Mass. House Rejects Series Of Tax Relief Proposals

STATE HOUSE, BOSTON, APRIL 25, 2022…..House Democrats kicked off debate Monday on a nearly $50 billion state budget bill by rejecting Republican-led efforts to weave tax relief into the annual spending plan.

Massachusetts raked in more than $5 billion in surplus tax revenues last fiscal year and is running at least $1.5 billion ahead of the current year’s projections, performance that — coupled with more than $2 billion in federal American Rescue Plan Act socked away for future use — has generated a steady hum of calls for relief.

Gov. Charlie Baker has pressed recently to share the excess revenues with taxpayers in the form of rate relief, but so far has failed to convince lawmakers. Democrats shot down proposals to temporarily suspend the gas tax, lessen the impact of the estate and capital gains taxes, and boost a tax break for senior citizens.

Monday’s decisions keep pieces of Baker’s tax relief package in limbo. While legislative leaders say his proposal could still find success outside the budget process, the House votes show a lack of interest in paying for the recurring tax breaks in the annual budget and leave questions about possible future plans.

Rep. Nicholas Boldyga, a Southwick Republican, sought to incorporate a trio of tax changes into the House’s fiscal 2023 state budget (H 4700): reducing the short-term capital gains tax rate from 12 percent to 5 percent, doubling the threshold at which the estate tax kicks in from $1 million to $2 million, and increasing from $750 to $1,755 the circuit breaker tax credit for Bay Staters ages 65 and older.

“What we’re seeing right now with the soaring inflation and the cost of living, farmers that I even have in my district know that they can’t sell land or they can’t pass their farms down to the next generation without being hit with an amazing tax that we have here,” Boldyga said while introducing his estate tax amendment. “I think increasing this (threshold) to $2 million is the least that we could do for people in Massachusetts and the farmers we have so we can protect future generations from being hit with these taxes and not being able to preserve their property and their land.”

His amendments mirrored sections of Baker’s bill (H 4361), which is larger in scope and calls for roughly $700 million in tax breaks. The lame-duck governor’s push for tax relief remains before the Revenue Committee, which currently faces a May 4 deadline to decide its fate but could seek another postponement.

Rep. Mark Cusack, a Braintree Democrat who co-chairs the Revenue Committee, described all three of Boldyga’s amendments as “premature.” He said his panel is “working diligently” on the governor’s package but did not specify any plans to advance tax relief for a vote in the House.

“We’ve had positive conversations with the administration and working with our colleagues on the Revenue Committee as well as the chair of Ways and Means,” Cusack said. “This is a premature amendment and it’s a premature vote. I ask my colleagues to join me in rejecting this so the committee can continue to do its work going forward.”

“When is helping our senior citizens premature?” Boldyga fired back while introducing the third and final amendment in the set. “When is helping our most vulnerable citizens of the commonwealth premature? And since when has this august body ever listened or waited for the governor to take action?”

Representatives voted 31-125 to reject Boldyga’s senior circuit breaker tax credit amendment, 30-126 to reject his estate tax amendment, and 29-127 to reject his capital gains tax amendment.

The House also turned aside the latest attempts to halt collection of the state’s gas tax, a levy Republicans have unsuccessfully targeted for weeks amid surging gas prices and the broader impact of skyrocketing inflation.

With a 32-124 vote, the House rejected a Rep. Paul Frost amendment that would have paused collection of the 24-cents-per-gallon gas tax for 60 days. Frost said he aimed for the suspension to take place during the summer months, when many Massachusetts families are traveling and the Bay State’s tourism business surges.

“That two months can make a world of difference for families who are struggling to pay higher prices at the grocery store, higher prices for goods and services, who are paying higher prices to drive to work, at a very crucial time this summer when we want our economy to continue to rebound,” Frost said on the House floor.

Frost’s amendment called for the state to use money from its General Fund to cover transportation costs funded by the gas tax, such as road and bridge maintenance, during the two-month holiday.

The Auburn Republican pointed to neighboring Connecticut, where Democrat Gov. Ned Lamont signed a bill pausing collection of the Nutmeg State’s gas tax from April 1 to June 30.

“We can do this together. Republicans and Democrats, we can come together like Connecticut and give people immediate help, immediate relief,” Frost said.

Legislative Democrats for weeks have resisted calls to lift the gas tax on a short-term basis. They previously argued that pausing collection could harm the state’s bond rating and have been unconvinced by S&P Global Ratings’s pronouncement that such an outcome is “unlikely.”

Taking aim at Frost’s amendment on Monday, Transportation Committee Co-chair Rep. William Straus contended that the proposal “does not do what the sponsors say.”

