Tax revenues expected to grow by 3.5 percent next year
Heffernan revises tax forecast up by $700m in current year
TAX REVENUES IN Massachusetts are coming in higher than anticipated this year – and are expected to grow by 3.5 percent next year, the state’s top budget-writers said Friday.
Despite the pandemic-induced recession, state tax revenues have been consistently coming in higher this year than state budget officials had expected. A big part of this is likely the enhanced unemployment benefits that the federal government provided, which are taxable. On Friday, Secretary of Administration and Finance Michael Heffernan officially revised the expected revenues for fiscal 2021, which runs through June, up by $700 million, to $29.09 billion.
For next year, Heffernan and the chairs of the Ways and Means committees – Sen. Michael Rodrigues and Rep. Aaron Michlewitz – estimated that the state will raise $30.12 billion in taxes, or 3.5 percent more than this year.
The so-called “consensus revenue estimate” is required by law and will form the basis for crafting the fiscal 2022 budget.
Economists also note that there is a lot of uncertainty inherent in predicting the state’s fiscal situation next year, since a lot depends on how soon the pandemic subsides and the economy can reopen. It also depends on whether Congress and President-elect Joe Biden pass a new stimulus bill and how much money that sends to Massachusetts.
“The consensus revenue forecast for Fiscal Year 2022 is consistent with the expert testimony offered in December and importantly accounts for updated revenue trends in the current fiscal year,” Heffernan said in a statement.Michlewitz said the revenue forecast is “a modest and responsible forecast that will allow the Commonwealth to continue to provide the services our constituents deserve, while at the same time preserving our fiscal health.”
Rodrigues said as lawmakers develop next year’s budget, “We will continue to closely monitor tax collections, weigh the fiscal implications of COVID-19, and strive to put forward a budget that maintains fiscal responsibility and protects core essential services for our most vulnerable populations, while building an equitable economic recovery for all.”