Sometimes the Massachusetts Legislature can’t get out of its own way.
A much touted $1 billion in tax relief — half of it slated to go into the pockets of regular working class residents immediately and half dedicated to permanent and long overdue fixes to the tax system — was abandoned as the sun rose over Beacon Hill Monday morning and lawmakers ended their marathon session.
The tax relief was part of a more than $4 billion economic development bill — much of that devoted to critical investments in housing, environmental infrastructure, early childhood education, and relief for hard-pressed hospitals. And yes, it also included a large number of local earmarks, like $1 million to upgrade the Basketball Hall of Fame or renovations to a Dorchester Girls and Boys Club.
But all of that is on hold now because in the waning days of the session, lawmakers became totally flummoxed at the possibility that yet another pool of money might be going back to taxpayers in the form of tax credits triggered by a 1986 voter-passed law that hasn’t yielded a dime for taxpayers since 1987. How much that rebate will amount to won’t even be known until the state auditor runs the numbers in September, but estimates run from $2.5 billion to $3 billion.
House Speaker Ron Mariano last week cast doubt on whether the numbers advanced by Governor Charlie Baker were even accurate, and this week raised the issue of whether the state could afford the final tally.
“We thought it would be the wisest choice to make sure we do this properly,” Mariano told reporters Monday. “Getting $3 billion dropped on you the week before you are finalizing your year-end finances doesn’t lead to good decision-making. We want to be fiscally prudent, and know what we are getting into.”
Spoken like a guy who’s used to dealing in billions of dollars, not a constituent waiting for that promised $250 check to put toward the next car payment. With the state’s rainy day fund hitting a record $6.6 billion last month (before the fiscal year ended), and probably more on the way, what could possibly be “prudent” about a delay that could last months.
The distraction prompted by the sudden prospect of that round of tax rebates also brought to a screeching halt any effort by lawmakers to fix the state’s tax system and provide permanent relief to taxpayers — vitally important actions that keep getting lost in this legislative wringing of hands.
Sure, lawmakers managed during the those final 48 hours of non-stop deal-making to get some critical legislation to the desk of Baker, including bills to: improve access to mental health services; authorize $11.3 billion in infrastructure bonds; update regulation of the cannabis industry; expand clean energy; authorize sports betting; and reform governance of the state’s soldiers homes. That all of this was left to the last minute speaks to the Legislature’s habitual need to resolve differences only when all other options are gone.
This time it wasn’t just the clock that ran out on tax relief, it was the unwillingness of legislative leaders to do the right thing on taxes — and to do it in a timely fashion.
The 1986 law that so paralyzed lawmakers is aimed at limiting state tax revenue growth to the growth of total wages and salaries in the state. If revenue exceeds the “allowable” amount (averaged over three years), taxpayers are due a credit equal to the excess. Tax collections this year have been pretty much off the charts — that was no secret to legislators.
In fact, it further makes the case for those meaningful reforms that have already passed both branches — chief among them an effort to fix the estate tax so Massachusetts won’t continue to be a national outlier. Not only does Massachusetts tax all estates over $1 million (the legislation would raise that to $2 million) but also taxes estates from dollar-one if they go over $1 million. Why give small business owners and home owners who now find themselves accidental millionaires yet another excuse to move?
The economic development bill would also expand the Earned Income Tax Credit offering tax relief to low income taxpayers, increase the child and dependent care deduction, and provide permanent tax breaks for low-income renters and seniors.
There is a sliver of hope in the days ahead that some portions of the bill could pass. During the remainder of the year, lawmakers meet only in “informal” sessions where legislation requires the unanimous consent of all those present for passage. It’s a high bar.
“We’re disappointed, but we want to make sure we get it right,” Senate Ways and Means chair Michael Rodrigues said Monday, talking to reporters about the failure to finish work on the bill. “We are committed to getting some real, long-term permanent tax relief done.”
Voters need to hold him and his colleagues to that promise.
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