July 29, 2013
Secretary Glen Shor
Executive Office of Administration and Finance
The Honorable Stephen M. Brewer, Chairman
Senate Committee on Ways and Means
The Honorable Brian S. Dempsey, Chairman
House Committee on Ways and Means
Re: Capital Gains Tax Revenue and FY13 General Appropriation Act Stabilization Fund Transfers per Section 5G of Chapter 29:
Dear Secretary Shor, Chairman Brewer and Chairman Dempsey:
Pursuant to the final fiscal year 2013 certification received from the Commissioner of Revenue dated July 18, 2013, tax revenue estimated to have been collected from capital gains during fiscal year 2013 (July 1, 2012 through June 30, 2013) was $1.4675 billion. As such, tax revenues from capital gains in fiscal year 2013 exceed the $1,000,000,000 threshold by $467.5 million, which is approximately $162.3 million more than the DOR certification dated June 27, 2013.
The final fiscal year 2013 certification will generate the three transfers listed below:
- A transfer of approximately $162.3 million to the Stabilization Fund;
- A transfer equal to 5% of the capital gains tax revenues transferred to the Stabilization Fund, or $8.1 million, to the State Retiree Benefits Trust Fund;
- An additional transfer equal to 5% of the capital gains taxes transferred to the Stabilization Fund, or $8.1 million, to the Commonwealth's Pension Liability Fund.
Section 160 of Chapter 139 of the Acts of 2012 (the fiscal year 2013 General Appropriation Act) authorizes the transfer of interest earned by the Commonwealth Stabilization Fund during fiscal year 2013 to the General Fund. Therefore, a transfer of $461,176.82, which represents interest earned by the Stabilization Fund from June 1, 2013 through June 30, 2013, also will be processed in conjunction with the Office of the State Treasurer and Receiver General.
If you have any questions regarding this letter, please contact Howard Merkowitz, Deputy Comptroller at (617) 973-2602.
Martin J. Benison
Emme Schultz, Budget Director
Amy Pitter, Commissioner of Revenue
James MacDonald, First Deputy Treasurer
Howard Merkowitz, Deputy Comptroller
Kazim Ozyurt, Director, Office of Tax Policy Analysis, Department of Revenue
BJ Trivedi, FRAB Director, Office of the Comptroller
Julia Burns, GAB Director, Office of the Comptroller
Attachment # 1: Section 5G of Chapter 29 of the Massachusetts General Laws
Attachment # 2: Stabilization Fund Balance Spreadsheet
Chapter 29 of the Massachusetts General Laws
SECTION 5G After each quarter, the department of revenue shall certify to the state comptroller the amount of tax revenues estimated to have been collected during the preceding quarter from capital gains income. If the department of revenue certifies that the amount of tax revenues estimated to have been collected from capital gains income exceeds $1,000,000,000 in a fiscal year, the comptroller shall transfer quarterly any such amount that exceeds $1,000,000,000 collected during that fiscal year to the Commonwealth Stabilization Fund established in section 2H. The $1,000,000,000 threshold established in the preceding sentence shall be adjusted annually to reflect the average annual rate of growth in United States gross domestic product over the preceding 5 years based on the most recently available data published by the Bureau of Economic Analysis in the United States Department of Commerce.
This transfer shall be made before the certification of the consolidated net surplus for the previous fiscal year under section 5C. The department of revenue shall report by November 30 to the state comptroller, the executive office for administration and finance and the house and senate committees on ways and means tax revenues estimated to have been collected during the preceding fiscal year from capital gains income. The comptroller shall not make adjustment to amounts previously transferred if the capital gains revenue reported on November 30 differs from the amounts estimated during the preceding fiscal year.
Five per cent of any amount transferred to the Commonwealth Stabilization Fund under this section shall then be transferred from the Commonwealth Stabilization Fund to the State Retiree Benefits Trust Fund established in section 24 of chapter 32A and 5 per cent of any amount transferred to the Commonwealth Stabilization Fund under this section shall then be transferred from the Commonwealth Stabilization Fund to the Commonwealth's Pension Liability Fund established in section 22 of chapter 32.