Massachusetts Tax Collections Plummet in December
BOSTON — Reports from Beacon Hill indicate that Massachusetts is significantly behind the mark in tax collections for the month of December.
According to the State House News Service, tax receipts for the month of December missed the monthly benchmark by more than half-a-billion dollars, erasing months of above-benchmark collections.
The total for December has collections $108 million behind target midway through fiscal 2019, according to data released late Friday by the Massachusetts Department of Revenue. Income tax estimated payments totaled just $121 million for the month, which is $542 million or 81.7-percent below benchmark and $575 million or 82.6-percent below the December 2017 total.
"We underestimated the shift of estimated payments from December into January. Early indications are that other states may be having a similar experience," Revenue Commissioner Christopher Harding said in a statement.
Other key categories of receipts such as withholding, sales, and corporate taxes are flowing into state coffers near benchmarks, and estimated payments, which are not due until January 15, are "likely to be stronger in January as a result of the shift," Harding predicts.
"In prior years, many taxpayers chose to pay in December, to take advantage of the federal deduction for state taxes," Harding said.
Total December collections were $440 million or 14.6-percent less than collections in December 2017. Revenue collections of $13.312 billion over the first six months of fiscal 2019 are $108 million or nearly 1-percent below the year-to-date benchmark and $387 million or 3-percent greater than the same fiscal year-to-date period in 2017.
The original benchmark for fiscal year 2019 was $28.392 billion, but state officials on New Year's Eve, just four days before reporting the huge drop in December receipts, raised it to $28.529 billion, citing "current year-to-date revenues and economic data" and backing off the books an estimate of $63 million in marijuana tax revenues.
December is the fifth largest month of the year for tax collections and revenues for the month totaled $2.568 billion.
Fiscal 2018 tax collections of $27.787 billion surged 8.3 percent above fiscal 2017 collections, following several years in which collections tailed off during the final six months of the fiscal year.
This month, Governor Charlie Baker plans to file his fiscal 2020 budget proposal. If natural growth in tax collections erodes, major investments in priority areas like education, health care and transportation will become more difficult.
In his inaugural address Thursday afternoon, a day before the December numbers were released, Baker described the state economy as "booming."
"We have more people working than at any time in state history," Baker said.
"Over 200,000 jobs have been created since we took office. Our labor force participation rate is at an all-time high. And people are moving to Massachusetts because we offer good jobs and opportunity."