amount of this probable deficiency is estimated at $1.4 billion.

Approximately $1.1 billion of this projected deficiency is expected to result from a shortfall in state tax revenues compared to the benchmark on which the Fiscal Year 2009 budget was built. This shortfall is related to the national and international financial condition, which has recently begun to affect the Commonwealth's economy and tax revenues. In developing this recommendation, I have consulted with the Department of Revenue, a number of economists who specialize in economic forecasts, as well as other public finance policy experts. The projected shortfall of $1.1 billion falls within the range forecasted by these advisers.

The balance of the projected deficiency, approximately $320 million, reflects probable non-discretionary spending obligations not accommodated in the FY09 General Appropriation Act. These include snow and ice removal costs, health and human services caseload exposures, increased debt service, and certain public safety costs.

The unprecedented uncertainty surrounding the world and national economies complicates this forecast. It also suggests an aggressive approach to solving this projected shortfall now, while recognizing that additional solutions may still be needed later in the year should the revenue decline exceed even these significant expected losses.

Upon your direction, I will implement reductions under Section 9C of Chapter 29 and take such other steps as necessary to eliminate this projected deficiency.

Sincerely,

Leslie A. Kirwan

Secretary

Cc: [House and Senate Committees on Ways and Means]


This information provided by the Executive Office of Administration and Finance.