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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
Sunday, September 11, 2022
Tax Cap Refund
Response: An Abrupt Change of Mind, Or...?
Jump directly
to CLT's Commentary on the News
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Most Relevant News
Excerpts
(Full news reports follow Commentary)
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The
House’s budget chief says the Baker Administration’s
assertion the state took billions too much in taxes
last year is accurate and that lawmakers will work
to make sure taxpayers get their money back while
moving forward on a stalled economic development
bill.
“It seems
like that is the correct figure,” state Rep. Aaron
Michlewitz, chairman of the House Ways and Means
committee said in a Sunday appearance on WCVB’s On
the Record with Ed Harding and Janet Wu.
“We didn’t
know what the correct figure was at the end of July
when we were trying to make our determinations on
how to go forward with the economic development
bill, which is one of the reasons why we were a
little hesitant on moving that forward, but now that
we do have that number the Auditor will certify that
and we will move forward,” the Boston Democrat said.
Last week
Gov. Charlie Baker’s administration notified the
State Auditor that the government had claimed $2.94
billion too much income tax and a law passed in 1986
would be triggered, requiring the excess to be sent
back.
Michlewitz
said the Department of Revenue’s math is almost
certainly correct — the auditor has until September
20 to check — and that the government will now need
to figure out how to get the money back to
taxpayers, as a credit or a direct rebate.
“The way
the law is written it’s supposed to be a tax
credit,” he said. “I think the administration is
discussing exactly what that term could mean, could
it mean a direct check to someone.” ...
Baker
thinks Massachusetts can afford the mandatory tax
rebates and economic development bill, and said as
much last week when he announced a $1.6 billion
supplemental budget, noting he state took in so much
money last year — his administration said it beat
2021 by 20.5% — that the commonwealth’s rainy day
fund now sits at an all time high of $6.9 billion.
“With tax
revenues coming in far above budgeted amounts this
year, the Commonwealth is well-positioned to deliver
relief to taxpayers,” Baker said last week.
The
Boston Herald
Sunday, September 4, 2022
House budget chief
says Baker’s math right, $3B owed to taxpayers
When it
comes to the nearly $3 billion in state tax
collections that could be required to be returned to
taxpayers, the House budget chief said his branch
plans to "follow the letter of the law on this and
move forward with it," but also pointed to other
ways he'd like to see the billions spent.
As the
guest on an episode of WCVB's "On The Record" that
aired Sunday, House Ways and Means Chairman Aaron
Michlewitz said that the $2.941 billion figure the
Department of Revenue reported last week as subject
to Chapter 62F, the 1986 voter law that requires
excess state tax collections be refunded, "seems
like ... the correct figure" and suggested Auditor's
Suzanne Bump's confirmation by Sept. 20 could break
Beacon Hill's logjam.
"We didn't
know what the correct figure was at the end of July
when we were trying to make our determinations on
how to move forward with the economic development
bill, which is one of the reasons why we were a
little hesitant on moving that forward," Michlewitz
said, referring to a $4 billion investment package
that Democrats put on ice and which included a
separate $1 billion in tax relief and reforms. "But
now that we do have that number, you know, the
auditor will certify that and we will move forward
with that understanding."
Moving
forward could mean working to pass the numerous
legislative and executive branch priorities that
stalled out when the House and Senate ended formal
session Aug. 1 paralyzed by the recent revelation of
Chapter 62F's potential impact on the money at their
disposal....
"There are
funding needs, or spending needs, that we do have up
there," Michlewitz said.
The $52.7
billion fiscal year 2023 budget that Michlewitz
co-authored represents a spending increase of more
than $5 billion or nearly 11 percent compared to the
$47.6 billion annual budget passed for the previous
year.
And
Michlewitz has been among the Beacon Hill Democrats
who have put on this November's ballot a proposal to
shift Massachusetts away from a flat income tax
structure and impose a 4 percent surtax on annual
household income above $1 million, an idea that's
projected to raise about $1.3 billion each year.
Michlewitz
acknowledged that it remains an open question as to
how the $3 billion in excess tax collections will be
returned to taxpayers under Chapter 62F. The law
itself says that excess revenue should be returned
as a credit but the Baker administration has been
quietly working behind the scenes to change the
regulations around Chapter 62F since this spring.
As of
Thursday, the 62F regulation that the administration
has started to rescind was still in place, an
official said, and while Baker has been advocating
to deliver on the statutorily required tax relief
his administration has not said how it will be
handled.
"The way
the law is written, it is going to be a, it's
supposed to be a tax credit. I think the
administration is discussing exactly what that term
could mean. Could it mean a direct check to someone?
Is it something that someone would have to file,
later in April or next April when they're filing
their taxes? I think that's something that we we're
continuing to analyze," Michlewitz said.
State
House News Service
Tuesday, September 6, 2022
Michlewitz Ready To
See Tax Relief Advance
After Big Budget, Ways and Means Chief Sees More
Spending Needs
Evan
Horowitz, executive director of the Center for State
Policy Analysis at Tufts University and the host of
this week’s podcast, said money wasn’t the problem.
Between federal aid and a huge state surplus,
Horowitz said, Massachusetts had billions of dollars
in extra cash.
“This
session has been marked in a way quite different
from earlier legislative sessions by the fact that
there wasn’t a clear revenue constraint. That wasn’t
what was stopping legislators from doing things,” he
said.
Marie-Frances Rivera, president of the left-leaning
Massachusetts Budget and Policy Center, said the
problem was setting priorities.
“There are
big things that we need to do and I think that part
of the reason why there was such chaos at the end of
the session is because people are pretty
shortsighted about what’s happening right now and
aren’t really looking at the long term and what
we’re trying to build,” Rivera said....
Rivera
also urges caution on the tax cap, a voter-passed
law from 1986 that was triggered this year and
requires $2.9 billion in excess tax collections to
be returned to taxpayers. Rivera says some of the
money would go back to people who could really use
it, but a lot of the money would go back to people
who don’t really need it.
