CLT UPDATE
Tuesday, September 27, 2011
Twenty-two years of waiting for maybe . . .
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State tax collections rebounded strongly last
fiscal year, rising 10.6 percent or nearly $2 billion more than the
year before and making it likely that a small, mandated reduction in
the income tax will be triggered....
The strength of collections may also trigger a
reduction in the income tax from 5.3 to 5.25 percent. Senate
President Therese Murray said Monday she expected to know more about
the tax cut in October.
Massachusetts Taxpayers Foundation President
Michael Widmer said Tuesday the collections make it “likely” the tax
cut will take effect and said he believes the reduced tax rate
should not be blocked. Voters more than a decade ago ordered a 5
percent income tax but lawmakers froze the rate cut in 2002.
Under state law, the tax rate will fall to 5.25
percent if growth in fiscal 2011 inflation-adjusted baseline
revenues over fiscal 2010 exceeds 2.5 percent and if for each
consecutive three-month period starting in August and ending in
November 2011 there is positive inflation-adjusted baseline revenue
growth as compared to the same three-month period in 2010.
State documents say a final determination about
the tax cut will be made by the revenue commissioner on Dec. 15,
2011. State officials say the tax cut, which would take effect Jan.
1, 2012, is worth between $52 million and $56 million in fiscal 2012
and between $111 million and $117 million in fiscal 2013.
State House News Service
Tuesday, July 19, 2011
FY 2011 tax receipts rise nearly $2 billion, nearly eclipse FY '12
estimate
State tax collections began fiscal 2012 the way
they ended fiscal 2011: shattering projections. The Department of
Revenue announced Tuesday that officials collected $1.442 billion in
taxes in July, a 6.6 increase from a year earlier and $60 million
better than lawmakers and the Patrick administration predicted.
State House News Service
Tuesday, August 2, 2011
State Capitol Briefs
State tax collections continue upswing in first month of FY 2012
Top Beacon Hill Democrats are beginning to
acknowledge the strong possibility of a reduction in the state
income tax rate next year that could deliver $114 million in tax
relief. In recent remarks to business officials in Kingston,
Senate President Therese Murray noted state tax collections grew
7.2 percent between fiscal 2010 and fiscal 2011 and by 5 percent
in the most recent three months....
“If our tax collections stay steady in the
next three months, both taxpayers and businesses in
Massachusetts will benefit from a decrease in the income tax
rate,” Murray said, according to her prepared remarks.
State House News Service
Wednesday, September 14, 2011
State Capitol Briefs
Senate Prez: Income tax cut may be around the corner
And providing more reason for cheer: Senate
President Therese Murray told a business group in Kingston this
week that tax collections are also trending favorably....
Under state law, the income tax rate,
currently set at 5.3 percent, must be decreased in 0.5 percent
increments when certain revenue growth benchmarks are met. Such
a cut would yield $114 million in taxpayer savings, according to
state estimates....
Someone observed recently at a roundtable
discussion with Democratic Senate candidate Setti Warren that
the reason President Obama has trouble persuading Congress and
the public to support needed stimulus spending when times are
bad, like now, is that government has a bad habit of going on
spending binges when times are good. And the end result is that
voters don't trust government to spend their tax money wisely
regardless of the circumstances.
A Salem News editorial
Friday, September 16, 2011
Good economic news not a license to spend
The Commonwealth of Massachusetts on Friday
evening got the credit rating upgrade state officials have been
seeking....
“We’re going to save tens of millions of
dollars,” Grossman told the News Service in an interview, adding
that the exact savings will be calculated when the bonds are
priced....
Also, due to both conservative tax revenue
forecasting and a leap in fiscal 2011 tax collections of roughly
$2 billion, a $460 million surplus awaits allocation by the
governor and the Legislature and a reduction in the income tax
rate to 5.25 percent from 5.3 percent appears on track to
deliver $114 million in tax relief.
State House News Service
Friday, September 16, 2011
S&P boosts state credit rating
September is one of the four biggest months
of the year for state tax collections and receipts over the
first half of the month were up $88 million, or 9.7 percent,
according to a report to legislative leaders from the state
revenue commissioner. The report released Tuesday showed state
tax collections over the first two and a half months of the
fiscal year are up 6 percent.
State House News Service
Tuesday, September 20, 2011
State Capitol Briefs
Mid-September tax collections up 9.7 percent
Massachusetts sold $500 million worth of
bonds Wednesday at an interest rate of slightly below 3 percent
after securing what officials said was the highest credit rating
in the state's history.
