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Post Office Box 1147
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Marblehead, Massachusetts 01945
▪ (781) 639-9709
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
48 years as “The Voice of Massachusetts Taxpayers”
— and
their Institutional Memory — |
|
CLT UPDATE
Monday, August 15, 2022
Tax Cap Refund, Tax Relief:
Vacationing Legislature Dithers To Run Out The Clock
Jump directly
to CLT's Commentary on the News
|
Most Relevant News
Excerpts
(Full news reports follow Commentary)
|
|
There’s
talk on Beacon Hill of lawmakers picking up the
gavel again in a formal “special session” in order
to take up the $4 billion economic development bill
that fell to the cutting room floor during last
week’s end-of-session scramble.
“I think
it’s really important that the Legislature do all it
can to relieve the economic hardship specifically
that families are experiencing,” Secretary of State
candidate Tanisha Sullivan said Sunday on WCVB.
“Coming back into session would allow them to ensure
that we could hopefully advance childcare credits
for families, help ensure families can get some tax
credits and refunds into their pockets when they
need it most.”
A return
isn’t just a theoretical idea, it’s one that sources
say was floated well before they gaveled themselves
into a corner on Aug 1.
Lawmakers
were supposed to have finished business the day
before....
Returning
under the special session rules isn’t too hard, in
theory. Both chambers would need to submit a letter
signed by a simple majority to their chamber’s clerk
— that’s 21 members of the Senate and 81 members of
the House of Representatives — and then the matter
is voted on.
Getting
that many lawmakers together right now may be hard,
however.
Several
the Herald tried to reach Sunday indicated by
autoreply or voicemail they were already on
vacation.
The
Boston Herald
Monday, August 8, 2022
Could lawmakers return in
a special session? It’s possible
The Baker
Administration is preparing to change the rules for
returning roughly $3 billion in excess tax
collections so the governor can send out checks to
Massachusetts taxpayers before he leaves office in
January.
But a
legal expert, citing a 1987 Supreme Judicial Court
decision, says the changes being proposed by Gov.
Charlie Baker appear to violate the voter-approved
law governing excess tax collections as well as the
constitutional prohibition on appropriations in
ballot questions.
The
governor’s move to change the rules suggests he is
eager to return the money to taxpayers as quickly as
possible, perhaps to claim credit for returning the
money or to return it before the Legislature can
take any action to tinker with the law or prevent
all of the funds from going out.
The tax
cap was approved in 1986 via a ballot question
sponsored by Citizens for Limited Taxation
and the Massachusetts High Technology Council. The
question set a limit on how much tax revenue the
state could take in during a given year and required
returning any excess collections to taxpayers via
credits on their taxes....
The
governor announced the day after CommonWealth’s
report that the tax cap giveback would be “north of
$2.5 billion,” a number his administration raised to
$2.9 billion later in the day.
The
precise amount of the tax cap giveback won’t be
determined until the state auditor calculates the
number in mid-September. But the governor and his
administration have been busy laying plans to return
the money to taxpayers.
During a
brief scrum with reporters on Tuesday, Baker made
his most detailed statement yet about returning the
money.
“We’ve
already started working with the Department of
Revenue to make sure they turn around these refunds
to taxpayers as soon as possible,” he said. “And I
think at this point we expect that people will be
receiving their refunds sometime between the end of
November and the beginning of December.”
The
governor used the term refunds, implying that the
money would be returned to taxpayers in the form of
checks.
The tax
cap law, however, says the money should be returned
to taxpayers as a credit on their 2022 tax forms,
which won’t even become available until next
year....
Baker
administration officials are moving to accelerate
the process of returning the funds. In May, well
before the notion that the tax cap could be
triggered surfaced publicly, the Department of
Revenue put out a notice that it intended to rescind
the existing regulation that spells out in detail
the two-step process for returning excess tax
collections to taxpayers.
“This
regulation is being repealed because it is obsolete;
no credit has been required since 1987,” the hearing
notice said. “If a credit becomes available, DOR
will issue guidance and update forms specific to the
year the credit is allowed.”
No public
comments were submitted on rescinding the
regulation.
In a
statement, officials at the Executive Office for
Administration and Finance indicated they have not
completed the process of rescinding the regulation
but would do so once the auditor certifies 62F has
been triggered.
“The
language in the 62F statute does not define the term
‘credit’ or address the question of implementation
mechanism; as such, we have flexibility to determine
the best mechanism in a given year. DOR will issue
guidance that establishes the mechanism of payment
if it is determined that the 62F cap was reached for
FY22,” the statement said.
But Peter
Enrich, an attorney who worked as general counsel
and counsel for revenue policy at the Executive
Office for Administration and Finance in 1986 and
1987 when the tax cap law was being debated and
implemented, said the Baker administration’s stance
appears to run afoul of the law.
He said
the meaning of the term “credit” is not spelled out
in the 62F law, but the meaning is well established
in tax law – credits reduce taxes that are owed;
they are not refunds issued by check. “There’s not a
single exception to that,” Enrich said....
Christopher Anderson, the president of the
Massachusetts High Technology Council, said the
ballot question was specifically crafted using a
credit to avoid being viewed as an appropriation,
which under the state constitution cannot be
included in a ballot question.
Anderson
said he would welcome the tax cap money being
returned earlier, in part to head off any efforts
that could surface next year to tamper with the tax
cap.
But
Anderson said he wanted to hear more about the legal
and logistical issues involved in doing that.
Perhaps the Baker administration could argue
residents paid too much money in taxes and the state
is merely returning the overpayments, he said.
Enrich
said the Supreme Judicial Court in 1987 held that
the tax cap credit was not an appropriation because
it only reduced the amount of taxes paid by
taxpayers and did not funnel money to them directly.
