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CLT UPDATE
Saturday, January 14, 2012
$31B state budget still not enough without new "revenue"?
|
Legislative leaders and the Patrick
administration have agreed to base their fiscal 2013 budget bills on
the expectation that taxpayers will generate $21.95 billion in
taxes, according to a State House source.
That’s a 6.9 percent increase over the original
estimate used to build this year's state budget.
Patrick administration officials in October
increased their estimate of expected fiscal 2012 tax collections to
$21.01 billion and the projected tax take for next fiscal year is
4.5 percent more than that figure....
The fiscal 2013 tax revenue estimate reflects the
impact of a pair of tax cuts that took effect on Jan. 1 – a 0.05
percentage point reduction in the personal income tax and a 0.25
percentage point cut in the state corporate tax. The income tax cut
is estimated to be worth between $111 and $117 million in revenue.
State House News Service
Thursday, January 12, 2012
Patrick, legislative leaders agree on FY '13 revenue estimate
Even with revenue forecasters expecting a $940
million uptick in tax collections in the upcoming budget year,
spending on fixed costs in several major areas – Medicaid services
for low-income and disabled residents, debt service, public pensions
and collective bargaining agreements – are on track to easily
swallow up those revenues and much more, said Jay Gonzalez,
secretary of administration and finance....
Gonzalez said the fixed costs, if left unchecked,
would grow by $1.6 billion in fiscal 2013, the budget year that
begins on July 1, outpacing tax growth by more than $600 million and
cutting into revenues for other services. As a result, he said, the
Patrick administration plans to unveil a raft of reforms to keep
those costs in check. The rest of state government, he said, would
see an overall reduction in spending, with limited increases and
“many, many” programs level-funded, some slashed, and others
eliminated altogether....
Gonzalez said the governor’s budget, due for
release on Jan. 25, would include “what we believe to be
appropriate, responsible onetime resources” and “modest” revenue
increases, although he declined to offer specifics. He said he has
warded off demands from interest groups seeking funding increases.
State House News Service
Thursday, January 12, 2012
Despite rise in tax receipts, state's fixed costs mean more spending
cuts
Citing huge growth in the cost of state health
and social programs, Governor Deval Patrick’s top budget official
said yesterday that he will offer “modest and limited new revenue
proposals’’ for next year’s budget.
Jay Gonzalez, secretary of administration and
finance, would not specify whether that would entail new taxes,
fees, or other revenue generators. He said they would be a small
part of the state’s approach to fixing a budget hole, but he would
not rule out higher taxes.
The Boston Globe
Friday, January 13, 2012
Patrick to offer ‘new revenue proposals’
Increase in taxes, fees not ruled out
State officials framed the news as a sign that
the economy is improving but that Massachusetts is far from
recovery.
They would not say for sure whether taxes would
have to rise to cover the budget gap.
“It’s heading in the right direction, but we
still have a ways to go to dig ourselves out of the hole of the
recession,” said Jay Gonzalez, secretary of administration and
finance. “We’ve got some serious budget challenges.”
The Boston Herald
Friday, January 13, 2012
Official: cuts loom, despite bigger tax haul
Residents in 10 Massachusetts cities are on
the hook for a combined $4.5 billion in unfunded health care
benefits for public retirees, according to a new report, which
concludes the average single-family home would need to pay
nearly $13,700 to pay down the liability....
The tax hikes required to address the
liabilities without sacrificing local services often far exceed
the limits under Proposition 2½ but illustrate the “crushing
burden” the liabilities – effectively IOU’s for benefits already
earned – are playing on the fiscal ledgers of the state’s
biggest municipalities.
Employers are also at risk, the report found,
facing an additional $70 million in property taxes to help pay
their portion of the retiree health care liability.
“Simply put, the tax increases needed to fund
these massive liabilities would crush these cities and their
local economies,” said Michael Widmer, president of the
Massachusetts Taxpayers Foundation, in a statement accompanying
the report.
State House News Service
Friday, January 13, 2012
Report: $4.5B in unfunded muni-retiree health liabilities in 10
cities
Tax collections for the recent fiscal year in
Massachusetts rose $723 million more than projected and nearly
$2 billion more than the prior year ...
Revenue Commissioner Navjeet K. Bal said that
the state collected $20.5 billion in taxes for the fiscal year
that ended June 30, an increase of more than $1.9 billion or
10.6 percent from the prior year and $723 million more than
projections.