Associated Press
Wednesday, September 21, 2011
Mass. sells $500M in bonds after credit upgrade
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Chip Ford's CLT
Commentary
"If our tax collections stay steady in the
next three months, both taxpayers and businesses in
Massachusetts will benefit from a decrease in the income tax
rate."
— Senate
President Therese Murray
"[G]overnment has a bad habit of going on
spending binges when times are good. And the end result is that
voters don't trust government to spend their tax money wisely
regardless of the circumstances.
— A Salem News
editorial
In 1989 — twenty-two
years ago, when the state income tax was hiked to 5.75%
in what was then the largest tax hike in state
history — we were promised it would be
only "temporary."
In 1990 the Legislature kept it word, made that
hike "temporary" by hiking the income tax again, to 6.25% where it
remained for a couple years until it was lowered to 5.95%. A
couple years later it was slightly reduced to 5.85%
— where it remained until the 2000
election.
Eleven years after the income tax was first hiked
"temporarily," CLT and then-Governor Cellucci collected the
signatures, put the income tax rollback to 5% on the 2000 ballot,
and won
the rollback by 60-40 percent.
In 2002 the Legislature exceeded itself with a
new "largest
tax hike in state history," raising taxes by $1.14
billion and "freezing" the voter's tax rollback at 5.3%, again only
temporarily. This time they created "triggers." When revenue
reached a certain amount, the voters' income tax rollback allegedly
would creep downward by .05% From 5.3% to 5.25% then to 5.2%
etc.
That was nine years ago. The income tax rate is
still "frozen" at 5.3% where the pols locked it against the
will of the voters.
In 2009, instead of returning the income tax to
where it was two decades before, the Legislature
jacked up
the sales tax to 6.25%.
Twenty-two years have gone by
— a full generation
— since the first "temporary" promise
was made, eleven years have passed since the voters
overwhelmingly demanded the rollback, nine years have passed since
the Legislature "froze" the voters' mandate —
but we're still paying more than the historic 5% rate.
What do you suppose will happen before this
"trigger" is pulled?
We'll be watching.
But while we wait (without holding our collective
breath), Republicans in the Legislature are working to get our money
back.
In the ongoing casino gambling debate that began
yesterday in the state Senate, Sen. Bruce Tarr (R-Gloucester), the
Senate Minority Leader, has filed a number of amendments to the bill
to require some gaming revenue to be dedicated to tax reduction:
Amendment 34 – Budgeted Revenues
Requires all revenues deposited in the
Gaming Revenue Fund be considered “budgeted fund state tax
revenue” so that the funds will be counted toward the
triggers for a potential statutory income tax rollback.
Amendment 78 – Tax Reduction Fund
The bill provides that 10% of state
revenue from category 1 licenses be provided to the newly
created Economic Development Fund. This amendment would
instead allocate that 10% of revenues to the Tax Reduction
Fund. The Tax Reduction Fund provides for a temporary
increase in the amounts of the personal exemption allowable
on the income tax if the Fund is sufficiently funded and
meets certain additional criteria.
Amendment 82 – Gaming License Fund II
The bill sets up a fund to disperse money
received from the license fees from category 1 and category
2 gaming. The bill disperses 15.5 per cent to a
Manufacturing Fund, 19.5 per cent to a Community College
Fund, and 23 per cent to a Health Care Payment Reform Fund.
This amendment would eliminate that funding, and instead
provide 10% to the Stabilization Fund (Rainy Day Fund), 10%
to debt reduction, 10% to the unemployment trust fund, and
25% to the Tax Reduction Fund, which provides for a
temporary increase in the amounts of the personal exemption
allowable on the income tax if the Fund is sufficiently
funded and meets certain additional criteria.
Amendment 87 – Sales Tax Deduction
The bill provides that a combined 12% of
the state revenues from category 1 licenses shall be
transferred to a newly created Economic Development Fund and
the newly created Local Capital Projects Fund. That money
instead will be placed in the General Fund, and used to help
ensure revenue neutrality when reducing the state sales tax,
currently at 6.25%, to 5%. This reduction will take place in
a two-step process, with the first reduction cutting the
sales tax to 5.625%, and then another reduction to 5%.
More Is Never Enough (MINE) and never will be.
Bravo to Sen. Tarr and the other Republicans in the Legislature, but
let's not hold our collective breath for this to become reality
either.
The Bacon Hill tax-borrow-and-spend legislators'
motto remains: "What's mine is mine and what's yours is mine
too."