“There is
no authority to use funds in the Commonwealth’s
treasury to send funds back to people,” Enrich
said....
House
Speaker Ron Mariano issued a statement of caution.
“Considering the potential regulatory changes for
disbursement being discussed by the administration,
it’s evident that there is still a significant
amount of uncertainty and unanswered questions
around the specifics of 62F, which is exactly why we
need to be cautious and understand all the facts
before making these major decisions,” he said.
CommonWealth Magazine
Thursday, August 11, 2022
Baker changing rules on tax
cap giveback
Plans ‘refunds’ this fall instead of credits next
year
State tax
collections have surged in recent years to the point
that nearly $3 billion in excess revenue could be
returned to taxpayers, but so too has the amount of
money that Massachusetts keeps stashed away and the
state now has more than five times as much in its
rainy day fund as it did five years ago.
Massachusetts pumped $2.3 billion into its
Stabilization Fund during fiscal year 2022, which
ended June 30, bringing the reserve account's
balance to a historic high of $6.9 billion. And the
fiscal year 2023 budget that Gov. Charlie Baker
signed last month would put the Stabilization Fund
on track to reach yet another record high of roughly
$8.4 billion by next summer, his administration has
said.
Combined
with "remarkably strong revenue performance in
fiscal 2022," the amount of money socked away in
reserves has Massachusetts and other states "in a
much better position entering fiscal 2023 compared
to the prior year," Fitch Ratings said in a report
issued this week on state budget trends....
The credit
rating agency said that Massachusetts' rainy day
fund ended fiscal year 2022 with a balance "equal to
nearly 17% of tax revenue" and pointed out that the
fund's bottom line has "more than quintupled since
ending fiscal 2017 with a $1.3 billion balance."
While
there is no one-size-fits-all rule for how much a
state should hold in reserve, 10 percent of budgeted
spending has long been considered an ideal target.
Before the pandemic, Massachusetts was short of that
target. At the end of fiscal 2020, the stabilization
fund balance of $3.5 billion was only 8 percent of
that year's $43.321 billion budget. By comparison,
the $6.9 billion balance at the end of fiscal 2022
represented more than 14.3 percent of the $48.1
billion state budget lawmakers approved last year
and the projected balance of $8.4 billion at the end
of fiscal year 2023 would represent about 16 percent
of budgeted spending.
Instead of
stashing so much money away, alternatives include
spending it to address unmet needs, or adopting tax
relief or incentives to help Massachusetts residents
or make the state more competitive with other
states. Some of those approaches were included in
economic development bills that cleared the branches
with unanimous votes but were put on hold Aug. 1
because legislative leaders wanted to reassess the
state's fiscal picture.
State
House News Service
Thursday, August 11, 2022
State Savings Overflowing
Amidst Pause On Spending, Tax Relief
Fitch: Mass. Rainy Day Fund Balance Equaled 17
Percent Of Tax Revenues
Though
talks around economic development and tax relief
have continued since formal sessions ended early on
Aug. 1, the House and Senate remain far apart and,
according to Senate President Karen Spilka, House
leaders last weekend rejected the latest proposals.
Spilka
told the News Service that she thinks it is
imperative that the Legislature finish its work
reconciling differing versions of a roughly $4
billion economic development bill that included a $1
billion tax relief proposal and said the House
rejected Senate proposals shared last weekend....
Spilka
later added, "But we need the bill to come from the
House and I believe that that's what we need to do
now."
A short
while later, House Speaker Ronald Mariano told
reporters that the economic development bill is "a
long way from being finalized. So we will continue
to negotiate that." He also said that "we know
there's some things in there that we all agree on,
and we could just move right through those things."
But asked
why the economic development conference committee
has not yet moved those items to the House floor for
a vote, Mariano said, "Because no one's signed off
on the agreements yet. As we come to agreement, then
we can sign off and send them out."
State
House News Service
Tuesday, August 9, 2022
Tax Relief Talks Far Apart Ten
Days Into Summer Recess
Urgent Calls To Return, But Deal Could Emerge In
Informals Too
Triangles
are the strongest shape, but there can be some level
of conflict inherent with three-sided situations.
When three interests are involved, they can either
all be in agreement, each be on their own, or you
find yourself in a two-against-one situation....
It was
scheduled as a kumbaya moment for Gov. Charlie
Baker, House Speaker Ronald Mariano and Senate
President Karen Spilka to celebrate the state's new
reproductive rights law with advocates, but it
revealed pretty clearly that the three leaders are
not singing the same tune....
It's no
wonder the reporters were the only ones who wanted a
joint press conference Tuesday -- the relationship
between Baker, Spilka and Mariano has
two-against-one situations all over the place right
now.
Most
significantly, Baker and Spilka appear largely on
the same page when it comes to the $1 billion tax
relief package that's been put on ice. Spilka is
eager to advance that package "now" and said the
Senate is "willing to do whatever is necessary to
get it done." Baker has argued from the beginning
that the money is there to do the Legislature's tax
relief plan on top of Chapter 62F rebates and said
he "really hope[s] they come back and figure out a
way to get it done."
Mariano
was the odd man out Tuesday, telling reporters that
he thinks it would be "helpful if we knew how much
we had to spend" on the Chapter 62F relief before
doing anything else related to tax relief. That
would push action out until the end of September at
the earliest and Mariano holds the cards -- only the
House can introduce a tax bill, so Spilka is left to
wait until the House sends her chamber something to
do.
"We need
the bill to come from the House and I believe that
that's what we need to do now," she said Tuesday.
State
House News Service
Friday, August 12, 2022
Weekly Roundup - Three Sides To
This Story
As
lawmakers vacation or campaign ahead of the Sept. 6
primaries, the August sales tax holiday weekend is
the only form of tax relief they've made available
to Massachusetts residents who are feeling numb from
the higher costs of everything. The 6.25 percent
sales tax will be suspended for two days (Aug. 13
and 14) while the state sits on a massive fiscal
2022 surplus and a record rainy day fund account
balance.
