December tax collections up by 10 percent

Courtesy MGNonline

BOSTON (SHNS) – As Democratic legislative leaders and Governor-elect Charlie Baker mull ways to plug a midyear state budget hole, state officials reported Tuesday that tax collections in December totaled $2.3 billion, or 10.1 percent more than in December 2013.

The collections exceeded the monthly benchmark by $29 million. Halfway into fiscal 2015, the state has collected $11.2 billion in taxes, which is just $18 million below the benchmark used by budget writers.

“We finished December above what we expected largely due to greater than anticipated individual income estimated tax payments, corporate and business collections and estate tax collections which combined to offset less than expected withholding and sales tax payments,” Department of Revenue Commissioner Amy Pitter said in a statement.

Tax collections so far this fiscal year are up 4.1 percent over the same period in fiscal 2014. The $36.5 billion fiscal 2015 budget increases spending by 5.6 percent and Gov. Deval Patrick in November unilaterally cut spending accounts and proposed other budget fixes to close a budget gap that administration officials estimated at $329 million.

After the November elections, Patrick aides said non-tax revenues were missing expectations by $176 million, noted a slight income tax cut Jan. 1 would cost the state $70 million, and said the $82 million cost of a jobs bill approved over the summer was putting pressure on the budget.

The Massachusetts Taxpayers Foundation estimated a larger budget gap, prompting Patrick’s budget chief Glen Shor to dispute the foundation’s assumptions.

Shor disputed the foundation’s assumptions regarding health care spending, including exposures at the Massachusetts Health Connector, and with regard to spending exposures relating to last year’s welfare reform law and the cost of specialty drugs. Shor also said the state had over-budgeted for debt service and could count on funds reverting to cover a commitment to reduce public employee post-employment benefit liabilities.

Legislative leaders last month opted to wait until Baker takes office before attempting to address the midyear budget problem.

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