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Chip Ford |
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State House News Service
Tuesday, July 19, 2011
FY 2011 tax receipts rise nearly $2 billion, nearly eclipse FY '12
estimate
By Michael Norton
State tax collections rebounded strongly last fiscal year, rising
10.6 percent or nearly $2 billion more than the year before and
making it likely that a small, mandated reduction in the income tax
will be triggered.
Tax collections in June rose 5.2 percent over June 2010, up $106
million for that month alone. And fiscal 2011 collections of $20.507
billion fell only $128 million shy of the revenue estimate used in
the fiscal 2012 budget signed last week by Gov. Deval Patrick, which
means that unless collections suddenly and unexpectedly retreat,
state government will almost immediately start ringing up a revenue
surplus.
The strength of collections may also trigger a reduction in the
income tax from 5.3 to 5.25 percent. Senate President Therese Murray
said Monday she expected to know more about the tax cut in October.
Massachusetts Taxpayers Foundation President Michael Widmer said
Tuesday the collections make it “likely” the tax cut will take
effect and said he believes the reduced tax rate should not be
blocked. Voters more than a decade ago ordered a 5 percent income
tax but lawmakers froze the rate cut in 2002.
Under state law, the tax rate will fall to 5.25 percent if growth in
fiscal 2011 inflation-adjusted baseline revenues over fiscal 2010
exceeds 2.5 percent and if for each consecutive three-month period
starting in August and ending in November 2011 there is positive
inflation-adjusted baseline revenue growth as compared to the same
three-month period in 2010.
State documents say a final determination about the tax cut will be
made by the revenue commissioner on Dec. 15, 2011. State officials
say the tax cut, which would take effect Jan. 1, 2012, is worth
between $52 million and $56 million in fiscal 2012 and between $111
million and $117 million in fiscal 2013.
While Massachusetts’s unemployment is still relatively high at 7.6
percent and the nation’s economic recovery has been weak, the fiscal
2011 collections reflect a state economy "that grew noticeably
stronger over the past 12 months," Revenue Commissioner Navjeet Bal
said in a statement.
The steep rise in collections exceeded the revenue estimate
lawmakers and Patrick used for fiscal 2011 spending purposes by
$1.43 billion. However, a string of supplemental budgets approved
throughout the fiscal year will cut into the state’s expected fiscal
2011 surplus, which nonetheless will bill sizeable.
Gov. Deval Patrick’s budget chief, Secretary of Administration and
Finance Jay Gonzalez, said in a statement that the fiscal 2011
collections “are a reflection of a stronger-than-expected economic
recovery and are very good news for the state's balance sheet.”
Gonzalez said the administration was finalizing its non-tax revenue
and spending exposures and planned to file a final fiscal 2011
spending bill once the review was completed “within the next couple
of weeks.”
A “significant portion” of the fiscal 2011 surplus should be
deposited into the state’s rainy day fund, Gonzalez said, because a
“large portion” of above-benchmark revenues are attributable to
taxes collected on capital gains and other investment returns that
may not recur in fiscal 2012.
Gonzalez was unavailable to discuss the potential tax cut or total
fiscal 2011 supplemental spending.
Widmer cautioned that last year’s state budget was balanced with
about $1.5 billion in one-time revenues, claimed the fiscal 2012
budget underfunded the massive Medicaid account, and warned of
potential impacts from slowing economies in Europe and the outcome
of talks in Washington over deficit reduction plans and raising the
nation’s debt ceiling. Still, he said, the $2 billion uptick in
revenues was positive.
“We’re in a very uncertain period,” Widmer said. “There are a number
of risks and cautions but it’s clearly good news.”
The tax data released Tuesday showed:
● Compared to fiscal 2010
personal income tax collections in Massachusetts totaled $11.58
billion, an increase of $1.47 billion or 14.5 percent.
● Withholding taxes grew $574
million, or 6.5 percent.
● Income tax estimated payments
of $1.86 billion, which include revenue from capital gains,
dividends and interest, rose $373 million or 25.1 percent.
● Sales tax receipts, which help
fund the state transportation and school construction efforts, were
up $295 million in fiscal 2011, or 6.4 percent. The state sales tax
rate was increased from 5 percent to 6.25 percent in 2009. Regular
sales tax collections were up 5.9 percent, meals tax collections
increased 7.1 percent and motor vehicle sales tax receipts rose 7.9
percent.
● Fiscal 2011 corporate and
business tax collections totaled $2.23 billion, up 5.1 percent.
● Corporate excise tax
collections totaled $1.95 billion, up $351 million or 21.9 percent.
