Fiscal Year 2017 Revenue Forecast for Commonwealth - $26.86 Billion

BOSTON – Secretary of Administration and Finance Kristen Lepore, Senate Ways and Means Chair Karen Spilka (D-Ashland), and House Ways and Means Chair Brian S. Dempsey (D-Haverhill) announced a consensus revenue forecast for Fiscal Year 2017 of $26.860 billion, representing 4.3% growth over revised Fiscal Year 2016 projections.

The consensus joint revenue forecast represents the basis for which the Baker-Polito Administration, the House, and the Senate will use to build their respective Fiscal Year 2017 (FY17) budget recommendations.

Secretary Lepore also announced today that the Baker-Polito Administration is upgrading projected tax revenue for the current fiscal year by $140 million, based upon year-to-date revenues and economic data.

Pursuant to Section 5B of Chapter 29 of the General Laws, these three offices convene every year to establish a joint revenue forecast by January 15th. In addition to meeting with each other, the Secretary and Chairs heard expert testimony in December from the Department of Revenue, the State Treasurer’s Office, the Public Employment Retirement Administration Commission, and local economists on tax revenue from area foundations and universities.

“The consensus revenue estimate for Fiscal Year 2017 reflects consistent growth in the Massachusetts economy,” said Secretary Lepore, in a statement. “We are working to ensure that we match this consistent revenue growth with responsible spending. Over the long term we want to have a structurally balanced budget that serves the needs of the Commonwealth at a price we can afford.”

“I believe in the strength of the Massachusetts economy. These numbers are the result of our continued commitment to growing through innovation and increasing opportunities for everyone in a changing economy. Once again in Fiscal Year 2017, we will continue to be guided by the principles of sound fiscal stewardship. This modest estimate will allow us to make targeted investments while working within our financial reality,” said Senator Karen E. Spilka (D-Ashland), Chair, Senate Committee on Ways and Means.

“The Consensus Revenue agreement is an important first step in the process to building a balanced Fiscal Year 2017 budget. The 4.3% growth demonstrates that the state continues on a path of sustainable economic progress. While this steady progress, along with recent trends in both unemployment and tax collections are encouraging, it is important to note that FY17 will still be a challenging year and our focus continues to be on fiscally responsible decision making,” said Representative Brian S. Dempsey (D-Haverhill), Chairman House Committee on Ways and Means

The consensus revenue estimate for FY17 is within the range of the forecasts laid out by experts at December’s joint hearing. The projection also assumes that another income tax trigger will go into effect January 1, 2017, lowering the state’s personal income tax from 5.1% to 5.05%. Of the forecasted $26.860 billion in FY17, an estimated $1.484 billion is projected to come from taxes on capital gains

In addition, the three bodies reached agreement on statutorily required off-budget transfers that are mandated by current law.

· $867.1 million for the Massachusetts School Building Authority (SBA)

· $21.4 million for the Workforce Training Fund

· $1.001 billion for the Massachusetts Bay Transportation Authority (MBTA)

· $2.198 billion transferred to the pension fund, which includes full funding of the scheduled pension contribution for Fiscal Year 2017.

The $2.198 billion transferred to the pension fund follows the funding schedule as updated by Chapter 61 of the Acts of 2015. The pension schedule includes a 10% increase in FY17 in order to fully fund the pension liability by 2036, adjusted for pension related costs associated with employees who participated in the early retirement incentive program.

After $4.087.7 billion in off-budget transfers, the Secretary and Committee Chairs agree that $22.772 billion will be the maximum amount of tax revenue available for the budget in FY17, absent statutory changes. All three bodies will base their respective budget recommendations on this projection.