November 13, 2020 Commonwealth Credit Review Replay Information - PowerPoint PPT Presentation

The Commonwealth of Massachusetts Bond Financing Programs November 13, 2020 Commonwealth Credit Review

Replay Information Please note that a replay of the investor broadcast associated with the following slides is available. The replay can be accessed by following the link below and will remain available until November 13, 2021. http://munios.com/live/MACommonwealthNov2020 The full slide deck for this call is found in the pages below. These slides as well as those of prior investor calls may also be accessed by visiting the Investor and Rating Agency Presentation Archive on the Commonwealth’s investor website at: www.massbondholder.com For audio, participants are asked to dial in using the following information: Dial-in: +1 (888) 862-6557 Passcode: 50016853 2 2

Disclaimer This presentation has been prepared by The Commonwealth of Massachusetts to provide summary information relative to the general obligation credit of The Commonwealth. The presentation is incomplete. The presentation is not part of the Commonwealth’s Information Statement (Information Statement) and is qualified in all respects by reference to the most recently updated Information Statement that has been filed with the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access (EMMA) system. Investment decisions relating to Commonwealth general obligation bonds and notes should be based only upon the most recently updated Information Statement and the Official Statement of the Commonwealth relating to such bonds or notes. The provision of access to this presentation does not constitute an offer to sell or the solicitation of an offer to buy any bonds or notes that may be described or mentioned in the presentation. Commonwealth bonds and notes are sold only by means of an Official Statement and through registered broker-dealers. The information set forth herein includes information obtained from non-Commonwealth sources that are believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Commonwealth. All information and expressions of opinion herein are subject to change without notice. The Commonwealth undertakes no obligation to provide any additional information or to update any of the information or the conclusions contained herein or to correct any inaccuracies that may become apparent. This presentation contains certain forward-looking statements that are subject to a variety of risks and uncertainties that could cause actual results to differ from the projected results, including without limitation general economic and business conditions, conditions in the financial markets, the financial condition of the Commonwealth and various state agencies and authorities, receipt of federal grants, litigation, arbitration, force majeure events and various other factors that are beyond the control of the Commonwealth and its various agencies and authorities. Because of the inability to predict all factors that may affect future decisions, actions, events or financial circumstances, what actually happens may be different from what is set forth in such forward-looking statements. Forward-looking statements are indicated by use of such words as “may,” “will,” “should,” “intends,” “expects,” “believes,” “anticipates,” “estimates” and other similar words. 3 3

TREASURER DEBORAH B. GOLDBERG 4 4

GOVERNOR CHARLES D. BAKER 5 5

Department of Revenue Dr. Kazim P. Özyurt Chief Economist, Director, Office of Tax Policy & Analysis 6 6

Monthly year-over-year changes in collections: 7

FY20 Tax Collections June 2020 Tax Collection Summary (in $ millions) Month of June FY20 YTD as of June 06/2020 YTD 06/2020 YTD 06/2020 YTD 06/2020 YTD 06/2020 06/2020 v. 06/2020 v. 06/2020 Actual 06/2020 Actual 06/2020 v. 06/2019 v. 06/2019 Actual vs Actual vs Actual 06/2019 $ 06/2019 % vs Benchmark $ vs Benchmark % YTD Actual YTD $ YTD % Benchmark $ Benchmark % Collections Fav/(Unfav) Fav/(Unfav) Fav/(Unfav) Fav/(Unfav) Collections Fav/(Unfav) Fav/(Unfav) Fav/(Unfav) Fav/(Unfav) Income Income Withholding 1,094 (53) -4.6% (122) -10.0% 13,736 528 +4.0% (4) -0.0% Income Est. Payments 597 55 +10.1% 60 +11.1% 2,350 (118) -4.8% (227) -8.8% Income Returns/Bills 2,228 2,163 +3323.4% 2,163 +3354.1% 3,051 (37) -1.2% 199 +7.0% Income Refunds Net (outflow) (303) (266) -722.3% (265) -691.7% (1,789) (125) -7.5% (106) -6.3% Subtotal Non-withheld Income 2,521 1,951 +341.9% 1,958 +347.6% 3,612 (279) -7.2% (134) -3.6% Subtotal Income 3,615 1,898 +110.5% 1,836 +103.2% 17,348 249 +1.5% (138) -0.8% Sales & Use Sales - Regular 419 9 +2.1% (25) -5.7% 4,905 217 +4.6% (131) -2.6% Sales - Meals 62 (46) -42.5% (53) -45.8% 1,077 (139) -11.4% (204) -15.9% Sales - Motor Vehicles 102 3 +2.7% (6) -5.9% 828 (66) -7.4% (100) -10.8% Subtotal Sales & Use 583 (35) -5.6% (85) -12.7% 6,810 12 +0.2% (435) -6.0% Corporate & Business - Total 449 (164) -26.7% (101) -18.3% 2,924 (384) -11.6% (46) -1.5% All Other 166 (70) -29.6% (91) -35.4% 2,514 27 +1.1% (74) -2.9% Total Tax Collections 4,814 1,629 +51.2% 1,560 +47.9% 29,596 (96) -0.3% (693) -2.3% Notes: (1) The figures above exclude Tax-Related Settlements & Judgments exceeding $10 million each. The certified total for these was $0.0 million in June 2020 and $23.8 million during FY20 YTD. (2) The June and year-to-date benchmarks reflect the revised full Fiscal Year 2020 benchmark of $30.289 billion. 8

