After 23 hours and billions in relief left on the table, lawmakers promise to revisit their proposals

A group ascended the stairs toward the Massachusetts State House Sunday evening.Carlin Stiehl for The Boston Globe

After months of unfulfilled promises to help residents squeezed by inflation, Massachusetts Democratic leaders said Monday they still intended to pursue a suite of tax breaks despite failing to strike a deal on a $1 billion relief package as they wrapped a chaotic formal legislative session.

Lawmakers passed a host of other major legislation Monday, including bills that would legalize sports betting in Massachusetts, expand access to mental health care, and reshape the state’s firearms laws. In each instance, legislative leaders quickly rushed them to passage after allowing them to linger for hours, days, or weeks in closed-doors talks — all while lawmakers blew past a midnight deadline Sunday to complete their work from a 19-month legislative calendar.

But as the final marathon session stretched to a 10:13 a.m. close Monday — 23 hours after it began in the Senate — it was lawmakers’ most high-profile proposal, and one they had openly celebrated only weeks earlier, that stalled.

Legislative leaders pulled the plug on negotiations over the massive economic development and tax relief package, arguing they were upended by a late-session revelation that the state is likely to trigger a 1980s-era law that could send an additional $3 billion back to taxpayers in the coming months.

That likelihood, they said, muddied the state’s economic picture and stoked fears about the state’s ability to afford it all, even as Governor Charlie Baker argued Massachusetts has enough of a fiscal cushion to absorb both sets of tax relief.

Lawmakers ultimately scuttled the $4 billion spending package, which would have mixed one-time rebates and permanent tax changes for millions of taxpayers. But in a twist, they also claimed it wasn’t dead.

Instead, Democratic leaders said they planned to move parts of the tax package and spending initiatives — designed to prop up housing production, financially strained hospitals, and other priorities — through the informal sessions between now and January.

It’s a highly unusual route for such sweeping policy-making and a potentially fraught one; just one vote of dissent in an informal session can kill a bill.

“The fiscally responsible thing to do is to hit pause right now on all of this spending,” state Senator Michael J. Rodrigues, the Senate’s budget chairman, told reporters early Monday. “We’re disappointed, but we want to make sure we get it right. We are committed to getting some real, long-term permanent tax relief done.”

Baker’s announcement last week that the state’s record-setting revenues are poised to trigger a nearly 40-year-old tax cap law quickly complicated talks over a tax relief proposal that lawmakers spent months developing.

The 1986 voter-passed law at issue seeks to limit state tax revenue growth to the growth of total wages and salaries in the state. Should revenue exceed that “allowable” amount, taxpayers are then due a credit equal to the excess amount.

With revenues from last fiscal year far surpassing expectations, the Baker administration last week estimated taxpayers could be due more than $2.9 billion under the law, which hasn’t been triggered since 1987. In response, House Speaker Ronald Mariano left open the possibility of seeking to undo, change, or suspend the law just as it’s about to benefit potentially millions of taxpayers.

Lawmakers, for now, opted for none of the above.

“We thought it would be the wisest choice to make sure we do this properly,” Mariano, a Quincy Democrat, told reporters Monday. “Getting $3 billion dropped on you the week before you are finalizing your year-end finances doesn’t lead to good decision-making. We want to be fiscally prudent and know what we are getting into.”

Aides to Baker did not comment on lawmakers’ failure to reach an agreement Monday.

Lawmakers’ constituents have shouldered rapidly rising inflation, and economic worries have topped residents’ list of concerns.

Aiming to help, the House and Senate had tucked similar tax relief packages into the economic development plan, including proposed increases to a tax deduction for renters, the Earned Income Tax Credit, and the state’s child and dependent tax credits.

They also planned to send millions of taxpayers a $250, one-time rebate, and the economic development bill itself would spend billions of dollars, including money pulled from an expected budget surplus and unspent federal stimulus funds.

But its fate will now have to be determined this fall, as members of the 200-seat Legislature seek reelection and Beacon Hill prepares to transition from a Baker administration after eight years.

“I think there is an element of the fact that Baker is on his way out. Is this a grasping for straws-type last hurrah?” Representative Erika Uyterhoeven, a first-term Somerville Democrat, said of the governor announcing the likely trigger of the old tax law. Baker had said his administration confirmed it only recently.

Supporters of the tax cap law, however, said lawmakers’ effort to cast it as a reason not to pursue the wider package is a “convenient excuse,” said Chris Anderson, president of the Massachusetts High Technology Council, which pushed the original 1986 voter-passed law.

“It still doesn’t undercut their ability to pursue the economic development bill, at least major sections of it,” Anderson said. “If they were caught by surprise, it’s probably because they were distracted by the billions of dollars they had a free hand to spend.”

The Legislature on Monday also failed to deliver on a budget policy rider to provide no-cost telephone calls for incarcerated people. Baker tried to tie the plan for free calls to language that would allow a court to hold people suspected of certain dangerous crimes without bail. The Senate passed a version of Baker’s proposal, but the House, which rejected it last week, did not take up the Senate’s amendment before the formal session’s end. That left the fate of both proposals in limbo.

Lawmakers, however, didn’t leave everything on the table.

Among the bills that they passed in the early hours of Monday morning and later shipped to Baker was a long-awaited package to legalize sports betting and bolster mental health care in the state.

If signed into law by Baker, who has expressed his support for sports betting in the past, Massachusetts will join 35 states and Washington, D.C., in approving the increasingly popular type of gambling, according to the American Gaming Association.

The sweeping mental health bill, among other changes, would mandate insurance coverage for an annual mental health wellness exam and ensure compliance with the state’s mental health parity laws.

And shortly before 5 a.m., lawmakers announced a deal on language that would retool the state’s firearms laws in the wake of a Supreme Court decision expanding gun rights across the country.

The agreement would broaden who is prohibited from getting a license to carry to anyone who has a temporary or permanent harassment prevention order against them, as well as require police to conduct a “personal interview” of anyone seeking a license to carry, according to legislative officials.

The language would also bar police from imposing restrictions on licenses, something Massachusetts officials said the high court case, known as New York State Rifle & Pistol Association v. Bruen, demanded. The decision overturned a New York law — similar to one in Massachusetts — that required applicants to prove a special need to get a license to carry a firearm in public.

Lawmakers, however, discarded a more far-reaching House proposal that would have required gun owners to renew their licenses twice as often.

“This is consistent with what the chambers aimed to do, which was a narrow response to Bruen to start and a promise of a lot more to come on gun control,” Representative Michael S. Day, the House judiciary chairman, told reporters early Monday.

A late-session crunch is typical on Beacon Hill. Lawmakers’ self-imposed deadlines often prove to be the last antidote to legislative logjams, forcing compromise, horse-trading, or in some cases, the death of major bills. But not in at least a generation has the Legislature entertained such major tax relief plans, let alone in the session’s waning hours.

And while joint legislative rules require formal lawmaking to conclude by midnight, on Beacon Hill lawmakers often suspend their own rules — and did again Monday, repeatedly inching their calendar deeper into August as they waited for movement on major legislation.

Besides barreling toward making major changes to state law at dawn, lawmakers’ tardiness also gave the upper hand to Baker, a lame-duck Republican governor who isn’t seeking reelection this fall.

Baker is allowed 10 days to act on any legislation that reaches his desk, meaning he can veto a bill and the Legislature will have little ability to counter. Veto overrides require a two-thirds vote — something lawmakers can’t do in an informal session.