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Local Aid and Finance State revenue outlook for FY11 improves
The economic decline has likely ended in Massachusetts, and the state can expect tax collections to grow next year as a slow recovery takes hold.
This was the consensus of economists and other fiscal experts who spoke on Dec. 16 at a state revenue hearing attended by the chief budget officers from the governor’s office and the Legislature.
The global recession that began in 2007 has been the main cause of a two-year decline in state tax collections that is expected to reach $2.6 billion, or 12.5 percent, by the end of fiscal 2010.
State revenue commissioner Navjeet Bal reported that state tax revenues for fiscal 2011 are expected to fall within a range from $18.53 billion to $19.34 billion; the midpoint of this range would represent an increase of $487 million (2.6 percent).
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said his organization is forecasting tax collections next year at $18.95 billion.
“The beginning of an economic recovery in Massachusetts will produce growth in baseline tax revenues of $524 million, or 3 percent, in fiscal 2011,” Widmer said in written testimony. “In addition, a full year of the sales tax increase (compared to 10 months in 2010) will generate another $150 million in 2011.”
Widmer also told panel members, however, that “even with this revenue growth, the state faces an estimated $3 billion structural deficit in fiscal 2011. Balancing the 2011 budget will require significant cuts across all of state government.”
The MTF’s forecast for fiscal 2010 is lower than the Department of Revenue’s.
The annual revenue hearing is intended to provide state budget leaders with the latest economic and tax forecasts for use in developing a common revenue projection for the coming fiscal year. This projection will be used in the governor’s fiscal 2011 budget bill, due to be filed by Jan. 27, and in the House and Senate budget bills, which will come out in the spring.
The revenue panel was chaired by Administration and Finance Secretary Jay Gonzalez along with Sen. Steven Panagiotakos and Rep. Charles Murphy, the chairs of the Senate and House Ways and Means committees, respectively. The hearing was attended by many Ways and Means committee members from both branches.
The revenue panel also heard some reassuring testimony about fiscal 2010. State tax collections through the end of November were on track to meet a lowered tax forecast for the year that was adopted in mid-October. The new tax forecasts presented at the hearing were consistent with the revised October forecasts.
Panelists also heard that a shortfall in State Lottery sales that was projected earlier in the year might close by the end of fiscal 2010, as the Lottery Commission starts a new multi-state game and the economic recovery helps to boost sales. The Lottery shortfall, originally forecast at $34 million over the summer, had heightened worries about a mid-year cut in municipal aid.
Local Aid and Finance State revenue outlook for FY11 improves
State revenue outlook for FY11 improves
The economic decline has likely ended in Massachusetts, and the state can expect tax collections to grow next year as a slow recovery takes hold.
This was the consensus of economists and other fiscal experts who spoke on Dec. 16 at a state revenue hearing attended by the chief budget officers from the governor’s office and the Legislature.
The global recession that began in 2007 has been the main cause of a two-year decline in state tax collections that is expected to reach $2.6 billion, or 12.5 percent, by the end of fiscal 2010.
State revenue commissioner Navjeet Bal reported that state tax revenues for fiscal 2011 are expected to fall within a range from $18.53 billion to $19.34 billion; the midpoint of this range would represent an increase of $487 million (2.6 percent).
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said his organization is forecasting tax collections next year at $18.95 billion.
“The beginning of an economic recovery in Massachusetts will produce growth in baseline tax revenues of $524 million, or 3 percent, in fiscal 2011,” Widmer said in written testimony. “In addition, a full year of the sales tax increase (compared to 10 months in 2010) will generate another $150 million in 2011.”
Widmer also told panel members, however, that “even with this revenue growth, the state faces an estimated $3 billion structural deficit in fiscal 2011. Balancing the 2011 budget will require significant cuts across all of state government.”
The MTF’s forecast for fiscal 2010 is lower than the Department of Revenue’s.
The annual revenue hearing is intended to provide state budget leaders with the latest economic and tax forecasts for use in developing a common revenue projection for the coming fiscal year. This projection will be used in the governor’s fiscal 2011 budget bill, due to be filed by Jan. 27, and in the House and Senate budget bills, which will come out in the spring.
The revenue panel was chaired by Administration and Finance Secretary Jay Gonzalez along with Sen. Steven Panagiotakos and Rep. Charles Murphy, the chairs of the Senate and House Ways and Means committees, respectively. The hearing was attended by many Ways and Means committee members from both branches.
The revenue panel also heard some reassuring testimony about fiscal 2010. State tax collections through the end of November were on track to meet a lowered tax forecast for the year that was adopted in mid-October. The new tax forecasts presented at the hearing were consistent with the revised October forecasts.
Panelists also heard that a shortfall in State Lottery sales that was projected earlier in the year might close by the end of fiscal 2010, as the Lottery Commission starts a new multi-state game and the economic recovery helps to boost sales. The Lottery shortfall, originally forecast at $34 million over the summer, had heightened worries about a mid-year cut in municipal aid.
Written by MMA Legislative Director John Robertson
