Budget surplus could reach $3.6 billion

MASSACHUSETTS CONTINUES TO be swimming in cash.

After dire warnings early in the pandemic, COVID-19 has proven to be an economic boon to Massachusetts, primarily because of federal largesse. Congress’ COVID recovery packages have funneled billions of dollars into the state, through government aid and aid to individuals and businesses, which translates into higher tax revenue.

On Wednesday, the business-backed Massachusetts Taxpayers Foundation provided the latest stunning figures. The organization estimates that for the fiscal 2022 year, which ended June 30, Massachusetts will have a budget surplus of nearly $3.6 billion.

The initial fiscal 2022 budget was around $34.5 billion, and collections have come in nearly $6 billion above that, according to MTF. Some of that extra money was eaten up by additional spending and required deposits into the rainy day fund, the MBTA, and the School Building Authority, leaving an estimated $3.6 billion available.

That is a huge figure, even in comparison to the prior fiscal year, where there was a $1.5 billion surplus.

The reason this is important is as lawmakers finish up the two-year legislative session this month, they will have to make some major spending decisions. If lawmakers do nothing, the entire surplus will be deposited in the rainy day fund. But with that fund already at a record high, more likely they will look to spend a large chunk of the money.

One option is tax relief. Gov. Charlie Baker has proposed a $700 million tax break package, and lawmakers are considering but have not yet released their own tax relief package. The Revenue Committee recently released Baker’s bill and a slate of others, indicating that they are still considering changes to the estate tax, the earned income tax credit, and tax breaks for seniors and renters. Notably, the committee did not release Baker’s proposal to lower the tax rate on short-term capital gains. Senate Revenue Committee chair Adam Hinds said this is because lawmakers “really want to focus on tax relief for those who need it most.”

Baker in May filed a $1.7 billion supplemental budget for fiscal 2022 that included money for a wide range of transportation, housing, environmental, education, and economic development initiatives. It included funding for offshore wind port development, Cape Cod water and sewer projects, housing construction, financial assistance to businesses, and public college building projects. The Legislature has not yet acted on this bill, but if they do, lawmakers are likely to replace many of Baker’s priorities with their own.

Baker also filed the FORWARD Act, a $3.5 billion economic development bill that relied on federal American Rescue Plan Act money in addition to state surplus to invest in a range of building projects, including money for climate resiliency, clean energy, state parks, downtown reinvestment, housing production, and workforce training. A House committee reported out a slimmer, $1.2 billion bill that did not rely on the ARPA money, according to the State House News Service. That bill is still pending.

“My sense is you’ll see the Legislature take up some pretty big spending bills using some FY22 resources,” predicted Doug Howgate, executive vice president at the Massachusetts Taxpayers Foundation.

While formal sessions end July 31, lawmakers have in recent years delayed passing a closeout budget for the prior fiscal year until sometime in the fall – often upsetting the state comptroller who can’t close the year’s books until that happens. So some decisions could be delayed. But if lawmakers are not in formal sessions, the opposition of a single lawmaker can derail a bill, and they cannot override Baker’s vetoes.

The more complicated or policy intensive a big spending bill is, the more benefits there are to get it done before July 31,” Howgate said.

SHIRA SCHOENBERG

 

FROM COMMONWEALTH

Early vote challenge: A group of leading Massachusetts Republicans had its day in court on Wednesday, arguing to the Supreme Judicial Court that a law recently enacted by the Legislature – and signed by Republican Gov. Charlie Baker – permanently allowing residents to vote by mail for any reason is unconstitutional. The plaintiffs say the new law exceeds the state constitution’s provisions for who can cast an absentee ballot. Several justices seemed skeptical of the claim, suggesting that voting by mail is not the same as voting absentee. Secretary of State William Galvin argues that the constitution sets a floor, not a ceiling, on who can cast a ballot remotely. Read more

“Partisan” charges: Former state senator Dean Tran, who was indicted last week on charges that he stole a firearm from an elderly constituent, blasted the case against him as “partisan corruption” and said he’ll continue his Republican bid for Congress against Democratic Rep. Lori Trahan in the 3rd Congressional District. Read more

Cram session: Like college students pulling all-nighters to catch up on reading in the days before finals, lawmakers have managed to let pile up a slew of bills to potentially consider in the waning weeks before their two-year legislative session ends on July 31. First, they need to deal with the 2023 state budget, already past its July 1 due date. Meanwhile, there is legislation pending dealing with everything from sexting to sports betting. A transportation bond bill has cleared the House but not the Senate. The Senate is poised today to take up a bill expanding subsidies for childcare. A number of the bills have been passed by both branches but are now in conference committees trying to iron out differences between House and Senate versions. Those include legislation on sports betting, mental health reform, cannabis laws, clean energy, and the form of governance of state-run homes for veterans. Read more

Wiretapping and domestic violence: A woman who survived domestic violence recorded her alleged abuser, then faced criminal charges under the state’s wiretapping statute. State Sen. Patrick O’Connor is working with her to get the law changed. Read more.

