Determination of Whether Net State Tax Revenues Exceeded Allowable State Tax Revenues

This is the State Auditor’s check of whether state tax collections stayed under the legal revenue growth cap for the year that ended June 30, 2014.

“In accordance with the provisions of the Massachusetts General Laws, Chapter 62F, we have reviewed the Report of the Net State Tax Revenues and Allowable State Tax Revenues for the fiscal year ended June 30, 2014, as prepared by the Commissioner of Revenue.”

State law requires the Auditor to review the Department of Revenue’s report and decide whether tax revenue exceeded the legal limit.

“Pursuant to Chapter 62F of the Massachusetts General Laws (inserted by St. 1986, C, 555, S. 2), the State Auditor is required to (1) review and ensure the completeness and accuracy of the Commissioner of Revenue’s Report of the Net State Tax Revenues and Allowable State Tax Revenues for the fiscal year ended June 30, 2014 and (2) independently determine whether net state tax revenues exceeded allowable state tax revenues and report the determination and amount of any excess state tax revenues for the fiscal year ended June 30, 2014.”

If taxes had gone over the limit, the state would have had to provide a tax credit; because they did not, no credit was triggered.

“Thereafter, the Commissioner shall take all the necessary action to effectuate a tax credit equal to the total amount of such excess.”

For an ordinary taxpayer, the key practical result is that this audit found no excess revenue and therefore no Chapter 62F credit for fiscal year 2014.

“For the fiscal years ended June 30, 1988 through 2013, the State Auditor determined that net state tax revenues were less than allowable state tax revenues; therefore, no tax credit was required to be effectuated by the Commissioner of Revenue for those years.”

The state collected about $23.67 billion in net tax revenue, which was about $3.38 billion under the allowable limit.

“As a result of our review, we have determined that the net state tax revenues of $23,666,801,083.65 for the fiscal year ended June 30, 2014 were below the allowable state tax revenues of $27,048,676,153.33 (as defined in Chapter 62F of the General Laws) by the amount of $3,381,875,069.68.”

Because the Auditor found no excess state tax revenue, the report does not call for a taxpayer credit or other refund action.

“If the State Auditor determines an excess of state tax revenues, she shall report that determination and the amount by which allowable state tax revenues were exceeded to the Governor, the President of the Senate, the Speaker of the House, the respective Chairmen of the Committees on Ways and Means of the Senate and House, and the Commissioner.”

The report confirms that, for fiscal year 2014, Massachusetts tax revenue stayed below the Chapter 62F cap even though net tax revenue rose compared with fiscal year 2013.

“Totals $ 23,666,801,083.65 $ 22,397,185,748.50 $ 1,269,615,335.15 5.67%”

“Allowable state tax revenues” means the legal cap on how much state tax revenue may grow, tied to growth in Massachusetts wages and salaries.

“This chapter provides for the establishment, for each fiscal year beginning with the fiscal year ended June 30, 1987, of a state tax revenue growth limit, calculated on the basis of the level of growth in total wages and salaries of the citizens of the Commonwealth.”