“There are
lots of things we could do with that money,” she
said, suggesting the law could be tweaked to steer
the money toward addressing some of the state’s
long-term problems.
Rivera
also isn’t backing away from her support for a
constitutional amendment imposing a tax surcharge on
income over $1 million. The so-called millionaire
tax, which comes before voters in November, is
expected to add $1.3 billion to $2 billion a year to
state coffers.
“Perhaps
we have a surplus on the books right now, in this
fiscal year, but we have to look at what’s the
10-year plan, what’s the 20-year plan. Our
infrastructure is crumbling, right, so what revenue
streams are we putting in place that are fair?” she
asks.
Horowitz
said he is worried about Beacon Hill’s ability to
spend the money wisely. “Given what we saw this
session about how legislators use money when they
have it, what makes you confident that they will use
the millionaire tax revenue in the ways that you are
laying out?” he asked.
“To be
totally honest, I’m not confident,” Rivera said.
CommonWealth Magazine
Tuesday, September 6, 2022
Big money and unfinished
Beacon Hill business
The
Department of Revenue collected more than $2.6
billion in taxes last month, an increase of $108
million or 4.3 percent over actual collections in
August 2021 as fiscal year 2023 continued its strong
start for the state's coffers....
Through
two months of fiscal year 2023, DOR has collected
just more than $5 billion and Massachusetts is
running about $250 million or more than 5 percent
ahead of the fiscal year 2022 tax collection pace
that led to a multibillion-dollar surplus. Last
week, DOR reported to Auditor Suzanne Bump that it
believes $2.94 billion from fiscal 2022 tax
collections will be required to be returned to
taxpayers under the Chapter 62F revenue cap law.
State
House News Service
Tuesday, September 6, 2022
August Collections Build
On Record Tax Haul
August tax
revenues were even higher this year than last — more
good news as a nearly $3 billion overage appears to
be heading back to taxpayers.
Department
of Revenue Commissioner Geoffrey Snyder said the
bump came “in most major tax types in comparison to
August 2021, including increases in non-withheld
income tax, sales and use tax, corporate and
business tax and the ‘all other taxes’ category.”
Despite
August’s two-day sales tax holiday, Snyder said that
“the sales and use tax increase reflects continued
strength in retail sales.”
August’s
taking was $2.6 billion, $124 million more than was
taken in 2021, an increase of 5%. About $1.4 billion
of that came from income taxes, $1.3 billion from
withholdings, and $825 million in sales tax.
So far
this fiscal year DOR has taken $5 billion in taxes,
they said, 5% more than this point last year.
The
Boston Herald
Tuesday, September 6, 2022
August
revenue up over last year’s excessive haul,
according to DOR
"Sales and
use tax collections for August totaled $825 million,
$112 million or 15.7% more than August 2021."
Massachusetts Department of Revenue
Tuesday, September 6, 2022
News Release
August Revenue Collections Total
$2.601 Billion
Monthly collections up $108 million or 4.3% vs.
August 2021 actual
. . .
Before her successor takes office, Auditor Suzanne
Bump, serving her final months in office, has a
decision on her hands that could resolve more than
six weeks of uncertainty, bickering and paralysis on
Beacon Hill.
Bump by
Sept. 20 must certify how much excess tax revenue
Massachusetts collected in fiscal year 2022. The
Baker administration expects a pot of $2.94 billion
to flow back to taxpayers under a 1986 law referred
to as Chapter 62F, an amount it projects would leave
lawmakers a surplus of about $2.3 billion.
So far,
Bump has given little indication if those numbers
are right. She wrote to lawmakers on Aug. 5 to
detail the audit steps required before her final
determination, and otherwise has stayed quiet on the
topic.
None of
the state's top financial officials who attended a
Comptroller Advisory Board meeting -- including
Bump, Comptroller William McNamara, and
Administration and Finance Secretary Michael
Heffernan -- took the opportunity to make any
reference to 62F or tax relief.
It's now
closeout budget season on Beacon Hill, too, but even
that is mired in the silent stillness that hangs
over much legislative activity. McNamara hopes to
see the final supplemental budget bill signed into
law by the end of September in order to meet his own
Oct. 31 deadline to file an annual state financial
report.
He might
wind up putting in late hours to fulfill that goal,
if McNamara's able to finish the Statutory Basis
Financial Report in October at all. The spending and
tax relief proposal still needs to emerge from the
House Ways and Means Committee, clear both branches,
receive possible vetoes or amendments from Baker,
and secure the governor's signature, which is a lot
of steps for the three weeks remaining in September.
State
House News Service
Friday, September 9, 2022
Weekly Roundup - The Season Has Changed
By Chris Lisinski
. . . On
Beacon Hill, Democrats could be poised to strengthen
their hand in the coming elections by delivering in
full or in part on a $4 billion economic development
bill that was cruising toward final passage in late
July before the brakes were applied as lawmakers
were blindsided by $3 billion in statutorily
required, one-time tax relief stemming from an
historic state tax revenue surplus. There's emerging
bipartisan consensus that the Chapter 62F tax relief
will be delivered, and Auditor Suzanne Bump could
certify the final figure in the coming days.
Democratic
legislative leaders need to decide how much of the
$4 billion bill, which they framed as critical to
numerous sectors of the economy, to advance. And
keep your eye on the House Ways and Means Committee,
where chairman Rep. Aaron Michlewitz is working on a
redraft of a $1.6 billion spending bill filed by
Gov. Baker to close the books on fiscal 2022.
The suite
of decisions on the 62F tax relief, the fiscal 2022
closeout budget, and the economic development bill,
which uses surplus revenues and American Rescue Plan
Act funds, are all intertwined as policy and
politics collide in election season.
State
House News Service
Friday, September 9, 2022
Advances - Week of Sept. 11, 2022
The region
needed rain, but three hours before the polls closed
Tuesday afternoon, Eric P. Lesser said he had no
idea whether the wet weather helped or hurt his
chances at the polls.
