When A Surplus Is Not Extra
BOSTON, MA – The Commonwealth has seen annual tax collections come in far beyond what had been anticipated over the past two years, while at the same time, the state budget has been enacted based on cautious estimates. Robust capital gains income and the economic boost from an infusion of one-time federal revenues are among the factors that have led to tax collection levels that had been unforeseen. This has left policymakers with a significant amount of unobligated revenue (misleadingly referred to as a “surplus”) at the end of the fiscal year. Even though this is referred to as a surplus, it doesn’t mean that the budget as enacted had adequately funded the state’s essential programs and services.
A new report from the Massachusetts Budget and Policy Center (MassBudget), “When A Surplus Is Not Extra,” looks at trends in our state tax collections and provides recommendations for policymakers grappling with how best to invest the state’s surplus. “Tax revenues are always tricky to forecast, but that shouldn’t prevent us from investing our state’s revenue to solve real challenges we’re facing at the moment,” said Nancy Wagman, MassBudget’s Research & KIDS COUNT Director. “Despite being one of the wealthiest states in the nation, thousands in Massachusetts are at risk of eviction, face food insecurity, and struggle to make ends meet. Policymakers can use this moment to meet the moral mandate of our state budget.”
- Investing current unobligated “surplus” dollars to address significant, unmet community needs in areas of the state budget;
- Supporting low-income residents who have been left behind during the pandemic through thoughtful changes to tax policy; and
- Avoiding risky, unwise, and unjust permanent tax cuts for high-income residents from this temporary surplus.