House and
Senate Democrats intended to pass $1 billion in tax
relief to go along with more than $3 billion in
spending, but shelved their economic development
bill at the start of this month and haven't returned
to it, at least publicly. Lawmakers said they wanted
to explore the 1986 tax cap law that is poised to
deliver nearly $3 billion in income tax relief this
year, but House Speaker Ron Mariano and Senate
President Karen Spilka have not scheduled any public
events to dissect that law, which crept up on them
in late July and wrecked their plans for what in
past years has been a celebratory jobs bill that
incumbents then use on the campaign trail to show
off their accomplishments.
State
House News Service
Friday, August 12, 2022
Advances - Week of Aug. 14, 2022 |
Chip Ford's CLT
Commentary |
The Boston Herald reported
last Monday ("Could lawmakers return in a
special session? It’s possible"):
There’s talk on Beacon Hill of lawmakers picking up the gavel
again in a formal “special session” in order to take up the $4
billion economic development bill that fell to the cutting room
floor during last week’s end-of-session scramble....
A
return isn’t just a theoretical idea, it’s one that sources say
was floated well before they gaveled themselves into a corner on
Aug 1....
Returning under the special session rules isn’t too hard, in
theory. Both chambers would need to submit a letter signed by a
simple majority to their chamber’s clerk — that’s 21 members of
the Senate and 81 members of the House of Representatives — and
then the matter is voted on.
Getting that many lawmakers together right now may be hard,
however.
Several the Herald tried to reach Sunday indicated by autoreply
or voicemail they were already on vacation.
Anything whatsoever can be passed in
an "informal" session if not a single representative or senator is
present to object. All it takes is one member's objection to
kill a stealth bill during an informal session. There are only
27 Republicans in the House, just three in the Senate. Though
a distinct minority, certainly an endangered species, at least it's enough to cover informal sessions
and stop objectionable bills from being passed while nobody's
looking. Let's hope they do — it's all
any of us can hope for.
CommonWealth Magazine's
Bruce Mohl, who initially
broke the news on July 27, reported on Thursday ("Baker
changing rules on tax cap giveback—Plans
‘refunds’ this fall instead of credits next year"):
The Baker Administration is preparing to change the rules for
returning roughly $3 billion in excess tax collections so the
governor can send out checks to Massachusetts taxpayers before
he leaves office in January.
But a legal expert, citing a 1987 Supreme Judicial Court
decision, says the changes being proposed by Gov. Charlie Baker
appear to violate the voter-approved law governing excess tax
collections as well as the constitutional prohibition on
appropriations in ballot questions.
The governor’s move to change the rules suggests he is eager to
return the money to taxpayers as quickly as possible, perhaps to
claim credit for returning the money or to return it before the
Legislature can take any action to tinker with the law or
prevent all of the funds from going out.
The tax cap was approved in 1986 via a ballot question sponsored
by Citizens for Limited Taxation and the Massachusetts
High Technology Council. The question set a limit on how much
tax revenue the state could take in during a given year and
required returning any excess collections to taxpayers via
credits on their taxes....
The governor announced the day after CommonWealth’s report that
the tax cap giveback would be “north of $2.5 billion,” a number
his administration raised to $2.9 billion later in the day.
The precise amount of the tax cap giveback won’t be determined
until the state auditor calculates the number in mid-September.
But the governor and his administration have been busy laying
plans to return the money to taxpayers....
The mechanism under CLT's
tax cap law for returning "excess state tax revenues" was intentionally vague to avoid
the ballot question being ruled unconstitutional for appropriating
funds by the state Supreme Judicial Court before signatures on the
petition could even be collected. Appropriating funds, among a
few other prohibitions, is forbidden under Article 48, the
initiative petition law. When it was
triggered for the only time before now, in 1987, the tax credit was interpreted to mean
that it would be returned by a tax deduction added to the following year's income tax returns.
Remember, the Commissioner of Revenue and the Secretary of
Administration and Finance back then were appointees of Gov. Michael
Dukakis — assuredly no friend of
taxpayers, nor of Citizens for Limited Taxation and opposed to our
1986 ballot question.
The CommonWealth Magazine
report continued:
During a brief scrum with reporters on Tuesday, Baker made his
most detailed statement yet about returning the money.
“We’ve already started working with the Department of Revenue to
make sure they turn around these refunds to taxpayers as soon as
possible,” he said. “And I think at this point we expect that
people will be receiving their refunds sometime between the end
of November and the beginning of December.”
The governor used the term refunds, implying that the money
would be returned to taxpayers in the form of checks.
The tax cap law, however, says the money should be returned to
taxpayers as a credit on their 2022 tax forms, which won’t even
become available until next year....
That's not exactly
what CLT's tax cap laws says. Here's what the law states:
Massachusetts
General Laws Part I, Title IX, Chapter 62F:
LIMITATION ON THE GROWTH OF STATE TAX REVENUES
Section 6: Effect
of net state tax revenues in excess of allowable state tax
revenues; tax credit
Section 6. If net state tax revenues in any fiscal
year exceed allowable state tax revenues for said fiscal year
the amount of such excess, as determined by the State Auditor
and reported to the Commissioner pursuant to section five of
this chapter, shall result in a credit equal to the total amount
of such excess. The credit shall be applied to the then current
personal income tax liability of all taxpayers on a proportional
basis to the personal income tax liability incurred by all
taxpayers in the immediately preceding taxable year.
The Commissioner shall
take such action and shall have the authority to issue such
rules and regulations as are necessary to effectuate the
requirements of this section.