“Everybody
has their theories, but the voters have a way of
sorting it out,” Lesser said as he stood outside the
Castle of Knights hall in Chicopee, where voters
were casting ballots in the state primary.
For
Lesser, the water from above portended a watershed
career moment. A four-term state senator from the
1st Hampden and Hampshire District, the Longmeadow
resident entered the race for lieutenant governor,
thus becoming the only candidate for statewide
office who lived west of Interstate 495.
The night
ended with the first defeat for elective office in
his career. Salem Mayor Kimberley Driscoll defeated
Lesser in a three-way Democratic primary that also
included Tami Gouveia, a state representative from
the 14th Middlesex District.
Legislators serve two-year terms, so losing left
Lesser out of elective office altogether at age 37.
That leaves plenty of time to come back, but it also
leaves no guarantees.
When a new
Senate is inaugurated in January, Lesser will be
outside of elective office for the first time since
he was in his 20s. He sounded nothing like a
defeated candidate whose days were done....
Hours
before the polls closed, Lesser was asked if he’d
considered what he’d do next if he were to lose. He
acted taken aback by the question.
“I haven’t
given that a thread of thought. We’re running
through the tape (to the finish line),” he said as
voters filed past him to the ballot boxes.
He will
have to think about it now. Political consultant
Paul Robbins says it’s much too early to count
Lesser out, but that re-entering the arena from the
outside is not easy.
“It’s
hard, sometimes, being out. He has to decide, what
does he want to do?” Robbins said.
Running
for lieutenant governor was the riskiest political
challenge undertaken by Lesser, who worked in the
White House as a special assistant to David Axelrod,
senior advisor to President Barack Obama. Later,
Lesser served as director of strategic planning at
the Council of Economic Affairs.
In 2016,
the last election in which he was opposed, Lesser
was the only Massachusetts candidate endorsed by
Obama.
The
Springfield Republican
Wednesday, September 7, 2022
Eric Lesser’s political
gamble comes up short |
Chip Ford's CLT
Commentary |
Last Sunday The Boston
Herald reported ("House budget
chief says Baker’s math right, $3B owed to taxpayers"):
The House’s budget chief says the Baker Administration’s
assertion the state took billions too much in taxes last year is
accurate and that lawmakers will work to make sure taxpayers get
their money back while moving forward on a stalled economic
development bill.
“It seems like that is the correct figure,” state Rep. Aaron
Michlewitz, chairman of the House Ways and Means committee said
in a Sunday appearance on WCVB’s On the Record with Ed Harding
and Janet Wu.
“We didn’t know what the correct figure was at the end of July
when we were trying to make our determinations on how to go
forward with the economic development bill, which is one of the
reasons why we were a little hesitant on moving that forward,
but now that we do have that number the Auditor will certify
that and we will move forward,” the Boston Democrat said....
Michlewitz said the Department of Revenue’s math is almost
certainly correct — the auditor has until September 20 to check
— and that the government will now need to figure out how to get
the money back to taxpayers, as a credit or a direct rebate.
“The way the law is written it’s supposed to be a tax credit,”
he said. “I think the administration is discussing exactly what
that term could mean, could it mean a direct check to someone.”
...
That report sounded quite
encouraging, straightforward, as though CLT's Tax Cap law has been
accepted as law by at least the House leadership.
Then the State House News
Service followed up on Tuesday with its report ("Michlewitz
Ready To See Tax Relief Advance — After
Big Budget, Ways and Means Chief Sees More Spending Needs")
— and the discussion turned to "spending
needs," despite "The $52.7 billion fiscal year 2023 budget that
Michlewitz co-authored" which represents "a spending increase of
more than $5 billion or nearly 11 percent compared to the $47.6
billion annual budget passed for the previous year.":
When it comes to the nearly $3 billion in state tax collections
that could be required to be returned to taxpayers, the House
budget chief said his branch plans to "follow the letter of the
law on this and move forward with it," but also pointed to other
ways he'd like to see the billions spent....
Moving forward could mean working to pass
the numerous legislative and executive branch priorities that
stalled out when the House and Senate ended formal session Aug.
1 paralyzed by the recent revelation of Chapter 62F's potential
impact on the money at their disposal....
"There are funding needs, or spending
needs, that we do have up there," Michlewitz said.
The $52.7 billion fiscal year 2023 budget that Michlewitz
co-authored represents a spending increase of more than $5
billion or nearly 11 percent compared to the $47.6 billion
annual budget passed for the previous year.
And Michlewitz has been among the Beacon Hill Democrats who have
put on this November's ballot a proposal to shift Massachusetts
away from a flat income tax structure and impose a 4 percent
surtax on annual household income above $1 million, an idea
that's projected to raise about $1.3 billion each year.
Michlewitz acknowledged that it remains an open question as to
how the $3 billion in excess tax collections will be returned to
taxpayers under Chapter 62F. The law itself says that excess
revenue should be returned as a credit but the Baker
administration has been quietly working behind the scenes to
change the regulations around Chapter 62F since this spring.
As of Thursday, the 62F regulation that the administration has
started to rescind was still in place, an official said, and
while Baker has been advocating to deliver on the statutorily
required tax relief his administration has not said how it will
be handled.
"The way the law is written, it is going to be a, it's supposed
to be a tax credit. I think the administration is discussing
exactly what that term could mean. Could it mean a direct check
to someone? Is it something that someone would have to file,
later in April or next April when they're filing their taxes? I
think that's something that we we're continuing to analyze,"
Michlewitz said.
Bear in mind that it was
just over a month ago that the State House News Service reported
on July 29 ("Mariano
Mulling Changes To 1986 Tax Relief Law"):
With Democrats heading into the weekend scrambling for a path
forward on tax relief, House Speaker Ron Mariano said Friday
that he is open to changing, delaying or spiking a 1986 voter
law that appears poised to return nearly $3 billion to
taxpayers....
Mariano said Friday that he would consider all courses of
action, up to and including altogether scrapping the tax relief
trigger law voters enacted in 1986.
