August 5th 2024.
According to a report released on Monday by the Department of Revenue, Massachusetts has collected $2.6 billion in tax revenues for the month of July. This amount is similar to what was collected during the same time last year, showing a steady trend in the state's fiscal health.
Interestingly, this revenue report was released just days after a top budget writer in the state Senate expressed concerns about the expected outcome for July, stating that it was expected to be "very bad". However, the actual numbers show a decrease of only $18 million, or 0.7%, compared to July of 2023.
The main decreases were observed in the categories of withholding, non-withheld income tax, and the "all other" tax category, as reported by Department of Revenue Commissioner Geoffrey Snyder. However, these decreases were partially offset by increases in sales and use tax, as well as corporate and business tax. Snyder explained that the decrease in withholding can be attributed to the current labor market conditions and periodic fluctuations. Meanwhile, the decrease in the "all other" tax category can be attributed to the fluctuations in the estate tax, which is known to vary.
It's worth noting that Governor Maura Healey's administration has not yet released the revenue benchmark for the fiscal year, so it's difficult to compare the July haul to official expectations. Additionally, the Department of Revenue mentioned that July is typically one of the smaller tax collection months, as quarterly payments are not due for most individuals and businesses. In fact, historically, only about 7% of the annual revenue is collected during July.
Doug Howgate, the President of the Massachusetts Taxpayers Foundation, cautioned against using the July revenue report as a predictor for the rest of the fiscal year. He emphasized that July and August are relatively small months in terms of revenue and that it's important to track the numbers closely. However, he also noted that it's too early to make any strong conclusions and that a clearer picture will emerge towards the end of the first quarter.
Last week, during a busy period of lawmaking, Senate budget writer Michael Rodrigues had expressed his concerns about the expected revenues for July, stating that it was likely to be "very bad". This was used as a reason for not voting to restore any of the $317 million that Governor Healey vetoed from the fiscal year 2025 budget. A spokesperson for Rodrigues did not respond to a request for comment.
In a letter outlining her budget vetoes, Governor Healey also highlighted the uncertainties in the economy at the start of the fiscal year. She mentioned that anticipated interest rate reductions did not materialize and that some tax collections for the previous fiscal year did not meet expectations. This, coupled with the usual deficiencies that require active management, presents a challenge for managing the state's resources and staying within budgetary limits.
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