State Announce Consensus Revenue Forecast for Fiscal Year 2025
BOSTON – Secretary of Administration and Finance Matthew J. Gorzkowicz, Senate Ways and Means Chair Michael J. Rodrigues and House Ways and Means Chair Aaron Michlewitz agreed on a consensus revenue forecast for Fiscal Year 2025 (FY25) of $40.202 billion.
Secretary Gorzkowicz also announced a decrease of $1 billion to the FY24 state tax revenue estimate to $39.410 billion, based on current year-to-date revenues and economic data. The new FY25 consensus revenue estimate of $40.202 billion represents $208 million less in available revenue than what was used to build the FY24 budget, and a 2 percent increase above revised FY24 estimates, excluding surtax.
The agreement also estimates that sufficient revenue will be available in FY25 from the voter-approved 4 percent surtax to support $1.3 billion in additional spending on education and transportation initiatives, an increase of $300 million in available funds over the FY24 budget.
"This Fiscal Year 2025 consensus revenue forecast responsibly considers the many external pressures that have led to a slowdown in revenue growth over past months and put significant pressure on state spending. While acknowledging the challenges ahead, we are confident this agreement will allow us to construct a budget for FY25 that continues to invest in key priorities and supports our residents and communities. The increase in available resources from the surtax will also enable us to build on the blueprint for surtax spending we established last year with our partners in the Legislature to make meaningful progress in education and transportation to keep Massachusetts competitive, affordable, and equitable," said Administration and Finance Secretary Matthew J. Gorzkowicz. "I want to thank Chair Rodrigues, Chair Michlewitz, and the Ways and Means teams for their collaboration as we developed this revenue forecast and look forward to continued partnership through the FY25 budgeting process."
The consensus revenue forecast is the basis on which the Healey-Driscoll Administration, the House, and the Senate will build their respective FY25 budget recommendations. Pursuant to Section 5B of Chapter 29 of the General Laws, the Executive and Legislative branches 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 December 4, 2023.
Of the forecasted $40.202 billion in FY25 state tax revenues, an estimated $2.077 billion is projected to be capital gains tax revenue, of which, per statute, $528 million will be transferred to the Stabilization Fund and other long term liability funds for pension and retiree health insurance costs.
The agreement also includes several off-budget transfers that are mandated by current law, including:
- $4.5 billion to be transferred to the pension fund, a $395 million increase over the FY24 contribution that keeps the Commonwealth on schedule to fully fund its pension liability by 2036
- $1.465 billion to support the operations of the Massachusetts Bay Transportation Authority (MBTA), an increase of $2 million over the FY24 budgeted contribution
- $1.305 billion for the Massachusetts School Building Authority (MSBA), an increase of $2 million over the FY24 budgeted contribution, which will support school construction projects across the Commonwealth
- $27 million for the Workforce Training Fund to support the Commonwealth's workforce and business productivity and competitiveness
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 2024, as required by M.G.L. 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 agreement that the PGSP figure for calendar year 2024 will remain 3.6 percent. 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.
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