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April Revenue May Be the Last Sharp Turn for Healey in FY2024’s Wild Ride…

Healey Gorzkowicz

FY24 has been a roller coaster for Gov. Healey and her ANF Secretary Matt Gorzkowicz. (created with images from Google search)

Bean counters for the Commonwealth of Massachusetts breathed a sigh of relief after monthly revenue figures beat expectations by $1 billion. The $6.32 billion in collections for April, which yields the largest haul each year because taxes are due this month, zoomed $1.03 billion over benchmarks. It surpassed last April’s take by over one and a half billion dollars.

Despite the ruddy complexion of the economy, both nationally and in the commonwealth, Governor Maura Healey has had to contend with wild gyrations in state revenue. Until March of this year, revenue fell short for eight months. That prompted budget adjustments in January, a hiring freeze and some fiscal dieting for the next year.

“April collections increased in non-withheld income tax, income tax withholding, and sales tax in comparison to April 2023”, Revenue Commissioner Geoffrey Snyder said in a release. “These increases were partially offset by decreases in corporate and business tax and ‘all other’ tax.’”

Secretary of Administration & Finance Matthew Gorzkowicz had projected confidence about April revenue during an appearance with Healey in Melrose. However, The Boston Globe reported that moves made to keep the current budget in the black shall remain.

Massachusetts has not been the only state with whipsawing revenue. Although the economy is healthy, ongoing pandemic-era ripples and mechanisms to mitigate lower federal deductions for state taxes have upended revenue projections everywhere. The administration blamed the latter, in part, for last April’s acutely disappointing take.

Still, Massachusetts has had a particularly chaotic 2024 fiscal year, which began last July. Healey has faced heavy criticism for pushing her tax cut last year, which cut taxes for businesses and wealthy estates. (As she did Friday during an appearance on GBH News, she highlighted the bill’s increased breaks for seniors and caregivers.)

Maura Healey

Healey eschews fiscal thrill rides to instead sign a nice relaxing road funding bill on Friday. Gorzkowicz, in grey suit, betrays no objections to something quiet. (WMP&I)

Fiscal turbulence led her and Gorzkowicz to initiate cuts January 8. Some reductions to MassHealth were actually savings brought forward from smaller caseloads. Millions in other programs faced the axe, though. The governor also used her emergency fiscal authority to shave down earmarks lawmakers hung onto the budget.

The cuts reset expectations for revenue. January and February revenue still disappointed. The day March revenue figures came out—which broke the streak of revenue misses—Healey implemented a hiring freeze. She had styled it as hiring “controls,” because it did not absolutely bar hiring and exempted many categories.

The Boston Herald found that payroll still grew in April, but given the exceptions, it may take time for those savings to materialize.

Nevertheless, April’s figures are a welcome respite for Healey and her team. While passing its budget, the House of Representatives claimed more care while attaching amendments. The Senate has assured a lean approach as it begins its budget debate this month. Legislators on Beacon Hill may remain careful, but they could unclench their buttocks a bit, too.

Snyder and Gorzkowicz cautioned that some of the increase was in “non-withheld” income tax, which suggests part of the surge was in the millionaires tax. Voters amended the state constitution in 2022 to allow a 4% surcharge on incomes over $1 million while dedicating the funds to education and transportation. In other words, these funds cannot plug current deficits easily or possibly not at all.

Overall income tax revenue came in at $4.64 billion or $1.067 over the benchmarks for this budget. Withholdings from payroll was $1.5 billion or $81 million short of expectations. The DOR’s release suggests this was partly due to the timing of collections. It attributed a $10 million miss in sales and use tax collections to the same thing. The DOR reported $834 million in revenue from this category. Business and “other” tax categories combined came up $40 million short of benchmarks.

What made up the difference was revenue from tax returns and bills in April. Collections overshot expectations by $1.17 billion, totaling $3.34 billion for the month. Another category of income tax, estimated payments for the 2024 tax year, hit $429 million or $85 million above benchmarks.

While the 4% surcharge gives officials pause, Gorzkowicz has indicated he thinks the worst of the ride is over. He told the State House News that after April’s figures, he expects the budget to end in balance. The fiscal year concludes June 30.