With tax revenues over projections and inflation squeezing spenders at the checkout line, Governor Charlie Baker on Tuesday worked to build support for a tax package that he said would give nearly $700 million back to taxpayers in the form of new tax breaks and other reforms.
Flanked by representatives from the Massachusetts Taxpayers Foundation, Greater Boston Chamber of Commerce, the Retailers Association of Massachusetts, and others during a Tax Day news conference, Baker argued that the state can afford both more targeted spending on programs like early childhood education as well as tax relief. He called the state’s fiscal health ”a surplus beyond one’s imagination.”
Through March, the state had collected $3.6 billion above what it initially projected for the fiscal year, Baker’s finance secretary Michael J. Heffernan announced Tuesday.
“We can afford to give money back to the taxpayers,” Baker said. “The Commonwealth is in a very unique and unusual position ... we are currently running a budget surplus that is billions of dollars above our benchmark for the second year in a row. These are billions with a ‘B.’”
Baker filed the legislation in January, and as inflation has gotten worse, he’s emphasized it’s a top priority in his last budget cycle in office.
His news conference came a week before the state House of Representatives will debate its version of the state budget, which notably did not include the governor’s tax relief plan.
The Baker package would raise the income level at which people are required to file an income tax return, increase the cap on rent deductions, double the threshold for the state’s estate tax from $1 million to $2 million, and double the allowable tax credits for dependent children and child care.
The House budget would increase spending by nearly $1.4 billion more than the spending package proposed by the governor. The budget includes targeted spending on an array of programs focused on populations such as children in public schools and the incarcerated.
The state is so flush with cash, Baker said, that it’s possible to achieve both his tax-reduction priorities and the spending goals of House leaders.
“I think there is plenty of room to make sure that we make the investments we all need to make on behalf of the people of Massachusetts,” he said.
Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation, told the Globe in an interview that the Legislature should take advantage of the “enviable” position Massachusetts finds itself this year.
“You can do tax relief and you can increase targeted spending,” McAnneny said. “There is a path forward to do both.”
The House is expected to take up the budget next week, and some tax relief such as a suspension of the gas tax and a reworking of the estate tax were among the 1,521 amendments filed.
Others ranged from more money for towns that don’t offer kindergarten, local projects like dog parks and library improvements, and training for House members on how to distinguish between the reply and reply-all buttons when responding to a building-wide email.
While Baker’s proposal is not included in the budget — and was filed separately from Baker’s own budget plan — it is up for consideration by the Joint Committee on Revenue.
Representative Mark Cusack, the House chairman of the Joint Committee on Revenue, said the governor’s proposal is “obviously still alive,” and that the committee may extend its May 4 deadline in order to take it up.
“There is an overreaction from the business community,” Cusack, a Braintree Democrat, said of the Tuesday news conference. “We are working on it. There are 200 members of the Legislature, it’s not just the governor.”
When asked by the Globe Tuesday whether he thinks his proposal will get a favorable nod from the committee, Baker threw his arms up to mimic a shrug.
“There’s a long way to go between now and the end of the year,” he said. “If there’s one thing I’ve learned in this particular business is that predictions on how the legislative process is going to work usually end badly.”