BOSTON (State House News Service) – After months of paralyzing the most important pending issues, the wheels of legislation appear to be starting to turn.
Both the House and Senate adjourned Monday without presenting a budget to close the fiscal year that ended four months ago or a compromise on their already-approved economic development and tax break packages, but the House plans to meet twice more this week, which is unusual and perhaps revealing.
After presiding over Monday’s House of Representatives session, Rep. Paul Donato said he expects his chamber to reconvene on both Wednesday and Thursday. The House of Representatives often puts together a key bill a day before the vote, so the scheduling delays signal something big is about to happen.
Senate budget chief Michael Rodrigues said Monday on his way out of the chamber that lawmakers are “very close” to finalizing fiscal 2022 and that it could “maybe” be postponed this week.
Meanwhile, Republican Sen. Ryan Fattman, a member of the Senate Ways and Means Committee, told Rodrigues the intelligence service he believes action could come “as soon as this week.”
“Hopefully there will be fewer tricks and a lot more treats,” Fattman said.
Top Democrats have already ignored Comptroller William McNamara’s calls for timely action on the $1.6 billion completion budget he must complete before he can file an annual state financial report. That report was due Monday, which marked another year in which lawmakers’ inaction meant this report’s filing exceeded its deadline.
Massachusetts has repeatedly been among the last states to finalize annual budgets in recent years, an approach Moody’s Investor Services described in July 2019 as “governance underreflection.”
Year-end budgets are also a source of delays. Three years ago, the Legislature didn’t finish its final budget bill until December, prompting then-Commissioner Andrew Maylor to threaten unilateral action to funnel $1 billion in excess revenue into the state’s rainy day fund.
The other major bill currently in limbo, a massive package designed to use the state’s surplus and federal aid to boost the state’s economy, create new jobs and ease the burden on taxpayers struggling under painful inflation have struggled does not have such a strict deadline.
Still, lawmakers likely feel some pressure to finalize a revised version of the bill before the Nov. 8 election lest they face the criticism that would come with a lame vote, especially if they decide to trim the original $500 million $500 million in one-time tax breaks for middle earners and $500 million in permanent tax breaks for renters, seniors, caregivers and others.
“I just want to make sure that the tax breaks that we created in the Senate and the House version are implemented. That’s the most important thing to me,” said Fattman, a Republican from Sutton. “People deserve to get their money back. You worked hard for it. You will be killed by the price of everything.”
A look back at commitments to pass tax breaks could be particularly fraught with mandatory tax breaks under a law known as Chapter 62F, which takes effect Tuesday.
Since this law dictates that money must be returned in proportion to taxes paid, the state’s wealthiest taxpayers must make one-off payments of tens of thousands of dollars, while middle earners receive several hundred dollars each, and taxpayers in the lowest income bracket could make single-digit amounts to get.
Legislators are essentially obligated under current law to deliver bonanzas to the wealthiest taxpayers, and at the same time they have so far given no guarantee that they will meet the full breadth of their summer tax break obligations to the rest of the state.
In September, Rodrigues told WBSM’s South Coast Tonight that the lawmaker-approved plan to send one-time checks of $250 to middle-income single taxpayers and $500 to middle-income married taxpayers “probably won’t.” ‘ would be included in the final bill. But his outlook – or the tone of the negotiations – may have changed over the past month.
“I think it was still a matter of trying to figure out how much we want to spend on this breakthrough and how much we want to save for the future,” House budget chief Aaron Michlewitz told the news service on Monday. “We’re working with our Senate colleagues to figure out what the appropriate number would be, and then what are you spending that money on?” Obviously there were different sides, different versions – both on the House side and on the Senate side – had different spending initiatives, different levels in different plays. So trying to iron out the differences was kind of a back-and-forth, which we’re dealing with right now.”
Both branches unanimously approved their own economic development bills with an end result of about $4.3 billion in the House (H 5034) and $4.57 billion in the Senate (S 3030), before top Democrats paused when They were stunned by the revelation that the government owes nearly $3 billion in taxpayer refunds.
Those bills each included about $1.5 billion in bond approvals and about $2.4 billion in expenses split between the state’s fiscal 2022 tax surplus and the remaining American Rescue Plan Act funds, plus direct expenses for the one-time tax refunds, according to a Massachusetts taxpayer analyzing fundamentals this summer.
Borrowing it would require a roll-call vote, which lawmakers can’t do in the informal sessions scheduled for the remainder of the term, and removing it from the bill would likely force a significant cut.
Asked if budget negotiators would roll out the final budget along with the economic development package, Rodrigues said that “everything is still a work in progress, but you will hear something very, very soon.”
“That’s a huge bill. So there’s a lot of components that we’re going through piece by piece,” he said.
As Democrats grapple with what they can afford in the face of potentially darkening economic clouds, the state continues to haul in taxpayers’ money at a rapid pace.
In the first quarter of fiscal 2023, tax revenue is more than 5 percent higher than the same period in fiscal 2022, when a historic increase in tax revenue left the state with a massive surplus.
Doug Howgate, executive vice president of the Massachusetts Taxpayers Foundation, who will soon take over as the group’s next head, said the first three months of tax collection historically had “little correlation to revenue trends in subsequent months.”
“The economic environment of the last two years has been absolutely unprecedented, certainly from a government budget perspective, and so I think people are wise to assume that things will become precedent again,” Howgate told the news service. “I think all of us, if you watch the news, it wouldn’t be too hard to find signs of, ‘Oh dear. Will the sales roller coaster take a different turn?’”
Howgate said his group still believes there is a way forward for lawmakers to pursue robust spending as originally planned while still meeting their Chapter 62F requirements and strengthening the state for a potential downturn.
“With these unprecedented resources available in ’21 and ’22, there is an approach that will allow you to continue to build those reserves, adjust future revenue expectations downward, and make investments including tax breaks. We think that path was a viable one,” Howgate said. “But the idea that it makes sense not to assume that everything that’s happened in the last 24 months will continue to happen — that makes sense, too.”
The Massachusetts Fiscal Alliance leaned toward some Halloween images on Monday, with spokesman Paul Diego Craney warning of potential “tricks,” such as this week.
“Governor Charlie Baker, a Republican, has pledged to make Chapter 62F repayments totaling $3 billion as soon as possible,” Craney said. “Meanwhile, Democratic Speaker Ron Mariano and Senate Speaker Karen Spilka can’t seem to agree on a measly $500 million in tax refunds and $500 million in tax reforms.”