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State’s highest court sides with Senate in tax fight

The Supreme Judicial Court said Monday that the Senate was on solid constitutional ground in pressing for changes to tax law in its state budget proposal.

The opinion marks a win for the Senate and could give the chamber added leverage as it wrangles with the House over taxes and more than $38 billion in spending for the fiscal year that begins next month.

The Senate’s budget, approved in May, would stop an automatic decrease in the state income tax and add a new tax on some flavored tobacco products.

The House of Representatives, which had earlier passed its own budget plan, asked the state’s highest court to opine on whether the Senate’s plan ran afoul of the state constitutional requirement that all “money bills” — essentially legislation that transfers property or money from people to the state — originate in the House.


One of the Senate’s arguments was that since the House budget included a provision delaying the implementation of a big corporate tax deduction, it was a money bill.

On Monday, the SJC agreed.

“[W]e are of the view that the House bill was a money bill, and that the Senate did not improperly originate a money bill,” the justices said in a 27-page opinion.

Delaying the implementation of the corporate deduction “effectively increases the amount of tax revenue that the Commonwealth will realize” in the new fiscal year, they wrote. Therefore, the House budget was a money bill.

The opinion, submitted by Chief Justice Ralph D. Gants and the six associate justices, was advisory in nature and answered a legal question. But it is certain to have political ramifications as it ripples through the power struggle between the two Democratic-controlled legislative chambers.

The Senate, seen as more liberal, and the House have battled in recent weeks on matters ranging from how to fix the troubled Massachusetts Bay Transportation Authority to whether to change the rules of the legislative committee process.


They are now reconciling their respective spending plans, before forwarding a budget to Governor Charlie Baker who can, among other actions, veto all or part of it.

Baker, a Republican, opposes raising taxes and on Monday strongly hinted he is opposed to the idea of freezing the diminution of the income tax rate.

It remains uncertain whether the Senate’s tax changes will make it out of the budget negotiations between the two chambers — and if so, whether they would be subject to the governor’s veto.

The new fiscal year begins on July 1.

In 2000, voters passed a ballot initiative knocking the income tax rate down from 5.85 percent to 5 percent in steps. The first ticks downward took place at the beginning of 2001 and 2002. But then the Legislature, facing hard economic times, froze the final tax cut and set up a much slower diminution.

Under current law, the tax rate is set to incrementally decline from the current 5.15 percent to 5 percent if the state meets certain economic growth thresholds.

Senators proposed freezing the rate at 5.15 percent in order to finance an increase in the state’s earned income tax credit, which benefits low-income workers, and to pay for an increase in the personal exemption available to all taxpayers.

Speaking to reporters in the State House Monday, Senate President Stanley C. Rosenberg and Speaker Robert A. DeLeo were restrained in their responses to the SJC opinion.


Rosenberg said the opinion affirmed the Senate was within its rights to propose changes to tax law in its 2016 budget.

He also argued that the Senate’s proposed tax changes addressed an important matter.

“What the Senate’s action did was put on the agenda, and bring up for discussion, this idea that we need to address income inequality,” Rosenberg told reporters.

DeLeo said he “felt that the House’s position was the correct one,” but was not disappointed by the justices’ take, and is thankful they moved quickly on the matter.

The Massachusetts Constitution gives each branch of the Legislature the power to ask the high court justices for their opinions on “important questions of law, and upon solemn occasions.” The House made use of that rarely invoked prerogative in the budget matter this year.

In a nod to an old tradition, the advisory opinion was hand-delivered by an SJC officer to the clerk of the House, who carefully unsealed it, then read it during a House session Monday morning.

The opinion notes the justices of the high court have discussed the meaning of “money bill” on three previous occasions: 1781, about a century later, then in 1958.

Joshua Miller can be reached at joshua.miller@globe.com. Follow him on Twitter @jm_bos.