Comptroller Fiscal Year Memo Letter Head

May 8, 2013 

Secretary Glen Shor
Executive Office of Administration and Finance 

The Honorable Stephen M. Brewer
Senate Committee on Ways and Means 

The Honorable Brian S. Dempsey, Chairman
House Committee on Ways and Means 

Dear Secretary Shor, Chairman Brewer and Chairman Dempsey:

On May 2, 2013, the Attorney General and the Department of Revenue jointly certified to the State Comptroller’s Office that for the period March 1, 2013 through April 30, 2013 there were no individual judgments and settlements in excess of $10 million, and year-to-date judgments and settlements totaled $133,803,323.56. Pursuant to Section 2H of Chapter 29 of the Massachusetts General Laws, individual judgments and settlements in excess of $10 million are to be transferred to the Stabilization Fund, so there will be no transfers on account of March and April settlements.

The entire fiscal year 2013 settlement amount of $133,803,323.56 normally would be transferred to the Commonwealth Stabilization Fund pursuant to section 2H of Chapter 29. However, Section 79 of Chapter 238 of the Acts of 2012, “An Act Relative to Infrastructure Investment, Enhanced Competitiveness and Economic Growth in the Commonwealth”, requires that the Comptroller transfer $4,000,000 from the General Fund to the Smart Growth Housing Trust Fund from judgments and section 80 of the same Act requires that, rather than be transferred to the Stabilization Fund, such revenue be retained in the General Fund to reimburse it for revenue foregone during the August 2012 sales tax holiday.  On December 31, 2012, the Commissioner of Revenue certified that the amount of sales tax revenue foregone by the General Fund due to the August 2012 sales tax holiday totaled $21,040,000.00, after adjusting for increases in income and corporate tax revenue generated by greater economic activity induced by the sales tax holiday.

Furthermore, Section 2A of Chapter 3 of the Acts of 2013 requires that $30,000,000.00 of settlement revenue, which would normally be transferred to the Stabilization fund, will be retained in the General Fund to fund Hinton drug lab remediation costs. 

Previously in FY13, I transferred $4,000,000 from judgments and settlements to the Smart Growth Housing Trust Fund, retained $21,040,000 in the General Fund to reimburse it for tax revenue lost due to the sales tax holiday, and retained $30,000,000 in the General Fund to fund Hinton drug lab remediation costs. As a result of these adjustments, $78,763,323.56 has been transferred to the Stabilization Fund in FY13 on account of judgments and settlements in excess of $10 million.

Section 160 of Chapter 139 of the Acts of 2012 (the fiscal year 2013 General Appropriation Act) authorizes the transfer of interest earned by the Commonwealth Stabilization Fund during fiscal year 2013 to the General Fund.  Therefore, a transfer of $1,448,606.72, which represents interest earned by the Stabilization Fund during fiscal year 2013 between March 1, 2013 and April 30, 2013, also will be processed in conjunction with the Office of the State Treasurer and Receiver General.

If you have any questions regarding this letter, please contact Howard Merkowitz, Deputy Comptroller at (617) 973-2602.

Sincerely, 

Martin J. Benison
Comptroller 

Enc.     
 

Attachment #1:  Section 79 of Chapter 238 of the Acts of 2012  
Attachment #2:  Section 80(g) of Chapter 238 of the Acts of 2012
Attachment #3 doc format of Section 2A of chapter 3 of the Acts of 2013.doc
:  Section 2A of Chapter 3 of the Acts of 2013            
Attachment #4 xls format of Stabiliz Fund April13 attch4
:  Stabilization Fund Balance Spreadsheet

Cc:       
Amy Pitter, Commissioner, Department of Revenue
Judy Zeprun Kalman, Deputy Attorney General, Attorney General’s Office
Samuel Goldhar, Budget Director, House Ways and Means
Douglas Howgate, Budget Director, Senate Ways and Means
James MacDonald, First Deputy Treasurer, Treasurer’s Office
Kazim Ozyurt, Director, Office of Tax Policy Analysis, Department of Revenue
Howard Merkowitz, Deputy Comptroller, Office of the Comptroller
BJ Trivedi, FRAB Director, Office of the Comptroller
Julia Burns, GAB Director, Office of the Comptroller

Attachment #1

Ch. 238 of the Acts of 2012

SECTION 79. Notwithstanding the last paragraph of section 2H of chapter 29 of the General Laws, $4,000,000 received from proceeds of one-time settlements or judgments that would otherwise be transferred to the Commonwealth Stabilization Fund shall instead be deposited in the Smart Growth Housing Trust Fund, established in section 35AA of chapter 10 of the General Laws.

Attachment 2

Ch. 238 of the Acts of 2012

Section 80 (g).  Not later than December 31, 2012, the commissioner of revenue shall certify to the comptroller the amount of foregone revenue from any sales tax holiday enacted by the General Court in calendar year 2012. Notwithstanding the last paragraph of section 2H of chapter 29 of the General Laws, for the purpose of compensating for that amount of foregone revenue the comptroller shall transfer to the General Fund such amount of foregone revenue, the proceeds of one-time settlements or judgments that would otherwise be transferred to the Commonwealth Stabilization Fund, according to a schedule approved by the secretary of administration and finance and considering the cash flow needs of the commonwealth.