“The increase of nearly $2 billion in
collections reflects a Massachusetts economy that grew
noticeably stronger over the past 12 months,” Bal said in a
statement.
The total was close to the $20.8 billion
received for the fiscal year that ended in June 2008, the
most-ever taxes collected by the state, said a spokesman for the
revenue department. Tax collections plunged by about $2.5
billion the following year during the recession.
The Springfield Republican
Tuesday,
July 19, 2011
Massachusetts brings in $723 million more in taxes than
projected
June collections exceed monthly benchmark by
$48 million; full year collection exceeds FY11 revised estimate
by $723 million and is almost $2 billion more than a year ago.
Commonwealth of Massachusetts
Department of Revenue
News Release - June Revenue Collections Total $2.142 Billion
Tuesday,
July 19, 2011
Without declaring it, state officials
essentially said the “reform before revenue” era, a misnomer
since the 2009 reform law was accompanied by new revenues from a
sales tax hike, is over. Reform and more revenue may be apropos.
To some, the era never began.
“Looks like I was right all along when I said
reform without revenue was meaningless – here we are again,
thanks in large part to the legislature failing to adopt the 19
cent gas tax increase and $2 parking fee at Logan airport that
the governor and I proposed in 2009, a substantial portion of
which would have been dedicated to the MBTA” – that’s former
Patrick administration Transportation Secretary James Aloisi....
Legislators awoke from a seven-week slumber
Wednesday, rubbing the grit from their eyes and declaring with
ceremonial swagger, that they are ready to return to do the
people’s business. The branches then immediately adjourned for
the week, slamming the chamber doors and clearing the capitol
...
The State House News Service
Friday, January 6, 2011
Weekly Roundup – All's Fare
|
|
Chip Ford's CLT
Commentary
Confused yet?
Let's see if we've got this right. According to
the state Department of Revenue, last fiscal year's (July 2010-June
2011) revenue exceeded even the state financial gurus'
upward-revised estimate by $723 million. The total revenues
extracted was nearly $2 Billion more than the year before.
Last fiscal year's total revenue, $20.507
Billion, was an increase of $1.963 Billion or 10.6 percent over FY10
collections.
But "reform before revenue" is "meaningless
— the state says it needs more money
from us again to operate?
Next fiscal year (FY2013) the state expects to
extract $21.95 Billion from taxpayers, a 6.9 percent increase over
the original estimate used to build this year's state budget. That
will be $1.44 Billion more than the state took in last fiscal year;
almost $3.5 Billion more than was extracted from taxpayers just two
years before.
But the state needs more money from us
again to keep operating?
This fiscal year's initial budget of $30.6
Billion (fattened by an additional $480 million "supplemental
budget" last October — bringing
spending up to at least $31 Billion) is $3
Billion larger than just the previous year's $27.6 Billion initial
budget. But the state still needs even more
money from us to function?
Is anyone with a straight face still arguing
whether it's a revenue or spending problem?
|
Recent Initial
State Budgets by Fiscal Year |
|
FY08 |
$26.8 billion budget, a 4.2 percent
increase in spending from FY07. |
|
FY09 |
$28.11 billion budget, a 4.86 percent
increase in spending from FY08. |
|
FY10 |
$27 billion budget, which included
imposing an increase in the state’s sales tax, from 5
percent to 6.25 percent. |
|
FY11 |
$27.6 billion fiscal 2011 budget. |
|
FY12 |
$30.6 billion state budget for FY12,
which started on last July 1. |
The above table shows just the starting figures
in the initial budgets that constitutionally must be passed by the
beginning of every fiscal year, July 1. Then come the "supplemental
budgets" throughout the year, adding to the actual spending total.
For example, in October of last year the State
House News Service reported:
On the same day the House and Senate sent a
$480 million budget bill to Gov. Deval Patrick closing the books
on fiscal 2011, the Patrick administration filed a new midyear
spending bill worth $161 million....
The fiscal 2011 close-out budget bill, which
also included some spending for fiscal 2012 and a $350 million
deposit into the state's rainy day fund, landed on Patrick desk
Monday after both the House and Senate took final votes to
approve the bill.
By the way, that infusion of our cash raised the
state's rainy day fund to $1.4 Billion, the third largest among the
states, according to Patrick administration officials.
Nonetheless, the state claims to need
even more money from us to keep on keeping on.
