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Baker says his budget proposal ‘does not raise taxes.’ Technically, it does

The governor is again targeting drug manufacturers with a 15 percent levy on gross opioid sales

Governor Charlie Baker speaks during a press conference at the State House announcing the budget for fiscal year 2020 on Wednesday.
Governor Charlie Baker speaks during a press conference at the State House announcing the budget for fiscal year 2020 on Wednesday.Nancy Lane

In releasing a revised budget plan Wednesday, Governor Charlie Baker emphasized that while it increased spending amid a revenue shortfall, it was notable for what it didn’t do. “It does not raise taxes,” the governor said at a State House news conference.

But tucked within a 62-page addendum of policy pitches, Baker did, in fact, include a tax hike: a 15 percent levy on opioid manufacturers, a proposal he’s made before and previously said could generate up to $14 million in revenue.

While not novel, its inclusion is notable, given Baker’s declaration against broad-based tax hikes and his promise to veto any tax increases should the Legislature pass any as part of the budget process in the coming weeks.

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The opioid tax was not part of the original spending plan Baker filed in January before the pandemic upended the state’s fiscal picture, and he did not mention it in a 20-page summary he included with the revised $45.5 billion budget bill he unveiled Wednesday.

The proposal roughly mirrors one Baker first made in 2019, when the Republican governor included — and the Democratic-led Legislature rebuffed — a plan to tax the gross receipts of opioid sales as part of his budget plan for last fiscal year.

At the time, Baker framed the proposed tax as an effort to make drug companies “put something in to help pay for the carnage they’ve created” in the state’s opioid crisis. It also didn’t expressly bar manufacturers from passing the extra cost from the tax onto consumers.

Terry MacCormack, a Baker spokesman, said Friday that the opioid tax proposal applies to manufacturers, “not residents," and that the budget — which seeks to address a projected $3.6 billion shortfall in tax receipts created by the pandemic — doesn’t assume any revenue from the tax proposal.

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“The Governor’s revised budget does not raise taxes on Massachusetts residents to address this shortfall," MacCormack said in a statement, adding that the tax "would support continued efforts to combat substance misuse and the opioid crisis.”

Baker also paired the tax proposal with language he had first included in an October 2019 health care bill, and which would penalize drug companies that increase their prices “excessively,” or more than 2 percent a year, on top of inflation.

That section drew immediate pushback Friday from the pharmaceutical industry lobbyists, who roundly opposed it when Baker first filed it.

“At the same time that more than 90 Massachusetts life sciences companies are leading the way in developing new tests, therapies, and vaccines for COVID-19, the Governor is reheating an old proposal to impose price controls on prescription drugs,” said Robert K. Coughlin, president of the Massachusetts Biotechnology Council, who called it an “unnecessary” measure.

Jasmine Gossett, spokesperson for the Pharmaceutical Research and Manufacturers of America, or PhRMA, also warned it “shortsightedly targets drug spending" and could limit the options residents have.

To be sure, the opioid proposals are relatively small pieces of Baker’s $45.5 billion plan, which leans on billions in one-time budget solutions, including tapping the state’s savings account, to close the revenue gap.

There are also other tax changes, though. Citing the state’s “fiscal challenges,” his administration also proposed delaying for one year a charitable deduction Massachusetts residents could begin claiming on their state tax returns starting in January.

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Voters had first approved that deduction at the ballot box in 2000, the same year they also voted to lower the state’s income tax rate to 5 percent. But it took nearly 20 years to come to fruition thanks to legislative changes, and taxpayers were only able to capitalize on the tax deduction for one tax year before the Legislature suspended it.

Postponing the deduction would save the state $64 million in revenue. But it can mean major money if left in place. The Baker administration estimated that it could cost the state coffers (read: save taxpayers) roughly $300 million on a full-fiscal-year basis.

Baker also called for creating a Disability Employment Tax Credit, worth up to $2,000 per employee for businesses that hire individuals with disabilities.

In all, Baker’s budget proposal includes 114 different policy proposals, known as outside sections, many of which are repeats from past bills and his original plan from January.

There are exceptions, however. In his spending proposal from January, Baker sought to dramatically restrict who has access to Massachusetts birth records, death certificates, and marriage notices — documents that can currently be viewed or purchased by the public, with a few exceptions.

Under Baker’s plan, birth or marriage records would only become widely available to the public 90 years after a person is born or married, and a death certification would only be public 50 years after a person dies.

The change, Baker’s office said, would have better shielded potentially sensitive personal information and mirror “national best practices," but it drew swift opposition from open-records advocates and genealogical researchers.

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The governor ultimately didn’t refile it as part of his new budget this past week. His office on Friday did not explain why.


Matt Stout can be reached at matt.stout@globe.com. Follow him on Twitter @mattpstout.