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November 19, 2012

State mulls impact of 'cliff' cuts


Gonzalez said economic forecasters have estimated that the economy across the country, including in Massachusetts, could slow by another 1 percent to 1.5 percent if sequestration cuts are allowed to go into effect. The Department of Revenue estimates tax collections in Massachusetts would decline up to $300 million over the second half of fiscal 2013 and the first quarter of fiscal 2014, and could total $1 billion in reduced revenue over the next full calendar year, according to Gonzalez.

Cuts to defense and health spending, both cornerstones of the state’s economy, would also siphon money out of the economy. The Patrick administration estimates federal spending in the defense sector could be reduced by $1.2 billion annually, while National Institutes of Health funding to the state would fall by $188 million a year.

Formula and discretionary grants that flow through the state to municipalities could also be slashed by $200 million, impacting special education, Title 1 grants, low-income home energy assistance, child care and small city and neighborhood stabilization block grants.

Gardner Mayor Mike Hawke said cities would bear the brunt of going over the “fiscal cliff,” projecting that unemployment in his city would “tumble back” to 11 percent or 12 percent from its current level of 8.7 percent, well above the state average. “This is obvious that as a Massachusetts Republican none of this is my fault,” Hawke said.

Lt. Gov. Timothy Murray, who chaired the meeting, said the Patrick administration has initiated conversations with the White House and Congressional delegations about the importance of reaching a bipartisan compromise, and said some “belt tightening” would be needed, but there’s a more responsible way to do it.

“It’s all muscle and bone we’re talking about here,” Murray said.

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