Tracking total state spending for any year is daunting if not
impossible for citizens. To further obfuscate comprehension, every
few years the state shifts some major expenditure “off-budget,” so
many costs aren’t included in the table above. The
best cumulative source is the
Office of the State Comptroller, but wading through the maze of
accounting jargon there — using its
Comprehensive Annual Financial Reports (CAFR) or Statutory Basis
Financial Reports (SBFR) — is baffling
to say the least; beyond my pay grade.
All that spending
— while piling on more debt.
[T]he Commonwealth’s debt burden remains
among the highest in the nation by certain measures. Moody’s
Investors Service ranks Massachusetts fourth in total net
tax-supported debt, fourth in total gross tax-supported debt
(down from third in 2007), second in net tax-supported debt as a
percentage of personal income, and second in net tax-supported
debt per capita (down from first in 2007). Standard and Poor’s
Massachusetts rankings are similar: second in tax-supported debt
per capita (down from first in 2007), third in tax-supported
debt as a percentage of personal income (down from second in
2007), and fourth in total tax-supported debt.
Governor Deval Patrick's Five Year Capital
Investment Plan FY2011 - FY2015
http://www.mass.gov/bb/cap/fy2009/exec/hdebtafford_5.htm
The financial planning website mainstreet.com
periodically gathers all the state debt numbers across the country,
based on the most recent census data. Then it uses each state’s
population for the same year and calculates what each resident's
share is of their state's debt. "In the intervening year since these
numbers were current, it’s likely that debt has increased in many
states," it warns. On page 21 of its
December 14, 2009 report it lists Massachusetts as "The Most
Debt-Ridden State," owing $71,892,262,000.
In its most recent report published
March 4, 2011 (page 12), "The States Most Burdened by Debt,"
Massachusetts again holds the most debt-ridden distinction:
|
Total State Debt: |
$74,597,901,000 |
|
Total Population: |
6,592,205 |
|
*
Debt Per Resident: |
$11,316.08 |
*
Note that Debt Per Resident in MainStreet's computation is
the amount every man, woman, and child in the Commonwealth
owes to pay off the state debt, assuming an equal share owed
by every resident. The amount owed by those who pay
taxes as opposed to those who don't dramatically increases
each taxpayer's personal share of that debt.
Taxpayers in just 10 Massachusetts cities
are in debt for $4.5 Billion in unfunded health care benefits for
municipal public retirees, which translates to nearly $13,700 debt
for every average single-family homeowner in those ten cities.
That's just to fund retired government employees' health care
benefits; no mention of their pensions and taxpayers' liability.
CLT and others have been warning of the
approaching cataclysm for over a decade (The
Ticking Time Bomb - Public Employee Benefits), like voices in
the wilderness. Only in recent years has it become universally
recognized and generally accepted that this scheme is inevitably
unsustainable and collapsing soon.
"The tax hikes required to address the
liabilities without sacrificing local services often far exceed the
limits under Proposition 2½."
Only CLT's Proposition 2½ stands in the way of
unlimited property tax increases again, just to fund retired
government employees' generous benefits.
In the pre-1980 bad old days before we put
Proposition 2½ on the ballot and the voters adopted it, back when
Massachusetts had one of if not the highest property taxes in the
nation that only kept rising, the solution was obvious, easy, and
practiced regularly: Just hike property taxes.
Proposition 2½ is now more important than ever.
It will need to be protected and defended strenuously and
ceaselessly if we taxpayers are to survive.
Dark clouds of the fiscal perfect storm have
gathered on the horizon. Government at all levels
— municipal, state, and federal
— have reached the brink of financial
disaster. No longer can municipalities count on local aid bailouts
from the state, nor the state from Washington.
They have all hit the wall: Municipalities in the millions, states
in the billions, and the federal government in the trillions
(heading toward quadrillions).
With The Great Recession strangling the economy
nationwide, higher taxes will only bring on the end sooner. But for
those who live off burdened taxpayers' largesse, the longer they can
keep squeezing us,
pushing off the inevitable and whistling past the graveyard, the
better for them.
Is anyone still standing who argues this
impending crisis is due to a lack of revenue, not decades of
mindless overspending, irresponsible borrowing, and callous
promises?
 |
|
Chip Ford |
|
|
|
|
State House News Service
Thursday, January 12, 2012
Patrick, legislative leaders agree on FY '13 revenue estimate
By Michael Norton
Legislative leaders and the Patrick administration have agreed to
base their fiscal 2013 budget bills on the expectation that
taxpayers will generate $21.95 billion in taxes, according to a
State House source.
That’s a 6.9 percent increase over the original estimate used to
build this year's state budget.
