State Auditor Suzanne Bump announced Thursday that her office has determined that the state’s tax revenue last year exceeded the allowable limit by nearly $3 billion, confirming the estimate put forward by Gov. Charlie Baker and clearing the way for the money to be returned to taxpayers.
Chapter 62F, a law approved by voters in 1986, sets limits on state tax revenue growth and requires the overage to be returned to taxpayers. The re-emergence of the law, which had only been triggered once before decades ago, snarled a planned economic development bill in the last hours of the legislative session.
Bump determined that the excess came to $2.94 billion, in line with the estimate put forward by Gov. Charlie Baker. Bump’s office was required to certify the amount by Sept. 20 before the state could proceed with tax relief.
“According to Chapter 62F, a return of this amount in the form of a credit must be effectuated by the commissioner of DOR,” Bump said in her statement.
Earlier this week, Baker budget chief Michael Heffernen told lawmakers the overage would be returned to taxpayers in proportion to taxes paid, but he did not shed any light on whether the money would be returned in the form of tax credits, rebates or something else.
However, he said they would try to get money to taxpayers “as quickly as possible” following Bump’s required review.
The influx of state tax revenue for fiscal 2022 reflects “unprecedented capital gains tax revenue, the temporary impact of pass-through entity (PTE) excise payments, current labor market conditions, and strength in retail sales,” Bump said.
Several taxpayer groups, including the conservative-leaning Massachusetts Fiscal Alliance, had made clear they intended to sue if the state did not follow the provisions of the tax cap law.
“This is a tremendous victory for all taxpayers of the Commonwealth,” Paul D. Craney, a spokesperson for the Massachusetts Fiscal Alliance, said in a statement following the auditor’s announcement.