The Baker administration,
seeing the tax cap trigger potentially approaching this year for
only the second time since its adoption 36 years ago, began planning for what was
likely coming while recognizing "The Commissioner shall take such
action and shall have the authority to issue such rules and
regulations as are necessary to effectuate the requirements of this
section." The CommonWealth Magazine report continued:
Baker administration officials are moving to accelerate the
process of returning the funds. In May, well before the notion
that the tax cap could be triggered surfaced publicly, the
Department of Revenue put out a notice that it intended to
rescind the existing regulation that spells out in detail the
two-step process for returning excess tax collections to
taxpayers.
“This regulation is being repealed because it is obsolete; no
credit has been required since 1987,” the hearing notice said.
“If a credit becomes available, DOR will issue guidance and
update forms specific to the year the credit is allowed.”
No public comments were submitted on rescinding the regulation.
In a statement, officials at the Executive Office for
Administration and Finance indicated they have not completed the
process of rescinding the regulation but would do so once the
auditor certifies 62F has been triggered.
“The language in the 62F statute does not define the term
‘credit’ or address the question of implementation mechanism; as
such, we have flexibility to determine the best mechanism in a
given year. DOR will issue guidance that establishes the
mechanism of payment if it is determined that the 62F cap was
reached for FY22,” the statement said....
Then the attorney who worked
as general counsel and counsel for revenue policy at the Executive
Office for Administration and Finance in 1986 and 1987 (during the
Dukakis administration) criticized Gov. Baker's refund plan
in the report:
But Peter Enrich, an attorney who worked as general counsel and
counsel for revenue policy at the Executive Office for
Administration and Finance in 1986 and 1987 when the tax cap law
was being debated and implemented, said the Baker
administration’s stance appears to run afoul of the law.
He said the meaning of the term “credit” is not spelled out in
the 62F law, but the meaning is well established in tax law –
credits reduce taxes that are owed; they are not refunds issued
by check. “There’s not a single exception to that,” Enrich
said....
Christopher Anderson, the president of the Massachusetts High
Technology Council, said the ballot question was specifically
crafted using a credit to avoid being viewed as an
appropriation, which under the state constitution cannot be
included in a ballot question.
Anderson said he would welcome the tax cap money being returned
earlier, in part to head off any efforts that could surface next
year to tamper with the tax cap.
But Anderson said he wanted to hear more about the legal and
logistical issues involved in doing that. Perhaps the Baker
administration could argue residents paid too much money in
taxes and the state is merely returning the overpayments, he
said.
Enrich said the Supreme Judicial Court in 1987 held that the tax
cap credit was not an appropriation because it only reduced the
amount of taxes paid by taxpayers and did not funnel money to
them directly.
“There is no authority to use funds in the Commonwealth’s
treasury to send funds back to people,” Enrich said....
Massachusetts High
Technology Council president Chris Anderson's point is precisely on
target, and I suspect so too is Gov. Baker for the very same reason:
Anderson said he
would welcome the tax cap money being returned earlier, in part
to head off any efforts that could surface next year to tamper
with the tax cap.
And but of course . . .
House Speaker Ron Mariano issued a statement of caution.
“Considering the potential regulatory changes for disbursement
being discussed by the administration, it’s evident that there
is still a significant amount of uncertainty and unanswered
questions around the specifics of 62F, which is exactly why we
need to be cautious and understand all the facts before making
these major decisions,” he said.
If anyone has any doubt
that Massachusetts can afford to refund the over-taxation surplus, the
State House News Service eliminated it in its Thursday report ("State
Savings Overflowing Amidst Pause On Spending, Tax Relief—Fitch:
Mass. Rainy Day Fund Balance Equaled 17 Percent Of Tax Revenues"):
State tax collections have surged in recent years to the point
that nearly $3 billion in excess revenue could be returned to
taxpayers, but so too has the amount of money that Massachusetts
keeps stashed away and the state now has more than five times as
much in its rainy day fund as it did five years ago.
Massachusetts pumped $2.3 billion into its Stabilization Fund
during fiscal year 2022, which ended June 30, bringing the
reserve account's balance to a historic high of $6.9 billion.
And the fiscal year 2023 budget that Gov. Charlie Baker signed
last month would put the Stabilization Fund on track to reach
yet another record high of roughly $8.4 billion by next summer,
his administration has said....
The credit rating agency said that Massachusetts' rainy day fund
ended fiscal year 2022 with a balance "equal to nearly 17% of
tax revenue" and pointed out that the fund's bottom line has
"more than quintupled since ending fiscal 2017 with a $1.3
billion balance." ...
At the end of fiscal 2020, the stabilization fund balance of
$3.5 billion was only 8 percent of that year's $43.321 billion
budget. By comparison, the $6.9 billion balance at the end of
fiscal 2022 represented more than 14.3 percent of the $48.1
billion state budget lawmakers approved last year and the
projected balance of $8.4 billion at the end of fiscal year 2023
would represent about 16 percent of budgeted spending.
"Though talks around
economic development and tax relief have continued since formal
sessions ended early on Aug. 1, the House and Senate remain far
apart and, according to Senate President Karen Spilka, House leaders
last weekend rejected the latest proposals," the State House News
Service reported on Tuesday ("Tax Relief Talks
Far Apart Ten Days Into Summer Recess—Urgent
Calls To Return, But Deal Could Emerge In Informals Too"),
adding:
Spilka told the News Service that she thinks it is imperative
that the Legislature finish its work reconciling differing
versions of a roughly $4 billion economic development bill that
included a $1 billion tax relief proposal and said the House
rejected Senate proposals shared last weekend....
Spilka later added, "But we need the bill to come from the House
and I believe that that's what we need to do now."
A
short while later, House Speaker Ronald Mariano told reporters
that the economic development bill is "a long way from being
finalized. So we will continue to negotiate that." He also said
that "we know there's some things in there that we all agree on,
and we could just move right through those things."
