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Local Aid and Finance Drop in tax collections heralds retrenchment
With tax collections through the first quarter of the fiscal year falling $143 million below target, Gov. Deval Patrick today outlined a plan to cut state spending and implement cost-savings in order to keep the budget in balance.
The governor’s plan does not include cuts to the main municipal and school aid accounts in the fiscal 2009 state budget. According to the State House News Service, the governor characterized cutting local aid as a “last resort.”
Tax collections through the end of September totaled $4.79 billion, an increase of less than 1 percent over the fiscal 2008 amount and $143 million short of the three-month benchmark.
The first quarter numbers showed weakness across the board. Total income tax collections fell $53 million short of the target, including an $84 million shortfall in the important income withholding category. Estimated income tax payments grew only slightly over last year, to $555 million.
State Revenue Commissioner Navjeet Bal warned that “given current national and regional economic conditions, it is expected that estimated payments, and, in particular, capital gains collections, will decline over the course of the fiscal year as taxpayers adjust those quarterly payments to reflect less income realized from capital gains and other sources of dividend and interest income.”
Sales tax collections were $75 million below target. Business taxes were up slightly for the first quarter, but only because of a one-time payment received in July.
The governor’s Fiscal Action Plan calls for spending cuts in Executive Branch agencies, as allowed by state law, and voluntary cuts in legislative and judiciary accounts. The governor also seeks reforms to the operation of state government, including “dismantling the Turnpike Authority,” consolidating state agencies, pension system reform, and health care cost containment.
• Link to governor’s Fiscal Action Plan Web site
Local Aid and Finance Drop in tax collections heralds retrenchment
Drop in tax collections heralds retrenchment
With tax collections through the first quarter of the fiscal year falling $143 million below target, Gov. Deval Patrick today outlined a plan to cut state spending and implement cost-savings in order to keep the budget in balance.
The governor’s plan does not include cuts to the main municipal and school aid accounts in the fiscal 2009 state budget. According to the State House News Service, the governor characterized cutting local aid as a “last resort.”
Tax collections through the end of September totaled $4.79 billion, an increase of less than 1 percent over the fiscal 2008 amount and $143 million short of the three-month benchmark.
The first quarter numbers showed weakness across the board. Total income tax collections fell $53 million short of the target, including an $84 million shortfall in the important income withholding category. Estimated income tax payments grew only slightly over last year, to $555 million.
State Revenue Commissioner Navjeet Bal warned that “given current national and regional economic conditions, it is expected that estimated payments, and, in particular, capital gains collections, will decline over the course of the fiscal year as taxpayers adjust those quarterly payments to reflect less income realized from capital gains and other sources of dividend and interest income.”
Sales tax collections were $75 million below target. Business taxes were up slightly for the first quarter, but only because of a one-time payment received in July.
The governor’s Fiscal Action Plan calls for spending cuts in Executive Branch agencies, as allowed by state law, and voluntary cuts in legislative and judiciary accounts. The governor also seeks reforms to the operation of state government, including “dismantling the Turnpike Authority,” consolidating state agencies, pension system reform, and health care cost containment.
• Link to governor’s Fiscal Action Plan Web site
Written by MMA Legislative Director John Robertson
