Legislative and Baker administration budget writers are projecting that state tax revenue will grow by 2.7 percent next fiscal year, from the $35.948 billion they are now expecting the state to collect in fiscal 2022.
Administration and Finance Secretary Michael Heffernan and Ways and Means Committee chairs Sen. Michael Rodrigues and Rep. Aaron Michlewitz are required to jointly develop a revenue forecast each year, which lawmakers and Gov. Charlie Baker use in crafting their spending plans. Baker, who makes the first volley in the annual budgeting process, is due to file his bill by Jan. 26.
The trio on Friday announced a consensus revenue forecast of $36.915 billion for the fiscal year beginning July 1, which would make a maximum of $29.783 billion in tax revenue available for the fiscal 2023 budget after accounting for statutorily required transfers. In conjunction with the announcement, Heffernan said he is revising this year’s revenue projection upward by $1.548 billion based on year-to-date collections and economic data. As of December, the state had collected more than $17.8 billion in taxes so far, this fiscal year.
The upgraded fiscal 2022 number assumes 5.3 percent growth over fiscal 2021 collections, according to a Massachusetts Taxpayers Foundation analysis, meaning the 2.7 percent estimate for fiscal 2023 would represent a slowdown in growth.
The fiscal 2023 estimate of $36.9 billion lands within the range of possibilities experts offered at a December hearing, when they said Massachusetts could expect at least about $36.48 billion and possibly as much as nearly $40.8 billion next year, while flagging the continued uncertainty of the pandemic and its economic toll.
“After some tumultuous budget cycles over the last several years, this consensus revenue agreement for Fiscal Year 2023 is a reasonable and appropriate forecast that will allow the Commonwealth to continue to provide the services our constituents deserve, while at the same time preserving our fiscal health,” Michlewitz said. “Despite the pandemic, our revenue intake continues to be better than anticipated, proving the continued resiliency of the Commonwealth’s economy.”
