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TO: His Excellency Deval L. Patrick, Governor
The House Committee on Ways and Means
The Senate Committee on Ways and Means
The Joint Committee on Revenue
Under Massachusetts General Laws (MGL) Chapter 29, Section 5B, I am required on or before October 15th to prepare estimates of budgeted revenues for the current and ensuing fiscal year.
Based on available data on tax collections and economic trends, I do not believe it is necessary at this time to revise the Fiscal Year 2014 (FY14) tax revenue estimate of $22.797 billion, reflecting the FY14 consensus tax revenue estimate augmented by additional revenues assumed in the FY14 General Appropriations Act (GAA) or enacted as part of the transportation finance bill. The $22.797 billion estimate also reflects the estimated cost of the sales tax holiday that took place this past August. Year-to-date tax revenues through September are $199 million above the current benchmarks for those months. However, in light of the repeal of the software tax and economic uncertainty related to ongoing federal budget dynamics, we believe that it is prudent at this time to retain the existing tax revenue estimate.
While we are encouraged by over-benchmark tax revenue performance to date, we do currently forecast lower-than-expected performance for non-tax revenues (approximately $150 million in reduced revenue relative to levels originally assumed in the FY14 GAA). This non-tax exposure does not include estimates of the impact of an extended federal government shutdown, which could more significantly jeopardize federal reimbursements. We will continue to monitor all aspects of our revenue performance closely as one component of our FY14 budget management.
As is customarily the case, I am not providing a FY15 revenue estimate at this time. Our capacity to forecast FY15 revenues will benefit from a few more months of tax collection data and testimony regarding updated economic forecasts at the FY15 consensus revenue hearing in December.