● Tax refunds of $1.4 billion
were down $101 million or 6.7 percent.
● Income tax payments with
returns and bills of $1.69 billion grew $432 million or 34.2
percent.
State House News Service
Tuesday, August 2, 2011
State Capitol Briefs
State tax collections continue upswing in first month of FY 2012
State tax collections began fiscal 2012 the way they ended fiscal
2011: shattering projections. The Department of Revenue announced
Tuesday that officials collected $1.442 billion in taxes in July, a
6.6 increase from a year earlier and $60 million better than
lawmakers and the Patrick administration predicted.
DOR Commissioner Navjeet Bal attributed the better-than-expected
results to a 9.9 percent -- $71 million -- increase in income tax
collections in July from the same month a year earlier. The state
also benefited from "several one-time estate tax payments" totaling
$25 million, according to DOR. Sales tax collections remained flat
last month, coming in at $449 million, down $41 million from last
July.
Lawmakers and the Patrick administration estimate that the state
will collect $20.636 billion in fiscal 2012, which began July 1,
although the estimate will be adjusted downward by $20.5 million to
reflect the projected impact of an Aug. 13 to Aug. 14 sales tax
holiday. Massachusetts tax officials collected nearly as many tax
collections in fiscal 2011 as they are expected to bring in during
fiscal 2012, raising questions about whether midyear adjustments to
reflect revenue growth are a likelihood.
State House News Service
Wednesday, September 14, 2011
State Capitol Briefs
Senate Prez: Income tax cut may be around the corner
Top Beacon Hill Democrats are beginning to acknowledge the strong
possibility of a reduction in the state income tax rate next year
that could deliver $114 million in tax relief. In recent remarks to
business officials in Kingston, Senate President Therese Murray
noted state tax collections grew 7.2 percent between fiscal 2010 and
fiscal 2011 and by 5 percent in the most recent three months.
A 2002 state law that raised taxes included provisions allowing the
income tax rate of 5.3 percent to drop in annual 0.5 increments if
tax revenue growth benchmarks were met.
The Salem News
Friday, September 16, 2011
A Salem News editorial
Good economic news not a license to spend
While the national economy remains shaky, yesterday brought the
welcome news that the Massachusetts unemployment rate had dipped to
7.4 percent in August, which, a release from the state Executive
Office of Labor and Workforce Development noted, is "well below the
national rate of 9.1 percent, and the state's lowest monthly rate
since February 2009."
It was also down a couple of ticks from July's rate of 7.6 percent,
making for a healthy trend we hope to see continue.
And providing more reason for cheer: Senate President Therese Murray
told a business group in Kingston this week that tax collections are
also trending favorably.
"If our tax collections stay steady in the next three months, both
taxpayers and businesses in Massachusetts will benefit from a
decrease in the income tax rate," Murray told the group according to
the State House News Service.
Under state law, the income tax rate, currently set at 5.3 percent,
must be decreased in 0.5 percent increments when certain revenue
growth benchmarks are met. Such a cut would yield $114 million in
taxpayer savings, according to state estimates.
Still, it's important that Murray and her colleagues avoid viewing
an increase in tax collections as an invitation to spend.
Someone observed recently at a roundtable discussion with Democratic
Senate candidate Setti Warren that the reason President Obama has
trouble persuading Congress and the public to support needed
stimulus spending when times are bad, like now, is that government
has a bad habit of going on spending binges when times are good. And
the end result is that voters don't trust government to spend their
tax money wisely regardless of the circumstances.
State House News Service
Friday, September 16, 2011
S&P boosts state credit rating
By Michael P. Norton
The Commonwealth of Massachusetts on Friday evening got the credit
rating upgrade state officials have been seeking.
In advance of next Wednesday’s planned sale of $475 million in
general obligation bonds, Standard & Poor’s boosted the state’s
rating to AA+ from AA, a move that Treasurer Steven Grossman said
reflects confidence in state fiscal management and gives the state
its highest rating ever.
“We’re going to save tens of millions of dollars,” Grossman told the
News Service in an interview, adding that the exact savings will be
calculated when the bonds are priced.
The assessment came weeks after the same agency lowered the United
States’ credit rating and arrived as Massachusetts crawls out of the
recession with slow but steady job growth rates – the state jobless
rate in August ticked down to 7.4 percent this week compared to a
U.S. unemployment rate of 9.1 percent.
Grossman said factors that helped the state win the upgrade included
efforts to rebuild state reserves and reduce unfunded pension system
liabilities, state budget management, an “absence of gridlock” among
state government’s top decision makers, and targeted job creation
efforts.