"Sure, it's an option," Mariano told reporters when asked if
lawmakers would consider undoing the trigger enshrined in
Chapter 62F. "Everything's on the table. We could undo the law,
we could change it, we could postpone."
To which I immediately
responded (CLT News Release, July 29, "The
Timing Couldn’t Be Better"):
Reportedly legislative leaders are contemplating hoisting the
middle-finger Beacon Hill salute to voters and taxpayers once
again.
According to the State House News Service: "’Sure, it's an
option,’ Mariano told reporters when asked if lawmakers would
consider undoing the 1986 voter law. ‘Everything's on the table.
We could undo the law, we could change it, we could postpone.’"
They could also leave it alone as mandated by 54% of voters,
their constituents. That would be the correct option “on the
table” in a truly representative government – the only honorable
course.
“That Speaker Mariano would even consider such an affront
to democracy, to election results, and to voters themselves –
that he even dares speak it aloud – demonstrates the degree of
sheer political arrogance that permeates ‘The Great and General
Court’ of the Commonwealth,” said Chip Ford, Executive
Director of Citizens for Limited Taxation which
co-sponsored the successful 1986 ballot question along with the
Mass. High Tech Council....
There are but two days remaining in the Legislature’s formal
session before “full-time” legislators will leave for the
remainder of the year so they can hit the campaign trail to seek
reelection or election to higher office at taxpayers’ expense.
The timing couldn’t be worse for legislators.
If their final vote before bailing out is to repeal the voters’
long-established tax-cap as soon as it is triggered, to deny
taxpayers the voter-mandated rebate of billions of their dollars
in excessive over-taxation, it may prove for many legislators to
be snatching defeat from the jaws of victory – which would be
the just consequence. Let legislators explain such a
cavalier betrayal to voters in their districts while asking for
their votes. The timing couldn’t be better for taxpayers
and voters.
Methinks their decision
has been made. We just don't really know what it is
yet. If it's the wrong one, our lawsuit is ready to launch
immediately. We hope the mandated refund of "excess revenue"
goes as smoothly as it should, that the rebate checks are in the
mail to all taxpayers owed come November, December at the latest.
I'm confident if this needs to go to the Supreme Judicial Court we
will prevail, but every day it languishes the value of the refund
will be further eroded due to Bidenflation.
One of the legal arguments
our attorneys will make if necessary was noted by Dan Winslow (a
former judge, Romney administration official and state
representative who now leads the New England Legal Foundation) in
the State House News Service report of August 22 ("Legal
Teams Ready To Defend Tax Relief Law"):
Winslow said his organization is particularly interested in
exploring the idea that the relief afforded by Chapter 62F
"could already be a vested property right in the hands of the
taxpayers to which they're entitled" regardless of any attempts
to amend the law.
"There's a significant question that this actually may already
be a done deal as a matter of law," he said. Winslow added
later, "Basically, what remains at this point is what we call a
ministerial act. It's simply almost an automatic kind of a
certification because the close of the fiscal year was June 30
and so the condition that this statute applies to already
existed as a matter of fact."
That should get taxpayers
through this year. What the Legislature does to/with
our law next year, with another revenue bonanza mounting,
will be up for grabs. Remember, CLT's Tax Cap is a law
— and all laws are subject to amending
or outright repeal going forward.
A lack of revenue today
does not honestly even factor in a legislator's alleged concern
— or shouldn't. Meanwhile the
revenue gravy train continues to chug along. On Tuesday The
Boston Herald reported ("August
revenue up over last year’s excessive haul, according to DOR"):
August tax revenues were even higher this year than last — more
good news as a nearly $3 billion overage appears to be heading
back to taxpayers.
Department of Revenue Commissioner Geoffrey Snyder said the bump
came “in most major tax types in comparison to August 2021,
including increases in non-withheld income tax, sales and use
tax, corporate and business tax and the ‘all other taxes’
category.”
Despite August’s two-day sales tax holiday, Snyder said that
“the sales and use tax increase reflects continued strength in
retail sales.”
August’s taking was $2.6 billion, $124 million more than was
taken in 2021, an increase of 5%. About $1.4 billion of that
came from income taxes, $1.3 billion from withholdings, and $825
million in sales tax.
So far this fiscal year DOR has taken $5 billion in taxes, they
said, 5% more than this point last year.
In its news release on
Tuesday ("August Revenue Collections Total $2.601
Billion — Monthly collections up $108
million or 4.3% vs. August 2021 actual the Department of Revenue
noted:
"Sales and use tax
collections for August totaled $825 million, $112 million or
15.7% more than August 2021."
I suspect most if not all
of that too is a consequence of Bidenflation rather than consumers
binge-spending. Remember, the 6.25% sales tax is added to the
retail price of a product or service when you purchase it. As
the cost of products and services increase so too does the
total sales tax collected by the state.
There was a note of
unabashedly great news this week to come out of the primary
elections, at least for me personally: The most dogged nemesis
of Proposition 2½ for many years was defeated
in his campaign for Lieutenant Governor, for which he had to
surrender his state Senate seat to pursue. That's not to say
the stealth attacks on Prop 2½ will end, but the lead attack dog has
been muzzled and restrained at least for the next two years.
His jumping in and losing was the best possible outcome for
taxpayers!
The Springfield Republican
reported on Wednesday ("Eric Lesser’s
political gamble comes up short"):
The region needed rain, but three hours before the polls closed
Tuesday afternoon, Eric P. Lesser said he had no idea whether
the wet weather helped or hurt his chances at the polls.
“Everybody has their theories, but the voters have a way of
sorting it out,” Lesser said as he stood outside the Castle of
Knights hall in Chicopee, where voters were casting ballots in
the state primary.
For Lesser, the water from above portended a watershed career
moment. A four-term state senator from the 1st Hampden and
Hampshire District, the Longmeadow resident entered the race for
lieutenant governor, thus becoming the only candidate for
statewide office who lived west of Interstate 495.
The night ended with the first defeat for elective office in his
career. Salem Mayor Kimberley Driscoll defeated Lesser in a
three-way Democratic primary that also included Tami Gouveia, a
state representative from the 14th Middlesex District.
