April 16, 2014
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
RE: Settlement and judgment revenue, interest revenue transfer and capital gains tax certification for FY2014
Dear Secretary Shor, Chairman Brewer and Chairman Dempsey:
On February 27, 2014, the Commissioner of Revenue certified to the State Comptroller’s Office that for the period October 1, 2013 through January 31, 2014 capital gains tax revenue totaled $347,500,000.00, and for FY14 year-to-date capital gains tax revenue totaled $514,800,000.00. Section 5G of Chapter 29 of the Massachusetts General Laws requires that capital gains in excess of the fiscal year threshold be transferred to the Stabilization Fund. For FY2014 this threshold is $1,023,242,988.00, since the total capital gains tax revenue has not exceeded this threshold, no transfer will be made.
On March 5, 2014, the Attorney General and Commissioner of Revenue jointly certified to the State Comptroller’s Office that for the period January 1, 2014 through February 28, 2014 individual judgments and settlements in excess of $10 million totaled $206,712,278.01, and for FY14 year-to-date such judgments and settlements totaled $391,066,319.01. Section 2H of Chapter 29 of the Massachusetts General Laws requires that individual judgments and settlements in excess of $10 million be transferred to the Stabilization Fund. Earlier in FY14, transfers totaling $184,354,041.00 were previously made in FY2014 on account of judgments and settlements in excess of $10 million.
Chapter 55 of the Acts of 2013 requires that, rather than be transferred to the Stabilization Fund, revenue from judgments and settlements such revenue be retained in the General Fund in an amount equal to the revenue lost from the sales tax holiday that took place in August 2013. On December 31, 2013 the Commissioner of revenue certified that the amount of sales tax revenue foregone due to the August 2013 sales tax holiday totaled $22,220,000.00, after adjusting for increases in income and corporate tax revenue generated by greater economic activity induced by the sales tax holiday. Based on the Commissioner of Revenue’s certification of revenue foregone due to the sales tax holiday, $22,220,000.00 was retained in the General Fund.
Section 172(b) of Chapter 38 of the Acts of 2013 (the fiscal year 2014 General Appropriation Act) authorizes the transfer of interest earned by the Commonwealth Stabilization Fund during fiscal year 2014 to the General Fund. Interest earned by the Stabilization Fund during fiscal year for the period February 1, 2014 through April 14, 2014 totaled $1,015,798.17. 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.
If you have any questions regarding this letter, please contact Howard Merkowitz, Deputy Comptroller, at (617) 973-2602.
Martin J. Benison
Amy Pitter, Commissioner, Department of Revenue
Judy Zeprun Kalman, Deputy Attorney General, Attorney General’s Office
Ashley Groffenberger, 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
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