Vehicle sales taxes off, total taxes up 1.2 percent fiscal 2017

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When the Department of Revenue emphasized in early August that state tax collections in July exceeded benchmarks it did not mention that the monthly benchmark had been lowered.

Gov. Charlie Baker and Democratic legislative leaders spent the spring ripping up and rewriting budget plans because tax collections month after month fell short of their expectations. For budget-writing purposes, they marked down their estimate of fiscal 2017 tax collections by $630 million.

But Baker’s team so far has not officially lowered their fiscal 2017 revenue estimate of $26.86 billion, a move that could come in October. Administration officials acknowledged recently to the News Service that despite officially maintaining the higher estimate, they have lowered monthly revenue benchmarks to correspond to an annual estimate of $26.231 billion.

Tax collections in July of $1.707 billion worked out to a $36 million or 2.1 percent increase over July 2015, and surpassed the benchmarks corresponding to the $26.231 billion estimate by $7 million.

In an Aug. 18 letter to lawmakers, Revenue Commissioner Michael Heffernan reported that tax receipts over the first half of August were down $8 million from the same period in August 2015 and that total tax collections for the year-to-date period of fiscal 2017 through mid-August were $2.485 billion, which is $28 million or 1.2 percent ahead of the same year-to-date period in fiscal 2016. Motor vehicle sales taxes were up 4.6 percent during the first half of August, rebounding a bit from July, when motor vehicle sales taxes for the month were down by $11 million, or 14.4 percent compared to July 2015.

State officials plan to release their report on August revenues in early September. In early August, a DOR official said remaining monthly benchmarks are being finalized and would be released soon.

— Written by Michael P. Norton

Copyright State House News Service