Financial Journal Stories Mass. Financial system “Shifted Into A Decrease Gear”
FEB. 5, 2025…..January is a giant month for tax collections so its receipts are intently watched as a sign of how the second half of the state funds yr might play out. And this January’s collections got here in sturdy — up 14% over January 2024 and beating official expectations for the month by 11% or greater than $400 million.
The Division of Income reported Wednesday that it collected $4.1 billion final month, a rise of $505 million or 14.1% in comparison with precise collections final January and $406 million or 11% above the month-to-month benchmark. The wholesome haul pads the state’s income cushion within the face of calls for on state spending.
Fiscal yr 2025 collections via December had been $159 million or 0.8% forward of benchmark and January’s take moved the state to now stand $566 million or 2.5% above the Healey administration’s expectation for this level within the funds yr.
“January income included will increase relative to January 2024 collections in withholding, and non-withheld revenue tax,” Income Commissioner Geoffrey Snyder mentioned. “The rise in withholding is probably as a consequence of bonus associated actions and surtax income. The rise in non-withholding revenue tax is due, partially, to a probable enhance in surtax income, capital good points tax income, and the pass-through entity excise.”
DOR considers January a big month for revenues as a result of many private revenue taxpayers are required to make quarterly estimated funds throughout the month. The month has traditionally generated 10.2% of annual tax income, DOR mentioned.
Collections usually are not break up evenly throughout the 12 months and the second half of the fiscal yr (January via June) usually produces about 60 p.c of the state’s annual tax income, officers have mentioned. The second half of the funds yr additionally tends to be extra unstable for tax collections. DOR is because of report February collections by Wednesday, March 5. The administration’s benchmark for the month is ready at $2.009 billion.
On Tuesday, Administration and Finance Secretary Matthew Gorzkowicz advised the comptroller’s advisory board that the state’s funds are “definitely in a significantly better place than we had been final yr” on the identical time. Final January, Gov. Maura Healey used her unilateral 9C powers to chop $375 million in spending from the fiscal 2024 funds and downgraded the income outlook by about $1 billion.
“I believe we’re monitoring the revenues intently. I believe we really feel like we’re in an excellent place, primarily based on a few of the changes we made final yr and the truth that our consensus income quantity, I believe appropriately, forecasted a modest progress in income going into ’25,” the secretary mentioned after delivering an replace on income collections via December.
Additionally Tuesday, the economists at MassBenchmarks reported that the Massachusetts actual gross state product (GDP) elevated at an annual charge of 1.1% within the fourth quarter of 2024, whereas U.S. GDP elevated at an annual charge of two.3%. The Massachusetts economic system has grown extra slowly than the nationwide economic system in every of the final three quarters.
“The Massachusetts economic system seems to have shifted right into a decrease gear, with stagnant employment progress, rising unemployment, and tepid spending on gadgets topic to common gross sales taxes. That is in distinction to the U.S. economic system, which can be decelerating, however remains to be rising at a average tempo,” the most recent notes from the MassBenchmarks board, printed by the College of Massachusetts Amherst Donahue Institute in cooperation with the Federal Reserve Financial institution of Boston, mentioned.
