The Legislature has stalled its own plan to provide economic relief to taxpayers and invest in industries hardest hit by COVID after the state overtaxed in the past fiscal year.
“I think the members are disappointed. You know, we are all disappointed because we all had projects and investments in this bill. We have had investments that are needed for our hospitals, for our social services workforce, for early education,” said Ways and Means Chairman, Senator Michael Rodrigues.
The House on July 11 announced that it had reached a plan to help residents struggling with the rising cost of most consumer goods. The plan would have combined about $500 million in tax cuts with an additional $500 million in direct rebate checks.
The Senate was quick to announce a similar plan. Both houses adopted their versions and had worked against time to reach a compromise to send to the governor before the end of their formal sessions on July 31.
Then 1986 called.
Implemented only once, a Dukakis-era rule – Chapter 62F of the General Laws – was passed to prevent the Commonwealth from overtaxing its residents, as it apparently did by 14 cents in 1987, when a credit was applied to tax bills.
Last year, tax revenue soared north of 20% over the previous year. The state received so much money that the Revenue Department said it may have to return $2.97 billion under the old law.
Lawmakers were apparently taken by surprise when they learned that the revenue cap law would be triggered.
So surprised that they aren’t even sure they can afford the economic development plan they were trying to squeeze out of the joint conference committee during the all-nighter on Sunday.
The bill “will remain in conference until we dig deeper and have more time to really analyze the effects of the 62F case that we just learned about earlier this week,” Rodrigues said. He said lawmakers didn’t even know what they had to do to satisfy this law.
The president was more direct about shelving the plan.
“We were going to spend too much money,” Mariano said.
“If the economy slows down, we’re going to talk about job cuts, potential budget cuts, and maybe even, if it’s bad, possibly tax increases,” he said.
Governor Charlie Baker, whose tax cut plan was mostly included in the Economic Development Bill, said the tax cuts and tax credits were “affordable”.
Lawmakers briefly discussed changing the old law in order to move forward with the Economic Development Bill, but that’s apparently not the plan right now.
“We have 62F it’s the law of the land and it’s going to happen,” Mariano said. “The governor said it was the law of the land and it was worth, he thinks, $2.5 billion, but he’s not even sure and he thinks he can get it out this year. So I think that’s a significant return for taxpayers.
Herald news services contributed.