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Tax Revenues Falling in Massachusetts – Will State Raise Taxes During Coronavirus Economy?

October 7, 2020

Tax revenues for the current fiscal year in Massachusetts will likely come in somewhere between 4 and 12 percent less than expected before coronavirus hit, a state revenue official said.

That leaves the question of whether state legislators will cut spending, increase taxes, or wait for a federal bailout.

Geoffrey Snyder, the state’s revenue commissioner, said Wednesday that the Massachusetts Department of Revenue expects between $25.918 billion and $28.387 billion for fiscal year 2021, which runs from July 1, 2020 through June 30, 2021.

Snyder made the comments Wednesday, October 7 before the Massachusetts Legislature’s Joint Committee on Ways and Means, according to State House News Service.

The state saw a 1.4 percent year-over-year drop in revenue in September 2020. The state took in $3.144 billion in tax revenue in September 2019, which is about $46 million less than what the state took in during September 2019, according to State House News Service.

Given the state’s hot economy before March 2020, state officials thought before coronavirus that the state would take in about 2.8 percent more tax revenue during the current fiscal year than during the previous fiscal year.

Governor Charlie Baker is expected to release on Thursday, October 15 revised revenue estimates for the fiscal year that began July 1.

Some business leaders are worried about the apparent interest of some state officials to increase taxes to offset the revenue losses.

The Massachusetts High Technology Council noted in a memo that the state’s unemployment rate remains high and that small businesses are struggling, according to State House News Service.

The unemployment rate in Massachusetts for August 2020 was 11.3 percent, according to the U.S. Department of Labor.

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