BOSTON (State House News Service) – After months of paralysis on the most significant unfinished business, the wheels of lawmaking appear to be creaking into action.
Both the House and Senate adjourned Monday without bringing forward a budget bill to close the books on the fiscal year that ended four months ago or a compromise on their already-approved economic development and tax relief packages, but the House plans to meet two more times this week, which is unusual and perhaps telling.
After presiding at Monday’s House session, Rep. Paul Donato said he expects his chamber to reconvene both Wednesday and Thursday. The House often tees up a major bill one day before bringing it to the floor for a vote, so the scheduling shifts signals something big might be in store.
Senate budget chief Michael Rodrigues said on his way out of the chamber Monday that lawmakers were “real close” to acting on the fiscal year 2022 closeout, and that it could “maybe” move this week.
Meanwhile, Republican Sen. Ryan Fattman, a member of the Senate Ways and Means Committee Rodrigues helms, told the News Service he believes action could come “as soon as this week.”
“Hopefully there will be less tricks, and a lot more treats, in that,” Fattman said.
Top Democrats already ignored Comptroller William McNamara’s calls for timely action on the $1.6 billion closeout budget, which he needs completed so he can file an annual state financial report. That report was due Monday, which marked another year when legislative inaction pushed that report’s filing past its deadline.
Massachusetts has repeatedly ranked among the last states to finalize annual budgets in recent years, an approach that Moody’s Investor Services in July 2019 said “reflect(s) governance weakness.”
Year-end budgets are a source of delay, too. Three years ago, the Legislature did not finish its closeout budget bill until December, prompting then-Comptroller Andrew Maylor to threaten unilateral action to sweep $1 billion in surplus revenues into the state’s rainy day fund.
The other major bill currently in limbo, a massive package designed use the state’s surplus and federal aid to supercharge the state’s economy, generate new jobs and relieve taxpayers struggling under bruising inflation, does not have as hard a deadline attached.
Still, lawmakers likely feel some pressure to get a revised version of the bill done before the Nov. 8 election so they do not expose themselves to the criticism that would come with a lame-duck vote, especially if they decide to whittle down the original legislation’s $500 million in one-time tax relief for middle-income earners and $500 million in permanent tax breaks for renters, seniors, caregivers and others.
“I just want to make sure that the tax relief that we had created in the Senate and the House version are realized. That’s the most important thing to me,” Fattman, a Sutton Republican, said. “People deserve to get their money back. They worked hard for it. They’re getting killed by the cost of everything.”
Walking back past commitments to enact tax relief could be especially fraught with mandatory tax relief under a law known as Chapter 62F starting to flow Tuesday.
Because that law requires money to be returned in proportion to taxes paid, the state’s wealthiest taxpayers are in line for one-time payments of tens of thousands of dollars, while middle earners will each receive several hundred dollars and taxpayers on the bottom rungs of the income bracket could get a single-figure amount.
Legislative leaders in essence are required by existing law to deliver windfalls to the richest taxpayers, and at the same time, they so far have given no guarantee whether they will fulfill the full range of their summertime tax relief commitments to the rest of the state.
In September, Rodrigues told WBSM’s South Coast Tonight that the plan the Legislature approved to send one-time checks of $250 to middle-income single taxpayers and $500 to middle-income married taxpayers would “probably not” feature in the final bill. But his outlook — or the tone of the negotiations — could have changed in the past month.
“I think it was still a matter of trying to work through how much are we looking to spend this go-around, and how much may we want to save for the future,” House budget chief Rep. Aaron Michlewitz told the News Service on Monday. “We are working through, with our colleagues in the Senate, in trying to come up with what the appropriate number would be, and then in turn, what are you spending that money on? Obviously, there were different sides, different versions — on both the House and the Senate side — had different spending initiatives, different levels in different pieces. And so, trying to iron out the differences has been kind of some of the back-and-forth that we’ve been dealing with right now.”
Both branches unanimously approved their own economic development bills, with bottom lines of about $4.3 billion in the House (H 5034) and $4.57 billion in the Senate (S 3030), before top Democrats hit pause when they were stunned by the revelation state government owes nearly $3 billion in refunds back to taxpayers.
Those bills each featured roughly $1.5 billion in bond authorizations and about $2.4 billion in spending split between the state’s fiscal year 2022 tax surplus and its remaining American Rescue Plan Act funds, plus direct spending on the one-time tax rebates, according to a Massachusetts Taxpayers Foundation analysis this summer.
The borrowing would require a roll call vote, which lawmakers cannot take in the informal sessions scheduled for the remainder of the term, and its removal from the bill would likely force significant trimming from it.
Asked if budget negotiators would be rolling the closeout budget together with the economic development package, Rodrigues said that “it’s all a work in progress, but you will be hearing something very, very shortly.”
“It’s a huge bill. So there’s a lot of components that we’re going through, piece by piece,” he said.
While Democrats grapple with questions of what they can afford to spend amid potentially darkening economic clouds, the state continues to haul in tax dollars at a blistering pace.
Through the first quarter of fiscal year 2023, tax receipts are running more than 5 percent ahead of the same span in fiscal 2022, when a historic spike in collections left the state with a massive surplus.
Massachusetts Taxpayers Foundation Executive Vice President Doug Howgate, who will soon take over as the group’s next leader, said the first three months of tax collections historically “bore little connection to revenue trends in subsequent months.”
“The economic environment of the last two years, certainly from a state budget standpoint, has been absolutely unprecedented, and so I think folks are wise to assume that things become precedented again,” Howgate told the News Service. “I think all of us, as you look at the news, it wouldn’t be too hard to find signs that, ‘Oh gee. Is the revenue roller coaster going to take a different turn?'”
Howgate said his group still believes there is a path forward for lawmakers to pursue robust spending as they originally planned while also fulfilling their requirements under Chapter 62F and fortifying the state for a possible downturn.
“Given this unprecedented resources available in (fiscal years) ’21 and ’22, there is an approach that allows you to continue to build those reserves, adjust future revenue expectations downward, and make investments including tax relief. We think that path was a viable path,” Howgate said. “But the idea that it makes sense not to assume that everything that happened over the last 24 months is going to continue to happen — that makes sense, too.”
The Massachusetts Fiscal Alliance leaned into some Halloween imagery Monday, with spokesman Paul Diego Craney warning of possible “tricks” such as passage of an income surtax at the ballot box while celebrating the “treat” of Chapter 62F rebate checks expected to start flowing to taxpayers this week.
“Governor Charlie Baker, a Republican, has promised to dispatch Chapter 62F rebates as soon as possible, totaling $3 billion dollars,” Craney said. “Meanwhile, Democrat Speaker Ron Mariano and Senate President Karen Spilka cannot seem to agree to a measly $500M in taxpayer rebates and $500M in tax reform.”