We’re five months into the State’s fiscal year and still without an approved budget, creating uncertainty in an already uncertain year. And the stark reality of what is to come economically as a result of the COVID-19 pandemic, may not be felt for another year.
We were fortunate to have Massachusetts Taxpayer Foundations’ CEO, Eileen McAnneny, present their findings based on Governor Baker’s proposed FY2021 budget and the House’s Economic Development bill to our CEO community.
As of today, the Commonwealth will be facing a $3.6 billion shortfall in 2021. While federal funding through the CARES Act has helped provide much needed assistance this year, the state was forced to withdrawal a significant amount from the State’s Stabilization Fund and other trust fund sweeps that will need to be replaced.
Additionally, with the massive unemployment being paid out, the Massachusetts UI Trust Fund is projected to be at a $5 billion deficit, resulting in a possible 60% increase for employer contributions.
Irrespective of these unforeseen pandemic-related economic hits, the state also faces year over year increases due to MA Health and public pensions exacerbating an already fragile situation.
While there were many more details and a robust question and answer period, the summation of the session is that we are just in the beginning of weathering the potential economic fallout, which will likely last through 2022. The state must tread lightly and companies must expect to undertake additional burden.