OPINION

Help on the way? Senate President Karen Spilka and Sen. Jason Lewis say a Senate bill could transform the state’s costly childcare landscape by expanding eligibility for state subsidies to cover day care costs. Read more

Out of race but not politics: Democratic Sen Sonia Chang-Diaz explains that while she ended her race for governor, she’s still pushing for change by backing a slate of what she calls “Courage Democrats” who are calling for the kind of progressive change she campaigned for. Read more.

Tax talk: Critics of a ballot question that would raise taxes on high earners in the state warn that its passage would provoke an exodus from the state of well-heeled residents. Boston College law professor Thomas Barnico explains how the state’s flat income tax – which is being targeted by the ballot question – originated as an effort to thwart in-state migration to communities with lower taxes. Read more

Gun ruling: Former assistant attorney general Gary Klein looks at what the US Supreme Court’s ruling in a New York gun law case means for Massachusetts gun laws. He writes that virtually every element of the Commonwealth’s gun laws will be open to a potential challenge. Read more.

 

FROM AROUND THE WEB

 

BEACON HILL

A Massachusetts gun rights group is calling on Attorney General Maura Healey to retract the guidance she issued, jointly with the Executive Office of Public Safety, to local police on granting licenses to carry concealed weapons in the wake of the US Supreme Court decision overturning a New York state law restricting licenses. (Boston Herald)

MUNICIPAL MATTERS  

A new privacy policy in the Boston Public Schools is frustrating law enforcement officials, who say the school department is blocking them from gaining access to information about students believed to be involved in serious crime. (Boston Globe

Salem puts nearly $600,000 in ARPA funds toward providing food security. (ItemLive)

A Dorchester Reporter editorial voices disappointment that Boston police seemed unaware ahead of time of the recent march through the city of right-wing Patriot Front “white supremacist agitators.” 

HEALTH/HEALTH CARE

It’s not clear how interstate battles over abortion-related travel will play out in the courts (Providence Journal)

After community members complained about MetroWest Medical Center’s plans to eliminate some outpatient oncology services, the center says it is in talks with Tufts Medicine to continue providing some services on the Framingham campus. (MetroWest Daily News)

Workers at Planned Parenthood clinics in Marlborough, Boston, Worcester, and Springfield vote to unionize. (MetroWest Daily News)

WASHINGTON/NATIONAL/INTERNATIONAL

British Prime Minister Boris Johnson will resign following an unrelenting spate of scandals over his tenure. (New York Times

ELECTIONS

Worcester Mayor Joe Petty has a significant lead in fundraising in his state Senate bid. (Telegram & Gazette)

The Berkshire Eagle has a primer on the looming Democratic primary for Berkshire district attorney between incumbent progressive Andrea Harrington and challenger Timothy Shugrue, which it describes as a contest of “dueling Democrats” who “find themselves on either side of a big tent party.”  

BUSINESS/ECONOMY

The New Bedford Light does a deep investigation into how foreign private equity has impacted the local fishing industry.

EDUCATION

Boston injects $20 million into expanding its universal pre-k program, including incorporating family childcare providers into its network. (MassLive)

TRANSPORTATION

The Globe’s Taylor Dolven, using information from a public records request, tracks the internal twists and turns of how MBTA officials coordinated with the governor’s office about how to publicly share – and sometimes obfuscate – information about a string of three derailments of construction vehicles working on the Blue Line. 

ENERGY/ENVIRONMENT

The US Environmental Protection Agency is warning the company dismantling the Pilgrim nuclear power plant against dumping potentially radioactive water into Cape Cod Bay. (Boston Globe

CRIMINAL JUSTICE/COURTS

Workers return to the Roderick Ireland courthouse in Springfield after a “deep clean” only to find dirt, dust, and bugs left untouched. (MassLive)

Amherst swears in a group of “community responders,” an unarmed, civilian force that will respond to some non-violent police calls. (Daily Hampshire Gazette

The Amherst police investigate white supremacist flyers found on the ground in Amherst. (Daily Hampshire Gazette)