Legislators serve two-year terms, so losing left Lesser out of
elective office altogether at age 37. That leaves plenty of time
to come back, but it also leaves no guarantees.
When a new Senate is inaugurated in January, Lesser will be
outside of elective office for the first time since he was in
his 20s. He sounded nothing like a defeated candidate whose days
were done....
Hours before the polls closed, Lesser was asked if he’d
considered what he’d do next if he were to lose. He acted taken
aback by the question.
“I haven’t given that a thread of thought. We’re running through
the tape (to the finish line),” he said as voters filed past him
to the ballot boxes.
He will have to think about it now. Political consultant Paul
Robbins says it’s much too early to count Lesser out, but that
re-entering the arena from the outside is not easy.
“It’s hard, sometimes, being out. He has to decide, what does he
want to do?” Robbins said.
Running for lieutenant governor was the riskiest political
challenge undertaken by Lesser, who worked in the White House as
a special assistant to David Axelrod, senior advisor to
President Barack Obama. Later, Lesser served as director of
strategic planning at the Council of Economic Affairs.
In 2016, the last election in which he was opposed, Lesser was
the only Massachusetts candidate endorsed by Obama.
|
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|
Chip Ford
Executive Director |
|
|
|
The Boston
Herald
Sunday, September 4, 2022
House budget chief says Baker’s math right, $3B owed to
taxpayers
By Matthew Medsger
The House’s budget chief says the Baker Administration’s
assertion the state took billions too much in taxes last
year is accurate and that lawmakers will work to make sure
taxpayers get their money back while moving forward on a
stalled economic development bill.
“It seems like that is the correct figure,” state Rep. Aaron
Michlewitz, chairman of the House Ways and Means committee
said in a Sunday appearance on WCVB’s On the Record with Ed
Harding and Janet Wu.
“We didn’t know what the correct figure was at the end of
July when we were trying to make our determinations on how
to go forward with the economic development bill, which is
one of the reasons why we were a little hesitant on moving
that forward, but now that we do have that number the
Auditor will certify that and we will move forward,” the
Boston Democrat said.
Last week Gov. Charlie Baker’s administration notified the
State Auditor that the government had claimed $2.94 billion
too much income tax and a law passed in 1986 would be
triggered, requiring the excess to be sent back.
Michlewitz said the Department of Revenue’s math is almost
certainly correct — the auditor has until September 20 to
check — and that the government will now need to figure out
how to get the money back to taxpayers, as a credit or a
direct rebate.
“The way the law is written it’s supposed to be a tax
credit,” he said. “I think the administration is discussing
exactly what that term could mean, could it mean a direct
check to someone.”
Lawmakers seemed surprised when the Baker Administration
announced in July they expected nearly $3 billion in excess
revenue. Michlewitz said it wasn’t the law that surprised
them, but the amount. The last and only time the law went
into effect it was triggered by an overage of just $27
million.
“I don’t know if we saw to that degree, of the multi-billion
dollars, that was going to happen,” he said.
The Boston representative also sits on the joint legislative
committee trying to iron out the differences between a pair
of $4 billion economic development bills which cleared both
chamber’s unanimously but were suddenly stymied by the news
the 1986 law, Chapter 62F, would be triggered.
Baker thinks Massachusetts can afford the mandatory tax
rebates and economic development bill, and said as much last
week when he announced a $1.6 billion supplemental budget,
noting he state took in so much money last year — his
administration said it beat 2021 by 20.5% — that the
commonwealth’s rainy day fund now sits at an all time high
of $6.9 billion.
“With tax revenues coming in far above budgeted amounts this
year, the Commonwealth is well-positioned to deliver relief
to taxpayers,” Baker said last week.
State House News
Service
Tuesday, September 6, 2022
Michlewitz Ready To See Tax Relief Advance
After Big Budget, Ways and Means Chief Sees More Spending
Needs
By Colin A. Young
When it comes to the nearly $3 billion in state tax
collections that could be required to be returned to
taxpayers, the House budget chief said his branch plans to
"follow the letter of the law on this and move forward with
it," but also pointed to other ways he'd like to see the
billions spent.
As the guest on an episode of WCVB's "On The Record" that
aired Sunday, House Ways and Means Chairman Aaron Michlewitz
said that the $2.941 billion figure the Department of
Revenue reported last week as subject to Chapter 62F, the
1986 voter law that requires excess state tax collections be
refunded, "seems like ... the correct figure" and suggested
Auditor's Suzanne Bump's confirmation by Sept. 20 could
break Beacon Hill's logjam.
"We didn't know what the correct figure was at the end of
July when we were trying to make our determinations on how
to move forward with the economic development bill, which is
one of the reasons why we were a little hesitant on moving
that forward," Michlewitz said, referring to a $4 billion
investment package that Democrats put on ice and which
included a separate $1 billion in tax relief and reforms.
"But now that we do have that number, you know, the auditor
will certify that and we will move forward with that
understanding."
Moving forward could mean working to pass the numerous
legislative and executive branch priorities that stalled out
when the House and Senate ended formal session Aug. 1
paralyzed by the recent revelation of Chapter 62F's
potential impact on the money at their disposal. Baker said
in late July, when the Legislature was down to crunch time
for its economic development bill, that Chapter 62F would
lead to "probably north of $2.5 billion" in returns.
Beyond the economic development bill topics -- hospital
funding, money to support the state's new climate law,
millions in local project funding, and more -- Michlewitz
told "On The Record" that he sees plenty of other areas
where the Chapter 62F money could be spent. He expects the
Federal Transit Administration's safety investigation of the
MBTA to require the state to spend somewhere "in the
billions of dollars range" and also pointed to the Special
Legislative Early Education and Care Economic Review
Commission's estimate that $1.5 billion is needed to
stabilize the early education and care system and help it
meet the needs of families.
"There are funding needs, or spending needs, that we do have
up there," Michlewitz said.
