Consensus Revenue Forecast of $40.410 Billion Announced for Fiscal Year 2024

According to a press release issued from their offices, Secretary of Executive Office of Administration and Finance Matthew J. Gorzkowicz, Senate Ways and Means Chair Michael J. Rodrigues, and House Ways and Means Chair Aaron Michlewitz announced that they had agreed on a consensus revenue forecast for fiscal year 2024 (FY24) of $40.410 billion, a 1.6% increase in state tax revenue over adjusted fiscal year 2023 (FY23) projected revenue. In addition, the agreement also estimates an additional $1 billion will be available in FY24 to support new education and transportation initiatives in line with the requirements of the new 4% surtax approved by ballot initiative in November 2022.

An increase to the FY23 state tax revenue estimate was also announced by Secretary Gorzkowicz, increasing the forecast by $151 million to $39.768 billion, based on current year-to-date revenues and economic data. The Secretary and Chairs also reached agreement to utilize $100 million in FY23 to fully pay down pension liabilities attributable to the 2015 Early Retirement Incentive Program (ERIP) ahead of the previously established pension schedule, which would have seen these additional liabilities fully amortized in Fiscal Year 2027.

The consensus revenue forecast is the basis on which the Healey-Driscoll Administration, the House, and the Senate build their respective FY24 budget recommendations. Pursuant to Section 5B of Chapter 29 of the Massachusetts General Laws, the three officials convene every year to establish a joint revenue forecast. This process was informed by testimony given by the Department of Revenue, the State Treasurer’s Office, and independent, local economists from area foundations and universities during a public hearing held by the Secretary and Chairs on January 24, 2023.

Of the forecasted $40.410 billion in FY24 state tax revenues, an estimated $2.063 billion is projected

Legislative Update continued from page 9 to be capital gains tax revenue, of which, per statute, $583 million will be transferred to the Stabilization Fund and other long term liability funds for pension and retiree health insurance costs. The Secretary and the House and Senate Committees on Ways and Means also determined the potential gross state product (PGSP) growth benchmark for calendar year 2023, as required by Massachusetts General Laws Chapter 29, Section 7H ½. The PGSP growth benchmark informs the Commonwealth’s health care cost growth benchmark, established by the Health Policy Commission each year. The three bodies have reached an agreement that the PGSP figure for calendar year 2023 will remain 3.6%. PGSP is a measure of the “full employment” output of the Commonwealth’s economy and reflects long-term trends in the economy rather than fluctuations due to the business cycle and, as a result, is meant to be fairly stable from year to year. continued on page 13

For a snapshot of the information and testimony the Secretary and respective Ways and Means Chairs relied upon, you can watch the FY24 consensus revenue hearing at: https://malegislature.gov/ Events/SpecialEvents/Detail/403.

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