April 2, 2010

Secretary Jay Gonzales
Executive Office of Administration and Finance
State House, Room 373
Boston, MA  02133

Secretary Jeffery Mullan
Massachusetts Department of Transportation
10 Park Plaza, Room 3170
Boston, Massachusetts, 02116

RE: April 2010 Certification of MBTA Dedicated Sales Tax Revenues for the Fiscal Year Ending June 30, 2010

Dear Secretary Gonzales and Secretary Mullan:

Pursuant to Massachusetts General Laws (MGL) Chapter 10, Section 35T and the Memorandum of Understanding (MOU) signed by and between our office, the Massachusetts Bay Transportation Authority (MBTA), the Department of Revenue, the Office of the Treasurer and Receiver – General of the Commonwealth, and the Executive Office for Administration and Finance, as of April 1, 2010, I am required to certify the projected dedicated sales tax revenue amount for fiscal 2010.  This certification is done in consultation with the Department of Revenue.  This estimate provides information provided to us by the Department of Revenue based on their fiscal 2010 “Monthly Tax Collection Benchmark Midpoint Estimates Based on the 1/7/2010 A&F Tax Revenue Estimate.”

Pursuant to that disclosure, the midpoint of the estimated tax revenues estimate for 2010 is expected to be $18.460 billion, including dedicated sales tax revenues to the MBTA in the amount of $623.67 million.  This amount is $143.39 million less than the “base revenue amount” I certified to you on March 1, 2009, in the amount of $767.06 million.  Therefore I certify to you that the amount of $767.06 million, the base revenue amount, will transfer to the MBTA for fiscal 2010.  Please note that so far this fiscal year, we have transferred $66.9 million from the general fund to make up for the funding shortfall between the stream of dedicated sales tax revenue and the fiscal 2010 base revenue as certified on March 1, 2009.

The table used in the previous FY2010 certification letter was based on a preliminary estimate provided by DOR based on dedicated sales taxes of $3,739,002,000 in November 2009.  The revised table reflects new estimates.

 

 

Fiscal Year
2010
March 15, 2009

 

Fiscal Year 2010
November 17,
2009

 

Fiscal Year
2010
April 1, 2010

 

 

Change from 
November 17, 2009

Projected Sales and Use Tax Collections, Exclusive of Meals Tax

 

$3,372,063,000

 

$3,372,063,000

 

$3,769,091,000

 

$30,089,000

Percentage due to the MBTA(*)             

x20.0%

x16.5513%

x16.5469%

x16.025%

Projected Dedicated Sales Tax Revenue for FY 2010 (rounded down)

$644,349,000

$653,299,000

$654,750,000

$1,451,000

Base Revenue as
Certified on March 1, 2009

$767,056,684

 $767,056,684

$767,056,684

$0

(*) As of August 1, 2009 the sales tax rate was increased from 5% to 6.25% for both regular sales and motor vehicle sales. Based on this new sales tax rate, the MBTA dedication percentage is now 16.00% (1 cent of 6.25 cents per dollar) as compared to the prior dedication percentage of 20% (1 cent of 5 cents per dollar). The dedication percentage of 16.5469% used in the table above for FY2010, and 16.5513% used in the November 17, 2009 certification letter reflect the fact that the sales tax rate increase was not in effect in July 2009, and only affected motor vehicle sales tax collections in August 2009.

The projected dedicated sales tax revenue amount 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.”  Therefore, 16.5469% the sales tax, net of refunds and abatements, amounts set aside under paragraph (b) of section 10 of chapter 152 of the acts of 1997 (the “Convention Center Portion”) and meals taxes are dedicated for the MBTA.

Should you have any questions on the calculation of this amount, please feel free to call me.

Sincerely yours,

Martin J. Benison
Comptroller

Cc:     Senator Stephen C. Panagiotakos, Chairman Senate Ways and Means
          Representative Charles A. Murphy, Chairman House Ways and Means
          Timothy Cahill, Treasurer and Receiver – General, TRE
          Navjeet Bal, Commissioner of Revenue
          Matthew Gorzkowicz, Undersecretary, ANF
          Douglas Howgate, Senate Ways and Means Budget Director
          Jeita Phillips, House Ways and Means Budget Director