Revenue markup, film tax credit, and rideshare fees bound for conference talks

Boston Statehouse
Massachusetts State House bill_639218

BOSTON (SHNS) – The Senate unanimously passed a $47.7 billion budget for next year after three days of debate over how best to invest state resources as Massachusetts looks to recover from the hardships of the past year of the COVID-19 pandemic.

Senate President Karen Spilka said the budget that passed 40-0 would put Massachusetts on “stable fiscal footing” and begin to restitch the fabric of society that had frayed over the last year, while Senate Ways and Means Chairman Michael Rodrigues said the bill would help get the state “back to better.”

“Overall, we have charted a hopeful path forward,” Rodrigues said.

The vote sets the stage for negotiations with the House over a range of issues, from the film tax credit to fees on Uber and Lyft rides, but perhaps most consequential will be the decision the two branches will have to make about revenues.

Both the House and Senate relied on revenue projections of just over $30 billion in taxes for the fiscal year that begins July 1. But with revenue continuing to pour in at a clip that has exceeded expectations month after month, Democratic leaders have said they could consider increasing the projection.

The budget also did not tap into any of the $5.3 billion in discretionary federal dollars the state is expecting to receive from the American Rescue Plan Act, which Democratic leaders have said they want to allocate through a separate spending bill.

In keeping with that approach, senators rejected amendments that would have steered federal funds to the unemployment solvency fund to reduce the burden on business owners. They also turned aside amendments to extend the authorization for restaurants to serve to-go cocktails beyond the COVID-19 state of emergency as House and Senate leaders are working on a separate review of pandemic policies they might want to extend.

The budget that passed the Senate would increase spending by close to $1.3 billion over fiscal 2021 after senators added $63.7 million to the bottom line through amendments, putting the final total on par with what was approved last month by the House.

Both branches are in agreement on a $219.6 million increase in Chapter 70 funding for public schools that lawmakers said would finance one-sixth of the 2019 school finance reform law and put the funding schedule back on track after 2020.

The Senate budget also relies on $1.55 billion in reserves, which would leave the balance of the state’s stabilization account at $1.15 billion if all the funds authorized for use are needed.

All three Republicans in the Senate voted for the budget and Senate Minority Bruce Tarr lavished praise on Spilka and Rodrigues for leading what he described as an inclusive process that incorporated the ideas of the minority party into a budget that did not raise taxes or wipe out reserves.

The Gloucester Republican said the Senate “should stand as a beacon for how democracy should operate in this country, which has seen too much division and too much rancor.”

New spending approved through amendments bulked up support for everything from the METCO school desegregation program and a $50,000 Senate internship program geared toward under-represented students to funding for the Executive Office of Energy and Environmental Affairs to hire new staff to implement this year’s climate law.

The Senate waded through 923 amendments over the course of three days and avoided the late nights that are typically a hallmark of budget debates in both chambers of the Legislature.

Rodrigues will almost certainly be tasked with leading negotiations for the Senate opposite House Ways and Means Chairman Aaron Michlewitz as the branches’ competing budget bills move before a six-member conference committee.

One of the more high-profile issues to be ironed out is the future of the film tax credit. The House voted to eliminate the program’s January 2023 sunset date, while the Senate budget extends the sunset by four years and reforms the program by requiring a production company to spend at least 75 percent of its filming budget or conduct at least 75 percent of principal photography days in Massachusetts, capping salaries eligible for the credit at $1 million, and banning the transfer of the credits.

House Speaker Ron Mariano has been an ardent defender of the film tax credit as a local job producer, but Senate leaders have questioned the cost and support it gives to wealthy actors and out-of-state production companies.

The Senate also voted this week to scrap three additional tax credits and exemptions for harbor maintenance, medical device company user fees and certain patent-related income that were not part of the House budget.

With COVID-19 restrictions being lifted and many workers and residents returning to their daily commutes and travel schedules, the Senate’s vote this week to add increased fees on ride-hailing services to the budget also stands out as a major difference with the House.

Sen. Joseph Boncore’s proposal would increase the current flat 20 cent fee per trip to 40 cents for a shared ride, $1.20 for a non-shared ride and $2.20 for a luxury ride. It would also put an additional 20-cent fee on rides that start and end in the MBTA’s service area.

The House has voted in the past for higher fees on ride services as a way to address traffic congestion, but the pandemic changed a lot of the nature of the debate about how people were using those services.

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