THE COMMONWEALTH OF MASSACHUSETTS
EXECUTIVE OFFICE FOR ADMINISTRATION AND FINANCE
SENATE COMMITTEE ON WAYS & MEANS
HOUSE COMMITTEE ON WAYS & MEANS
STATE HOUSE - BOSTON, MA 02133

LESLIE A. KIRWAN
SECRETARY
EXECUTIVE OFFICE FOR ADMINISTRATION AND FINANCE
SENATOR STEVEN PANAGIOTAKOS
1 st MIDDLESEX DISTRICT
CHAIRMAN
SENATE COMMITTEE ON WAYS & MEANS
REPRESENTATIVE ROBERT A. DELEO
19 TH SUFFOLK DISTRICT
CHAIRMAN
HOUSE COMMITTEE ON WAYS & MEANS
CONTACT:
CYNDI ROY, COMMUNICATIONS DIRECTOR
617.727.2040
CONTACT:
DJ CORCORAN, CHIEF OF STAFF
617.722.1481
CONTACT:
JIM EISENBERG, CHIEF OF STAFF
617.722.2700

FOR IMMEDIATE RELEASE

January 13, 2009

KIRWAN, PANAGIOTAKOS, DELEO ANNOUNCE CONSENSUS ON FISCAL YEAR 2010 REVENUE FORECAST

BOSTON -- Administration and Finance Secretary Leslie A. Kirwan, Senator Steven C. Panagiotakos, (D-Lowell) chairman of the Senate Committee on Ways and Means, and Representative Robert A. DeLeo (D-Winthrop), chairman of the House Committee on Ways and Means, issued the following joint statement today regarding the Fiscal Year 2010 consensus revenue figure:

"Today, the Executive Office for Administration and Finance, the Senate and the House of Representatives reached accord on the consensus revenue figure for Fiscal Year 2010. The joint tax revenue number agreed to by the Secretary of the Executive Office for Administration and Finance and the Chairs of the House and Senate Committees on Ways and Means is $19.53 billion for Fiscal Year 2010. The figure was arrived at after the parties received testimony at the consensus revenue hearing, at which 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."

Halfway through Fiscal Year 2009, the Commonwealth is experiencing an unprecedented economic downturn similar to the national and international decline. According to economists who testified during the December 15 th revenue hearing, it is likely the Commonwealth will continue to experience a downturn through FY10 and possibly longer.

The dramatic loss of capital gains taxes, due in large part to the ongoing foreclosure crisis and weak home sales, is a key contributing factor to the drop in revenue. Capital gains are an historically volatile revenue source that make up a significant share of the state budget. Additionally, it is possible the decline in the stock market and other financial asset markets will result in significantly reduced bonus payments in FY09 and FY10.Additionally, the country's unemployment rate is at its highest level in 16 years, and the losses are expected to continue to mount. As consumers cut spending, sales tax collections are down significantly and are expected to continue their decline.

"All of us will have to make tough choices in the weeks and months ahead in order to finalize a Fiscal Year 2010 budget that balances our difficult fiscal reality with our responsibility to serve the residents of the Commonwealth," said Secretary Kirwan. "We will continue to monitor our financial situation and work together to address the challenges that lie ahead."

"Having heard experts give their best estimates on what we will face in the coming fiscal year, we arrived at what is a sobering, but realistic revenue figure," stated Chairman DeLeo. "The tough decisions we make today will position Massachusetts for an accelerated recovery once the global economy improves."

"Subsequent to the economic outlook provided by those testifying at the hearing, we have arrived at a reasonable revenue figure given the situation we are facing," said Chairman Panagiotakos.

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

  • $767 million for the MBTA
  • $641 million for the School Building Assistance (SBA)
  • $1.376 billion for the pension transfer, which represents a $62 million increase over last year's payment, but makes no changes to existing fiscal assumptions or pension funding schedule.

The total amount of off-budget transfers is $2.784 billion. Therefore, the secretary and chairpersons agree that $16.746 billion will be the maximum amount of tax revenue available for the General Appropriations Act (GAA) in Fiscal Year 2010, and will base their respective budget recommendations on that number.