Comptroller Fiscal Year Memo Letter Head

February 28, 2014

Secretary Glen Shor
Executive Office for Administration and Finance
State House, Room 373
Boston, MA  02133

Secretary Richard A. Davey
Massachusetts Department of Transportation
10 Park Plaza, Room 3170
Boston, MA  02116

RE:      March 2014 Certifications of MBTA Base Sales Tax Revenues and Dedicated Sales Tax Revenues for FY2015

Dear Secretary Shor and Secretary Davey:

Pursuant to Massachusetts General Laws Chapter 10, Section 35T, this letter certifies for FY2015 the following amounts: 1) MBTA Base Sales Tax Revenue; and 2) MBTA Dedicated Sales Tax Revenue. This certification was done in consultation with the Department of Revenue. The details of the two calculations are shown on the accompanying attachment.

1) Base Sales Tax Revenue Amount: The base revenue amount for fiscal 2015 is calculated by comparing the change in the calendar year 2013 consumer price index for all urban consumers for the Boston metropolitan area as determined by the Bureau of Labor Statistics of the United States Department of Labor to the per cent increase in gross sales tax revenues received pursuant to Massachusetts General Laws chapters 64H and 64I for the same period.  The calendar year 2013 “gross sales tax revenues” is defined as sales tax receipts by taxpayers from nonexempt sales, less amounts abated, refunded, or reimbursed. Attachment A presents calculation of the base revenue amount. The percentage increase in base sales tax revenue is the lower of the percent increase in gross sales tax revenues or the inflation rate.

I certify to you that the base revenue amount for fiscal 2015 increased by an amount of $11,341,999 compared to the FY 2014 figure of $799,295,175 due to the inflation rate of 1.419%.  The base revenue amount for FY 2015 is $810,637,174.

2) Dedicated Sales Tax Revenues (projected):  The projected dedicated sales tax revenue is the amount of “monies received by the Commonwealth equal to one percent of the gross receipts of a sale as defined by the provisions of MGL chapter 64H and one percent of the sales price of a purchase as defined by the provisions of chapter 64I from that portion of the taxes imposed under the provisions of said chapters 64H and 64I as excises upon the sale and use at retail of tangible property or of services, and upon the storage, use or other consumption of  tangible property or of services, including interest thereon or penalties but not including any portion of such taxes imposed on the sale of meals as defined in paragraph (h) of section 6 of chapter 64H”. Based on the most recent FY2015 consensus revenue estimate of $24.337 billion, the dedicated sales tax revenue amount for fiscal 2015 is projected to be $771,547,328, as calculated in Attachment B.

Any shortfall between dedicated sales tax revenue and the base revenue certified on March 1, 2014 will be made up by quarterly transfers from the General Fund, pursuant to the MOU and Chapter 10, Section 35T(b). Based on the attached calculations, the shortfall between FY 2015 dedicated and base tax revenues is estimated to be $39,089,846.

Should you have any questions on the calculation of this amount, please feel free to call me or Howard Merkowitz, Deputy Comptroller. 

Sincerely yours,

Martin J. Benison
Comptroller

Attachment (calculations)

Cc:       
Senator Stephen M. Brewer, Chairman Senate Ways and Means            
Representative Brian S. Dempsey, Chairman House Ways and Means            
Steven Grossman, Treasurer and Receiver – General, TRE            
Amy Pitter, Commissioner of Revenue            
Scott Jordan, Undersecretary, ANF
Douglas Howgate, Senate Ways and Means Budget Director            
Ashley Groffenberger, House Ways and Means Budget Director

 

FISCAL YEAR 2015 MBTA BASE AND DEDICATED REVENUE CALCULATIONS

Attachment A: Base Revenue
The base revenue amount was calculated as follows:

Change in inflation index for the Boston metropolitan area for calendar  2013 (annualized, non-seasonally adjusted)

 

1.419 %

 

 

Growth in gross sales tax revenues, from calendar  2012 to  2013

 

4.459%

 

 

Allowable base revenue growth (lesser of sales tax growth or inflation, but not greater than 3%)

 

1.419%

 

 

Current year’s base revenue (FY 2014)

$799,295,175

Growth Factor

1.419%

Upcoming year’s base revenue (FY 2015)

$810,637,174

 

Attachment B: Dedicated Revenue
The projected dedicated sales tax amount was calculated as follows

 

Fiscal Year 2015

March 1, 2014 Certification

Projected Sales and Use Tax Collections, Exclusive of Meals Tax

 

$4,822,170,803

Percentage due to the MBTA(*)       

´ 16%

 

 

FY 2015 Projected Dedicated Sales Tax Revenue

 

$771,547,328

 

 

FY 2015 Base Tax Revenue

$810,637,174

 

Difference, FY2014 Dedicated Minus Base Revenue                 -$39,089,846