Revenue skid ends as state tax haul beats benchmark
BOSTON >> Despite dire warnings from the Baker administration about overly optimistic tax collection estimates used to build this year's $39.1 billion state budget, the first month of the new fiscal year ended in the black, with receipts beating benchmarks by $7 million, according to revenue officials.
The Department of Revenue announced Wednesday that the state collected more than $1.7 billion in July, or 2.1 percent more than in the same month last year. Income, corporate and business taxes all beat projections for the month, while sales and use taxes and withholding collections missed their mark.
"We are close to benchmark for the first month of Fiscal Year 2017," DOR Commissioner Michael Heffernan said in a statement. "July saw modest growth in income tax revenues and lower than expected growth in overall sales tax revenues. We will watch revenues closely to identify potential trends in our collections."
Tax collections over the last half of fiscal 2016 repeatedly fell shy of benchmarks - the last time revenues beat the monthly benchmark was in March - and the July haul starts state government off on a good foot on the revenue front. On the spending side, the Massachusetts Taxpayers Foundation on Wednesday estimated a $240 million gap in the new budget, largely due to spending veto overrides in late July.
Total tax collections in fiscal 2016 of $25.267 billion were up by $550 million or 2.2 percent from fiscal 2015 and $484 million below the budget benchmark.
The administration in June filed an updated financial disclosure for investors warning that expected tax revenues for fiscal 2017 were likely to run $450 million to $750 million below the estimates that Gov. Charlie Baker and House and Senate budget writers arrived at in January.
In July, income tax collections of $949 million grew by 3.7 percent year over year, beating benchmarks by $20 million, and corporate and business taxes were up 4.3 percent over last year and $4 million ahead of estimates.
The $544 million in sales and use tax collections were down $5 million, or less than 1 percent, from last July and $18 million below benchmark, which revenue officials attributed to a "substantial decrease" in motor vehicle sales.