FY21 Local Revenue

Local Revenue comprises 13.6% of the recurring revenue budget in FY21, a decrease compared to FY20 due to the anticipated economic impact of COVID-19.

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Local revenue includes revenue from excise taxes, payments-in-lieu-of-taxes, licenses and permits, fees and fines, investment income, and available funds.

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Overview

Local receipts, or revenue the City is able to generate locally, includes items like excise taxes, fees, fines, and permits. This vital revenue source generally follows the City’s overall economic health and is projected to decrease by $42.1 million or 8.0% in FY21.

The effects of the COVID-19 pandemic are not fully known and are likely to significantly affect the collection of these sources. In FY21, the entire Administration & Finance Cabinet will continue to work with departments citywide to review collections, understand revenue drivers, and maximize revenue recovery efforts.

The graph to the right shows the share of each category within this revenue source.

Recurring Local Receipts by Type

FY20 and FY21 are budget amounts.

Excises

An excise tax is a tax applying to a specific industry or good.

The largest excise tax collected for the City is the local room occupancy excise, increased in FY20 from 6% to 6.5% tax, levied on occupancy of hotel rooms, motel rooms and short-term rental units. In addition to the local tax, the State collects a 5.7% excise tax and a 2.75% fee, transferred to the State’s convention center fund, for a total tax from all sources of 14.95%.

The FY21 budget estimates $72.0 million in local room occupancy collections, significantly reduced from previous years due to the sharp drop in hotels and short term rental units’ occupancy as a result of the COVID-19 public health measures as well as the effects of the current recession on tourism and travel.

Other excise taxes projected to be affected by COVID-19 due to business closures, reduced tourism and an economic slowdown, include:

Meals - 0.75% local excise on meals
Jet fuel tax - 5% of the average sales price, but no less than five cents per gallon
Motor vehicle - an excise in lieu of property tax on motor vehicles, $25 per one thousand dollars of vehicle valuation

See below a table summarizing all excise taxes the City collects.

The table below LISTS all excise taxes levied in the City:

Categories	FY19 Actual	FY20 Budget	FY21 Budget	Difference in $$	Difference in %
Room Occupancy	$100,578,619	$97,000,000	$72,000,000	-$25,000,000	-25.8%
Motor Vehicle	$66,025,609	$52,000,000	$50,000,000	-$2,000,000	-3.8%
Meals	$33,013,330	$30,500,000	$23,000,000	-$7,500,000	-24.6%
Aircraft Fuel	$34,475,671	$23,000,000	$17,000,000	-$6,000,000	-26.1%
Vehicle Rental Surcharge	$1,562,199	$1,500,000	$1,500,000	$0	0.0%
Condominium Conversion	$742,500	$500,000	$500,000	$0	0.0%
Marijuana Excise	$0	$0	$1,250,000	$1,250,000
Community Host Agreements	$0	$0	$1,250,000	$1,250,000
Boat Excise	$50,152	$40,000	$40,000	$0	0.0%

Fines

Parking Fines

In FY19, the City issued 1.3 million parking tickets and has maintained a 92% rate of collection on those tickets.

The City collected parking fines revenue of $60.7 million in FY18. In FY19, the City made a strategic set of increases to the previous parking fines structure, designed to reduce congestion and emissions, increase cleanliness, and improve the parking experience. Overall in FY19, the City issued approximately 126,000 fewer tickets compared to FY18, a 9% decrease in issuance, and collected $70.1 million.

COVID-19 impact

Parking fines revenue is budgeted at $65.3 million in FY20 and $61.2 million in FY21. Issuance and collection will likely be affected by COVID-19, mostly in FY20, as many businesses are closed throughout the City and stay-at-home orders have nearly halted travel throughout Boston.