State Senate President Karen Spilka wants lawmakers to take immediate action to finalize a tax relief and economic development bill that’s caught in legislative limbo, but her House counterpart says the state still needs a better handle on what it can afford.
The House and Senate failed to finish their bill by the July 31 end of formal legislative sessions, calling into question the fate of a $1 billion tax relief package and another $3 billion in spending on areas like housing, climate and health care.
Spilka and House Speaker Ronald Mariano each said Tuesday that the two sides are still talking about the bill. Spilka, though, said she doesn’t think the discussions are moving quickly enough.
“I believe that the Legislature should pass tax relief and an economic development bill now,” she told reporters after an unrelated event with Mariano and Gov. Charlie Baker. “I believe we have the money, I believe residents need tax relief. Our tax relief bill, our proposals that were still working on, offered progressive tax relief that would touch almost every single resident, help almost every single resident, especially the low- and moderate-income residents who need tax relief now.”
The House and the Senate each agreed to different versions of a relief package that featured one-time, $250 rebates to middle-income taxpayers, estate tax reforms as well as breaks for seniors, renters, caregivers and lower-income workers. But they were unable to agree on a final approach once it became clear that the Baker administration expected a little-known 1986 law capping state revenue collections to kick in this year.
The law, triggered only once before, calls for the state to return excess revenues to taxpayers. Auditor Suzanne Bump’s office is due to determine in September if the state exceeded the cap, and by how much. Mariano said Monday it’s a “bit premature” to talk about tax relief before knowing just how much excess revenue the state will already be sending back.
“Being fiscally prudent got us into the situation where we have this huge amount of surplus, so we’re not going to abandon that now in the midst of this and start to just spend money,” Mariano said. “We want to be sure we’re spending it effectively, we’re getting it into the right hands.”
Though Spilka wants quick movement on tax relief, when the Legislature acts is ultimately Mariano’s call. Tax-related bills have to start in the House, so the Senate could not bypass the ongoing negotiations to pass its own bill.
“I could call us into session, but there’s nothing that we can do unless we have a bill,” Spilka said.
Spilka and Baker said the state can afford both credits under the tax-cap law and other relief, while Mariano said he wants to first know just how much is available to spend. The Department of Revenue last week announced that the state is on track for a $1.9 billion surplus for the fiscal year that ended June 30, after accounting for $3 billion in anticipated refunds under the law.
In addition to the tax breaks, Baker said the $4 billion economic development bill contains other key investments, including money for water and sewer projects on Cape Cod, downtown development efforts and initiatives to address the state’s “terrible housing problem.”
“There were a lot of elements there that I think people were counting on, and I really hope they come back and they figure out a way to get it done,” Baker said.
