DEERFIELD — For the first time in years, the state may not have a budget in place for the fiscal year that begins July 1, because revenue projections are a “moving target,” legislators told Franklin County business leaders Friday.

In addition, even though the Democratic-controlled Legislature has been working more closely with the Republican governor than it has with some Democrats in the past, some budget worries are tied to Washington politics, said Rep. Stephen Kulik, D-Worthington.

A budget on time — something that many agencies, communities and schools are anxious to see — is still possible, said Kulik, although time is running short.

“It’s particularly challenging this year,” said Kulik, who as Ways and Means vice chair is one of three conference committee members charged with blending House and Senate versions of a spending plan. He said income tax, sales tax and capital gains revenues have continued to “shrink” through the year.

“Our revenues are declining, and we’re having to manage the conclusion of the fiscal year with some challenges in spending,” he said. Even as they look at priorities for spending a $40.5 billion budget for the coming year, “We’re having to deal with the expectation that we won’t have enough money to sustain all of that.”

House and Senate budget versions are not yet reconciled, and there could be a tighter spending plan from Gov. Charlie Baker in the mix. “We’re going to have to probably make some reductions, so we have a balanced budget,” Kulik said.

Overall, the state economy has been doing “pretty well,” with unemployment at 4.2 percent and “out of sight” construction in the Boston area, Kulik said. But corporate and personal income tax as well as capital gains revenue are being hurt by taxpayer behavior. Taxpayers, Kulik said, are anticipating the changes in federal tax law that “we hear talked about a lot by the president and the Congress.”

In anticipation of those potential changes, he said, many companies and individuals are deferring their tax payments, if they can, hoping that rates will decline at the federal level.

Also declining are sales tax revenues, because of the continuing shift in buying habits to online purchasing.

“That’s unfortunate, and as much as we can, we continue to tell people to buy local, because not only are you supporting local brick-and-mortar businesses that many of you represent, but you’re also helping to sustain the local treasury that supports education and health care, job training and all of the other things we expect,” Kulik said. 

Online giant Amazon has to pay state sales tax receipts because it has offices in Cambridge and a distribution center in southeastern Massachusetts. There’s some hope that even online businesses without a physical presence in the state will have to pay state sales taxes, due to Baker’s new “cookie” tax. It’s based on a new interpretation of the existing law, and equates the digital “cookies” that online retailers leave behind in customer computers and phones with the traditional interpretation of a physical presence in the state. But the idea, and the revenues it would collect, faces a certain court challenge, Kulik said.

Since local government also depends heavily on state aid and state programs, he added, local online spending has “more impacts than you can imagine.”

An even bigger threat from Washington would be the health care cuts now before Congress, which Kulik warned would be “profound, and profoundly negative.”

The U.S. House version of heath care reform would cost Massachusetts $2 billion immediately, “and we’d have to make that up, because for many people, that’s their health care coverage. ...,” Kulik said. “The safety net we have in Massachusetts would be shredded.” There are estimates that over the next 10 years, the state would lose at least $13 billion in federal health care revenue, he added.

Kulik added, “I hope the dysfunction in Washington that we all despise, I hope in this instance that it continues.”

Marijuana law

Kulik, along with Senate President Stanley Rosenberg, D-Amherst, and Rep. Paul Mark, D-Peru, also discussed pending legislative changes to the state’s new marijuana law. Rosenberg said the Senate and House are “fine-tuning” the language passed by voters in last November’s election, reconciling differences including the tax rates that should be applied to pot sales.

“We’ve committed to getting a bill to the governor’s desk by June 30,” he said. “I don’t believe we have to get every matter resolved in that bill. ... If we don’t, we should get everything that we can agree to the governor’s desk, so we can get the agency going, and then over the next few weeks after that, resolve some of the differences that are not critical to standing up the agency.”

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