Matt Gorzkowicz, Healey’s budget chief, said officials believe most of the unexpected revenue was generated by the state’s new surtax on annual income exceeding $1 million — the so-called millionaire’s tax — and collections from capital gains, all money that state officials largely can’t use to balance the budget as a whole.
Revenue from the millionaires tax is constitutionally mandated to go toward education and transportation initiatives, while excess revenue from capital gains must flow to the state’s emergency savings account.
State officials won’t officially determine for months how much money was generated specifically by the millionaires tax or capital gains. Nevertheless, Gorzkowicz said Friday that state officials believe they’re on track to close the fiscal year at the end of June in line with projections.
“We feel really good about the plans we put in place,” he told reporters earlier Friday before the April figures were released. “Things are playing out, I think, as we expected.”
Overall, the state Department of Revenue reported Friday that it collected $6.3 billion in tax revenue in April, the most significant month for tax collections. The haul topped projections for the month by nearly 20 percent and was $1.5 billion more than what the state collected last April, when tax revenues plummeted and upended the state’s fiscal forecast.
Until now, the state had faced significant headwinds this fiscal year. With revenue lagging the state’s initial benchmarks for months, Healey in January slashed hundreds of millions from programs that provide outreach for seniors, behavioral health supports, homeless shelters, and others, and readjusted the state’s projections, downgrading the tax forecast by $1 billion.
The first-term Democrat then froze hiring in several pockets of state government even as collections beat projections in March, too, albeit to a far smaller degree, putting the monthly haul $129 million above benchmark.
But even with that, the state had entered April having raked in $145 million less than officials were counting on.
That’s now changed dramatically. State officials say they’ve now collected $889 million, or 2.7 percent more than the year-to-date benchmark.
The wide swing indicates the state is still navigating an atypical time, particularly with collections in some areas, such as sales tax revenue, still falling below expectations, said Doug Howgate, president of the Massachusetts Taxpayers Foundation, a business-backed budget watchdog group.
“You don’t want to panic when things aren’t looking that great, and you also don’t want to spike the ball too early when you have your first good month in a long time,” Howgate said. “This is probably a good sign or no sign [of what to expect from collections going forward]. We really don’t know what the future is going to look like.”
Even with state officials and others preaching caution about the figures, the over-performing collections will likely bring a sigh of relief on Beacon Hill. The House last week passed its $58 billion spending plan for next fiscal year, adding roughly $95 million in spending over three days of debate but keeping the bottom line slightly below what Healey herself had proposed.
Senate leaders are expected to release their own budget proposal on Tuesday, with debate to follow later this month.
The House and Senate will then have to negotiate a final version of the budget ahead of the start of the fiscal year on July 1, though closed-door talks have historically bled well into the summer. The state has started its fiscal year without an annual budget in place for 13 years running, and entering last year, was the only state that was late in completing its annual spending plan every single year since 2017.
Budget watchers told the Globe last month that they consider the state’s recent revenue trouble to be a short-term problem, even though some believe the state’s move last year to ease the tax burden on residents left Massachusetts vulnerable.
Healey signed a sweeping $1 billion tax package that beefed up tax credits for caregivers, renters, and seniors, fulfilling a campaign promise that pleased the business community as well.
Healey said Friday that she does not regret signing the tax cuts amid the state’s uncertain fiscal picture, noting the law was expected to help an array of taxpayers, from parents with dependent children to seniors.
“I don’t regret helping seniors,” she said Friday during an appearance on GBH’s “Boston Public Radio.”
Matt Stout can be reached at matt.stout@globe.com. Follow him @mattpstout.