DESPITE ALL THE gloom and doom among budget officials on Beacon Hill, Massachusetts tax collections continue to roll along surprisingly well.
The state Department of Revenue said on Monday that tax revenues in September were down 1.4 percent compared to the same month last year, but overall through the first three months of fiscal 2021 revenues were up 1 percent to $7.27 billion.
In a cryptic press release, the Department of Revenue said income taxes withheld from paychecks and meals taxes were down, while sales taxes, motor vehicle sales taxes, and corporate and business taxes were up. The press release said September typically accounts for 10 percent of the state’s annual revenue, although it cautioned that the numbers this September were probably lower than usual because the due date for payments of certain sales, meals, and room occupancy taxes had been put off until May.
The growth in tax revenue during the first quarter of the year is fairly amazing, given the coronavirus pandemic, the shutdown of much of the state and national economy, and the resulting high unemployment.
The new numbers set an interesting stage for state officials and economists, who are expected to gather via Zoom on Wednesday to develop a consensus revenue forecast for the remainder of the fiscal year. The House and Senate will then get to work on a budget for the year, close to four months after the start of the fiscal year. (The state has been operating under a temporary budget using roughly the same level of spending as last year.)
House and Senate lawmakers have been projecting a budget shortfall of $4 billion to $6 billion this fiscal year. House Speaker Robert DeLeo was the latest state leader to make that forecast, urging Democrats and Republicans in Washington to come together and pass another stimulus package.
“Without the assistance from Washington, which hasn’t been forthcoming so far, we’re very concerned,” DeLeo said.
Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.
About Bruce Mohl
Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.
What none of the state leaders has fully explained is how the shortfall projection can be so high if revenue numbers are keeping pace with last year. The possible answer: Either the revenue numbers are surprising everyone, or spending during the pandemic is running far above what it was last year.
Gov. Charlie Baker has provided the most detailed explanation so far, saying he expects the state to “work our way through” the current fiscal year, presumably by tapping some of the state’s $3.5 billion rainy day fund. Baker has warned that fiscal 2022, which doesn’t start until July 2021, will be the real problem. He has said more funding from Washington will be needed if the state is to weather shortfalls expected then.
