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Mass. Tax Collections Up 10.6 Percent

Lawmakers on Beacon Hill have an unexpected problem on their hands: how to spend a surplus.

Massachusetts tax collections for the fiscal year that ended June 30 exceeded projections by $723 million, leaving the state with an apparently significant surplus despite continued economic uncertainty.

State officials reported Tuesday that preliminary revenue estimates for the 12-month period were just above $20.5 billion, a 10.6 percent increase - nearly $2 billion - more than the previous fiscal year.

Revenue commissioner Navjeet Bal said part of the money came from income taxes.

"That's a good indication that more people are working, or people are working longer hours, or getting paid more for working, in some cases making bonuses.  So that's kind of a good indication of the current state employment picture," Bal said.

Bal also credited a stronger economy combined with a large boost in capital gains receipts.

The surplus has prompted calls for restoring cuts in programs that occurred during the economic downturn, and a slight cut in the state income tax.

But state budget-writers and fiscal watchdogs say the windfall is primarily due to an infusion of one-time revenues, and they caution that the state's financial condition remains tenuous at best.

Bal also said  it's hard to tell if that increased revenue will continue, since it was based on stock market gains.

This program aired on July 19, 2011. The audio for this program is not available.

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