The $52.7 billion fiscal year 2023 budget that Michlewitz
co-authored represents a spending increase of more than $5
billion or nearly 11 percent compared to the $47.6 billion
annual budget passed for the previous year.
And Michlewitz has been among the Beacon Hill Democrats who
have put on this November's ballot a proposal to shift
Massachusetts away from a flat income tax structure and
impose a 4 percent surtax on annual household income above
$1 million, an idea that's projected to raise about $1.3
billion each year.
Michlewitz acknowledged that it remains an open question as
to how the $3 billion in excess tax collections will be
returned to taxpayers under Chapter 62F. The law itself says
that excess revenue should be returned as a credit but the
Baker administration has been quietly working behind the
scenes to change the regulations around Chapter 62F since
this spring.
As of Thursday, the 62F regulation that the administration
has started to rescind was still in place, an official said,
and while Baker has been advocating to deliver on the
statutorily required tax relief his administration has not
said how it will be handled.
"The way the law is written, it is going to be a, it's
supposed to be a tax credit. I think the administration is
discussing exactly what that term could mean. Could it mean
a direct check to someone? Is it something that someone
would have to file, later in April or next April when
they're filing their taxes? I think that's something that we
we're continuing to analyze," Michlewitz said.
WCVB's Janet Wu asked Michlewitz about House Speaker Ronald
Mariano's suggestions that the Baker administration somehow
blindsided the Legislature with the late July revelation
that some of the state's massive surplus would have to be
refunded to taxpayers. She asked the Ways and Means
Committee chairman, whose office gets the same annual 62F
report from the state auditor that the governor's
administration gets, if he had "the responsibility of
knowing that and informing the speaker" of the potential
impact of the law.
"It's not that we didn't know necessarily about the law,
because, I mean, the law has been out there. I've heard
about this discussion of whether -- it hadn't been triggered
in 35 years. So for it to get triggered for the first time
in 35 years was a little bit of a surprise to some degree,"
he said. "I think it's more about the amounts that we were a
little more concerned about. The last time this was
triggered, it was [$29] million in 1987 ... I don't know if
we saw it to that degree of the multi-billion dollars that
was going to happen, and I think that really kind of changed
our outlook on exactly how to move forward with a lot of
spending; because we do have a lot of things we have to
worry about going forward."
CommonWealth Magazine
Tuesday, September 6, 2022
Big money and unfinished Beacon Hill business
By Bruce Mohl
The Legislature passed a slew of bills at the end of the
session, but there was still a lot of unfinished business,
according to two Massachusetts policy analysts who compared
notes on The Codcast.
Evan Horowitz, executive director of the Center for State
Policy Analysis at Tufts University and the host of this
week’s podcast, said money wasn’t the problem. Between
federal aid and a huge state surplus, Horowitz said,
Massachusetts had billions of dollars in extra cash.
“This session has been marked in a way quite different from
earlier legislative sessions by the fact that there wasn’t a
clear revenue constraint. That wasn’t what was stopping
legislators from doing things,” he said.
Marie-Frances Rivera, president of the left-leaning
Massachusetts Budget and Policy Center, said the problem was
setting priorities.
“There are big things that we need to do and I think that
part of the reason why there was such chaos at the end of
the session is because people are pretty shortsighted about
what’s happening right now and aren’t really looking at the
long term and what we’re trying to build,” Rivera said.
She said lawmakers need to get focused and address the
state’s challenges in a more straightforward way. She
suggested the Legislature designate specific months of the
year to address key problems – for example, February for
early child care and education and March for the MBTA.
“We need to pace ourselves and commit to meeting deadlines,”
she said. “We’re not really having the constructive
conversations that we need to have to really solve these
issues.”
Rivera also urges caution on the tax cap, a voter-passed law
from 1986 that was triggered this year and requires $2.9
billion in excess tax collections to be returned to
taxpayers. Rivera says some of the money would go back to
people who could really use it, but a lot of the money would
go back to people who don’t really need it.
“There are lots of things we could do with that money,” she
said, suggesting the law could be tweaked to steer the money
toward addressing some of the state’s long-term problems.
Rivera also isn’t backing away from her support for a
constitutional amendment imposing a tax surcharge on income
over $1 million. The so-called millionaire tax, which comes
before voters in November, is expected to add $1.3 billion
to $2 billion a year to state coffers.
“Perhaps we have a surplus on the books right now, in this
fiscal year, but we have to look at what’s the 10-year plan,
what’s the 20-year plan. Our infrastructure is crumbling,
right, so what revenue streams are we putting in place that
are fair?” she asks.
“My mind doesn’t change because we’ve had COVID and all this
federal funding came through and our economy is a little
funky right now,” she said.
Horowitz said he is worried about Beacon Hill’s ability to
spend the money wisely. “Given what we saw this session
about how legislators use money when they have it, what
makes you confident that they will use the millionaire tax
revenue in the ways that you are laying out?” he asked.
“To be totally honest, I’m not confident,” Rivera said.
State House News
Service
Tuesday, September 6, 2022
August Collections Build On Record Tax Haul
By Colin A. Young
The Department of Revenue collected more than $2.6 billion
in taxes last month, an increase of $108 million or 4.3
percent over actual collections in August 2021 as fiscal
year 2023 continued its strong start for the state's
coffers.
"August collections increased in most major tax types in
comparison to August 2021, including increases in
non-withheld income tax, sales and use tax, corporate and
business tax and the 'all other taxes' category. Withholding
decreased relative to August 2021 collections. However,
FY2023 year-to-date withholding collections are more than
collections in the same period of FY2022," Revenue
Commissioner Geoffrey Snyder said. "The sales and use tax
increase reflects continued strength in retail sales."
Through two months of fiscal year 2023, DOR has collected
just more than $5 billion and Massachusetts is running about
$250 million or more than 5 percent ahead of the fiscal year
2022 tax collection pace that led to a multibillion-dollar
surplus. Last week, DOR reported to Auditor Suzanne Bump
that it believes $2.94 billion from fiscal 2022 tax
collections will be required to be returned to taxpayers
under the Chapter 62F revenue cap law.
