Tax collections soared 15% last fiscal year
Photo | Flickr | Ajay Suresh
The Massachusetts State House
Beacon Hill is awash with your old cash.
Over the last year, Massachusetts state government collected more than $5 billion more from residents, workers and businesses than it was expecting, a surge in tax receipts that should give lawmakers a massive surplus to spend at the same time that they are considering how to use billions of dollars that the federal government has provided in connection with the pandemic and economic recovery from it.
The Department of Revenue on Tuesday evening reported that final tax collections for fiscal year 2021 totaled $34.137 billion, $5.047 billion or 17.3 percent above the state's benchmark and $4.528 billion or 15.3 percent more than the actual amount collected in fiscal year 2020.
"Fiscal Year 2021 revenue collections reflect the impact of the ongoing economic recovery, federal fiscal and monetary policies, and the financial markets' performance," Revenue Commissioner Geoffrey Snyder said.
The year-end numbers mean the Legislature and Gov. Charlie Baker will have a sizeable fiscal 2021 surplus to dispense with, though the exact amount of surplus cash is still to be determined. DOR said it expects to make some "year-end" adjustments to fiscal 2021 collections during the month of August. Fiscal 2021 ended June 30.
Through May, the state had already collected $3.9 billion more than projected over the first 11 months of fiscal 2021, and midway through June the Department of Revenue reported having already collected 80 percent of what was expected for the full month.
By the end of June, DOR said it had collected $3.687 billion for the month -- $1.11 billion or 43.1 percent more than what the agency had been expecting to bring in. The June haul capped off a fiscal year during which collections rose more than 15 percent from the $29.596 billion collected in fiscal year 2020.
Total fiscal 2021 tax revenue nearly hit the mark that lawmakers and the Baker administration have set for the current budget year. State tax collections will need to grow by less than 1 percent in fiscal 2022 to hit the revenue estimate of $34.35 billion that lawmakers included in the budget that Baker signed last month.
DOR said Tuesday that it had certified $2.5326 billion in fiscal 2021 capital gains collections, which generates a $1.098 billion transfer to the stabilization fund, a $61 million deposit into the State Retiree Benefits Trust Fund and a $61 million contribution to the Pension Liability Fund.
DOR said Tuesday that Comptroller William McNamara has already transferred $946.5 million to those funds, meaning that the year-end numbers will necessitate additional transfers of $273.7 million.
In late June, the Massachusetts Taxpayers Foundation published a seven-page analysis that projected the state could wind up with a discretionary surplus from fiscal 2021 of between $1.13 billion and $1.48 billion after accounting for an automatic deposit of up to $1.56 billion in reserves from capital gains collections and $800 million in projected balances to end the fiscal year.
Gov. Charlie Baker had proposed to use $900 million of the expected surplus on a two-month sales tax holiday, but that idea was shot down by top Democrats and died without a vote in the House or Senate. In addition to the surplus money the government collected from taxpayers, Massachusetts lawmakers also have about $4.8 billion in American Rescue Plan Act money that needs to be allocated by 2024. The Legislature's public hearing process on how to use that money is expected to resume once lawmakers return from their summer recess.
The first indication of how fiscal year 2022 tax collections are shaping up is expected to come Wednesday when DOR is due to report July receipts.
After agreeing in January to an estimate of $30.12 billion in taxes, lawmakers and the administration agreed in the budget signed last month to increase the tax revenue projections for fiscal 2022 to $34.35 billion, a $4.23 billion increase.
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