Morning Briefs: Billion Over Benchmark | Business Confidence Up | Development Oversight

State House News Service3/6/23 9:28 AM

• Taxes Running $1 Billion Over Benchmark
• Businesses More Optimistic In February, But Still Grappling With Unknowns
• Healey Plan Divides Oversight Of Development Projects

Taxes Running $1 Billion Over Benchmark
Through the first eight months of fiscal 2023, tax collections of $23.6 billion are running 0.2 percent behind the record fiscal 2022 haul but are outpacing the state's benchmarks by about $1 billion, or 4.4 percent. Tax revenues in February of $1.98 billion exceeded benchmark levels, continuing the trend that has held for much of this fiscal year. Collections last month were up 9 percent above February 2022, and 2.5 percent over benchmark, the Department of Revenue reported late Friday. After adjusting for an elective pass-through entity excise tax, year-to-date collections are $1.058 billion or 4.7 percent more than collections in the same period of fiscal 2022 and $572 million or 2.5 percent higher than the year-to-date benchmark. Fiscal 2022 tax collections soared over the previous fiscal year, triggering nearly $3 billion in tax returns and leaving Beacon Hill with a substantially expanded tax revenue base from which to begin fiscal 2024 budget deliberations. Income withholding taxes of $10.9 billion are up 3.6 percent so far this fiscal year and sales and use taxes of $6.3 billion, another big revenue base for the state budget, are up 8.8 percent compared to the same eight-month period in fiscal 2022. Corporate and business taxes of $2.16 billion are up 0.5 percent, and non-withheld income tax collections of $2.34 billion are down just over 27 percent so far this fiscal year. "February collections increased in withholding, sales and use tax, and 'all other tax' in comparison to February 2022," Commissioner Geoffrey Snyder said in a statement. "These increases were partially offset by decreases in non-withholding income tax. The increase in withholding is likely related to labor market conditions and the increase in sales and use tax reflects, in part, continued strength in retail sales. The increase in 'all other tax' is primarily attributable to estate tax, a tax category that tends to fluctuate." - Michael P. Norton/SHNS

Businesses More Optimistic In February, But Still Grappling With Unknowns
A two-month slide in business confidence came to an end in February, but Bay State employers are largely in wait-and-see mode as they try to discern what track the economy will take in 2023, according to the latest readout from Associated Industries of Massachusetts. AIM's Business Confidence Index gained 0.3 points last month to rise to 53.5 on the zero-to-100 scale. February's confidence level sat 3.2 points lower than a year prior. Since tumbling nearly 5 full points in December, there has not been significant movement in the index. AIM said that sentiments among the businesses that responded to its survey are "driven by a swirl of often contradictory economic signals" and that companies are still trying to figure out whether a recession, persistently high inflation, labor shortages or economic growth will be the trend for 2023. "Leading indicators suggest that economic growth will decelerate during 2023, yet the state and national economies continue to exhibit a strong labor market, low unemployment, and a persistently high rate of inflation," the organization said. Employers felt better in February about the Massachusetts economy than about the national economy. The Massachusetts Index gained 3.2 points last month to climb to 53.4, but it remains 4.3 points below last February's mark. At the same time, the US Index remained in pessimistic territory for a fifth straight month with a reading of 47.1 despite gaining 0.4 points in February. AIM also flagged a shift in its Manufacturing Index: while confidence among non-manufacturing companies rose to 56.1 in February, the outlook for manufacturing slumped 1.3 points and landed in the pessimistic range at 49.5. "Consumer spending remains strong nationally and the job market is still historically tight -- Massachusetts payroll employment grew at an annual rate of 4.2 percent in the fourth quarter," Katherine Kiel, professor of economics at the College of the Holy Cross, said. "At the same time, the fact that confidence among Massachusetts manufacturing companies has fallen into pessimistic territory is a matter of concern." - Colin A. Young/SHNS

Healey Plan Divides Oversight Of Development Projects
Gov. Maura Healey wants to separate housing and economic development in the state's bureaucracy, mostly to give housing production the enhanced focus she says it desperately needs. But Healey doesn't want to completely shatter the connection between the two topics. According to the details of a government reorganization bill she filed last week, Healey wants oversight of public and private community redevelopment corporations and their projects to be divided between the new Executive Office of Housing and Livable Communities, which is supposed assume all of the powers and responsibilities of the existing Department of Housing and Community Development, and the new Executive Office of Economic Development. Oversight responsibility will be exercised by the Executive Office of Housing and Livable Communities for projects exclusively or primarily focused on housing development, according to a March 1 letter Healey wrote with her bill, and by the Executive Office of Economic Development for projects primarily or exclusively focused on commercial development. Healey says her bill also duplicates the current legislative authorization for MassWorks, a popular infrastructure grant program, in a new "HousingWorks" statute "dedicated exclusively to funding municipal infrastructure that supports new or redeveloped housing." That change, Healey said, will ensure that officials in the new housing secretariat can make use of the grants currently provided to municipalities "pursuing smart housing growth policies." The bill also "includes some provisions that update and streamline the organization and administration of agencies" currently under the Executive Office of Economic Development, including the Massachusetts Office of Business Development. In her filing letter, Healey describes a "housing crisis" in Massachusetts that she says "has been in the making for decades" and contributes to a high cost of living that "places Massachusetts at a significant disadvantage as we compete with peer states to attract and retain businesses." Cracking that problem, in an environment where key housing decisions are made at the local level, remains the challenge facing Beacon Hill. "In short, we must create an adequate supply of housing for our young families, workers, and an aging population if we want to remain one of the best states in the nation to live and work," Healey wrote. Warmer weather states in the south and west have in recent years drawn new residents in part due to lower cost of living metrics. - Michael P. Norton/SHNS

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3/6/2023

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