Michlewitz Facing Unforeseen Challenges in State Budget

This year has brought a set of unique and unforeseen challenges for Rep. Aaron Michlewitz, who is charged with managing the state’s annual fiscal budget in his role as House Chair of the Joint Committee on Ways and Means.

“Because of the shelter-in-place advisory and the number of businesses now closed, the revenue shortfalls could be unprecedented,” said Rep. Michlewitz, adding that traditionally the House would be finished with the budget by this time of year. “A consensus was reached between the House, the Senate and the governor in January at the start of the budget process, but a lot changed once the pandemic hit.”

Now, the state must consider when and how businesses will be be able to open back up, and what restrictions will then be in place due to social distancing and other measure taken to contain the spread of COVID-19 in reevaluating its fiscal ’21 budget, he said.

“Unlike other recessions and the Great Depression, which were the results of the real estate market going bust or the country going to war, because of this public health situation, we’re in a ‘self-induced coma,’ as some have said, and how we wake up from that coma is anybody’s guess,” Rep. Michlewitz said. “It could be a really fast comeback, but it’s more likely to be a slow recovery. We don’t want to project too high or too low, so the process will be flexible because of the uncertainty.”

But despite this uncertainty, the FY ’21 budget must be finalized by July 1, and unlike the federal government, the state doesn’t have the luxury of going into a deficit. “They can print their own money whereas we at the state have different circumstances,” Rep. Michlewitz said.

The state is now looking at a number of different financial forecasts that predict budget shortfalls of between $2 billion and $6 billion.

“Six Billion is more severe, so obviously we’re hoping it turns out to be closer to two billion,” he said. “Either way, it’s going to be tough to manage the budget.”

Moreover, between $14 billion and $16 billion has already been earmarked, such as for funding Mass Health, leaving the state around $29 billion for discretionary spending.

“Hypothetically, we’re looking at about one-fifth of the budget being cut, and that will have a drastic impact on social services and state agencies like [the Department of Conservation and Recreation] that are going to have severe shortfalls and severe cuts being made,” Rep. Michlewitz said. “It could also trickle down into the schools and a number of other places as well.”

Still, Rep. Michlewitz said how this all plays out is now largely dependent on the course that the novel coronavirus takes.

“The virus dictates a lot of that, since the sooner we flatten  the curve, the sooner we can open the economy up, but right now, I’d say that’s a ways off,” he said. “And will the pandemic have a second wave later in the year? That obviously is a huge factor in how we operate the state budget.”

On top of trying to manage the budget, Rep. Michlewitz has been instrumental in several new measures taken by the state to provide some relief to its residents and businesses during the ongoing pandemic.

Besides devising a “new scenario” where restaurants can also offer beer and wine for takeout and delivery, the legislature was also successful in cancelling MCAS testing requirements for the school year because of students’ inability to take the test or study properly, he said.

Also, Rep. Michlewitz said the state now allows electronic notarization for real estate closings and other services while a “mechanism” was also put into place that provides immediate funding to homeless shelters for their COVID-19 response.

“A number of bills have been passed to extend unemployment benefits,” he added. “We worked with the federal government to extend those benefits to as much of population as possible.”

Rep. Michlewitz and his colleagues at the State House also passed a moratorium on evictions and foreclosure for residents and commercial businesses.

And yet another bill he helped champion delays the due date of state income-tax payments until July 15.

“There’s a huge amount of revenue we usually depend on not coming in while we allow people to delay paying their income tax,” Rep. Michlewitz said. “Because of that, we created a bill to allow the state treasurer to borrow money to pay for Fiscal Year ’20 responsibilities.”

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