But asked why the economic development conference committee has
not yet moved those items to the House floor for a vote, Mariano
said, "Because no one's signed off on the agreements yet. As we
come to agreement, then we can sign off and send them out."
Can you believe this
continuing, flagrant dysfunction perpetrated by "The Best
Legislature Money Can Buy"? Legislators have had almost two years to get the
people's business done before taking their five-month paid vacation, but Mariano and his sheep flock
are still
grazing and dithering. They just can't get past having to give
back some of the multi-billions of surplus revenue to its rightful
owners, those from whom it was extracted without any legitimate,
even arguable need.
If you need further
evidence, on Friday in its Weekly Roundup the News Service noted ("Three
Sides To This Story"):
Triangles are the strongest shape, but there can be some level
of conflict inherent with three-sided situations. When three
interests are involved, they can either all be in agreement,
each be on their own, or you find yourself in a two-against-one
situation....
It was scheduled as a kumbaya moment for Gov. Charlie Baker,
House Speaker Ronald Mariano and Senate President Karen Spilka
to celebrate the state's new reproductive rights law with
advocates, but it revealed pretty clearly that the three leaders
are not singing the same tune....
It's no wonder the reporters were the only ones who wanted a
joint press conference Tuesday -- the relationship between
Baker, Spilka and Mariano has two-against-one situations all
over the place right now.
Most significantly, Baker and Spilka appear largely on the same
page when it comes to the $1 billion tax relief package that's
been put on ice. Spilka is eager to advance that package "now"
and said the Senate is "willing to do whatever is necessary to
get it done." Baker has argued from the beginning that the money
is there to do the Legislature's tax relief plan on top of
Chapter 62F rebates and said he "really hope[s] they come back
and figure out a way to get it done."
Mariano was the odd man out Tuesday, telling reporters that he
thinks it would be "helpful if we knew how much we had to spend"
on the Chapter 62F relief before doing anything else related to
tax relief. That would push action out until the end of
September at the earliest and Mariano holds the cards -- only
the House can introduce a tax bill, so Spilka is left to wait
until the House sends her chamber something to do.
"We need the bill to come from the House and I believe that
that's what we need to do now," she said Tuesday.
In
its Advances - Week of Aug. 14, 2022, the State House News
Service noted:
Lawmakers said they
wanted to explore the 1986 tax cap law that is poised to deliver
nearly $3 billion in income tax relief this year, but House
Speaker Ron Mariano and Senate President Karen Spilka have not
scheduled any public events to dissect that law, which crept up
on them in late July and wrecked their plans for what in past
years has been a celebratory jobs bill that incumbents then use
on the campaign trail to show off their accomplishments.
Yep,
this sure is "The Best Legislature Money Can Buy" performing
at its finest. They'll get right on it, someday when they get
around to it — or not. To them it's only returning some of the
state's obscene revenue surplus to the victim taxpayers they
unnecessarily extracted it from.
What's the rush anyway? There's always next year, and by then
maybe they can entirely ignore the call for tax relief.
Remember, that's how they rammed through in a mere month their
obscene legislative pay grab in January of 2017 while hoping
voters would forget in two years when they were up for re-election.
It worked for them back then, didn't it?
This
is precisely why CLT's state tax cap was so critical in 1986 and
remains even more so today.
|
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|
Chip Ford
Executive Director |
|
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|
The Boston
Herald
Monday, August 8, 2022
Could lawmakers return in a special session? It’s possible
By Matthew Medsger
There’s talk on Beacon Hill of lawmakers picking up the
gavel again in a formal “special session” in order to take
up the $4 billion economic development bill that fell to the
cutting room floor during last week’s end-of-session
scramble.
“I think it’s really important that the Legislature do all
it can to relieve the economic hardship specifically that
families are experiencing,” Secretary of State candidate
Tanisha Sullivan said Sunday on WCVB. “Coming back into
session would allow them to ensure that we could hopefully
advance childcare credits for families, help ensure families
can get some tax credits and refunds into their pockets when
they need it most.”
A return isn’t just a theoretical idea, it’s one that
sources say was floated well before they gaveled themselves
into a corner on Aug 1.
Lawmakers were supposed to have finished business the day
before.
They sent Gov. Charlie Baker dozens of bills, but their plan
to provide tax relief to residents and send low income
earners $250 each was suddenly stymied by an
all-but-forgotten 1986 law which requires excess revenue —
maybe $3 billion this year — be sent back to taxpayers.
Now legislators are faced with the hard choice of providing
permanent economic relief to residents in the form of tax
cuts or complying with the will of voters from 1986.
Lawmakers had briefly discussed changing that law to push
out their tax plan, but eventually came down on the side of
sending taxpayers their money under the 1986 law.
Returning under the special session rules isn’t too hard, in
theory. Both chambers would need to submit a letter signed
by a simple majority to their chamber’s clerk — that’s 21
members of the Senate and 81 members of the House of
Representatives — and then the matter is voted on.
Getting that many lawmakers together right now may be hard,
however.
Several the Herald tried to reach Sunday indicated by
autoreply or voicemail they were already on vacation.
CommonWealth Magazine
Thursday, August 11, 2022
Baker changing rules on tax cap giveback
Plans ‘refunds’ this fall instead of credits next year
By Bruce Mohl
The Baker Administration is preparing to change the rules
for returning roughly $3 billion in excess tax collections
so the governor can send out checks to Massachusetts
taxpayers before he leaves office in January.
But a legal expert, citing a 1987 Supreme Judicial Court
decision, says the changes being proposed by Gov. Charlie
Baker appear to violate the voter-approved law governing
excess tax collections as well as the constitutional
prohibition on appropriations in ballot questions.
