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Officials say state revenues improving

  • FILE - In this Wednesday, Jan. 25, 2017, file photo, Massachusetts Republican Gov. Charlie Baker takes questions from members of the media during a news conference at the Statehouse in Boston. Baker and Boston Mayor Martin J. Walsh have announced a tuition-free college program. (AP Photo/Steven Senne, File) Steven Senne



Associated Press
Wednesday, December 06, 2017

BOSTON — The state’s financial picture appeared to be stabilizing after several years of revenue shortfalls that forced cuts in spending, state officials and economists said Wednesday.

Tax collections through the first five months of the current fiscal year were running nearly 5 percent higher than a year ago, while exceeding official benchmarks by more than $200 million, according to the Massachusetts Department of Revenue.

Revenue Commissioner Christopher Harding told a joint hearing of the House and Senate Ways and Means Committees that he expects the generally positive trend to continue into the next fiscal year, with tax collections expected to grow about 3.4 percent over the current year.

“Today we see that overall revenue growth has somewhat stabilized and is in line with underlying recent moderate economic growth,” said Harding.

The annual consensus revenue hearing on Wednesday is the first step in a lengthy process of assembling the state budget. Republican Gov. Charlie Baker and the Democratic-controlled Legislature will seek to forge an agreement on a revenue forecast that will shape the level of spending in the fiscal year starting July 1.

The forecasts have missed the mark in each of the last three fiscal years, forcing the governor and lawmakers into what some have called “painful” cuts in the state’s approximately $40 billion budget. This year’s original revenue projection was revised downward by $733 million.

Analysts cited overall strong economic growth in Massachusetts and low unemployment as driving fiscal improvement. But they also pointed to a number of uncertainties, including potential impacts from a proposed federal tax overhaul making its way through Congress.

“Forecasting state tax revenues 18 months into the future is always risky as unforeseen events often undermine predictions as the past three years have shown,” the Massachusetts Taxpayers Foundation said in a statement.

The nonpartisan fiscal research group offered a more conservative estimate of 2.8 percent growth in state tax collections next year.

Harding said revenue growth should be sufficient to trigger an automatic reduction in the state income tax from 5.1 percent to 5.05 percent on Jan. 1, 2019.

He also testified the state would likely take in between $44 million and $82 million in marijuana taxes if retail pot shops begin opening as scheduled in mid-2018. Those estimates, however, were not included in the overall revenue projections.