Exhibits of the Chapter 555 Report for Fiscal Year 2018

An overview of the information used to support the conclusions of this report.

Exhibit I

Calculation to Determine Whether Net State Tax Revenues Exceeded Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2018

Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2018 (see Exhibit IV)	$32,531,393,763
Less:
Net State Tax Revenues for the Fiscal Year Ended June 30, 2018 (see Exhibit II)	28,178,560,547
Net State Tax Revenues (under) Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2018	$(4,352,833,216)

Exhibit II

Net State Tax Revenues for the Fiscal Year Ended June 30, 2018

Type of State Tax Collected (by Agency)	Gross State Tax Revenues	Refunds and Abatements	Net State Tax Revenues
Department of Revenue (DOR):
Alcoholic Beverages	$85,024,779	$47,272	$84,977,507
Financial Institutions	20,607,221	3,164,566	17,442,655
Cigarettes*	595,335,238	1,162,389	594,172,849
Corporations	2,722,521,392	330,367,281	2,392,154,111
Deeds	193,662,743	122,234	193,540,509
Estate and Inheritance	501,081,897	28,126,038	472,955,859
Income*	18,055,756,525	1,800,101,603	16,255,654,922
Insurance	397,285,058	33,715,906	363,569,152
Motor Fuels and I.F.T.A.†	774,785,216	5,641,131	769,144,085
Public Utilities	(650,000)	0	(650,000)
Room Occupancy ‡	263,803,340	354,659	263,448,681
Sales and Use ‡	6,526,048,265	34,785,800	6,491,262,465
Club Alcoholic Beverages	888,824	24,318	864,506
Motor Vehicle Excise	120,322	4,135	116,187
Convention Center Surcharges	17,178,594	997	17,177,597
Community Preservation Trust	23,793,880	0	23,793,880
Controlled Substances	7	0	7
Satellite	9,721,322	181	9,721,141
Subtotal (Department of Revenue)	$30,186,964,623	$2,237,618,510	$27,949,346,113
Massachusetts Gaming Commission:
Pari-Mutuel Taxes	886,950	0	886,950
Gaming Revenue Tax	68,010,487	0	68,010,487
Lottery Commission:
Beano	730,836	0	730,836
Raffles and Bazaars	1,030,972	0	1,030,972
State Athletic Commission:
Boxing Contests	208,390	0	208,390
Boxer’s Fund	33,239	0	33,239
Division of Insurance:
Excess and Surplus Lines Insurance	42,681,550	0	42,681,550
Secretary of State:
Deeds Excise Stamp Tax Fees	90,956,209	0	90,956,209
Department of Unemployment Assistance:
Workforce Training Contribution	24,675,801	0	24,675,801
Subtotal (Other Agencies)	$229,214,434	$0	$229,214,434
Total (Department of Revenue and Other Agencies)	$30,416,179,057	$2,237,618,510	$28,178,560,547

*    Includes income tax penalties assessed under Section 2 of Chapter 111M of the General Laws (totaling $16,093,026) and cigarette excise revenue assessed in accordance with Sections 12 and 70 of Chapter 302 of the Acts of 2008 (totaling $122,926,882) credited to the Commonwealth Care Trust Fund (CCTF). Fiscal year 2018 tax revenues credited to the CCTF totaled $139,019,908.

†    International Fuel Tax Agreement. 

‡    Includes sales, meals, room occupancy excise taxes, and service fees for the City of Worcester DCU Capital Improvement Fund.

Exhibit III

Net State Tax Revenue Sources for the Fiscal Year Ended June 30, 2018

Note: Percentages are rounded to the nearest whole number.

Exhibit IV

Calculation of Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2018

Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2017*	$31,095,184,910
Allowable State Tax Growth Factor for the Fiscal Year Ended June 30, 2018	X          1.0461875
Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2018	$32,531,393,763

*    As defined in Section 2 of Chapter 62F, “allowable state tax revenues” for fiscal year means the following: beginning after June 30, 1986, an amount equal to the greater of the allowable state tax revenues for the immediately preceding fiscal year multiplied by the allowable state tax growth for the current year, or in any case no less than the allowable state tax revenues for the preceding fiscal year. Allowable state tax revenues as disclosed in our prior report (No. 2017-5555-3S) totaled $31,095,184,910.

