Rushed to the finish, lawmakers from the Mass. face an unexpected hurdle in the Tax Capping Act 1986


Specifically, it quickly turned discussions on a separate $1 billion tax relief proposal that lawmakers had spent months developing and aimed to finalize before the end of the weekend.

But it also threw a spanner in the already growing to-do list of Democratic leaders and raised the uncomfortable prospect that lawmakers would roll back an old tax relief law just as they were about to provide significant sums to number of their voters.

With two working days left before the end of the official sessions, the tax cap bomb “challenges all the decisions we have made so far on our tax cuts”, the president of the Chamber, Ronald Mariano, while keeping the option open. to repeal the old tax cap law.

“It raises concern about what’s going to happen with future budgets,” the Democrat from Quincy said. “It challenges everything that is on the table.”

It’s a harsh reality with literal hours left in a 19-month legislative session. The estimated $2.9 billion credit that taxpayers are expected to eclipse one-time rebates and permanent tax cuts that the House and Senate approved separately and must be reconciled by negotiators by the end of the weekend if they are to become law.

Competing pressures have left lawmakers scrambling for an answer. The law in question passed by voters in 1986 seeks to limit the growth of state tax revenue to the growth of total wages and salaries in the state. If income exceeds this “allowable” amount, then taxpayers are entitled to a credit equal to the excess amount.

Thanks to record tax revenues in the fiscal year that ended in June, the state appears on track to trigger the law for the first time since 1987, this time with multi-billion dollar ramifications.

Mariano said lawmakers are considering a range of options, including seeking to “reverse the law”, change it or delay it. He also questioned whether the law would even be triggered, even though the budget committees of both Houses said in a letter to Baker’s revenue commissioner on Wednesday that they in fact believed it was.

Yet in that same letter, they also sought a series of basic data from the Baker administration that would help explain its estimate, illustrating how the development had taken lawmakers by surprise.

The Pioneer Institute, a free-market think tank, said Friday it believed the refund would actually be even higher — around $3.2 billion — based on estimates of June revenue numbers, which the State should publish as early as next week. State Auditor Suzanne M. Bump will verify the amount of the surplus in September.

“This formula is very complicated, and we don’t even know if the numbers are correct,” Mariano said on Friday.

The possibility of overturning the law drew heavy criticism from its supporters, who said it would amount to “cavalry betrayal” by voters.

“That President Mariano even considers such an affront to democracy, to the election results and to the voters themselves – that he even dares to say it out loud – demonstrates the degree of sheer political arrogance that pervades” the Assembly legislative, said Chip Ford, executive director of Citizens for Limited Taxation, which pushed the ballot issue in 1986 with the Massachusetts High Technology Council.

Still, legislative leaders have yet to decide if, or how, this affects their own fiscal plans. The House and Senate are in sync on many parts of their tax relief proposal, which Mariano said is a “well-thought-out plan that will work.” Part of their proposal includes $250 rebates for potentially millions of taxpayers, plus permanent relief for seniors, renters and others whose changes lawmakers say will help as inflation squeezes the residents’ portfolio.

But accommodating the Legislature’s tax relief proposals and the tax cap credit are “a big hurdle,” Mariano said.

“It’s new, and we have a lot of bills,” Senator Michael J. Rodrigues, Senate budget chief, said of the tax cap law. “We’re burning midnight oil and trying to do our best.”

It is also far from being the only thing that remains on the plate of the legislators. Half a dozen bills remained parked in closed-door negotiations Friday night, including proposals that would change state cannabis laws and borrow billions of dollars for infrastructure projects.

Lawmakers are still trying to reconcile bills that would legalize sports betting, an effort that is taking place amid a public dispute between Mariano and Senate Speaker Karen E. Spilka over whether to include college sports among contests on which people can place bets.

On Thursday, Baker also returned to lawmakers several policies they had included in the state’s $52.7 billion budget with requests for changes. For example, Baker asked them to edit a section that would provide inmates with free phone calls by adding unrelated language. this would allow a court to hold persons suspected of certain dangerous crimes without bail.

The Legislature had essentially killed off a similar proposal the previous week, infuriating Baker and raising tensions to such a degree that Mariano on Friday opted out of attending a bill-signing ceremony with Baker for a high-profile rights bill. to abortion.

On Friday, Baker also returned to lawmakers a sweeping climate and energy bill with several amendments, including changes to efforts to streamline the offshore wind industry’s bidding process. Lawmakers can accept Baker’s recommendations, or they can choose to reject or rework them, after which the bill would go back to Baker.

Then there are also proposals that still have to go through both chambers. The Senate has yet to pass legislation the House passed last week that would strengthen state gun laws following a Supreme Court ruling expanding gun rights to across the country.

Spilka said the chamber is committed to passing legislation overhauling the state’s gun laws, but it could adopt different language, which would force lawmakers to reconcile the differences in a short period of time. of time.

It’s also unclear whether the Senate will pass a House bill, and a Baker priority, to criminalize so-called revenge porn, targeting a form of abuse that’s already banned in 48 other states. .

And yet, the tax debate could overshadow everything — and will likely end up defining the last-minute crush lawmakers find themselves in again.

“That’s not how it should be,” said Phineas Baxandall, senior tax analyst at the left-leaning Massachusetts Budget and Policy Center, of the tax cap law that goes into effect now. “When people may have voted for this 40 years ago, I don’t think they imagined dropping a bombshell in the final days of legislative planning for the years to come, [and] take billions of revenue off the table after months of careful planning.

Matt Stout can be contacted at [email protected] Follow him on Twitter @mattpstout. Samantha J. Gross can be contacted at [email protected] Follow her on Twitter @samanthajgross.

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