September Revenues Take a Hit

Massachusetts revenues have fallen substantially below budget projections in September, with estimates that the gap could be as high as $200 million. Final figures for the month are not complete, but the figures in hand have set off alarm bells in Boston. The Governor will likely need to submit revised revenue estimates in October, which could lead to a fresh round of mid-stream budget cutting. Local aid accounts could be cut in that process, although Governor Patrick has said that it is to early to tell if local aid will be slashed. Michael Widmer talked of another $500 million dollar gap in this budget. From the Globe:

“Oh, Lordy,’’ said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, when told of the estimates. “Numbers like this for September suggest [the state’s revenue estimates] could be $500 million or more too high for the year.’’

While we will have to wait for final numbers and do the requisite analysis it appears that state budget folks may have overestimated the revenue from the increased sales tax. Sales data appears to be showing steep declines in retail sales on the Massachusetts side of the border, with a corresponding increase in sales on the New Hampshire side. Customers are voting with their feet, adding millions of dollars in sales for New Hampshire merchants. Nancy Kyle, President of the New Hampshire Retailers Association, summed it up.

“It’s definitely more than usual – the number of out-of-state residents shopping here in recent weeks,’’ Kyle said. “It’s wonderful for New Hampshire retailers. We are ecstatic.’’

And so the revenue news continues to jolt the State, where reserves have plunged and federal stimulus money will be gone soon. Some hard choices are dead ahead.

Globe sales tax story.

Globe Revenue story.

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6 Responses to September Revenues Take a Hit

  1. Jules Gordon says:

    Your Honor,

    The taxes go up and the revenue goes down. Mathematically the formula is:

    R = 1/Tx.
    R = Revenue
    Tx = Taxes

    Now if you do the obvious and lower the tax the Revenue will increase. However, your ‘friends’ will describe such an act as trickle down economy and a tax cut for the rich. Of course sales tax is regressive and the poor folks get on the chin.

    But, of course, being Democrats, the legislature will raise taxes in a useless attempt to recover revenue.

    Can you imagine what will happen when your federal ‘friends’ get hold of Health Care. God save us.



  2. Jules Gordon says:

    Your Honor,
    What went wrong with the calculations that lead to expected revenue from the sales tax increase?



  3. Bill Manzi says:


    Final data is not in, so sales tax revenue breakout is not yet available. But my hunch is that the state may have over estimated sales tax revenue. At one point House budget writers had that number at $900 million. The Senate downgraded to about $600 million. Don’t remember what it finally came in at but in light of some of the sales data being kicked around publicly it is likely still too high.



  4. Ben Nevis says:

    Mr.Mayor, you’ve seen the prilim. numbers and you have a HUNCH that the state may have OVER estimated sales tax revenues! Geeesh, I thought you were a lot sharper than that.:)


  5. Bill Manzi says:


    I actually have not seen the specific numbers, just the aggregates. Have not seen the sales tax breakout, that is why I said what I did. I also posted this before the month was up.



  6. Jules Gordon says:

    Your Honor,

    I think your are a wonderful manager, but you are deficient as a historian.

    Those guys in Boston, like their big brothers in Washington, never get estimates right. If I’m wrong then name one correct estimate from either legislative body in living memory.

    Here’s the rule (I give it at no charge to you). When ever they come up with a revenue estimate reduce it by 30%. Then prepare for the worst, because all these guys are doing is trying to preserve their jobs.



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