Gorzkowicz, Rodrigues, Michlewitz, Announce Consensus Revenue Forecast of $40.410 Billion for Fiscal Year 2024
Baseline state tax revenue growth projected at 1.6%
BOSTON — Secretary of Administration and Finance
Matthew J. Gorzkowicz, Senate Ways and Means Chair Michael J. Rodrigues, and
House Ways and Means Chair Aaron Michlewitz today agreed on a consensus revenue
forecast for Fiscal Year 2024 (FY24) of $40.410 billion, a 1.6% increase in
state tax revenue over adjusted Fiscal Year 2023 (FY23) projected revenue. In
addition, the agreement also estimates an additional $1 billion will be
available in FY24 to support new education and transportation initiatives in
line with the requirements of the new 4% surtax approved by ballot initiative
in November 2022.
An increase to the FY23 state tax revenue estimate was also announced by Secretary Gorzkowicz today, increasing the forecast by $151 million to $39.768 billion, based on current year-to-date revenues and economic data. The Secretary and Chairs also reached agreement to utilize $100 million in FY23 to fully pay down pension liabilities attributable to the 2015 Early Retirement Incentive Program (ERIP) ahead of the previously established pension schedule, which would have seen these additional liabilities fully amortized in Fiscal Year 2027.
"The Fiscal Year 2024 consensus revenue forecast lays the groundwork for a fiscally responsible FY24 spending plan that supports core services for residents and makes meaningful and sustainable progress in addressing the varied needs and issues facing the Commonwealth. More importantly, the additional surtax revenue will allow for significant new investments in transportation and education that will make the Commonwealth more competitive, affordable, and equitable," said Administration and Finance Secretary Matthew J. Gorzkowicz. "I want to thank Chair Rodrigues, Chair Michlewitz, and the Ways and Means teams for their close collaboration as we developed this budget baseline and took the additional step of making a fiscally prudent investment of available FY23 resources to reduce future pension liabilities."
"This consensus revenue agreement for Fiscal Year 2024 provides a strong foundation for the Legislature and the Healey-Driscoll administration to develop a forward looking FY24 budget plan that upholds fiscal responsibility and meets the critical needs of our communities. Reflecting our commitment to taxpayers and respecting the will of the voters, this agreement also includes an estimated $1 billion in new Fair Share surtax revenue to support investments in new education and transportation initiatives, while utilizing available resources to fully pay down pension liabilities attributable to the 2015 Early Retirement Incentive Program,” said Senator Michael J. Rodrigues (D-Westport), Chair of the Senate Committee on Ways and Means. "I want to thank Chair Michlewitz and Secretary Gorzkowicz for their collaboration, partnership and commitment to prioritizing the long-term fiscal health and well-being of our Commonwealth. With this agreement, Massachusetts is well positioned to confront an uncertain economic future and ensure continued stability.”
“This Fiscal Year 2024 consensus revenue figure will allow the Legislature and the Healey-Driscoll administration to collectively construct a reasonable and appropriate budget for the upcoming fiscal year. By basing the budget on a judicious consensus revenue figure, the Commonwealth will be able to make the necessary investments that our constituents deserve, while at the same time enhancing the state’s fiscal health. The agreement also includes a projection for the additional surtax from the Fair Share amendment that passed last year that will lead to at least $1 billion in further investments into our education and transportation systems,” said House Committee on Ways and Means Chair Representative Aaron Michlewitz (D Boston). “I want to thank Chair Rodrigues and Secretary Gorzkowicz for their partnership in working to reach this agreement. I look forward to continuing to work closely with both of them as we work towards a final budget for fiscal year 2024.”
The consensus revenue forecast is the basis on which the Healey-Driscoll Administration, the House, and the Senate will build their respective FY24 budget recommendations. Pursuant to Section 5B of Chapter 29 of the General Laws, the three officials convene every year to establish a joint revenue forecast. This process was informed by testimony given by the Department of Revenue, the State Treasurer’s Office, and independent, local economists from area foundations and universities during a public hearing held by the Secretary and Chairs on January 24, 2023.
Of the forecasted $40.410 billion in FY24 state tax revenues, an estimated $2.063 billion is projected to be capital gains tax revenue, of which, per statute, $583 million will be transferred to the Stabilization Fund and other long term liability funds for pension and retiree health insurance costs.
The agreement also includes several off-budget transfers that are mandated by current law, including:
- $4.105 billion to be transferred to the pension fund, a $361 million increase over the FY23 contribution that keeps the Commonwealth on schedule to fully fund its pension liability by 2036
- $1.463 billion to support the operations of the Massachusetts Bay Transportation Authority (MBTA), an increase of $138 million over the FY23 budgeted contribution
- $1.303 billion for the Massachusetts School Building Authority (MSBA), an increase of $138 million over the FY23 budgeted contribution, which will support school construction projects across the Commonwealth
- $27 million for the Workforce Training Fund to support the Commonwealth’s workforce and business productivity and competitiveness
The Secretary and the House and Senate
Committees on Ways and Means also determined the potential gross state product
(PGSP) growth benchmark for calendar year 2023, as required by M.G.L. Chapter
29 Section 7H ½. The PGSP growth benchmark informs the Commonwealth’s health
care cost growth benchmark, established by the Health Policy Commission each
year. The three bodies have reached agreement that the PGSP figure for calendar
year 2023 will remain 3.6%. PGSP is a measure of the “full employment” output
of the Commonwealth’s economy and reflects long-term trends in the economy
rather than fluctuations due to the business cycle and, as a result, is meant
to be fairly stable from year to year.
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