Time was when end-of-the-year revenue surpluses in Massachusetts were like unicorns — lovely to contemplate and entirely mythical. But not this year.
This year — which in fiscal terms officially ended June 30 — the black ink kept flowing. The state is now in the enviable position of having about $650 million it hadn’t anticipated spending.
There are always a host of worthy (and not-so-worthy) causes vying for a piece of leftover budgetary pie, but two that should be at the top of the list in 2019 are (1) investments in the state’s tattered infrastructure and (2) hiking the tax deduction for children or for the care of aging or disabled relatives.
Hiking the deduction from $1,000 to $2,000 for each dependent is the centerpiece of Governor Charlie Baker’s proposed $648 million supplementary budget filed earlier this month. The governor’s proposal also directs about $100 million to road, bridge, and water spending.
Now the Legislature has its say. House Ways and Means chair Aaron Michlewitz of Boston said the committee has just begun to unpack the budget’s many provisions, including its tax provisions, but he’d certainly like to help the state’s controller close the books by the traditional Oct. 31 deadline.
“Obviously that would look good for our bond rating,” he told the Globe.
The tax change would help about a million tax filers in the state, according to Baker’s office, most of them middle-income families, especially those with a couple of kids and perhaps granny to be cared for. The increased deduction would be worth an additional $50 per dependent off their tax bill.
Baker proposed to fund the first two years of the exemption hike (estimated to cost $87 million a year) by putting $175 million into a reserve account from this year’s surplus “which will give budget writers sufficient time to adjust to the revision in collections,” the governor noted.
The bill — at least as it came out of the governor’s office — would also contribute an additional $168 million to the state’s rainy day fund. That’s in addition to the $848 million already transferred this year under a statutory requirement that wisely requires excess capital gains tax revenue — an exceedingly volatile tax — be contributed to the fund. Preparing for those inevitable lean years is never a bad thing.
The budget bill also provides substantial new funding for valuable programs:
Some $50 million for “targeted assistance for school improvement” — aimed at encouraging the kind of public school innovation that too often gets talked about but rarely encouraged with actual state grants.
Another $50 million, also devoted to education programs, would fund higher-ed scholarships, public school safety infrastructure improvements, and STEM (Science, Technology, Engineering and Mathematics) programs.
Mortgage down payment assistance for first-time home buyers is targeted for $10 million.
Local road and bridge projects are slated to get an additional $50.5 million.
And $60 million is set aside for projects related to clean drinking water, including testing for contamination and supporting a revolving loan program municipalities can tap to upgrade water systems.
So, yes, lots of money for lots of worthy things big and small. Lawmakers will have other ideas — they always do. Michlewitz alluded to the challenges of spending a surplus and “doing it appropriately.”
“But it’s sure better than the alternative,” he added.
There is, in these boom years, the temptation to create new programs that will be difficult to sustain in lean years and indulge in pork barrel projects subject to the whims of the more powerful on Beacon Hill.
A modest tax break for the state’s hard-working families, targeted education investments, and an infusion of badly needed infrastructure spending would help curtail both temptations, and would be fitting ways to spend the state’s unexpected tax windfall.