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Local Aid and Finance State revenue worries continue
The state’s December tax revenue report, released yesterday, continues a trend of troubling fiscal news as the recession makes its presence felt in Massachusetts.
The Department of Revenue announced that state tax collections for the first six months of the fiscal year totaled slightly more than a revised benchmark set on Oct. 15, but only because of one-time business tax settlements. Without the settlement payments, collections would have fallen short of the target by almost $150 million.
The December tax report is yet another indication that a steadily worsening economy may require another big revision in the fiscal 2009 tax forecast sometime in early 2009 and another round of state budget cuts.
The January tax report, due early next month, “will begin to tell the story on capital gains tax collections for this fiscal year,” said Revenue Commissioner Navjeet Bal.
The forecast for the volatile capital gains part of the personal income tax was cut by 30 percent in October, and financial experts are warning that it could fall significantly further.
Capital gains taxes totaled $2.11 billion last year.
At the mid-year mark, all the major state tax categories were showing weakness. Total personal income tax collections year-to-date were up slightly, by $36 million (less than 1 percent), but December 2008 collections were down 8 percent compared to December 2007.
Sales tax collections for the six-month period were down by $77 million (almost 4 percent), and corporate and business taxes were down almost $200 million (after taking out one-time settlement payments).
Tax collections through mid-year totaled $9.06 billion, a reduction of $68 million (almost 1 percent) compared to the first six months of fiscal 2008, but $24 million higher than the benchmark. When settlement payments are subtracted, total taxes year-to-date fall $145 million short of the benchmark.
The original tax forecast for fiscal 2009 of $21.4 billion, set last spring when the budget for the year was adopted, was revised downward in October when collections started to falter as it became apparent that the state was heading into a significant recession. The October forecast of $20.3 billion – $1.1 billion lower than the original – assumes that total collections will drop by $586 million (2.8 percent) from what was collected in fiscal 2008.
Revenue Commissioner Bal and economist Alan Clayton-Matthews will talk about the economy, state finances and tax collections at a workshop to be held during the MMA’s Annual Meeting & Trade Show Jan. 23-24.
• More Annual Meeting workshop information
Local Aid and Finance State revenue worries continue
State revenue worries continue
The state’s December tax revenue report, released yesterday, continues a trend of troubling fiscal news as the recession makes its presence felt in Massachusetts.
The Department of Revenue announced that state tax collections for the first six months of the fiscal year totaled slightly more than a revised benchmark set on Oct. 15, but only because of one-time business tax settlements. Without the settlement payments, collections would have fallen short of the target by almost $150 million.
The December tax report is yet another indication that a steadily worsening economy may require another big revision in the fiscal 2009 tax forecast sometime in early 2009 and another round of state budget cuts.
The January tax report, due early next month, “will begin to tell the story on capital gains tax collections for this fiscal year,” said Revenue Commissioner Navjeet Bal.
The forecast for the volatile capital gains part of the personal income tax was cut by 30 percent in October, and financial experts are warning that it could fall significantly further.
Capital gains taxes totaled $2.11 billion last year.
At the mid-year mark, all the major state tax categories were showing weakness. Total personal income tax collections year-to-date were up slightly, by $36 million (less than 1 percent), but December 2008 collections were down 8 percent compared to December 2007.
Sales tax collections for the six-month period were down by $77 million (almost 4 percent), and corporate and business taxes were down almost $200 million (after taking out one-time settlement payments).
Tax collections through mid-year totaled $9.06 billion, a reduction of $68 million (almost 1 percent) compared to the first six months of fiscal 2008, but $24 million higher than the benchmark. When settlement payments are subtracted, total taxes year-to-date fall $145 million short of the benchmark.
The original tax forecast for fiscal 2009 of $21.4 billion, set last spring when the budget for the year was adopted, was revised downward in October when collections started to falter as it became apparent that the state was heading into a significant recession. The October forecast of $20.3 billion – $1.1 billion lower than the original – assumes that total collections will drop by $586 million (2.8 percent) from what was collected in fiscal 2008.
Revenue Commissioner Bal and economist Alan Clayton-Matthews will talk about the economy, state finances and tax collections at a workshop to be held during the MMA’s Annual Meeting & Trade Show Jan. 23-24.
• More Annual Meeting workshop information
Written by MMA Legislative Director John Robertson
