December 12, 2005
another year of strong growth in state tax revenues
-At a State House hearing this morning, The Beacon Hill Institute at
Suffolk University released its forecasts of Massachusetts state tax
revenue for fiscal years (FY) 2006 and 2007 -- predicting that the state's
economy will continue to generate strong revenue growth. However, revenue
growth is expected to moderate in FY 2007.
forecasts for FY 2005 and 2006 are:
FY 2006 (ending June 30, 2006): $18.028 billion, for growth of 5.5%
over FY 2005.
FY 2007 (ending June 30, 2007): $18.951 billion, for growth of 5.1%
over the predicted level for FY 2006.
G. Tuerck, Executive Director of BHI and Chairman and Professor of Economics
at Suffolk University, presented the forecast in testimony before the
joint Senate and House Ways and Means Committee and the Secretary of
Administration and Finance. The Institute's forecasts for FY 2004 and
FY 2005 proved closer to actual revenues than other recognized forecasts.
State tax revenues grew by 7.1% over the FY 2004 and FY 2005.
continue to be cautiously bullish on the state economy and therefore
on the outlook for state tax revenues," says Tuerck in his prepared
remarks. "Although Massachusetts lags the national economy, we
see strong growth in state tax revenue through the rest of fiscal 2006.
State tax revenue growth will fall off a bit during fiscal 2007 but
will nevertheless reflect continued underlying strength in the state
bases its forecast on predictions that state personal income will grow
by just over 5% through calendar year 2006 and slow to 3.8% in 2007.
the effects on the state economy of a reduction in the personal income
tax to 5% effective January 1, 2007. Using its State Tax Analysis Modeling
Program (STAMP), BHI found that the tax cut would create 7,827 new jobs,
$456 million in disposable income and $15.7 million in new capital spending.
Taking into account these "dynamic" effects, the predicted
tax revenue for FY 2007 would be $18.699 billion, $252 million less
than the amount predicted above.
Tax Revenue Forecasts for FY 2006 and FY 2007 may be obtained
at www.beaconhill.org or by calling BHI at 617-573-8750.
1/16/07 2:14 PM