Massachusetts Gov. Healey Announces $375M in Budget Reductions Due to Anticipated Shortfall

Massachusetts Governor Maura Healey made a decisive move to address the state’s looming fiscal challenges, announcing budget cuts totaling $375 million for the current fiscal year. 

The administration is trying to close a projected $1 billion deficit because funds are arriving later than anticipated.

The most substantial cut, approximately $250 million, will affect MassHealth, the state’s Medicaid program. However, it’s crucial to note that these reductions won’t affect eligibility for the health insurance system. 

The remaining $625 million to cover the deficit will be sourced from revenue-boosting opportunities identified by administration officials, steering clear of tax increases.

Governor Healey’s administration has chosen to implement these spending cuts independently, bypassing the need for approval from state lawmakers. Notably, the state’s rainy day fund, exceeding $8 billion, will remain untouched as it is reserved for more severe budget crises.

Massachusetts Gov. Healey’s Immediate Action

Healey’s chief budget official, Matthew Gorzkowicz, confirmed that no layoffs were used to close the budgetary deficit and underlined that these cuts amount to less than 1% of the state budget. He stressed that although there is a need to tighten belts, the current state of affairs does not indicate a recession. 

The administration remains optimistic about continued economic growth in 2025, spanning over the next 12-18 months.

Gorzkowicz also addressed concerns regarding emergency shelter shortages for migrants and homeless families, asserting that the budget reductions are unrelated to this crisis.

Governor Healey, in a letter to lawmakers outlining the cuts, emphasized the necessity of immediate action given the consistent shortfall in revenues for the past six months. She emphasized the attempt to safeguard critical state investments, particularly local aid to cities, town funding, and school allocations, amidst these reductions.

Simultaneously, state officials adjusted the estimated revenue for the 2025 fiscal year to $40.2 billion, marking a $208 million reduction from the initial budget projections. This move reflects the pragmatic approach of recalibrating financial estimates in response to the current economic scenario.