The continued collection of surplus revenue imposes a drag on state economies. Surplus revenue is money that the state collects in excess of its budgeted spending for a given fiscal year. The phenomenon of surplus revenues is not limited to Massachusetts. If the state enacts a tax cut in calendar year 1998, the actual surplus for FY 99 will be smaller. Government uses surplus revenues by making supplemental appropriations or by saving them.
Supplemental appropriations are for new state spending or refunds to taxpayers.
Lines 2 shows the portion spent as supplemental appropriations and Line 3 shows the portion saved. The rest went for new spending or saving. At the beginning of the fiscal year, the executive branch declares, in its annual budget, how much it plans to spend and how much it plans to collect in revenue over the next twelve months. Because no entity, public or private can anticipate exactly how much it will spend and how much it will collect in revenue, the budget is a statement of planned spending and of planned revenue collections. Actual , as opposed to planned spending and revenue collections will vary with economic conditions and with other conditions beyond the control of government.