August is generally one of the least significant months for
state tax receipts (average of 6.7 percent of annual
revenue) and DOR cautioned against drawing conclusions based
on the monthly results. But so far, the continued strong
pace of tax collections makes fiscal year 2023 appear likely
to generate more than the $39.576 billion revenue
expectation that the administration and lawmakers agreed to
bake into the annual budget.
The Boston
Herald
Tuesday, September 6, 2022
August revenue up over last year’s excessive haul, according
to DOR
By Matthew Medsger
August tax revenues were even higher this year than last —
more good news as a nearly $3 billion overage appears to be
heading back to taxpayers.
Department of Revenue Commissioner Geoffrey Snyder said the
bump came “in most major tax types in comparison to August
2021, including increases in non-withheld income tax, sales
and use tax, corporate and business tax and the ‘all other
taxes’ category.”
Despite August’s two-day sales tax holiday, Snyder said that
“the sales and use tax increase reflects continued strength
in retail sales.”
August’s taking was $2.6 billion, $124 million more than was
taken in 2021, an increase of 5%. About $1.4 billion of that
came from income taxes, $1.3 billion from withholdings, and
$825 million in sales tax.
So far this fiscal year DOR has taken $5 billion in taxes,
they said, 5% more than this point last year.
August is generally not a significant tax month, since
individuals and businesses don’t tend to make estimated
payments at this point in the year, according to the
department.
“Historically, roughly 6.7% of annual revenue, on average,
has been received during August,” the department said.
August shouldn’t be used to predict an overage in the
following months, as revenues will soon be adjusted to
reflect the state’s roughly $53 billion budget, which was
passed in early August, DOR added.
“Given the brief period covered in the report, August
results should not be used as a predictor for the rest of
the fiscal year. With the recent enactment of the Fiscal
Year 2023 budget, monthly revenue benchmarks are currently
under development and will be incorporated into future
revenue reports,” the department said in the release.
Massachusetts Department of
Revenue
Tuesday, September 6, 2022
News Release
August Revenue Collections Total $2.601 Billion
Monthly collections up $108 million or 4.3% vs. August 2021
actual
Boston, MA — Massachusetts Department of Revenue (DOR)
Commissioner Geoffrey Snyder today announced that
preliminary revenue collections for August totaled $2.601
billion, $108 million or 4.3% more than the actual
collections in August 2021. August 2022 revenue collections
were impacted by the elective pass-through entity (PTE)
excise. After adjusting for PTE excise [1],
August 2022 collections are $124 million or 5.0% above
actual collections in August 2021.
FY2023 year-to-date collections totaled approximately $5.007
billion, which is $249 million or 5.2% more than collections
in the same period of FY2022. After adjusting for PTE excise
[1], FY2023 year-to-date collections are $255 million or
5.4% more than collections in the same period of FY2021.
“August collections increased in most major tax types in
comparison to August 2021, including increases in
non-withheld income tax, sales and use tax, corporate and
business tax and the ‘all other taxes’ category. Withholding
decreased relative to August 2021 collections. However,
FY2023 year-to-date withholding collections are more than
collections in the same period of FY2022”, said Commissioner
Snyder. “The sales and use tax increase reflects continued
strength in retail sales.
August is one of the smaller months for revenue collections,
because neither individual nor business taxpayers make
significant estimated payments during the month.
Historically, roughly 6.7% of annual revenue, on average,
has been received during August.
Given the brief period covered in the report, August results
should not be used as a predictor for the rest of the fiscal
year. With the recent enactment of the Fiscal Year 2023
budget, monthly revenue benchmarks are currently under
development and will be incorporated into future revenue
reports.
Details:
• Income tax collections totaled $1.400 billion, $30 million
or 2.1% less than August 2021.
• Withholding tax collections for August totaled $1.315
billion, $33 million or 2.5% less than August 2021.
• Income tax estimated payments for August totaled $55
million, $10 million or 21.7% more than August 2021.
• Income tax returns and bills for August totaled $86
million, $21 million or 31.8% more than August 2021.
• Income tax cash refunds for August totaled $55 million in
outflows, $28 million or 99.3% more (unfavorable) than
August 2021.
• Sales and use tax collections for August totaled $825
million, $112 million or 15.7% more than August 2021.
• Corporate and business tax collections for August totaled
$84 million, $10 million or 13.0% more than August 2021.
• “All other” tax collections for August totaled $292
million, $17 million or 6.3% more than August 2021.
[1] PTE credits claimed by entity members
exceeded excise payments received from
pass-through-entities’ in August 2022 and FY2023
year-to-date.
The Springfield
Republican
Wednesday, September 7, 2022
Eric Lesser’s political gamble comes up short
By Ron Chimelis
The region needed rain, but three hours before the polls
closed Tuesday afternoon, Eric P. Lesser said he had no idea
whether the wet weather helped or hurt his chances at the
polls.
“Everybody has their theories, but the voters have a way of
sorting it out,” Lesser said as he stood outside the Castle
of Knights hall in Chicopee, where voters were casting
ballots in the state primary.
For Lesser, the water from above portended a watershed
career moment. A four-term state senator from the 1st
Hampden and Hampshire District, the Longmeadow resident
entered the race for lieutenant governor, thus becoming the
only candidate for statewide office who lived west of
Interstate 495.
The night ended with the first defeat for elective office in
his career. Salem Mayor Kimberley Driscoll defeated Lesser
in a three-way Democratic primary that also included Tami
Gouveia, a state representative from the 14th Middlesex
District.
Legislators serve two-year terms, so losing left Lesser out
of elective office altogether at age 37. That leaves plenty
of time to come back, but it also leaves no guarantees.
When a new Senate is inaugurated in January, Lesser will be
outside of elective office for the first time since he was
in his 20s. He sounded nothing like a defeated candidate
whose days were done.
“I’m just going to end this campaign with this: all of our
time in the state Senate has been about a vision, a vision
to connect our commonwealth. To get (west-east rail) done.
