STATE HOUSE NEWS SERVICE

NOW PARTWAY into the second quarter of a fiscal year that budget managers expect will generate between 4 percent and 12 percent less tax revenue for the state than the last, collections are still running more than 1 percent ahead of their fiscal year 2020 pace, the Department of Revenue said Wednesday.

DOR collected $2.089 billion from Massachusetts taxpayers in October, $62 million, or 3.1 percent, more than what was collected in October 2019, the agency said. October’s tax haul is among the smallest of the calendar year and DOR said the month typically generates about 6.5 percent of the state’s annual revenue.

“October revenue was driven mostly by increases in withholding, non-withheld income tax, and regular sales tax. These increases were partly offset by decreases in meals tax, and ‘All Other’ tax,” Revenue Commissioner Geoffrey Snyder said. “An increase in individual return payments, combined with a decrease in refunds, resulted in growth in non-withheld income tax in October. The moderate withholding increase reflects unemployment insurance benefits, one-time events, and timing factors.”

Through four months of fiscal year 2021, state tax collections of $9.347 billion are trending $118 million or 1.3 percent ahead of receipts during the same period of time during fiscal 2020, DOR said.

But by the end of June 2021, Snyder and DOR expect tax revenues will land somewhere between $25.918 billion and $28.387 billion — which would be between $2.76 billion and $5.23 billion below the assumption agreed to before the pandemic upended the economy and a drop from final fiscal year 2020 collections of $29.596 billion.

Gov. Charlie Baker’s revised fiscal 2021 budget counts on $27.6 billion in tax collections this fiscal year. The House Ways and Means Committee on Thursday plans to unveil its version of the governor’s budget.

At a budget hearing last month, Michael Goodman from UMass Dartmouth’s Department of Public Policy said the increase in year-to-date revenues has been “driven by unemployment insurance benefits and the taxable nature of them.” –