Consensus on Fiscal Year 2013 Revenue Forecast Announced

BOSTON – Thursday, January 12, 2012 – Secretary of Administration and Finance Jay Gonzalez, Senator Stephen M. Brewer, chairman of the Senate Committee on Ways and Means and Representative Brian S. Dempsey, chairman of the House Committee on Ways and Means today announced consensus on the Fiscal Year 2013 tax revenue forecast.

The joint tax revenue number agreed to by Secretary Gonzalez and the House and Senate Committees on Ways and Means is $21.950 billion for Fiscal Year 2013. Of this amount, $1.1 billion is assumed to be generated from taxes on capital gains. Under the new statutory fiscal policy, $100 million of this capital gains tax revenue will be required to be deposited into the Stabilization Fund and will not be available for budgetary purposes.

The figure was arrived at after the parties received testimony at the December consensus revenue hearing, at which the Department of Revenue, economists, budget watchdog groups and other participants provided information regarding Massachusetts’ economy and fiscal outlook. Following the hearing, the Secretary and budget committee chairs worked together to produce a reasonable and informed forecast for next fiscal year’s revenues.

The consensus tax revenue estimate for Fiscal Year 2013 is in the middle of the range of tax revenue growth estimates projected by economists and others at the December hearing. The $21.950 billion estimate reflects actual growth of 4.5 percent above the revised tax revenue estimate of $21.010 billion for FY12.

“The projected growth in tax revenues for Fiscal Year 2013 is good news, but it will not be sufficient to cover the growth in health care, safety net and certain fixed costs,” said Secretary Gonzalez. “We will continue to pursue innovative reforms to deliver state services more efficiently, but further reductions in programs and services in Fiscal Year 2013 will be unavoidable.”

“The consensus tax revenue figure we are releasing today is a positive sign for Massachusetts,” said Senator Brewer. “Although the growth is modest, Massachusetts is faring better than most other states across the nation. As we begin to budget for fiscal year 2013, cuts will be necessary; however, we will continue our commitment to cautious spending to find a balanced approach of cuts and revenues that best serves the citizens of the Commonwealth.”

“This consensus revenue figure represents moderate growth in baseline tax revenues based on historical trends, year to date collections, and the forecasts we received at the consensus revenue hearing in December,” said Representative Dempsey. "This estimate is subject to many obstacles including the uncertain pace of our national recovery and European economic instability. As a state, our budget will have to reconcile this moderate growth forecast with increases in entitlement program spending, new healthcare coverage mandates and vital services to millions of people across the Commonwealth.”

The Administration, Senate and House also today reached an agreement on statutorily required off-budget transfers that are mandated in current law:

$786.8 million for the Massachusetts Bay Transportation Authority (MBTA)

$689.4 million for  the School Building Assistance (SBA)

$1.552 billion for the pension fund transfer, which represents full funding of the scheduled pension contribution for Fiscal Year 2013

$20.2 million for the Workforce Training Fund, which was changed to a non-budgetary trust fund in the Fiscal Year 2012 General Appropriations Act (GAA) 

The total amount of off-budget transfers is $3.05 billion. Therefore, after taking into account the $100 million of capital gains tax revenue that must be deposited in the Stabilization Fund, the Secretary and committees agree that $18.801 billion will be the maximum amount of tax revenue available for the GAA in Fiscal Year 2013, and they will base their respective budget recommendations on that number.

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Posted: Thu, Jan 12, 2012
Updated Thu, Jan 12, 2012