The governor’s move to change the rules suggests he is eager
to return the money to taxpayers as quickly as possible,
perhaps to claim credit for returning the money or to return
it before the Legislature can take any action to tinker with
the law or prevent all of the funds from going out.
The tax cap was approved in 1986 via a ballot question
sponsored by Citizens for Limited Taxation and the
Massachusetts High Technology Council. The question set a
limit on how much tax revenue the state could take in during
a given year and required returning any excess collections
to taxpayers via credits on their taxes.
The law has been triggered only once, in 1987, and over time
largely faded from public view. That situation changed on
July 27 when CommonWealth reported that the law would be
triggered again this year for the first time in 35 years.
The news caught most of Beacon Hill by surprise, but the
Baker administration was well aware of the situation. The
governor announced the day after CommonWealth’s report that
the tax cap giveback would be “north of $2.5 billion,” a
number his administration raised to $2.9 billion later in
the day.
The precise amount of the tax cap giveback won’t be
determined until the state auditor calculates the number in
mid-September. But the governor and his administration have
been busy laying plans to return the money to taxpayers.
During a brief scrum with reporters on Tuesday, Baker made
his most detailed statement yet about returning the money.
“We’ve already started working with the Department of
Revenue to make sure they turn around these refunds to
taxpayers as soon as possible,” he said. “And I think at
this point we expect that people will be receiving their
refunds sometime between the end of November and the
beginning of December.”
The governor used the term refunds, implying that the money
would be returned to taxpayers in the form of checks.
The tax cap law, however, says the money should be returned
to taxpayers as a credit on their 2022 tax forms, which
won’t even become available until next year.
The tax cap law, dubbed 62F in legislative parlance, and the
accompanying regulations spell out how the credit works. If
excess tax collections end up being $3 billion, for example,
the law and regulations require the Department of Revenue to
determine what percent $3 billion is of the state’s total
tax take in 2021. That percentage is then used by each
taxpayer to determine how much of their individual 2021 tax
payment should be returned as a credit, but the credit can
only be taken against the individual’s tax liability for
2022.
It’s a two-step process that means taxpayers would see no
benefit until 2022, after Baker has left office.
Baker administration officials are moving to accelerate the
process of returning the funds. In May, well before the
notion that the tax cap could be triggered surfaced
publicly, the Department of Revenue put out a notice that it
intended to rescind the existing regulation that spells out
in detail the two-step process for returning excess tax
collections to taxpayers.
“This regulation is being repealed because it is obsolete;
no credit has been required since 1987,” the hearing notice
said. “If a credit becomes available, DOR will issue
guidance and update forms specific to the year the credit is
allowed.”
No public comments were submitted on rescinding the
regulation.
In a statement, officials at the Executive Office for
Administration and Finance indicated they have not completed
the process of rescinding the regulation but would do so
once the auditor certifies 62F has been triggered.
“The language in the 62F statute does not define the term
‘credit’ or address the question of implementation
mechanism; as such, we have flexibility to determine the
best mechanism in a given year. DOR will issue guidance that
establishes the mechanism of payment if it is determined
that the 62F cap was reached for FY22,” the statement said.
But Peter Enrich, an attorney who worked as general counsel
and counsel for revenue policy at the Executive Office for
Administration and Finance in 1986 and 1987 when the tax cap
law was being debated and implemented, said the Baker
administration’s stance appears to run afoul of the law.
He said the meaning of the term “credit” is not spelled out
in the 62F law, but the meaning is well established in tax
law – credits reduce taxes that are owed; they are not
refunds issued by check. “There’s not a single exception to
that,” Enrich said.
Enrich said the 1986 law does spell out the two-year process
for returning the money, and a 1987 Supreme Judicial Court
decision dealing with the tax cap also spells out clearly
how the credit is calculated and returned.
Christopher Anderson, the president of the Massachusetts
High Technology Council, said the ballot question was
specifically crafted using a credit to avoid being viewed as
an appropriation, which under the state constitution cannot
be included in a ballot question.
Anderson said he would welcome the tax cap money being
returned earlier, in part to head off any efforts that could
surface next year to tamper with the tax cap.
But Anderson said he wanted to hear more about the legal and
logistical issues involved in doing that. Perhaps the Baker
administration could argue residents paid too much money in
taxes and the state is merely returning the overpayments, he
said.
Enrich said the Supreme Judicial Court in 1987 held that the
tax cap credit was not an appropriation because it only
reduced the amount of taxes paid by taxpayers and did not
funnel money to them directly.
“There is no authority to use funds in the Commonwealth’s
treasury to send funds back to people,” Enrich said.
House Speaker Ron Mariano issued a statement of caution.
“Considering the potential regulatory changes for
disbursement being discussed by the administration, it’s
evident that there is still a significant amount of
uncertainty and unanswered questions around the specifics of
62F, which is exactly why we need to be cautious and
understand all the facts before making these major
decisions,” he said.
State House News
Service
Thursday, August 11, 2022
State Savings Overflowing Amidst Pause On Spending, Tax
Relief
Fitch: Mass. Rainy Day Fund Balance Equaled 17 Percent Of
Tax Revenues
By Colin A. Young
State tax collections have surged in recent years to the
point that nearly $3 billion in excess revenue could be
returned to taxpayers, but so too has the amount of money
that Massachusetts keeps stashed away and the state now has
more than five times as much in its rainy day fund as it did
five years ago.
Massachusetts pumped $2.3 billion into its Stabilization
Fund during fiscal year 2022, which ended June 30, bringing
the reserve account's balance to a historic high of $6.9
billion. And the fiscal year 2023 budget that Gov. Charlie
Baker signed last month would put the Stabilization Fund on
track to reach yet another record high of roughly $8.4
billion by next summer, his administration has said.
