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April 12, 2023

Budget chief mindful of possible slow recession

A woman wearing a green jacket speaks at a podium. A man in a gray suit is behind her. Photo | Courtesy of State House News Service Gov. Maura Healey and Administration and Finance Secretary Matthew Gorzkowicz

As chatter continues about the likelihood of a recession, Administration and Finance Secretary Matthew Gorzkowicz pointed Tuesday to "strong" March tax receipts as a "good indicator of where we're likely to go into April," the year's biggest collection month.

Speaking at a Local Government Advisory Commission meeting, Gov. Maura Healey's budget chief said he'll be tracking April numbers closely because that month has "the potential of making or breaking a fiscal year."

Revenue collections in March, reported by the Department of Revenue last week, rang in at $228 million above state expectations, which Gorzkowicz called "relatively good news."

And there's "a little bit of cushion going into the remaining months of the fiscal year," he said, despite the fact that "collections are down slightly, year over year."

"While we have been hearing a little bit about a slow recession -- and we hear about some softening in the capital markets, which affect a large part of our volatile revenues, our capital gains revenues -- what we've been experiencing here in the commonwealth are some pretty good numbers on withholding [income tax], and sales tax is continuing to be strong, particularly meals," Gorzkowicz said. Those areas have "really been propping up tax performance for the commonwealth and revenues continue to be strong," he said.

He told the local government officials that their municipalities have probably also seen some additional money rolling in if their city or town is among those that has adopted a local-option meals tax.

Associated Industries of Massachusetts reported Monday that its business confidence index in March "fell precariously close to pessimistic territory" as "employers managed challenges ranging from inflation to rising interest rates to banking disruptions."

"At the global level, we see recession averted, thanks to solid growth in mainland China and the emerging markets of Asia Pacific," said Sara Johnson, chair of the AIM Board of Economic Advisors. "The US economy had a strong start to 2023, but tightening financial conditions could undermine growth over the remainder of the year. Labor market conditions remain tight, keeping inflation above central bank targets in the US and Western Europe." 

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