FY20 Tax Collections • FY20 tax collections • impacted by pandemic-related factors • Recession, • Federal monetary and fiscal policies, • Extension of various tax return and payment deadlines, etc. • Preliminary FY20 tax collections totaled $29.596 billion. • $96 million or 0.3% below the final FY19 collections, • $693 million or 2.3% below the final FY20 revenue estimate of $30.289 billion, reflecting shortfall in almost all tax categories except estate tax. • More specifically:  Withholding ended FY20 at $13.736 billion, an increase of $528 million over FY19, and $4 million below benchmark. • Withholding on the expanded unemployment insurance benefits helped.  Non-withheld personal income tax ended FY20 at $3.612 billion, $279 million less 9 than FY19, and $134 million below benchmark.

FY20 Tax Collections  Sales & use tax (which consists of regular sales, meals, and motor vehicle excise) totaled $6.810 billion was $12 million above FY19 and $435 million below the FY20 benchmark.  Corporate and business tax totaled $2.924 billion, $384 million below FY19, and $46 million below the FY20 benchmark.  “ All Other ” tax categories totaled about $2.5 billion, up $27 million from FY19, and $74 million below benchmark. 10

FY21 Year-to-Date (Through October) Tax Collections Update October 2020 Tax Collections Summary (in $ millions) Preliminary as of November 4, 2020 Month of October FY21 YTD as of October 10/2020 YTD 10/2020 YTD 10/2020 10/2020 v. 10/2020 v. 10/2020 YTD v. 10/2019 v. 10/2019 Actual 10/2019 $ 10/2019 % Actual YTD $ YTD % Collections Fav/(Unfav) Fav/(Unfav) Collections Fav/(Unfav) Fav/(Unfav) Income Income Withholding 1,071 22 +2.1% 4,396 164 +3.9% Income Est. Payments 61 (1) -2.0% 659 (95) -12.6% Income Returns/Bills 144 6 +4.0% 261 (7) -2.7% Income Refunds Net (outflow) (101) 39 +28.1% (156) 47 +23.1% Subtotal Non-withheld Income 104 44 +71.9% 764 (55) -6.8% Subtotal Income 1,175 66 +5.9% 5,160 109 +2.2% Sales & Use Sales - Regular 445 34 +8.2% 1,786 148 +9.0% Sales - Meals 81 (30) -27.3% 314 (147) -31.9% Sales - Motor Vehicles 86 6 +7.0% 338 38 +12.5% Subtotal Sales & Use 612 9 +1.5% 2,437 39 +1.6% Corporate & Business - Total 77 1 +2.0% 932 103 +12.4% All Other 225 (14) -5.8% 818 (133) -14.0% Total Tax Collections 2,089 62 +3.1% 9,347 118 +1.3% Note: 1) The figures above exclude Tax-Related Settlements & Judgments exceeding $10 million each. The total for these was $0.0 million in October 2020 and $14.6 million in FY21 YTD. 2) Regular sales, meals, and room taxes deferred for the period of March 2020 through April 2021 are expected to be paid in May 2021. 11

FY21 Year-to-Date (Through October) Tax Collections Update •Fiscal 2021 tax collections through October  Year-to-Date total: $9.347 billion  +$118 million, or 1.3% from the same period in fiscal 2020 o Increases in income tax, • corporate & business tax collections, and • • sales tax partially offset by o Decreases in • “All Other” taxes, incl. motor fuels, cigarettes, alcohol, and deeds. 12

FY21 Year-to-Date (Through October Tax Collections Update) More specifically: • Withholding : $4.396B, +$164M, +3.9% actual • The moderate withholding increase reflects unemployment insurance benefits, one-time events, and timing factors • Non-withholding: $764M, -$55M or -6.8% actual • Sales & use tax collections: $2.437B, +$39M, +1.6% actual • Corporate and business tax collections: $932M, +$103M, +12.4% actual • All Other taxes: $818M, -$133M, -14.0% actual 13

Executive Office for Administration & Finance (A&F) Michael Heffernan Catharine Hornby Secretary Undersecretary Mark Attia Bran Shim Assistant Secretary Assistant Secretary for Budget Kaitlyn Connors Assistant Secretary 14