Exhibit V

Calculation of Allowable State Tax Growth Factor for the Fiscal Year Ended June 30, 2018

Calendar Year	Massachusetts Wages and Salaries* (in Thousands)	Wages and Salaries Yearly Growth Rate†
2014	$220,037,132
2015	$233,424,075	1.0608395
2016	$246,671,099	1.0567509
2017	$251,844,339	1.0209722
Sum of 2015–2017 Calendar Year Growth Increase	3.1385626
Allowable State Tax Growth Factor for Fiscal Year 2018 (3.1385626/3)	1.0461875

*  Source: US Department of Commerce, Bureau of Economic Analysis, Regional Income Division, Washington, D.C. (pursuant to Section 2 of Chapter 62F).

† Wage and yearly growth ratio is calculated by dividing each calendar year’s wages and salaries by those of the previous calendar year.

Note: Chapter 62F requires that, in calculating the allowable state tax growth factor for any fiscal year, the same total for Massachusetts’s wages and salaries for a calendar year utilized in prior calculations involving that calendar year shall be utilized in subsequent calculations involving that calendar year, notwithstanding periodic adjustments by the Bureau of Economic Analysis.

 The fiscal year 2018 allowable state tax growth factor of 1.0461875 decreased 0.0087017 from the prior year’s factor of 1.0548892.

Exhibit VI

Comparison of Net State Tax Revenues for the Two Fiscal Years Ended June 30, 2018

Type of State Tax Collected (by Agency)	Net State Tax Revenues for the Fiscal Year Ended June 30, 2018	Net State Tax Revenues for the Fiscal Year Ended June 30, 2017	Increase/ (Decrease)	Percentage Increase/ (Decrease)
Department of Revenue:
Alcoholic Beverages	$84,977,507	$84,468,004	$509,503	0.60%
Financial Institutions	17,442,655	(129,805)	17,572,460	13537.58%
Cigarettes*	594,172,849	619,437,194	(25,264,345)	(4.08%)
Corporations	2,392,154,111	2,196,705,024	195,449,087	8.90%
Deeds	193,540,509	205,757,639	(12,217,130)	(5.94%)
Estate and Inheritance	472,955,859	336,633,142	136,322,717	40.50%
Income*	16,255,654,922	14,699,874,290	1,555,780,632	10.58%
Insurance	363,569,152	358,169,889	5,399,263	1.51%
Motor Fuels and I.F.T.A.†	769,144,085	769,442,148	(298,063)	(0.04%)
Public Utilities	(650,000)	(100,549)	(549,451)	(546.45%)
Room Occupancy ‡	263,448,681	255,458,205	7,990,476	3.13%
Sales and Use ‡	6,491,262,465	6,241,665,623	249,596,842	4.00%
Club Alcoholic Beverages	864,506	929,018	(64,512)	(6.94%)
Motor Vehicle Excise	116,187	97,405	18,782	19.28%
Convention Center Surcharges	17,177,597	16,867,570	310,027	1.84%
Community Preservation Trust	23,793,880	26,675,500	(2,881,620)	(10.80%)
Controlled Substances	7	221	(214)	(96.83%)
Satellite	9,721,141	10,941,657	(1,220,516)	(11.15%)
Subtotal (Department of Revenue)	$27,949,346,113	$25,822,892,175	$2,126,453,938	8.23%
Massachusetts Gaming Commission:
Pari-Mutuel Taxes	886,950	902,142	(15,192)	(1.68%)
Gaming Revenue Taxes	68,010,487	63,431,786	4,578,701	7.22%
Lottery Commission:
Beano	730,836	787,239	(56,403)	(7.16%)
Raffles and Bazaars	1,030,972	955,407	75,565	7.91%
State Athletic Commission:
Boxing Contests	208,390	45,450	162,940	358.50%
Boxer’s Fund	33,239	8,517	24,722	290.27%
Division of Insurance:
Excess and Surplus Lines Insurance	42,681,550	39,349,128	3,332,422	8.47%
Secretary of State:
Deeds Excise Stamp Tax Fees	90,956,209	91,434,961	(478,752)	(0.52%)
Department of Unemployment Assistance:
Workforce Training Contribution	24,675,801	24,399,595	276,206	1.13%
Subtotal (Other Agencies)	$229,214,434	$221,314,225	$7,900,209	3.57%
Total (Department of Revenue and Other Agencies)	$28,178,560,547	$26,044,206,400	$2,134,354,147	8.20%

*    Includes income tax penalties assessed under Section 2 of Chapter 111M of the General Laws and cigarette excise revenues credited to the Commonwealth Care Trust Fund in accordance with Sections 12 and 70 of Chapter 302 of the Acts of 2008.

†    International Fuel Tax Agreement.

‡    Includes sales, meals, and room occupancy excise taxes, as well as service fees for the City of Worcester DCU Capital Improvement Fund.

Exhibit VII

History of Net State Tax Versus Allowable State Tax Revenue

 

Date published:	September 14, 2018