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Our members are the local governments of Massachusetts and their elected and appointed leadership.
At the annual consensus revenue hearing at the State House on Dec. 11, the state’s budget writers heard from the revenue commissioner, economists and other invited fiscal experts that the economy is expected to pick up a bit next year from the current slump, with state tax collections forecast to grow as well.
Commissioner Amy Pitter told the panel that the Department of Revenue’s most recent analysis showed tax collections for fiscal 2013 coming in pretty much at the new lower forecast, which was revised downward in December by $515 million. With the economy expected to grow slightly in fiscal 2014, the DOR forecasts that tax collections will grow by roughly 3.9 percent next fiscal year. This would provide about $833 million in tax revenue above the revised fiscal 2013 tax revenue base.
The governor’s chief budget officer, Administration and Finance Secretary Jay Gonzalez, announced at the hearing that the state had reached an agreement with Amazon.com for the online retailer to begin collecting the sales tax on Nov. 1, due to the company’s physical presence in the Bay State. Based on available information, Pitter testified, collections would be in the “lower tens of millions of dollars.” This expected revenue was not included in the DOR forecast for fiscal 2014, she said.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, told panel members that the MTF forecasts tax collections to grow by $835 million next year, or 3.9 percent, to $22.37 billion.
“While fiscal 2014 shows an improving revenue picture, we are still a long way from experiencing the level of revenue growth of prior economic recoveries,” he said. A report that accompanied Widmer’s testimony states that the forecast assumes an “orderly resolution to the ‘fiscal cliff’” that avoids much of the programmed cuts to defense and discretionary spending. Absent a resolution, tax collections could be “negatively impacted by $300 million in fiscal 2013 and $1 billion in fiscal 2014.”
The governor’s budget staff and legislative budget leaders are expected to reach agreement soon on a tax projection for fiscal 2014, a key number that will be used in the governor’s state budget recommendation (House 1), due to be filed by Jan. 23, and in the House and Senate budget committee recommendations, due out in April and May, respectively.
The revenue hearing was chaired by Gonzalez, House Ways and Means Committee Chair Brian Dempsey and Senate Ways and Means Committee Chair Stephen Brewer. (Gonzalez will be leaving his post in January.)