Comptroller Fiscal Year Memo Letter Head

November 8, 2012 

Secretary Jay Gonzalez
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 Gonzalez, Chairman Brewer and Chairman Dempsey: 

On November 5, 2012, the Attorney General and Commissioner of Revenue jointly certified to the State Comptroller’s Office that for the period September 1, 2012 through October 31, 2012 individual judgments and settlements in excess of $10 million totaled $15 million. Pursuant to Section 2H of Chapter 29 of the Massachusetts General Laws, that $15 million 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 in excess of $10 million that otherwise would be transferred to the Stabilization Fund. Therefore, I will transfer $4,000,000 from judgments and settlements to the Smart Growth Housing Trust Fund.

 In addition, section 80 of Chapter 238 requires that, rather than be transferred to the Stabilization Fund, revenue from judgments and settlements exceeding $10 million be retained in the General Fund to reimburse it for revenue foregone during the August 2012 sales tax holiday, after certification by the Commissioner of Revenue of the amount of sales tax revenue foregone. While the Commissioner of Revenue has not yet certified the revenue loss from the sales tax holiday (and is not required to do so until December 31, 2012), the most recent estimate of that revenue loss, as published in the Commonwealth Information Statement dated September 27, 2012, is $21.6 million, $18.1 million of which would be from the General Fund after adjusting for the 16% of applicable sales tax revenue dedicated to the Massachusetts School Building Authority. (Sales tax revenue dedicated to the MBTA will not be reduced due to a sales tax holiday, since that revenue is fixed at the MBTA’s FY13 base revenue amount.) In anticipation of that certification from the Commissioner of Revenue, the remaining $11 million from settlements and judgments received between September 1, 2012 and October 31, 2012 will be retained in the General Fund and not transferred to the Stabilization 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 $2,690,541.29, which represents interest earned by the Stabilization Fund during fiscal year 2013 through October 31, 2012, 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. 

Sincerely, 

Martin J. Benison
Comptroller 

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

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