Exhibits of the Chapter 555 Report for Fiscal Year 2019

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, 2019

Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2019 (see Exhibit IV)	$33,977,241,799
Less:
Net State Tax Revenues for the Fiscal Year Ended June 30, 2019 (see Exhibit II)	30,202,588,989
Net State Tax Revenues (under) Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2019	$(3,774,652,810)

Exhibit II

Net State Tax Revenues for the Fiscal Year Ended June 30, 2019

Type of State Tax Collected (by Agency)	Gross State Tax Revenues	Refunds and Abatements	Net State Tax Revenues
Department of Revenue (DOR):
Alcoholic Beverages	$86,435,991	$240,931	$86,195,060
Financial Institutions	22,957,961	3,490,805	19,467,156
Cigarettes*	554,865,316	1,604,144	553,261,172
Corporations	3,219,750,855	292,591,141	2,927,159,714
Deeds	218,567,679	36,064	218,531,615
Estate and Inheritance	623,539,437	22,233,481	601,305,956
Income*	18,810,921,634	1,685,088,270	17,125,833,364
Insurance	419,458,645	18,861,988	400,596,657
Motor Fuels and I.F.T.A.†	779,708,562	4,245,895	775,462,667
Public Utilities	40,000	0	40,000
Room Occupancy ‡	284,850,147	1,142,334	283,707,813
Sales and Use ‡	6,879,742,345	36,786,701	6,842,955,644
Club Alcoholic Beverages	945,275	19,552	925,723
Motor Vehicle Excise	101,094	23,821	77,273
Convention Center Surcharges	17,001,373	91	17,001,282
Community Preservation Trust	23,173,800	0	23,173,800
Controlled Substances	13,948,855	0	13,948,855
Satellite	8,605,108	0	8,605,108
Statewide Car Rental	1,096,138	10	1,096,128
Subtotal (Department of Revenue)	$31,965,710,215	$2,066,365,228	$29,899,344,987
Massachusetts Gaming Commission:
Pari-Mutuel Taxes	788,306	0	788,306
Gaming Revenue Tax	130,701,550	0	130,701,550
Lottery Commission:
Beano	697,460	0	697,460
Raffles and Bazaars	1,123,098	0	1,123,098
State Athletic Commission:
Boxing Contests	125,966	0	125,966
Boxer’s Fund	12,643	0	12,643
Division of Insurance:
Excess and Surplus Lines Insurance	44,848,231	0	44,848,231
Secretary of State:
Deeds Excise Stamp Tax Fees	99,815,285	0	99,815,285
Department of Unemployment Assistance:
Workforce Training Contribution	25,131,463	0	25,131,463
Subtotal (Other Agencies)	$303,244,002	$0	$303,244,002
Total (Department of Revenue and Other Agencies)	$32,268,954,217	$2,066,365,228	$30,202,588,989

*    Includes income tax penalties assessed under Section 2 of Chapter 111M of the General Laws (totaling $16,574,378) and cigarette excise revenue assessed in accordance with Sections 12 and 70 of Chapter 302 of the Acts of 2008 (totaling $113,439,387) credited to the Commonwealth Care Trust Fund (CCTF). Fiscal year 2018 tax revenues credited to the CCTF totaled $130,013,765.

†    International Fuel Tax Agreement.

‡    Includes sales, meals, and 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, 2019

Exhibit IV

Calculation of Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2019

Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2018*	$32,531,393,763
Allowable State Tax Growth Factor for the Fiscal Year Ended June 30, 2019	x 1.0444447
Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2019	$33,977,241,799

*    As defined in Section 2 of Chapter 62F of the Massachusetts General Laws, “allowable state tax revenues” for a 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. 2019-5555-3S) totaled $32,531,393,763.

 

Exhibit V

Calculation of Allowable State Tax Growth Factor for the Fiscal Year Ended June 30, 2019

Calendar Year	Massachusetts Wages and Salaries* (in Thousands)	Wages and Salaries Yearly Growth Rate†
2015	$233,424,075
2016	$246,671,099	1.0567509
2017	$251,844,339	1.0209722
2018	$265,849,684	1.0556111
Sum of 2016–2018 Calendar Year Growth Increase		3.1333342
Allowable State Tax Growth Factor for Fiscal Year 2019 (3.1333342/3)		1.0444447

*           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 2019 allowable state tax growth factor decreased 0.0017428 from the prior year’s factor of 1.0461875.

 

Exhibit VI

Comparison of Net State Tax Revenues for the Two Fiscal Years Ended June 30, 2019

Type of State Tax Collected (by Agency)	Net State Tax Revenues for the Fiscal Year Ended June 30, 2019	Net State Tax Revenues for the Fiscal Year Ended June 30, 2018	Increase/ (Decrease)	Percentage Increase/ (Decrease)
Department of Revenue:
Alcoholic Beverages	$86,195,060	$84,977,507	$1,217,553	1.43%
Financial Institutions	19,467,156	17,442,655	2,024,501	11.61%
Cigarettes*	553,261,172	594,172,849	(40,911,677)	(6.89)%
Corporations	2,927,159,714	2,392,154,111	535,005,603	22.37%
Deeds	218,531,615	193,540,509	24,991,106	12.91%
Estate and Inheritance	601,305,956	472,955,859	128,350,097	27.14%
Income*	17,125,833,364	16,255,654,922	870,178,442	5.35%
Insurance	400,596,657	363,569,152	37,027,505	10.18%
Motor Fuels and I.F.T.A.†	775,462,667	769,144,085	6,318,582	0.82%
Public Utilities	40,000	(650,000)	690,000	106.15%
Room Occupancy ‡	283,707,813	263,448,681	20,259,132	7.69%
Sales and Use ‡	6,842,955,644	6,491,262,465	351,693,179	5.42%
Club Alcoholic Beverages	925,723	864,506	61,217	7.08%
Motor Vehicle Excise	77,273	116,187	(38,914)	(33.49%)
Convention Center Surcharges	17,001,282	17,177,597	(176,315)	(1.03%)
Community Preservation Trust	23,173,800	23,793,880	(620,080)	(2.61%)
Controlled Substances	13,948,855	7	13,948,848	1,992,693%
Satellite	8,605,108	9,721,141	(1,116,033)	(11.48%)
Statewide Car Rental	1,096,128	0	1,096,128	NA
Subtotal (Department of Revenue)	$29,899,344,987	$27,949,346,113	$1,949,998,874	6.98%
Massachusetts Gaming Commission:
Pari-Mutuel Taxes	788,306	886,950	(98,644)	(11.12%)
Gaming Revenue Taxes	130,701,550	68,010,487	62,691,063	92.18%
Lottery Commission:
Beano	697,460	730,836	(33,376)	(4.57%)
Raffles and Bazaars	1,123,098	1,030,972	92,126	8.94%
State Athletic Commission:
Boxing Contests	125,966	208,390	(82,424)	(39.55%)
Boxer’s Fund	12,643	33,239	(20,596)	(6,196%)
Division of Insurance:
Excess and Surplus Lines       Insurance	44,848,231	42,681,550	2,166,681	5.08%
Secretary of State:
Deeds Excise Stamp Tax Fees	99,815,285	90,956,209	8,859,076	9.74%
Department of Unemployment Assistance:
Workforce Training       Contribution	25,131,463	24,675,801	455,662	1.85%
Subtotal (Other Agencies)	$303,244,002	$229,214,434	$74,029,568	32.30%
Total (Department of Revenue and Other Agencies)	$30,202,588,989	$28,178,560,547	$2,024,028,442	7.18%

*    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 16, 2019