State finances still a work in progress at 1st quarter mark

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Administration and Finance Secretary Michael HeffernanState budget officials got a bit of positive news last month when the Department of Revenue announced that state tax collections through the first quarter of the year were ahead of target by $124 million (about 2 percent).
Led by nearly 6 percent growth in income tax withholding payments, collections through September totaled $6.4 billion, a modest but welcome 2.6 percent increase over the same three-month period last year.
The positive revenue report led Administration and Finance Secretary Michael Heffernan to tell the governor and the chairs of the House and Senate Ways and Means committees that he would not be changing the state’s revenue forecast for fiscal 2018 at the first quarter mark.
State tax collections for fiscal 2018 are expected to reach $26.5 billion, an increase of 3.4 percent over last year. This is lower than the projection used when the budget bill was first developed earlier in the year, but higher than the full-year 1.4 percent revenue increase seen for fiscal 2017.
In his letter, Secretary Heffernan noted that he was not prepared to make an initial estimate for fiscal 2019, as is sometimes done in October, and that updated economic and tax information would be discussed at the annual “consensus” revenue hearing, usually held in December.
The much-reworked $40 billion state spending plan for fiscal 2018 is still taking final shape, as the House and Senate continue into October to override some of the $320 million in spending vetoes made by Gov. Charlie Baker when he signed the budget in July. The House restored funding to all the accounts vetoed by the governor, while the Senate so far has added back $124 million in vetoed funding.