Document Type

Research Report

Publication Date



"After the Miracle" documents the factors that have shaped the recent political debate in Massachusetts and are likely to determine continuing economic and fiscal conditions in Massachusetts in the near future. The paper indicates that 1990 may begin a decade of real limits for Massachusetts. The economy has stagnated and the next two years will be a period of deep economic uncertainty. It is also clear that a resurgence, like that of the boom period of the eighties, is unlikely to be replicated.

The 1980's was a period when state-local spending in Massachusetts, propelled by the infusion of double-digit tax revenue yields, increased by about 72% (from $10.8 billion to $18.6 billion), an average rise of 9% each year. State spending excluding direct local aid distributions between the 1981 and 1989 fiscal years increased from $4.8 billion to $9.6 billion, or by over 12% on average per year. As a result, the state share of state-local spending increased from 45% to 52% of the total. By contrast, spending by cities and towns climbed by only 50% (from $6 billion to $9 billion) during this same period, or by 6% on average per year.

The study shows that currently eight major cost centers dominate the state's spending priorities. They are like giant termites, eating away at a revenue stream with limited growth potential. If their total allocation over the current fiscal year had not been essentially level-funded (on the basis of proposed major policy and program changes), they would have added more than one billion dollars to the Governor's recommended budget for the 1991 fiscal year. Even as submitted, the $8,039 billion in budgetary requests for seven major cost centers, excluding pensions, is $2.0 billion over actual expenditures for these same purposes just four years ago, a jump of over 34%. The major cost centers account for 68% of the Governor's entire budget submission for next year as compared with 62% of total spending in the 1989 fiscal year. Estimated spending for all purposes other than the major cost centers, on the other hand, will be about 13% below actual expenditures for these same purposes two years ago.



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