The Massachusetts state finances are built on a number of revenue sources, primarily state taxes and federal reimbursements for programs such as Medicaid. A summary of the revenue receipts for the state fiscal year 2012 is below.
Funding Source Percentage FY12 SBFR Personal Income Tax 23% $11,911,399.00 Federal Reimbursements 13% $6,611,287.00 Sales Tax 10% $5,079,105.00 Fees, Fines & Assessments 10% $5,075,264.40 Federal Grants 10% $4,996,590.00 Lottery 9% $4,941,211.00 Higher Education Tuition, Fees & Other Revenue 7% $3,814,171.60 Pension Contributions 5% $2,590,096.00 Bond Proceeds 5% $2,400,765.00 Corporate/Business Taxes 4% $2,319,841.00 Other Taxes 4% $2,073,202.00 Gifts, Grants & Donations 1% $535,438.00 100% $52,348,370.00
State Revenue Source Descriptions
*Inter-fund Transfers –The Commonwealth by law accounts for its activity in over 130 funds. In the Commonwealth’s financial statements, transfers between funds are classified as revenues and expenses. For example, when the Commonwealth transfers the year-end surplus from the General Fund to the Stabilization Fund, an expenditure is recorded in the General Fund and a revenue is recorded in the Stabilization Fund. These required accounting entries are shown in the financial statements but do not result from inflows from external parties, so are not included in the Open Checkbook, nor are they included in the spending chart.
Personal Income Tax the state income tax paid in Massachusetts on personal income. Sales Tax proceeds from the state sales tax. Corporate/Business Taxes the amounts paid by corporations, financial institutions, insurance companies, and public utilities. Other Taxes include motor fuels, cigarette, estate and deeds-excise taxes. Federal Reimbursements federal reimbursements from the federal government for certain state services. The largest federal reimbursement is for Medicaid, which is typically reimbursed at 50% of every dollar spent, but was temporarily set at higher rates between October 2008 and June 2011 as part of the American Recovery and Reinvestment Act. Federal Grants federal grants for specific programs. Fees, Fines and Assessments primarily fees paid for state services. The largest sources are from the Registry of Motor Vehicles, industry assessments, court fines and professional licenses. Lottery proceeds from the sale of lottery tickets. Higher Education Tuition, Fees & Other Revenue revenues generated by the University of Massachusetts and the 24 state universities and community colleges, primarily from student tuition and fees. Pension Contributions amounts paid by employees to self-fund their pension benefits and draws of Commonwealth assets set aside in Pension reserves to pay benefits. Bond Proceeds amounts raised from selling General Obligation and Special Obligation debt of the Commonwealth to support long-term capital projects. Gifts, Grants and Donations amounts provided to the state, typically for a specified purpose. Includes grants from private foundations.
Tax Expenditures (Exemptions, Deductions And Credits)
While the state collects more than $20 billion in taxes each year, there are numerous exceptions to the current tax law which are estimated to cost the state more than $26 billion in fiscal year 2013. Commonly referred to as “Tax Expenditures”, they are detailed in a report issued by the Department of Revenue each year. That report was most recently updated in January 2012. Updates are issued each January in conjunction with the Governor’s budget submission. Historical reports are also available.
Additional Details Available
The Commonwealth routinely provides up-to-date information about its finances in Official Statements to investors, which are archived on the Treasurer’s website. They provide a wealth of information about historical and projected revenues as well as other financial conditions affecting the Commonwealth.
The Office of the Comptroller publishes annual financial statements known as the Comprehensive Annual Financial Reports (CAFR) and the Statutory Basis Financial Report (SBFR). They provide details for the financial activity for a particular state fiscal year.