And to make sure the promise of Massachusetts is there for
all our families,” Lesser said in conceding the race.
“Visions outlive election cycles. We are going to keep at
it.”
Hours before the polls closed, Lesser was asked if he’d
considered what he’d do next if he were to lose. He acted
taken aback by the question.
“I haven’t given that a thread of thought. We’re running
through the tape (to the finish line),” he said as voters
filed past him to the ballot boxes.
He will have to think about it now. Political consultant
Paul Robbins says it’s much too early to count Lesser out,
but that re-entering the arena from the outside is not easy.
“It’s hard, sometimes, being out. He has to decide, what
does he want to do?” Robbins said.
Running for lieutenant governor was the riskiest political
challenge undertaken by Lesser, who worked in the White
House as a special assistant to David Axelrod, senior
advisor to President Barack Obama. Later, Lesser served as
director of strategic planning at the Council of Economic
Affairs.
In 2016, the last election in which he was opposed, Lesser
was the only Massachusetts candidate endorsed by Obama. The
White House connection has provided Lesser a not-typical
cachet that opponents couldn’t duplicate, but whether it
translated into votes in this election was difficult to
measure.
Had he sought reelection to the Senate, he’d have been the
odds-on favorite. Instead, he made a bid for statewide
office, hoping to overcome the challenge facing any Western
Massachusetts candidate in a state where the population
tilts heavily east.
“Most observers thought he’d wait until (U.S. Rep.) Richard
Neal stepped down, and Eric might have been the odds-on
favorite for that seat,” longtime political consultant
Anthony Cignoli said.
Cignoli thinks this outcome changes the landscape. More
candidates may seek the office when Neal retires, he said,
and Lesser will not necessarily be the clear favorite.
“Running for lieutenant governor was a calculated risk, and
it will have impact,” said Cignoli, who thought Lesser was
facing serious obstacles in this race.
“Being from Western Massachusetts is an immediate handicap.
Kim Driscoll was very well known by the Greater Boston
media,” Cignoli said.
“Also, being a woman ... in early voting, an overwhelming
number of women voted. We expected that, but the numbers
were greater than expected,” Cignoli said.
Lesser’s final day of campaigning was a whirlwind that took
him to Chicopee, Springfield, Longmeadow, Holyoke,
Westfield, South Hadley, Easthampton and Northampton. That
didn’t include what he had optimistically called his
“victory party” at Center Square Grille in East Longmeadow
after the polls closed.
Prodded to share his feelings on a day the voters decided
whether they wanted his service or not, Lesser stayed on
message.
“For me, it’s about the issues and moving ideas forward,” he
said. The senator ran down his priority list: west-east
rail; new job training; closing the waiting list for
vocational training; and aggressively taking on the opioid
crisis, among others.
In the weekend before the vote, he even went into the lion’s
den. Lesser’s itinerary included a stop in Salem —
Driscoll’s home city — as well as Lawrence.
He said he was greeted with enthusiasm at each stop. Lesser
said housing, which he also lists among priorities, and
overdevelopment were of particular concern in those Eastern
Massachusetts cities.
It’s his Western Massachusetts pedigree, though, that made
Lesser’s candidacy unusual. Canvassing the east, where the
vast majority of voters live, while maintaining contact in
his home region constituted both an opportunity and a
challenge.
“Bringing some regional balance to the highest levels of
state government (is important),” Lesser said. “We’re always
the underdog,” he said of Western Massachusetts.
“But our ideas are popular, and our vision is compelling,”
Lesser added.
Regardless of the challenge he faced in a statewide contest,
Lesser was hardly invisible. His fundraising dwarfed
Driscoll’s by a 4-to-1 margin in July. Matched against
Gouveia, it was nearly 20-to-1.
Despite those deep coffers, Robbins isn’t sure Lesser ever
really had a good chance.
“You can evaporate $1 million really fast in a statewide
race if you don’t have name recognition. Voters need to know
the (candidate’s) name, and they have to connect it to
something,” Robbins said.
“Let’s say Eric had name recognition of 25 to 30%, and
Driscoll was at 45%. That’s a really steep hill to climb. He
raised a lot of money and made some early noise about doing
that, which was good because it established him as
legitimate,” Robbins said.
“But he didn’t fare well at the state convention, which was
probably a harbinger because those are the activists. To me,
it was a ‘tell’ that he was losing when he put out an attack
ad on Driscoll’s PAC (political action committee) activities
and she stayed positive, and didn’t mention him.”
Cignoli said Lesser’s fundraising also went up against
Driscoll’s PAC support.
“He was pretty badly outspent by the PAC support for
Driscoll. And it’s one thing to spend money and another to
spend it well - he ads said, ‘mayors get stuff done,’ and
that resonated, because lieutenant governors recently have
treated the job as super-mayor types,” Cignoli said.
Lesser’s campaign attracted a wide range of endorsements
from labor unions, media (including The Republican), and
political figures headlined by Neal, the chair of the House
Ways and Means Committee.
They didn’t all come from the western end of the state,
either. Senate President Karen Spilka endorsed Lesser, as
did several high-ranking legislators from Eastern and
Central Massachusetts.
On the other hand, support from his home territory was not
unanimous. Springfield City Council President Jesse
Lederman, fellow councilors Melvin Edwards and Sean Curran
(a former state representative), and School Committee member
LaTonia Monroe Naylor endorsed Driscoll - a rare departure
from the practice of backing the hometown candidate or if
not that, at least staying neutral.
“She had surprising strength in the 413 area code,” Cignoli
said.
If there is a blessing in defeat, it’s that Lesser will have
more time with his family. The 180-mile round trips to
Boston can take a toll, he said.
“I have a wonderful family and an incredible wife,” he said
in the drizzle Tuesday afternoon. As the dispiriting numbers
came in, Lesser again saluted his wife’s support.
“Politics is not easy on your family. I was away a lot and
when I was around, frankly I was distracted,” he said.
“Alison was our rock and kept everything going. (And) my
children keep me going and they kept me fighting through a
hard campaign.” |
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