Patrick administration officials in October increased their estimate
of expected fiscal 2012 tax collections to $21.01 billion and the
projected tax take for next fiscal year is 4.5 percent more than
that figure.
While the collection estimate is a major variable in the budget
every year – it largely determines the extent of budget investments
and reductions – a potentially greater variable next fiscal year is
the level of federal aid, with state officials saying they're
uncertain how deficit reduction efforts in Washington will affect
bottom line budget decisions.
Patrick and his budget deputies have made most of their major fiscal
2013 budget decisions and municipal officials expect the governor to
discuss his local aid plans late next week. Patrick plans to release
his full fiscal 2013 spending plan on Jan. 25, two days after he
delivers his State of the State address.
State law calls for legislative leaders and budget officials in the
executive branch to agree on a tax revenue estimate each year by
Jan. 15. The estimates are usually off the mark, often by hundreds
of millions of dollars, but serve as a starting point for budget
deliberations, which over the years have come to feature passage of
numerous midyear spending bills, such as a $131 spending bill that
was being teed up Thursday morning by the House Ways and Means
Committee.
The fiscal 2013 tax revenue estimate reflects the impact of a pair
of tax cuts that took effect on Jan. 1 – a 0.05 percentage point
reduction in the personal income tax and a 0.25 percentage point cut
in the state corporate tax. The income tax cut is estimated to be
worth between $111 and $117 million in revenue.
State officials have warned that despite an expected increase in tax
collections, residents should brace for additional budget cuts due
to continued high demand for government safety net and entitlement
programs, such as Medicaid.
Kyle Cheney and Matt Murphy contributed reporting.
State House News Service
Thursday, January 12, 2012
Despite rise in tax receipts, state's fixed costs mean more spending
cuts
By Kyle Cheney
Massachusetts residents should brace for another year of program
cuts and elimination of services, Gov. Deval Patrick’s top budget
adviser warned Thursday, citing the growth of budget-busting
accounts that he said will be the target of a new round of reforms.
Even with revenue forecasters expecting a $940 million uptick in tax
collections in the upcoming budget year, spending on fixed costs in
several major areas – Medicaid services for low-income and disabled
residents, debt service, public pensions and collective bargaining
agreements – are on track to easily swallow up those revenues and
much more, said Jay Gonzalez, secretary of administration and
finance.
“It’s heading in the right direction but we still have a ways to go
to dig ourselves out of the hole of the recession,” Gonzalez said in
a phone interview. “We’ve got some serious budget challenges.”
Gonzalez said the fixed costs, if left unchecked, would grow by $1.6
billion in fiscal 2013, the budget year that begins on July 1,
outpacing tax growth by more than $600 million and cutting into
revenues for other services. As a result, he said, the Patrick
administration plans to unveil a raft of reforms to keep those costs
in check. The rest of state government, he said, would see an
overall reduction in spending, with limited increases and “many,
many” programs level-funded, some slashed, and others eliminated
altogether.
“We’re going to try to do more creative cost control things … to try
to deliver government services more efficiently and effectively,” he
said.
Gonzalez declined to estimate the gap between expected spending and
revenues, arguing that he’d prefer to focus on ways the Patrick
administration plans to change state government operations.
In a separate interview, Sen. Stephen Brewer (D-Barre) estimated the
budget gap would fall between $800 million and $900 million, a lower
estimate than in recent years.
“We have certain exposures and an economy that still remains
sluggish. Human services needs continue to grow at a rapid rate,
health care needs continue to grow at a rapid rate,” Brewer told
reporters outside a Senate caucus. “We are making significant
progress. But we still have a ways to go.”
Brewer cited the cost of fuel and the potential for snow and ice
removal costs as variables in the size of the budget gap.
Gonzalez said the governor’s budget, due for release on Jan. 25,
would include “what we believe to be appropriate, responsible
onetime resources” and “modest” revenue increases, although he
declined to offer specifics. He said he has warded off demands from
interest groups seeking funding increases.
“What I tell all of them is, their expectations are out of line with
our budget reality and our new fiscal reality,” he said.
Gonzalez’s remarks indicate that discretionary programs – from
environmental protection initiatives to human services and local aid
for cities and towns – which have absorbed an onslaught of budget
cuts in recent years, will face stiff competition to fend off budget
reductions and reverse years of cuts.
In part, budget writers’ hands are tied by a fiscal formula that
prioritizes safety net spending, as well as automatic funding for
“off-budget” transportation, infrastructure and pension programs.
