Mariano tapping brakes on economic development bill

Speaker questions whether state can afford it and tax cap giveback

HOUSE SPEAKER Ron Mariano raised concerns on Tuesday about whether the state can afford a $3 billion tax cap giveback and the $3.5 billion in spending contained in the economic development bill, which stalled at the end of the legislative session.

Gov. Charlie Baker and Senate President Karen Spilka say the state can afford both, but Mariano is not so sure.

“If we continue to have robust revenues, then we can go ahead and fill all the needs that have been identified,” he said at a press scrum outside his office. “But if the economy slows down, which it could, and we don’t get the revenues that we have been getting, we may be wise to hold back on some of these things, save some of the ARPA money that was committed in this bill.”

The economic development bill provides funding for a lot of key priorities and it also includes a $500 million tax relief package and $500 million worth of $250 payments to most taxpayers.

The bill passed unanimously in both branches, but it stalled at the end of the legislative session amid concerns about the triggering of a 1986 law called 62F that caps how much tax revenue the state can take in each year. The law hasn’t been triggered in 35 years, but the Baker administration estimates the tax cap could send $3 billion back to taxpayers later this year.

Mariano said he would like more specificity about the size of the tax cap giveback and how that money will be returned to taxpayers.

“That’s hanging out there with a lot of questions that I’d like to see answered before we make major, major decisions about taxes and everything else,” Mariano said.

The 62F law authorizes the state auditor to certify the size of the giveback next month and it requires the money to go back as a tax credit on 2022 tax returns, although Gov. Charlie Baker is moving to change that process so refund checks could be mailed out later this fall before he leaves office.

Senate President Karen Spilka said the state can afford both the tax cap giveback and the economic development bill. The problem is the Legislature recessed for the year at the end of July, but Spilka believes lawmakers could pass the economic development bill in informal sessions where one lawmaker could prevent legislation from moving forward.

“We can do tax relief and the spending of the economic development bill in an informal session,” she said. “It was unanimous in the House. It was unanimous in the Senate. We should be able to get it through in an informal.”

Spilka said she wouldn’t be surprised if the governor proposed funding for some of the provisions in the economic development bill in a separate supplemental budget.

But she acknowledged that the House would need to go along to get anything done, and it doesn’t seem like Mariano is ready to do that yet. The speaker said he wants to see how the 62F money plays out and how state tax revenues hold up.

“One of the reasons we have this surplus is because we have been fiscally prudent and very protective of how we spend our money,” Mariano said.