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State Revenue Is Up For December: The Week Ahead On Beacon Hill

Cash.
Ed Ivanushkin
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Creative Commons / flickr.com/photos/barsen

Tax collections in December left Massachusetts flush with an unbudgeted windfall of cash, and have exceeded estimates by $728 million. 

The state is running six percent above the benchmark, and lawmakers will be taking another look at spending priorities.

Matt Murphy of the State House News Service explains what to watch for, including a caveat: the new federal tax bill may have pushed some people to file before January 1, possibly cutting into this month's revenue.

Matt Murphy, State House News Service: [It's] certainly welcome news, given what has happened over the past couple of years with tax collections, particularly in the second half of these fiscal years, dropping off and creating budget crises. Going into the new year after the December collections with a cushion is certainly welcome. 

But it did come with a caveat from revenue officials with the state, who say that some of these payments -- and just the sheer volume that came in December -- may be taken out of what they were expecting to get in January [2018] or future months, and federal tax policy may have had something to do with this.

They do believe bonuses were up a bit in December, [and] holiday shopping was good. But there were also a number of estimated payments that people made trying to get their tax payments in before the end of the year and the federal tax rules took effect.

So, a lot going on here, and they're going to be watching closely, particularly in January, to see if the pace keeps up, or if a chunk of this positive news gets taken out.

You know, just the sheer volume -- we're looking at 8 percent growth over last year. [Which is] part of the reason why you saw [Governor Charlie Baker] last week decide to release legislative earmarks across the state, that he had been holding out of concern that there were other parts of the budget that would need extra money in the new year, and he didn't know if the state could afford it.

He now feels comfortable moving forward. But it obviously bears watching given what has happened over the last couple years.

Acting Senate President Harriette Chandler -- who expressed "delight" last week at the Baker administration's release of those earmarks -- attends her first "big three" leadership meeting on Monday. Will those solid tax revenue numbers, combined with earmarked spending moving out the door, carry forward and influence Chandler's Senate priorities?

Oh, sure it will. And I'm sure the three of them will talk about it when they meet.

The governor is due to file his fiscal 2019 budget later this month, the last budget of his first term, sort of an election-year budget that will set the priorities for the coming year. Typically, we see supplemental filings come with that annual budget to boost certain accounts in the current year.

I'm sure the governor and legislative leaders are looking at this money, and wondering how they can spend it. It'll be interesting to see how much Chandler asserts herself coming into this year, given the fact that she has only said that she plans to stay there temporarily.

Could the way Chandler moves forward with the Senate have any implications for the next election cycle?

Absolutely, yes. When the legislature returned last week to kick off the second year of the two-year session, Chandler gave some remarks, and she sort of laid out a fairly interesting agenda. It included paid family medical leave, raising the minimum wage, and some other issues that people weren’t so sure whether she was going to steer the ship in the direction they were going, or put her imprint on the direction of the Senate while she's filling in, while the investigation into Senator [Stan] Rosenberg is ongoing.

And if she does try and get the Senate, and bring her House colleagues here in the legislature along, to do something on paid family medical leave, or to raise the minimum wage, that has an impact on the ballot questions moving forward, which are a big factor in the elections.

Some Democrats are looking, too, to help drive turn out. So it will be interesting to see if the legislature can get together and do something on these topics themselves before it goes to the ballot.

Carrie Healy hosts the local broadcast of "Morning Edition" at NEPM. She also hosts the station’s weekly government and politics segment “Beacon Hill In 5” for broadcast radio and podcast syndication.
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