Although state officials are anticipating a 4.5 percent bump in tax
collections beginning July 1 – projecting a $21.95 billion take in
fiscal 2013 – more than $3 billion is already marked for the MBTA,
school building assistance, public employee pensions and a workforce
training program.
A tax revenue estimate released Thursday by state budget writers
concluded that state law requires $1.55 billion in fiscal 2013
spending on public pensions, a $768.8 million appropriation for the
MBTA, a $689.4 million expenditure on school building, and a $20.2
million infusion for a workforce training fund.
Those carve-outs leave $18.8 billion in tax revenues remaining for
the rest of the budget.
Spending on Medicaid – health programs for about 1.3 million poor,
elderly and disabled residents – typically consumes billions of
dollars in tax revenue, and servicing the state’s debt also requires
about $2 billion. Another $1 billion expense is likely for
Commonwealth Care, a health insurance exchange that connects
low-income residents to heavily subsidized plans.
In addition, state officials are bracing for potentially devastating
cuts in federal funding over the next decade, increasing pressure to
backfill the cost of programs like heating assistance for low-income
residents.
Matt Murphy contributed reporting.
The Boston Globe
Friday, January 13, 2012
Patrick to offer ‘new revenue proposals’
Increase in taxes, fees not ruled out
By Noah Bierman
Citing huge growth in the cost of state health and social programs,
Governor Deval Patrick’s top budget official said yesterday that he
will offer “modest and limited new revenue proposals’’ for next
year’s budget.
Jay Gonzalez, secretary of administration and finance, would not
specify whether that would entail new taxes, fees, or other revenue
generators. He said they would be a small part of the state’s
approach to fixing a budget hole, but he would not rule out higher
taxes.
Patrick is set to release his proposed spending plan on Jan. 25 for
the budget year that begins in July. The House and Senate will have
their own proposals, and have in recent years rejected tax hikes.
Once the Legislature passes a spending plan, Patrick will need to
sign off on it.
An administration official said later yesterday that the proposals
would include the types of revenue boosters that Patrick has
previously put forth. The official ruled out reintroducing an
increase in the state gas tax.
In recent years, Patrick has proposed a number of small hikes in
taxes and fees, including an expansion of the state’s bottle deposit
law to include bottled water, a move that has been rejected by the
Legislature. And he has tried unsuccessfully to eliminate an
exemption in the sales tax that applies to soda and candy.
Gonzalez also unveiled yesterday the state’s annual tax collection
estimate, which he portrayed as mixed news. On one hand, state
officials expect tax collections to grow by 4.5 percent, or $940
million, over last year’s estimates, a sign the state economy is
recovering.
On the other hand, costs for indigent health care, homelessness
assistance programs, and other social safety net programs are on
pace to grow by $1.2 billion. Legally required expenses for
pensions, negotiated union contracts, and other fixed costs are set
to go up by another $400 million, he said.
That will mean many state services could either be cut or see no
increases in their budgets to account for inflation, he said.
Gonzalez promised to propose a number of changes to some state
programs in hope of saving money without cutting services. He said
the state will also withdraw money from its rainy day fund, which he
said is now one of the largest in the country. By July, it is
estimated to total about $1.3 billion to $1.4 billion.
“We’re headed in the right direction,’’ Gonzalez said in a phone
interview. “We still have a ways to go to get to a full recovery,
and, from a budget perspective, we still have a very challenging
year.’’
The secretary has been meeting with advocates for various causes in
recent weeks, trying to manage expectations. Many had hoped to have
money restored in areas such as higher education and social
services, funds that were cut during the heart of the economic
downturn.
The Boston Herald
Friday, January 13, 2012
Official: cuts loom, despite bigger tax haul
By Chris Cassidy
Expect painful, “unavoidable” cuts next year as Patrick
administration officials announced a projected budget gap yesterday,
raising the possibility of higher fees and taxes.
The state expects to collect $940 million more in taxes next year,
but that’s not enough to cover built-in expenses such as Medicaid,
pensions and union contracts, said state officials.
State officials framed the news as a sign that the economy is
improving but that Massachusetts is far from recovery.
They would not say for sure whether taxes would have to rise to
cover the budget gap.
“It’s heading in the right direction, but we still have a ways to go
to dig ourselves out of the hole of the recession,” said Jay
Gonzalez, secretary of administration and finance. “We’ve got some
serious budget challenges.”
Gonzalez said cuts to state programs and services next fiscal year
will be “unavoidable” but that state officials will seek “innovative
reforms” to reduce built-in costs.
