EXPERTS SEE RISING TAX COLLECTIONS, CONTINUED ECONOMIC GROWTH
By Michael Norton and Matt Murphy
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, DEC. 11, 2013.....State tax collections this fiscal year could grow by as much as 4.8 percent, up from the 3 percent growth rate used by lawmakers and the Patrick administration when they built the $34 billion fiscal 2014 budget, according to an updated Department of Revenue estimate.
In testimony prepared for lawmakers who are starting fiscal 2015 budget deliberations, DOR Commissioner Amy Pitter concluded fiscal 2014 collections may surpass original estimates by between $272 million and $383 million. Administration officials have previously warned that non-tax revenues might miss targets by $150 million.
Tax revenue growth in fiscal 2015 will accelerate to between 4.3 percent and 5.2 percent, according to Pitter's testimony. Improved economic fundamentals, including the housing market, and investments decisions earlier this year in response to federal tax law changes had caused tax collections to improve "significantly" in fiscal 2013 and over the first five months of fiscal 2014, Pitter reported.
The Beacon Hill Institute at Suffolk University on Wednesday predicted fiscal 2014 state tax collections will grow 5.3 percent and tax receipts in fiscal 2015 will surge by 7.9 percent, driven by growth in personal income.
"Both the U.S. and Massachusetts economies have survived the fiscal cliff and the government shutdown," institute director David Tuerck said in a statement. "There is uncertainty at the federal level over the effects of Dodd/Frank, the Affordable Care Act, and eventual tapering of federal reserve policy. But the continued capacity of Massachusetts to outperform the rest of the country bodes well for strong revenue growth."
Under Pitter's forecast, the Legislature and the Patrick administration would have $993 million to $1.2 billion in new tax collections available for spending next fiscal year.
In a presentation he is delivering this week, Administration and Finance Secretary Glen Shor, the governor's point person on budget matters, notes that half the roughly $34 billion budget is consumed by spending on subsidized health care (35 percent) and local aid and education aid (15 percent). About 75 percent of the state budget supports health care, human services and education alone, with another 12 percent allocated for fixed debt service and pension costs. That leaves 13 percent of revenue for all other purposes, including transportation, public safety, housing, labor programs, environmental protection and economic development.
In the presentation, state budget officials also note one-time revenues totaled $752 million in the fiscal 2014 budget, down from $903 million in fiscal 2013.
