Groggy lawmakers pull the plug on $1b tax package

STATE HOUSE NEWS SERVICE

THE HOUSE and Senate pulled an all-nighter to push through approval of a wide assortment of bills before the legislative session ended but ultimately decided Monday morning to abandon an economic development bill containing a $1 billion package of permanent tax cuts and one-time payments to taxpayers.

Legislators said it would be unwise to pass the tax package they had spent months developing after learning last week that a 1986 tax cap law dubbed 62F was going to be triggered, returning roughly $3 billion to taxpayers. House Speaker
Ron Mariano said last week he was open to modifying the 1986 law or doing away with it completely, but he backed away from that stance Monday morning and instead threw in the towel on the Legislature’s own tax package.

“We were going to be spending too much money,” he said.

Gov. Charlie Baker said the state could afford both tax givebacks, as did the Massachusetts Taxpayers Foundation and the Center for State Policy Analysis at Tufts University. But Mariano said the Legislature is more “fiscally prudent” than Baker, who will be leaving office in January.

“We’re gonna be here at the end of this year when, if the economy makes a downturn, we’re gonna be talking about reductions in line items, potential cuts in budgets, and maybe even if it gets bad eventually tax increases,” he said.

The Senate’s top budget official, Sen. Michael Rodrigues of Westport, suggested a refashioned economic development bill could possibly pass in informal sessions later this year. During informal sessions, a single lawmaker’s objection could prevent the bill from moving forward.

“I think members are disappointed. You know, we’re all disappointed because we all had projects and investments in that piece of legislation. We had investments that are necessary for our hospitals, for our human service workforce, for early education,” Rodrigues said. “So we’re disappointed, but we want to make sure we get it right.”

The decision means the one-time rebates of $250 to eligible individual taxpayers and $500 to married taxpayers who filed jointly, which lawmakers have promoted in recent weeks, will not be issued, Rodrigues said. The permanent tax cuts — an increase in the renter tax deduction, the Earned Income Tax Credit, and the state’s child and dependent tax credits, plus a revamp of the estate tax  — will also be shelved, at least for now.

Informal sessions are likely to continue in the House and Senate through early January, giving lawmakers the opportunity to keep moving bills as long as there’s unanimous consent among legislators present. Rodrigues said a pared down economic development might move during informal sessions and Mariano said he hoped the Legislature would “pick away” at it throughout informal sessions.

Rodrigues said the economic development bill is “going to remain in conference until we take a deeper dive and have more time to really analyze the effects of the 62F matter that we just learned about earlier this week.”

Sessions that started at or before noon Sunday went deep into Monday morning and were marked by long recesses. There was no shortage of lawmakers who said they were unsure what was happening or just sat around for hours waiting for their colleagues to come to agreements and serve up bills for votes.

The report earlier this week from CommonWealth magazine that a 1986 voter law could trigger $3 billion in tax relief caught Beacon Hill off guard and seemed to paralyze Democrats as they struggled to decide whether to pass a $4 billion economic development bill that also included the tax package.

The Legislature last month sent Baker an overdue $52.7 billion annual budget which raises state spending by about 10 percent and Baker signed off on nearly all of it, and said he believes the state can afford both the Chapter 62F tax relief under the 1986 law and the spending and tax relief in the economic development bill.