State Sen. Stephen Brewer, chairman of the Senate Ways & Means
Committee, said the increase in projected tax revenue is good — a
sign of a rebounding economy.
“Although the growth is modest, Massachusetts is faring better than
most other states across the nation,” Brewer said in a statement.
Material from State House News Service was used in this story.
State House News Service
Friday, January 13, 2012
Report: $4.5B in unfunded muni-retiree health liabilities in 10
cities
By Kyle Cheney
Residents in 10 Massachusetts cities are on the hook for a combined
$4.5 billion in unfunded health care benefits for public retirees,
according to a new report, which concludes the average single-family
home would need to pay nearly $13,700 to pay down the liability.
The report by the business-backed Massachusetts Taxpayers Foundation
examined the unfunded health care liabilities in Brockton,
Fitchburg, Haverhill, Holyoke, Lawrence, Lowell, New Bedford,
Pittsfield, Springfield and Worcester. Brockton fared the worst,
with single-family homes on the hook for an average $19,826,
compared to $18,297 for Holyoke and $15,660 for Lawrence.
“Without reforms, over the next 30 years municipalities would be
forced to siphon tens of millions from education, public safety and
other critical services simply to fund the annual costs of retiree
health care, leading to the layoffs of hundreds if not thousands of
municipal employees,” according to the report.
The tax hikes required to address the liabilities without
sacrificing local services often far exceed the limits under
Proposition 2½ but illustrate the “crushing burden” the liabilities
– effectively IOU’s for benefits already earned – are playing on the
fiscal ledgers of the state’s biggest municipalities.
Employers are also at risk, the report found, facing an additional
$70 million in property taxes to help pay their portion of the
retiree health care liability.
“Simply put, the tax increases needed to fund these massive
liabilities would crush these cities and their local economies,”
said Michael Widmer, president of the Massachusetts Taxpayers
Foundation, in a statement accompanying the report.
The report comes as Beacon Hill has squeezed municipal budgets in
recent years with cuts to local aid and other accounts that support
cities and towns. Although a major pension system reform passed last
year was aimed at relieving about $2 billion of municipal pension
costs, in many cases unfunded health are liabilities dwarf pension
obligations.
Widmer called on the Legislature to pass “serious reforms” to “rein
in the costs of these exceedingly generous benefits.” The Taxpayers
Foundation recommends the continued implementation of a plan signed
into law last year that gives city and town managers greater control
over health care costs.
It also recommends that employee health care benefits be tied to
their length of employment, ending a practice of allowing retirees
to obtain full health benefits after just 10 years of public
employment. The report recommends raising the minimum length of
service to 15 or 20 years.
The report also calls on the Legislature to raise the eligibility
age for retiree health care to 60 from 55, to restrict health care
eligibility to workers who work more than 27 hours per week, and to
end coverage for retirees’ dependents.
The Springfield Republican
Tuesday, July 19, 2011
Massachusetts brings in $723 million more in taxes than projected
By Dan Ring
Tax collections for the recent fiscal year in Massachusetts rose
$723 million more than projected and nearly $2 billion more than the
prior year, reflecting a “noticeably stronger” economy and most
likely assuring a sales tax holiday in August, the state Department
of Revenue and a top legislator said.
The robust collections could also mean that people will receive a
small cut in the state income tax in January, in what would be the
first cut in the income tax in a decade.
Revenue Commissioner Navjeet K. Bal said that the state collected
$20.5 billion in taxes for the fiscal year that ended June 30, an
increase of more than $1.9 billion or 10.6 percent from the prior
year and $723 million more than projections.
“The increase of nearly $2 billion in collections reflects a
Massachusetts economy that grew noticeably stronger over the past 12
months,” Bal said in a statement.
The total was close to the $20.8 billion received for the fiscal
year that ended in June 2008, the most-ever taxes collected by the
state, said a spokesman for the revenue department. Tax collections
plunged by about $2.5 billion the following year during the
recession.
Senate President Therese Murray signaled on Monday that a sales tax
holiday would be likely. “Yes we did talk about that. I think
there’s mostly a consensus that that’s what we might like to do,”
Murray said after a meeting with Gov. Deval L. Patrick and House
Speaker Robert A. DeLeo.
As they have in past recent years, legislators are expected to
approve a bill for a weekend in August to exempt the 6.25 percent
sales tax from most items worth $2,500 or less. It would be the
seventh sales tax holiday in the past eight years, with an absence
in only 2009, the year the governor and legislators raised the sales
tax from 5 percent to 6.25 percent.
