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Thursday, September 3, 2009

State revenue falls behind

Shira Schoenberg reports in the Concord Monitor on the dismal revenue figures from the month of August, as well as an explanation from the Lynch Administration.
Department of Administrative Services Commissioner Linda Hodgdon said part of the reason for the shortfall is economic, and is due to the way the projections were developed. The yearly revenue projections were set by the Legislature, working with commissioners and economists. Once the budget was passed, state agencies made the monthly projections.

Hodgdon said the monthly estimates were based on three-year averages, and the economy has worsened over those years. Because she did not know when the economy would recover, Hodgdon made the estimates as if the economy would remain the same throughout the year. That means revenues might be lower than expectations now, but could exceed expectations if the economy rebounds. "I didn't assume that by a particular month that's the month the economic recovery will happen, and more heavily weight revenue in that period," Hodgdon said. "There's no one right way to do it because no one can tell you exactly when economic recovery's going to happen."

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