Combined with "remarkably strong revenue performance in
fiscal 2022," the amount of money socked away in reserves
has Massachusetts and other states "in a much better
position entering fiscal 2023 compared to the prior year,"
Fitch Ratings said in a report issued this week on state
budget trends.
"The majority of states continue to take a prudent approach
of enhancing their budget resilience through adding to
reserves, paying down liabilities, and applying what may be
temporary revenues to one-time, rather than ongoing,
spending. States are making sizable deposits to rainy day
funds, many of which are now considered fully funded," Fitch
said.
The credit rating agency said that Massachusetts' rainy day
fund ended fiscal year 2022 with a balance "equal to nearly
17% of tax revenue" and pointed out that the fund's bottom
line has "more than quintupled since ending fiscal 2017 with
a $1.3 billion balance."
While there is no one-size-fits-all rule for how much a
state should hold in reserve, 10 percent of budgeted
spending has long been considered an ideal target. Before
the pandemic, Massachusetts was short of that target. At the
end of fiscal 2020, the stabilization fund balance of $3.5
billion was only 8 percent of that year's $43.321 billion
budget. By comparison, the $6.9 billion balance at the end
of fiscal 2022 represented more than 14.3 percent of the
$48.1 billion state budget lawmakers approved last year and
the projected balance of $8.4 billion at the end of fiscal
year 2023 would represent about 16 percent of budgeted
spending.
Instead of stashing so much money away, alternatives include
spending it to address unmet needs, or adopting tax relief
or incentives to help Massachusetts residents or make the
state more competitive with other states. Some of those
approaches were included in economic development bills that
cleared the branches with unanimous votes but were put on
hold Aug. 1 because legislative leaders wanted to reassess
the state's fiscal picture.
The reserves are also meant to gird the state against an
economic downturn. After "historically strong" U.S. gross
domestic product growth of 5.7 percent in 2021, Fitch said
it expects that growth will slow sharply in 2022 to 2.9
percent, and then even further to 1.5 percent in 2023 due to
rising inflation and tightening monetary policy.
Eric Kim, Fitch's senior director for state governments,
said Wednesday that most states are "well positioned for
slower growth" but that the most salient risk to state
government credit ratings over the next year and a half is
"definitely the potential for an economic downturn."
"State revenues are very closely linked to economic
performance, income and sales taxes are driven by economic
activity, so if we do hit a recession and there are
sustained declines in things like wages, jobs and consumer
spending, then that will bring down state revenues and
tighten budgets, for sure," Kim said Wednesday. "We do think
that states are generally well-positioned to manage through
a downturn, having rebuilt some fiscal resilience in recent
years. But a recession can be unpredictable and how deep it
is, or even what sectors of the economy get hit hardest --
so there's still clearly some risk there."
State House News
Service
Tuesday, August 9, 2022
Tax Relief Talks Far Apart Ten Days Into Summer Recess
Urgent Calls To Return, But Deal Could Emerge In Informals
Too
By Colin A. Young
Though talks around economic development and tax relief have
continued since formal sessions ended early on Aug. 1, the
House and Senate remain far apart and, according to Senate
President Karen Spilka, House leaders last weekend rejected
the latest proposals.
Spilka told the News Service that she thinks it is
imperative that the Legislature finish its work reconciling
differing versions of a roughly $4 billion economic
development bill that included a $1 billion tax relief
proposal and said the House rejected Senate proposals shared
last weekend.
"Well, last weekend, I proposed several options for
solutions for tax reform, economic development, and they
were all refused," the Senate president said. "I believe
that we need to get tax relief and economic development
done. We are willing to do whatever is necessary to get it
done."
Spilka later added, "But we need the bill to come from the
House and I believe that that's what we need to do now."
A short while later, House Speaker Ronald Mariano told
reporters that the economic development bill is "a long way
from being finalized. So we will continue to negotiate
that." He also said that "we know there's some things in
there that we all agree on, and we could just move right
through those things."
But asked why the economic development conference committee
has not yet moved those items to the House floor for a vote,
Mariano said, "Because no one's signed off on the agreements
yet. As we come to agreement, then we can sign off and send
them out."
State House News
Service
Friday, August 12, 2022
Weekly Roundup - Three Sides To This Story
Recap and analysis of the week in state government
By Colin A. Young
Triangles are the strongest shape, but there can be some
level of conflict inherent with three-sided situations. When
three interests are involved, they can either all be in
agreement, each be on their own, or you find yourself in a
two-against-one situation.
Directors and cinematographers have been using triangles to
tell stories for decades. Think about the iconic final scene
of "The Good, The Bad and The Ugly." What is already a tense
graveside interaction between Blondie and Tuco is taken to
the stratosphere when Angel Eyes appears and declares, "Two
can dig a lot quicker than one -- dig." The three-sided
standoff that ensues has become absorbed into the popular
culture and is likely the most recognizable part of the
classic spaghetti western.
Sergio Leone could have had a field day with the scene that
unfolded Tuesday in and outside of the State House library.
You could almost hear the sounds of Ennio Morricone's
soundtrack in the background as Beacon Hill's own Big Three
participated in the same event together for the first time
since economic development talks collapsed as Democrats
became paralyzed by Baker's recollection of a 1980s tax
relief law that complicated their own relief plans.
It was scheduled as a kumbaya moment for Gov. Charlie Baker,
House Speaker Ronald Mariano and Senate President Karen
Spilka to celebrate the state's new reproductive rights law
with advocates, but it revealed pretty clearly that the
three leaders are not singing the same tune.
The mock signing ceremony went smoothly, but things got a
touch awkward after Baker suggested that the horde of
reporters wait to speak with him out in the hallway. Mariano
was the first to head for the exits and was initially
reluctant to talk to the assembled media. Instead of getting
in front of the cameras and microphones, the speaker decided
take a lap of the building and promised he'd be back.