Tax collections for June totaled $2.142 billion, or $48 million more
than projected and an increase of $106 million, or 5.2 percent from
June of last year, the revenue department said.
The state secretary for administration and finance and top
legislators agree each year on a projection for tax collections for
the next fiscal year. Officials recently had projected $19.784
billion in revenue collections for the fiscal 2011 year ending June
30.
Personal income tax collections for the fiscal year were $11.576
billion, an increase of $1.466 billion, or 14.5 percent and $650
million more than expected.
Receipts from the sales tax totaled $4.905 billion, up $293 million,
or 6.4 percent, meeting projections.
Estimated income tax payments, which include capital gains from the
sale of stock and a tax on stock dividends, were $1.857 billion, up
25 percent, or $373 million, and $166 million more than projected.
Paul Bachman, director of research for The Beacon Hill Institute at
Suffolk University in Boston, said the surging tax collections were
spurred by a rally in the stock market last year and a state economy
that is growing faster than the national economy.
Bachman said taxes from the stock market can be volatile. “When
revenues are cratering, it’s usually because the stock market is
cratering,” he said. The strong growth in tax revenues could also
trigger a minuscule cut in the state income tax in January.
Under a 2002 state law, the state’s 5.3 percent personal income tax
will likely drop to 5.25 percent on Jan. 1, said Michael J. Widmer,
president of the Massachusetts Taxpayers Foundation.
In 2002, legislators froze the state income tax at 5.3 percent as
part of a law to help close a deficit in the state budget. At the
same time, legislators established a schedule for the income tax to
gradually be lowered to 5 percent. But the incremental cuts would
only be triggered if there was enough economic growth each year. If
the income tax does drop next year by 0.05 percent, it will mark the
first cut in the tax since it fell to 5.3 percent on Jan. 1, 2002.
There will likely be no shortage of ideas on how to spend the extra
tax revenues from the last fiscal year, but a good portion -
possibly $200 to $300 million - will likely be deposited into a
rainy day fund, Widmer said.
Jay Gonzalez, secretary of administration and finance, said a
“significant portion” of the fiscal 2011 surplus should be deposited
into that fund, because a hefty portion of the surplus tax revenues
came from capital gains and might not recur.
Commonwealth of Massachusetts
Department of Revenue
News Release
Tuesday, July 19, 2011
June Revenue Collections Total $2.142 Billion
June collections exceed monthly benchmark by $48 million; full year
collection exceeds FY11 revised estimate by $723 million and is
almost $2 billion more than a year ago.
Revenue Commissioner Navjeet K. Bal today announced that preliminary
revenue collections for June 2011 were $2.142 billion, an increase
of $106 million, or 5.2% from June 2010, $48 million above the
monthly benchmark. Preliminary revenues for all of FY11 were $20.507
billion, an increase of $1.963 billion or 10.6 percent from FY10
collections, $723 million above benchmark.
"The FY11 performance drew on an underlying sound economy that
generated year-to-year increases in withholding, sales and corporate
taxes, as well as an infusion of revenue from income tax on
investment income," Bal said. "The increase of nearly $2 billion in
collections reflects a Massachusetts economy that grew noticeably
stronger over the past 12 months."
Income tax collections for June were $1.117 billion, up $97 million
or 9.5 percent from a year ago, $72 million above benchmark. Income
tax estimated payments of $399 million were up $88 million or 28.2
percent from a year ago, $97 million above benchmark. Withholding
tax collections of $746 million were up $20 million or 2.8 percent
above a year ago, $18 million below benchmark.
June sales and use tax collections of $423 million were down $1
million or 0.3 percent from June 2010.
June corporate and business tax collections of $436 million were up
$18 million or 4.2 percent from a year ago and were $29 million
below the monthly benchmark.
For FY11 as a whole, personal income tax collection totaled $11.576
billion, an increase of $1.466 billion or 14.5 percent, $650 million
above benchmark, Withholding grew $574 million or 6.5 percent, $63
million above benchmark, while income tax estimated payments of
$1.857 billion, (which include revenue from capital gains, dividends
and interest) increased $373 million or 25.1 percent and was $166
million over benchmark. Refunds of $1.405 billion were down $101
million or 6.7 percent, and were $10 million below benchmark. Income
tax payments with returns and bills of $1.693 billion grew $432
million or 34.2 percent, $420 million above benchmark, with most
attributable to nonwithholding revenue growth.
