Tax collections continue skid into new year

December’s disappointing tax receipts spurred Gov. Maura Healey to make midyear budget cuts last week and the Department of Revenue has now reported that January’s collections got off to a tough start.

January is a significant month for state tax collections, usually ranking as the fourth-largest revenue month of the year. But through Jan. 12, tax collections for the month totaled $1.287 billion, which is $208 million or 13.9% less than what DOR took in during the same period in January 2023.

“January results show decreases in all major tax types except sales & use tax,” DOR said in its midmonth report to members of the Joint Committee on Ways and Means.

Last January, DOR collected $3.863 billion for the full month. Before the governor downgraded the year-end revenue estimate by $1 billion, the administration was expecting to collect $4.121 billion this January. DOR’s monthly benchmarks will be revised for the remainder of the budget year to reflect the revenue downgrade.

Through December, the halfway point of fiscal year 2024, the state has collected $769 million or 4.1% less tax revenue than the projections used to craft the $56 billion state budget, but $60 million or 0.3% more than what was collected to the same point last budget year.

“I think what really changed it for us was the December revenue,” Secretary Matthew Gorzkowicz said earlier this month when the governor’s budget cuts and revenue revision were announced. “We felt like we could no longer deal with it using existing resources, but we needed to then layer on some additional budget reductions in order to make sure that we had enough resources on the table to get to the end of the fiscal year and remain in balance.”

Gorzkowicz said the governor’s budget actions were designed to address the existing revenue shortfall and provide some breathing room for the remainder of the fiscal year, when he expects additional months of belowbenchmark collections.