“The innovation economy is actually working,” he said.
During and since the recession, Gov. Deval Patrick and the state
Legislature have used a blend of tax increases, spending reductions,
creative financing and reserve fund draws to balance the state
budget.
Also, due to both conservative tax revenue forecasting and a leap in
fiscal 2011 tax collections of roughly $2 billion, a $460 million
surplus awaits allocation by the governor and the Legislature and a
reduction in the income tax rate to 5.25 percent from 5.3 percent
appears on track to deliver $114 million in tax relief.
Legislation filed by Patrick last month would steer $300 million
from the surplus into the state’s rainy day fund and invest $95
million in infrastructure development, workforce training and other
job creation efforts. The bill is pending in a House committee and
expected to move this month or in October.
The upgrade followed a private sit-down this month between rating
agency officials and top state officials, including Gov. Patrick, in
Senate President Therese Murray’s ornate third floor office.
Federal budget cuts loom as a major factor in state finances.
According to state documents, top state officials don’t know the
details of $917 billion in spending reductions the federal
government plans to make as part of $2.4 trillion in savings under
the Budget Control Act of 2011, which President Barack Obama
approved Aug. 2 as part of a deal to raise the nation’s debt
ceiling. State documents say officials “will take appropriate
measures to prepare for and manage” the impacts of the federal
spending cuts.
State House News Service
Tuesday, September 20, 2011
State Capitol Briefs
Mid-September tax collections up 9.7 percent
September is one of the four biggest months of the year for state
tax collections and receipts over the first half of the month were
up $88 million, or 9.7 percent, according to a report to legislative
leaders from the state revenue commissioner. The report released
Tuesday showed state tax collections over the first two and a half
months of the fiscal year are up 6 percent.
Monthly collections through Sept. 15 totaled $994 million and the
benchmark for the collections over the full month is $2.052 billion,
or 1.8 percent more than September 2010.
Quarterly estimated payments for most businesses and individuals are
due in September, which helps make it a bigger month for collections
than most other months. Mid-month income tax collections were up
15.5 percent, income tax withholding receipts were up 8.1 percent,
and sales tax collections mid-month were up 5 percent. The September
sales tax benchmark assumed an increase of 1.2 percent, accounting
for the two-day suspension of the sales tax in August. Also,
month-to-date corporate and business cash estimated payments, which
Revenue Commissioner Navjeet Bal said are an indicator of current
business profits, declined by $12 million or 4 percent from last
year.
Associated Press
Wednesday, September 21, 2011
Mass. sells $500M in bonds after credit upgrade
BOSTON (AP) — Massachusetts sold $500 million worth of bonds
Wednesday at an interest rate of slightly below 3 percent after
securing what officials said was the highest credit rating in the
state's history.
The general obligation bonds will help pay for capital projects
around the state, said Treasurer Steven Grossman, who added that the
lower rate will save the state tens of millions of dollars.
The sale came less than a week after Standard & Poor's upgraded the
state's credit rating to AA+ from AA.
Grossman joined Gov. Deval Patrick and legislative leaders at a news
conference to tout the improved rating, which the leaders said was
the result of several steps taken cooperatively to stabilize state
finances.
The upgrade "speaks volumes about the way our securities are being
perceived in the marketplace and in the investor community,"
Grossman said.
Massachusetts also has ratings of Aa1 from Moody's Investors
Services and AA+ from Fitch Ratings.
The 2.97 percent rate on the bonds sold Wednesday was significantly
better than on the state's two most recent bond sales in the spring,
the treasurer's office said. The winning bid came from Bank of
America/Merrill Lynch, which outbid Wells Fargo & Co. and Citigroup
Inc.
Grossman, Patrick, Senate President Therese Murray and House Speaker
Robert DeLeo — all Democrats — pointed to several recent initiatives
that impressed the credit rating agencies, including a bill intended
to rein in public pension costs that was approved by the Senate last
week and which DeLeo said would be debated in the House within 2-3
weeks.
Patrick has also proposed using a portion of a surplus from the
fiscal year that ended July 1 to make a $300 million deposit into
the state's "Rainy Day" fund, which if approved would make
Massachusetts one of only four states with reserves exceeding $1
billion.
Patrick, a friend and supporter of President Barack Obama, said the
cooperation among state officials on financial matters contrasts
with partisan bickering in Washington where, he said, "You have a
small but vocal and influential minority in Congress who are
apparently willing to drive the economy over a cliff."
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
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