Outside Section 20

Stabilization Fund Transfers 1

SECTION 20.   Said chapter 29 of the General Laws is hereby amended by striking out section 5B, as appearing in the 2014 Official Edition, and inserting in place thereof the following section:-

Section 5B. The secretary of administration and finance, with the approval of the governor, shall on or before October 15 of every year, prepare estimates of budgeted revenues which in the secretary's judgment will be available for the current year. In making such estimate the secretary shall take into account existing taxes, the probable economic growth within the state, anticipated federal fund receipts, the anticipated growth in wages and salaries, departmental and other revenue based on existing laws and amounts available to be transferred into budgetary funds. Such estimates shall be delivered to the house and senate committees on ways and means and shall be made available to the general public in a conspicuous manner on the commonwealth's official website within 14 days of submission of such revisions to the governor. The secretary shall accompany any revision of previous estimates with explanations of any changes in the secretary's estimates for specific sources of revenue.

The commissioner of revenue shall annually prepare and present with the governor's proposed budget actual or updated estimates of tax expenditures which occurred during the preceding fiscal year, based on the best available information, and estimates of tax expenditures which in his judgment will occur during the current fiscal year and the ensuing fiscal year. Such estimates of tax expenditures shall be prepared to facilitate a comparison of increases or decreases from actual or estimated tax expenditures of the preceding fiscal year to the estimates of tax expenditures for the current fiscal year and to the ensuing fiscal year. Such estimates shall also compare actual or updated estimates of tax expenditures during the preceding fiscal year, based on the best available information, to estimates previously presented for that fiscal year by the commissioner of revenue under this paragraph. The commissioner shall identify and analyze reasons for updates in estimates or for significant discrepancies identified under the preceding sentence.

On or before January 15, the secretary of administration and finance shall meet with the house and senate committees on ways and means and shall jointly develop a consensus tax revenue forecast for the budget for the ensuing fiscal year which shall be agreed to by the secretary and said committees. In developing such a consensus tax revenue forecast, the secretary and said committees, or subcommittees of said committees, may hold joint hearings on the economy of the commonwealth and its impact on tax revenue forecasts; provided, however, that in the first year of the term of office of a governor who has not served in the preceding year, said parties shall agree to the consensus tax revenue forecast not later than January 31 of said year. Said consensus tax estimate shall be net of the amount necessary to transfer, from the General Fund to the Commonwealth's Pension Liability Fund, to amortize the unfunded liability of the system according to the schedule established under paragraph (1) of section 22C of chapter 32 , and of the amounts transferred to the MBTA State and Local Contribution Fund under section 35T of chapter 10 , and to the School Modernization and Reconstruction Trust Fund under section 35BB of chapter 10 . Said consensus tax estimate shall also include an estimate of taxes collected under chapter 62 for capital gains income, as defined therein, and shall be net of the amount necessary to transfer, from the General Fund to the Commonwealth Stabilization Fund, one-half of the amount by which the estimate of capital gains taxes exceeds $1,168,790,736. For fiscal year 2019 and later fiscal years, the threshold established in the preceding sentence shall be adjusted annually to reflect the average annual rate of growth in United States gross domestic product over the preceding 5 years based on the most recently available data published by the Bureau of Economic Analysis in the United States Department of Commerce. Said consensus tax revenue forecast shall be included in a joint resolution and placed before the members of the general court for their consideration. Such joint resolution, if passed by both branches of the general court, shall establish the maximum amount of tax revenue which may be considered for the general appropriation act for the ensuing fiscal year.

Not later than March 31 of the fiscal year for which the consensus revenue estimate was established, the comptroller shall transfer the excess capital gains tax amount described in the fourth sentence of the preceding paragraph from the General Fund to the Commonwealth Stabilization Fund. Any transfer under this paragraph shall be made by the comptroller in accordance with a transfer schedule to be developed by the comptroller, after consulting with the secretary of administration and finance and the state treasurer. The schedule shall provide for transfers in increments considered appropriate to meet the cash flow needs of the commonwealth and all transfers under the schedule shall be completed not later than March 31 of that fiscal year.



Summary:
This section, with the following section, is part of the Stabilization Fund transfer initiative. This section conforms section 5B of chapter 29 to the proposed replacement of the current capital gains transfer provision, and to establish the requirement to transfer, pre-budget, one-half of the amount by which estimated capital gains tax collections exceed the current statutory threshold for such collections.