Executive Office for Administration Finance
COMMONWEALTH OF MASSACHUSETTS
STATE. HOUSE a BOSTON, MA 02133
(617)727-2040

 

CHARLES E). BAKER KARYN E. 
GOVERNOR UEUTENANT GOVERNOR

KRESTEN LEPGRE
SECRETARY

October 15, 2015

TO: His Excellency Charles D. Baker, Governor
The House Committee on Ways and Means
The Senate Committee on Ways and Means

The Joint Committee on Revenue

Massachusetts General Laws Chapter 29, Section 5B, requires me to prepare estimates of
budgeted revenues for the current and ensuing ?scal year on or before October 15th of each
year.

I am formally revising the estimate of budgeted revenues that is available for Fiscal Year
2016 (FY16) down by $145 million to $3 8.002 billion due to lower-than~expected
performance for non-tax revenues relative to levels originally assumed in the FY16 General
Appropriations Act (GAA).

Based on available data on tax collections and economic trends, I am not revising the total
FY16 GAA tax revenue estimate of $25.611 billion contained in the GAA after adjusting for
the sales tax holiday. After consulting with the Department of Revenue and reviewing
updated economic data, I believe that the current tax revenue estimate is still warranted.

With regards to tax collections, we paid particular attention to the projected revenues
associated with capital gains. Independent vendors who are consulted by the Department of
Revenue currently project that capital gains taxes could end the year higher than the FY16
consensus revenue estimate of $1.387 billion. However, capital gains are subject to the
volatility of the stock market and are inherently unpredictable for many reasons including:
the lagging effect of how they are collected due to extensions and estimates; the complexity
of global markets and investment strategies; and the actions of the federal government. As
such, there is signi?cant uncertainty in the near future on capital gains revenues. Moreover,
amounts over the benchmark, should they occur, should be directed to the Stabilization Fund,
in the spirit of c. 29, 3. 5G.

 

Tax and Non-Tax Revision Letter
October 15, 2015
Page 2 

We will continue to monitor developments in revenue policy, economic trends and agency
collections to determine the continued appropriateness of this estimate.

As is customarily the case, I am not providing a Fiscal Year 2017 revenue estimate at this
time. Our capacity to forecast FY17 revenues will bene?t from a few more months of tax
collection data and testimony regarding updated economic forecasts at the FY17 consensus
revenue hearing this December.

Sincerely,



Kristen Lepore, Secretary
Executive Office for Administration Finance