FY11 sales tax receipts totaled $4.905 billion, up $293 million, or
6.4 percent, meeting benchmark. Regular sales tax totaled $3.477
billion, up $194 million, or 5.9 percent, $1 million below the full
year estimate; meals tax totaled $813 million, up $54 million, or
7.1 percent, at benchmark; and motor vehicle sales tax totaled $615
million, up $45 million, or 7.9 percent, also at benchmark.
FY11 full year corporate and business tax collections totaled $2.228
billion, up $108 million, or 5.1 percent, $3 million below the full
year estimate. Combined reporting has shifted the tax reporting of
some utilities and financial institutions into the corporate tax
type, with the result that many utilities and financial institutions
now do not pay the financial institutions excise tax or the public
utilities excise tax, but instead pay as corporate taxpayers.
Corporate excise tax collections totaled $1.951 billion, up $351
million or 21.9 percent from last year, $123 million above the full
year estimate; while insurance premiums taxes totaled $296 million,
up$11 million or 3.8% from last year, $8 million below the full year
estimate.
The State House News Service
Friday, January 6, 2011
Weekly Roundup – All's Fare
Recap and analysis of the week in state government
By Kyle Cheney
And so 2012 began on the Hill, not with the doe-eyed promise of
renewal that a New Year brings, but with the hulking tendrils of the
MBTA’s budget woes gripping the jugular of Bay State workers,
threatening to cast thousands off the T and onto the roads, scraping
the lining of commuters’ wallets, and, in some cases, eliminating
residents’ only route to work.
“It's a question really of how much hurt that we're going to put on
’em. But it's going to hurt,” Department of Transportation chairman
John Jenkins told the News Service on Wednesday.
What one well-known commuter once described as the “enabling network
of our economy,” the state’s system of public transit may slap
riders with a fare hike that could price out the low-income users
and reverse months of record ridership on the subways, buses and
commuter rail.
Fare hike and service cut scenarios that ranged from stark to
draconian were unveiled by T officials this week with a muted
response by the governor and Legislature. Transportation Secretary
Richard Davey assured reporters that Gov. Deval Patrick is unhappy
with any move to dissuade commuters from choosing public transit
options, but neither he nor legislative leaders offered an
alternative solution to an issue with potentially radioactive
electoral implications.
Without declaring it, state officials essentially said the “reform
before revenue” era, a misnomer since the 2009 reform law was
accompanied by new revenues from a sales tax hike, is over. Reform
and more revenue may be apropos. To some, the era never began.
“Looks like I was right all along when I said reform without revenue
was meaningless – here we are again, thanks in large part to the
legislature failing to adopt the 19 cent gas tax increase and $2
parking fee at Logan airport that the governor and I proposed in
2009, a substantial portion of which would have been dedicated to
the MBTA” – that’s former Patrick administration Transportation
Secretary James Aloisi....
Legislators awoke from a seven-week slumber Wednesday, rubbing the
grit from their eyes and declaring with ceremonial swagger, that
they are ready to return to do the people’s business. The branches
then immediately adjourned for the week, slamming the chamber doors
and clearing the capitol just in time to dodge a haymaker of
judicial proportions.
From the belly of the John Adams Courthouse, six justices of the
Supreme Judicial Court delivered an unrestrained broadside to the
legislative branch, labeling lawmakers – the defenders of gay
marriage, the protectors of transgender residents – “invidious”
discriminators, illegally blocking access to subsidized health care
for low-income immigrants.
In a bluntly worded, unanimous ruling by Weld/Cellucci-era judge
Robert Cordy, the court laid waste to an already-fragile compromise
between the Patrick administration and the Legislature, striking
down a program intended to corral 30,000 low-income, legal
immigrants into scaled-back health coverage, if only to spare the
state a $90 million budget expense.
The Supreme Judicial Court ruled Thursday that the program, hatched
in fiscal desperation by lawmakers in 2009, after Patrick refused to
eliminate health coverage for the immigrants altogether, violated
the equal protection clause of the Massachusetts Constitution.
“We recognize that our decision will impose a significant financial
burden on the Commonwealth,” Cordy wrote. “If the plaintiffs' right
to equal protection of the laws has been violated by the enactment
of [the law], then it is our duty to say so.”
The decision immediately blew an estimated $150 million hole in the
annual budget, hitting taxpayers with costs tied to a 2006 health
care law program for a population that the federal government
refuses to support, at least until provisions of a federal health
care law take effect in 2014.
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
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