BOSTON (SHNS) - One of the economic experts most often relied upon by Beacon Hill's budget managers recommended Thursday that the Legislature and administration develop a strategy to digest and respond to federal government shifts, and to do so in a way that relates closely to the ongoing state budg et process. Massachusetts Taxpayers Foundation President Doug Howgate said he thinks it's still too early to be thinking about potential changes revenue assumptions being used to build the roughly $62 billion state budget for fiscal year 2026, which starts July 1. But he urged lawmakers at a hearing of the Joint Committee on Ways and Means to work with Gov. Maura Healey's team to coordinate a state response to the flurry of changes President Donald Trump has made or says he will make, many of which could significantly affect state spending plans. "So much has happened. We don't know what the impacts are going to be, and we don't know what's going to happen. And so how does the state respond to that when we know that the resources available to us -- whether it's financial resources, time, process -- they're all limited, right? It's critically important that we create, I think, an approach across the administration, House and Senate, that allows us to collect information, assess options and coordinate a response," he said. "And I think it's critically important that as that exercise obviously takes into account how we listen to our communities, constituents, fellow members, but it also needs to reside pretty closely to budget decisions. At the end of the day, so much of what is going to be coming down the pike related to whatever the feds do or don't do, whatever happens to the economy, is going to be intertwined with the budget." Trump has moved quickly in his second term to reshape the federal government and its budget, making or planning steps that could force Massachusetts officials to rethink the state's plans. Two weeks before House Democrats are due to release their rewrite of Healey's budget (H 1), there'ss significant uncertainty around the future of Medicaid funding and other federal programs that are critical to the state budget. Medicaid reimbursements account for the majority of the $16 billion of federal dollars baked into the governor's budget. Senate Ways and Means Chairman Sen. Michael Rodrigues, who gets about a month longer than House chairman Rep. Aaron Michlewitz before he needs to unveil his committee's proposal for fiscal 2026, asked Howgate during a hearing on spending surplus surtax revenues whether he and Michlewitz should "be reconsidering what we had proposed for FY '26 given the actions of the president." Rodrigues, Michlewitz and Administration and Finance Secretary Matthew Gorzkowicz agreed in January to build the fiscal 2026 budget on a $43.614 billion consensus revenue estimate, including $2.4 billion expected from the state's surtax on high earners. Howgate said his answer would be "a provisional no" given where the state is in its budget development. "The question is, if you were to make different assumptions now, what would that be based on? And would they be better than the assumptions you'll make in May or June once you see some of those numbers? And my gut is the answer to that is probably no," he explained. "Now, setting correct expectations for folks that this stuff may not be written in pen right now, and we may need to make some serious adjustments -- just as both chairs made in 2020, when I think you took the appropriate action in terms of adjusting the budget, adjusting the timeline, in light of circumstances. We're not in that world right now, but folks need to know that when stuff changes, we have to adapt as well. I think that needs to be out there, but I don't know that you would have better information to make informed adjustments right now compared to a little later in the process." Responding to broad questions about Trump's economic policy from House Vice Chair Rep. Ann-Margaret Ferrante, Howgate detailed what he's watching for from D.C. He said he expects to know what the federal budget will look like and the fate of tax cut extensions by July, but that it will be harder for the state to anticipate or plan for administrative changes or shifts in economic conditions. "You can only kind of plan for the information you have. And so that's why I do think, as you think about the actions that the House, Senate, [and] administration are taking, keying in on the Congressional budget process and the tax cuts extension, along with what's going on in the stock market and what's going on with the economy, those are the three things we can best track day to day to day, because I think we're gonna have to hedge quite a bit for federal policy uncertainty that's going to continue to be, I'm sure, quite a roller coaster ride for the next three plus years." ...read more read less