Baker came out next and took questions from reporters as
Spilka and other senators hung back in the library for more
photos. With Baker and the media tied up, Spilka departed
the library but stopped to speak with the News Service
(which had the luxury of having multiple reporters on scene)
before heading back to her office.
Once the governor returned to his office, Mariano came back
to the hallway outside the library and took questions from
reporters flanked by Ways and Means Chairman Aaron
Michlewitz. And once that scrum was over, Spilka returned to
talk to the reporters who had been busy talking to Baker
when she first left the event in the library.
The Big Three, together at the same event during a time of
numerous open questions for the Legislature and governor ...
and they held three separate avails. The days of regular
Monday leadership meetings and the post-huddle press
conferences with the governor, speaker and Senate president
seem like a distant memory now.
It's no wonder the reporters were the only ones who wanted a
joint press conference Tuesday -- the relationship between
Baker, Spilka and Mariano has two-against-one situations all
over the place right now.
Most significantly, Baker and Spilka appear largely on the
same page when it comes to the $1 billion tax relief package
that's been put on ice. Spilka is eager to advance that
package "now" and said the Senate is "willing to do whatever
is necessary to get it done." Baker has argued from the
beginning that the money is there to do the Legislature's
tax relief plan on top of Chapter 62F rebates and said he
"really hope[s] they come back and figure out a way to get
it done."
Mariano was the odd man out Tuesday, telling reporters that
he thinks it would be "helpful if we knew how much we had to
spend" on the Chapter 62F relief before doing anything else
related to tax relief. That would push action out until the
end of September at the earliest and Mariano holds the cards
-- only the House can introduce a tax bill, so Spilka is
left to wait until the House sends her chamber something to
do.
"We need the bill to come from the House and I believe that
that's what we need to do now," she said Tuesday.
The more traditional two-against-one situation of the two
Legislative leaders pressuring Baker to sign off on bills
they worked to pass would also have been on full display.
Baker this week finished acting on all the bills the
Legislature sent him in the final hectic days of formal
sessions. At the time of Tuesday's event, Baker was still
weighing decisions around a major infrastructure bill,
sports betting, a significant climate package, a mental
health access bill, cannabis industry reforms and more.
For all the Legislature's warts, the Democrats who run the
show on Beacon Hill love to talk about how different things
are here than in Washington, D.C., whether that's really the
case or not. So all of the "Massachusetts as a model" talk
should not have been a surprise when Baker signed the great
majority of those bills this week.
On Tuesday -- a full 24 hours before Baker signed it into
law -- Spilka said that the mental health bill was "already
being heralded as a landmark, first-in-the-nation bill." The
new law seeks to rein in the emergency department boarding
crisis, eliminates a prior authorization requirement for
mental health acute treatment, and requires commercial
insurers to cover emergency service programs.
Sen. Sonia Chang-Díaz heralded Baker's signing of a sweeping
cannabis industry reform bill and said the changes and
funding included in the new law "will be game changers,
putting Massachusetts back among the leading states for
racial justice in our economic policy on cannabis."
And while reflecting on the last several years of working
with Charlie Baker and his Republican administration on
climate and energy issues, capped off Thursday with the
governor signing yet another major climate bill, one top
Democrat who has both worked and clashed with the
administration suggested that Baker's climate
accomplishments have national importance.
"He really did put offshore wind on the map for the entire
country," Sen. Michael Barrett of Lexington told the News
Service. Referring to the federal government's decision to
temporarily put the Vineyard Wind I project on hold, Barrett
added, "If Donald Trump hadn't held him up, he would have
been to market three, four years ahead of New York and New
Jersey."
Baker signed it into law this week, but it will be a while
until there are ways to legally bet on sports in
Massachusetts. Here's a hypothetical for you to bet the rest
of your prohibition-era "units" on: When will the first
legal bet be placed in Massachusetts? Over/under Thursday,
Jan. 5, 2023 at noon...when Charlie Baker will hand the
governorship to someone new.
The Gaming Commission is working through a number of heady
issues as it tries to launch betting quickly but
responsibly. This week, regulators themselves wondered aloud
about the order that things would get up and running.
"I would think, without knowing all the facts, that we would
want to get up and running as quick as possible the five
entities that are already here -- but understanding that,
does that get us in trouble if we give them five and then we
take our time with the other seven?" Commissioner Brad Hill
asked, referring to the five licenses available to the
casinos, slots parlor and simulcast centers the Gaming
Commission already works closely with and the seven
untethered mobile licenses that will be put up for bid.
A lot of that will start to be ironed out next week when the
Gaming Commission sits down with its current licensees to
get more info on their plans for offering sports betting.
As COVID-19 continues to fade from the headlines, a new
viral disease is taking its place. The Public Health Council
this week spent more time talking about monkeypox and the
state's vaccination strategy than it did discussing ongoing
COVID-19 measures.
The United States' first case of monkeypox this year was
confirmed in Massachusetts in May and the Bay State counted
a total of 202 cases as of Aug. 10. As cases continue to
rise, the state's entire Congressional delegation this week
called on Baker to declare a public health emergency around
monkeypox.
Baker's administration was resistant to the idea and said
the real problem was the very limited supply of the
monkeypox vaccine being made available by the federal
government. It doesn't seem like an emergency declaration is
in the cards unless the situation devolves further.
"Massachusetts is implementing a robust public health
response for monkeypox, and nothing outlined in this letter
would provide any additional resources," Baker's team said
in response to the Congressional letter....
STORY OF THE WEEK: Beacon Hill's three-ring circus marches
into its summer recess with three distinct ringmasters, each
with their own idea for how the grand finale should go. |
NOTE: In accordance with Title 17 U.S.C. section 107, this
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only. For more information go to:
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