Comptroller Fiscal Year Memo Letter Head

March 29, 2013 

Secretary Glen Shor
Executive Office of Administration and Finance

The Honorable Stephen M. Brewer
Senate Committee on Ways and Means

The Honorable Brian S. Dempsey, Chairman
House Committee on Ways and Means 

Dear Secretary Shor, Chairman Brewer and Chairman Dempsey:

On March 4, 2013, the Attorney General and Commissioner of Revenue jointly certified to the State Comptroller’s Office that for the period January 1, 2013 through February 28, 2013 individual judgments and settlements in excess of $10 million totaled $13,538,016.00, and for FY13 year-to-date such judgments and settlements totaled $133,803,323.56.  Pursuant to Section 2H of Chapter 29 of the Massachusetts General Laws, this entire amount normally would be transferred to the Commonwealth Stabilization Fund. However, Section 79 of Chapter 238 of the Acts of 2012, “An Act Relative to Infrastructure Investment, Enhanced Competitiveness and Economic Growth in the Commonwealth”, requires that the Comptroller transfer $4,000,000 from the General Fund to the Smart Growth Housing Trust Fund from judgments and settlements revenue and section 80 of the same Act requires that, rather than be transferred to the Stabilization Fund, judgments and settlements revenue be retained in the General Fund to reimburse it for revenue foregone during the August 2012 sales tax holiday.  On December 31, 2012 the Commissioner of Revenue certified that the amount of sales tax revenue foregone by the General Fund due to the August 2012 sales tax holiday totaled $21,040,000.00, after adjusting for increases in income and corporate tax revenue generated by greater economic activity induced by the sales tax holiday.

Previously in FY13, I transferred $4,000,000 from judgments and settlements revenue to the Smart Growth Housing Trust Fund and $21,040,000.00 was retained in the General Fund to reimburse it for the revenue foregone as a result of the sales tax holiday.  The remaining $95,225,307.56 in fiscal year 2013 judgments and settlements revenue exceeding $10 million received through December 2012 was transferred to the Stabilization Fund.

Pursuant to Sections 2A and 24 of Chapter 3 of the Acts of 2013, $30,000,000.00 of judgments and settlements revenue that normally would be transferred to the Stabilization Fund is required to be retained in the General Fund to fund Hinton drug testing laboratory costs. Therefore, the January and February judgments and settlements revenue of $13,538,016.00 will be retained in the General Fund and $16,461,984.00 previously transferred to the Stabilization Fund on account of judgments and settlements revenue will be transferred back to the General 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.  Interest earned by the Stabilization Fund during between January 1, 2013 and February 28, 2013 totaled $597,513.46. Therefore, a transfer of that amount from the Stabilization Fund to the General Fund also will be processed in conjunction with the Office of the State Treasurer and Receiver General, in addition to interest of $3,789,612.11 previously transferred from the Stabilization Fund to the General Fund in fiscal year 2013.

If you have any questions regarding this letter, please contact Howard Merkowitz, Deputy Comptroller at (617) 973-2602.

Sincerely,

Martin J. Benison
Comptroller 

Enc.     
Attachment #1 doc format of    Stabilization Fund March 2013 attch 1  :  Section 79 of Chapter 238 of the Acts of 2012            
Attachment #2 doc format of    Stabilization Fund March 2013 attch 2  :  Section 80(g) of Chapter 238 of the Acts of 2012
Attachment #3 doc format of    Stabilization Fund March 2013 attch 3  :  Section 2A of Chapter 3 of the Acts of 2013            
Attachment #4 xls format of    Stabilization Fund March 2013 attch 4  :  Stabilization Fund Balance Spreadsheet

Cc:       
Amy Pitter, Commissioner, Department of Revenue
Judy Zeprun Kalman, Deputy Attorney General, Attorney General’s Office
Samuel Goldhar, Budget Director, House Ways and Means
Douglas Howgate, Budget Director, Senate Ways and Means
James MacDonald, First Deputy Treasurer, Treasurer’s Office
Kazim Ozyurt, Director, Office of Tax Policy Analysis, Department of Revenue
Howard Merkowitz, Deputy Comptroller, Office of the Comptroller
BJ Trivedi, FRAB Director, Office of the Comptroller
Julia Burns, GAB Director, Office of the Comptroller