CHICOPEE, Mass. (WWLP) – Standard and Poor’s, one of the three major bond rating agencies in the country, downgraded Massachusetts credit outlook from stable to negative, while reaffirming the state’s current AA+ bond rating.
Despite having one of the largest stabilization funds in the country at over $1.2 billion, the state’s reserve fund balance is not as large as before the 2008 recession.
A Massachusetts Taxpayers Foundation Report says that between 2013 and 2015 lawmakers diverted a total of $2.2 billion from the stabilization fund to pay operating expenses.
For the first time in years, Baker’s administration produced a 2016 budget that did not draw on reserves to balance spending, but the $600 million budget gap remains.
Lt. Governor Karyn Polito told 22News, “This is a multi-year fix, this is not going to be fixed in one fiscal cycle. It’s going to take a few years to make sure that we continue to not spend beyond the rate of growth of our revenues and bring the fiscal discipline that is necessary to that process.”
The Baker administration lowered non-tax revenue projections this fall by $145 million and is tracking spending exposures of up to $250 million.
A decision on whether to make mid-year budget cuts is expected early this month.