BHI FaxSheet: Information and Updates on Current Issues

Massachusetts FY-94 tax revenues predicted to reach $10.3 billion

April 16, 1993

Massachusetts tax revenues will be $10,306.2 million in fiscal year 1994, $153.8 million less than predicted by Governor Weld his 1994 budget (House 1). The Beacon Hill Institute has made this prediction on the basis of its 1993 baseline forecast of Massachusetts tax revenues. The same forecast shows that FY 1993 tax revenues will be $9,921.1 million, $18.9 million less than that predicted by the governor.

The institute's baseline forecast assumes three-percent growth in real (constant-dollar) U.S. personal income, three-percent growth in the U.S. consumer price index and no change in Massachusetts tax policy. Table 1 provides the results of this forecast for FY-1993-95 and of forecasts that make alternative assumptions about the growth of real U.S. personal income and about Massachusetts tax policy. The low- and high-growth forecasts assume, respectively, two- and four-percent growth in real U.S. personal income and no change in Massachusetts tax policy. The tax-hike forecast adopts the baseline assumption concerning the real U.S. personal income but allows for a rise in tax rates aimed at funding new state expenditures on education. All forecasts are driven by the institute's dynamic econometric tax model for Massachusetts.

Table 1 provides, in addition to its April 1993 forecast, the institute's April 1992 forecast for FY 1992-95. Of note is the fact that the institute's April 1992 forecast for FY 1992 was accurate within one percent of actual revenues for that year. (1 ) Looking ahead to FY 1994-95, our April 1993 baseline forecast is somewhat more pessimistic than our April 1992 baseline forecast. (2)

Table 1
Taxes For Budget By Fiscal Year
($ Millions)


  1992 1993 1994 1995
BHI April 93 Forecast
Baseline   9,921.10 10,306.20 10,801.10
Low-Growth Forecast   9,914.90 10,254.90 10,700.00
High-Growth Forecast   9,927.20 10,357.30 10,901.50
Tax-Hike Forecast   9,921.10 10,596.00 11,094.90
BHI April 92 Baseline Forecast 9,398.80 10,015.70 10,598.20 10,968.10
House 1 Forecast   9,940.00 10,460.00  
Actual Amount 9,482.30      

Table 2 provides quarterly forecast of tax revenues and Massachusetts personal income (in millions of current dollars). Personal income and tax revenue for the second quarter of CY 1994 are expected to exceed those for the same quarter of CY 1993 by 4.8 percent.

Table 2
BHI 93 Baseline Forecast By Calandar-Year Quarter
($ Millions)

  1993:2 1993:3 1993:4 1994:1 1994:2
Taxes for Budget 2,830.70 2,371.50 2,388.90 2,578.50 2,967.30
Massachusetts Personal Income (annual rates) 149,189.00 150,962.00 152,753.00 154,562.00 156,389.00


(1) Last year, the Institute predicted $9,192 million in FY-1992 tax revenue, expressed in constant (inflation-adjusted) dollars. Given one-percent inflation, the nominal dollar equivalent is $9,398.8 million.

(2) This is the result of improvements we have made in the structure of the model.

Format revised on 11-Jul-2007 2:19 PM