Cap Gains Haul Driving Up Rainy Day Fund Balance
The state took in more than $3.877 billion in tax revenue from capital gains income during fiscal year 2022 and more than $2.525 billion of it is bound under law for either the rainy day fund, the state’s pension liability trust fund or a retiree benefits trust fund, the Department of Revenue said Wednesday.
Revenue Commissioner Geoffrey Snyder said in a letter to Comptroller William McNamara that capital gains income tax collections for June (the fourth of four uneven fiscal year periods that DOR uses to track capital gains revenue) totaled $340.53 million, bringing the fiscal year’s estimated total to $3.877 billion.
State law requires that any capital gains tax revenue above and beyond a defined threshold — set at $1,351,910,000 for fiscal 2022 — be transferred to various funds with 90 percent of the overage going to the state’s Stabilization Fund, 5 percent to the State Retiree Benefits Trust Fund and 5 percent to the state’s Pension Liability Fund.
“Therefore, this capital gains tax certification letter shall generate a transfer of approximately $2,525.10 million, to the aforementioned funds as follows,” Snyder said, detailing fiscal year 2022 deposits of more than $2.272 billion for the stabilization fund, and $126.26 million for each of the trust funds. The comptroller has already transferred more than $2.162 billion to the funds for fiscal 2022 and Snyder said a total of roughly $362.66 million must still be deposited.
There was about $4.63 billion in the state’s stabilization fund at the end of fiscal year 2021 and the deposits planned for fiscal year 2022 were expected to total about $1.98 billion, the Massachusetts Taxpayers Foundation said. With $2.272 billion bound for the rainy day fund, the account’s balance could rise to roughly $6.9 billion and put it in position to surpass $8 billion with fiscal year 2023 deposits.
