As the Massachusetts legislature weighs drastic budget cuts, economic experts detailed an unyieldingly grim forecast for the future of the state economy at a State House hearing yesterday.

Advising members of the Joint House and Senate Ways and Means Committee, financial experts discussed the ‘economic forecast’ for fiscal year 2003 and 2004 for both the state and the nation. Massachusetts, along with 45 other states, will soon enter the ‘murky waters of FY04,’ according to Representative John Rogers (D – 12th Norfolk), co-chair of the committee.

‘Just about every state in the nation is coming to grips with their fiscal problem,’ said Dr. Yolanda Kodrzycki, economist and assistant vice president of the Boston Federal Reserve. ‘Overall we have a weak economy.’

‘The U.S. economy is slowing down greatly, but there are some signs that our state economy [is not],’ said Dr. Alan Clayton-Matthews, a professor of Public Policy at the University of Massachusetts at Boston.

The experts predicted only a marginal improvement in the economy during the 2004 fiscal year. With impending military action in Iraq, both committee members and experts agreed the war would affect the recession, but were uncertain of its exact impact.

‘Traditionally, wars have caused a stimulus in the economy,’ Kodrzycki said.

Revenue, driven mainly by taxes, should increase from year to year through 2004; however, each of the experts gave different figures for the state’s revenue.

Alan Lebovidge, commissioner of the Mass. Department of Revenue said the state would make anywhere from $14.7 to 14.9 billion in 2003 and from $15.1 to 15.4 billion in 2004. The department also said unemployment would grow approximately one percent, wages would increase three to five percent and personal incomes would go up two to five percent.

Mike Widmer, president of the Massachusetts Taxpayers Association, gave more optimistic predictions, saying the revenue for the state would be about $200 million higher than the Department of Revenue’s estimate. The higher revenue figures come from a tax package passed six months ago under the Swift administration, he said.

The downward spiral of the national and state economies will continue through the next few quarters, hopefully reviving early in 2004, the experts said. They all agreed that technology and computer sales will take the state out of recession.

‘Businesses have been cutting back [on technology spending] in recent years,’ said Kodrzycki. ‘[Massachusetts] could see increased spending in the coming years.’

Kodrzycki said technology spending should especially help Eastern Massachusetts, a region housing many high tech companies and suffering in recent years due to cutbacks in spending on new computers, servers and software.

While most of the experts predicted an economic rebound in 2004, with at least marginal growth, Widmer warned 2004 could be the most difficult year of all.

‘The combination of a weak economic recovery and the state’s large structural deficit means that Fiscal 2004 will be the most difficult and painful year of the state’s prolonged fiscal crisis,’ Widmer said.

The committee recognized that these ‘forecasts’ may not ultimately become reality, with many committee members questioning if the economy would ever improve.

‘The committee has heard no evidence of any sign of an economic turnaround,’ Rogers said.

The state deficit comes after promises of a federal aid package and money for homeland security. Since that funding has not yet been received, the state is currently paying for new homeland security measures itself. The federal aid package still awaits approval in Congress, committee members said.

‘The state has taken on what the federal government refuses to take on,’ Kodrzycki said.