Most experts predicting year-over-year revenue dip
State tax collections this fiscal year could range anywhere from $25.9 billion to $29.8 billion, according to estimates offered Wednesday by economic experts that point to a likelihood that the state will see a year-over-year decline in tax receipts.
The estimates all fall below the $31.15 billion revenue estimate that the Ways and Means Committee chairs and Gov. Charlie Baker’s budget office agreed to in January, before COVID-19 took hold in the United States, leading to widespread business closures and restrictions and a steep economic downturn.
Ten months later, with the state still operating under temporary budgets, chairmen Sen. Michael Rodrigues and Rep. Aaron Michlewitz and Administration and Finance Secretary Michael Heffernan convened a group of experts to offer their latest forecasts and help inform the eventual crafting of a spending plan for the remainder of fiscal 2021.
The projections received Wednesday also reflect a host of unpredictable factors that experts said will shape the state and national fiscal pictures, including the trajectory of the coronavirus pandemic and future federal government policies and actions.
The state Department of Revenue projected a tax haul in the range of $25.918 billion to $28.387 billion. Three other speakers offered estimates in the area of $29 billion, shy of the $29.596 billion collected in fiscal 2020.
“There’s tremendous uncertainty in these forecasts,” Revenue Commissioner Geoffery Snyder said. “The trajectory of the pandemic, the timing of the development of vaccines and therapeutics, the measures governments have taken to control the pandemic and to mitigate its impacts, and the uncertainty surrounding potential action at the federal level have combined to create unprecedented challenges in revenue forecasting for the commonwealth.”
Reacting to Snyder’s testimony, Rodrigues said, “I’ve never seen this large of a range before in forecasts.”
The DOR forecasts are based on projections from economic vendors and tax collections for the first three months of fiscal 2021 — $7.27 billion through September. The range Snyder offered would represent a drop of anywhere from 4.1% to 12.4% from fiscal 2020 collections, or $2.764 billion to $5.233 billion below initial fiscal 2021 estimates.
Like Snyder, others who testified stressed that the pandemic and efforts to control the virus will be major drivers of the economy’s path going forward.
“If we can’t get the spread of the virus down, we cannot maintain much confidence that we can safely return to a fullthroated economic activity,” said Jeffrey Thompson of the Federal Reserve Bank of Boston.