The Massachusetts fuel tax is paid by distributors, not directly by consumers at the pump, according to Straus. He said about two-thirds of the gas tax revenue haul — roughly $50 million per month — “is paid by only 10 of these distributors, sometimes called Big Oil.”

“I’d ask for a show of hands: if we give Big Oil immediately a tax cut of $50 million a month from the General Fund, is there anyone who thinks that will really be passed along to the people we represent in the price they pay at the pump? I’m not seeing any hands and I’m certainly not seeing them in the second division,” Straus said, referring to the section of the House chamber where most Republicans sit. “The tax cut of $50 million a month goes to the oil companies with no assurance, no mechanism in the amendment, that it will actually be given to the people we represent.”

Straus, a Mattapoisett Democrat, said House leadership “is exploring the idea of different kinds of possible credits for those who are actually being hit with higher energy costs in the commonwealth,” but did not offer details of any action the House might take or project a timeline.

On Frost’s amendment, four Democrats joined Republicans in voting for a gas tax suspension: Rep. Colleen Garry of Dracut, Rep. David Robertson of Tewksbury, Rep. Alan Silvia of Fall River and Rep. Jeffrey Turco of Winthrop. Independent Rep. Susannah Whipps of Athol voted against the amendment.

The House rejected another gas tax suspension amendment from Republican Rep. Peter Durant of Spencer on a voice vote, and then laid aside one from Boldyga after deeming it too similar to Frost’s.

House Republicans last month rolled out a proposal similar to Durant’s amendment to suspend collection of the gas tax until prices fall below $3.70 per gallon, but they did not press for the measure to be decided with a roll call vote and Democrats — who wield a supermajority in both chambers — rejected it without individual lawmakers’ stances becoming clear at that time.

Gas prices have begun to tick upward again in Massachusetts after dipping below an earlier peak. AAA Northeast said Wednesday that the average price for a gallon of gasoline was $4.13, up six cents from a week earlier and 12 cents lower than a month prior.

The group’s analysts said prices face “opposing forces” of fears that China will experience a COVID-induced slowdown and that less Russian oil will enter the market.

“As long as the price of oil stays elevated, the price at the pump will struggle to fall,” AAA Northeast Director of Public and Government Affairs Mary Maguire said in a statement. “Consumers may be catching a little break from March’s record-high prices, but don’t expect any dramatic drops.”

The Massachusetts Fiscal Alliance, which has backed prior efforts to lift the gas tax, on Monday slammed House Democrats who opposed Frost’s amendment as “shameful.”

“Democrat state lawmakers across the Northeast and across New England are joining Republican state lawmakers to deliver relief for their state motorists but here in Massachusetts, 124 House Democrats refuse to work across the aisle and refuse to help their own motorists,” said MassFiscal spokesperson Paul Craney. “Today’s failed House vote to suspend the state gas tax is a perfect demonstration of what a greedy politician looks like. When the state is collecting a record amount of taxpayer money, while record gasoline prices are hurting middle class Massachusetts, 124 greedy House politicians stood in their way.”

While top Democrats have kept the governor’s proposal in play, they have not offered many indications that they see permanent tax relief as a priority and, at least in the House, are now en route to signing off on a budget that spends the same buckets of revenue Baker sought to keep in the hands of taxpayers.

House Speaker Ron Mariano and House Ways and Means Committee Chairman Aaron Michlewitz have instead pitched a targeted increase in spending on areas of need, such as the early education and care industry, as a better use of robust state tax collections.

Michlewitz noted while introducing the $49.6 billion spending bill Monday — to which representatives filed more than 1,500 amendments — that the House budget “does not account for the tax cut proposals” the governor stapled to his version.

“That proposal is still under consideration by the Revenue Committee, but we felt the immediate needs of making these necessary investments were a more pressing use of the funds for this budget,” Michlewitz said.

Asked during a GBH Radio interview if she supports the “basic direction” Baker is taking with his tax plan, Attorney General Maura Healey, a candidate for governor, said she knows the governor’s bill is “being reviewed now by others” and that she’d “have more to say about that at a later time.” She said “tax relief can’t be the only thing, though,” and said there is a need to address areas like infrastructure and housing.

She said she was “open to” the Legislature doing some tax cuts this session.

“I think that people are really hurting, you know, right now, with high costs,” Healey said. “You hear it every day, whether it’s at the pump or groceries or just the cost of living generally, housing, and we do need to find ways to give people relief. I think that tax cuts should be part of that. I just want to make sure that the relief is targeted in a way that makes sense, that it’s going to the families who most need it, so I’m looking at the governor’s proposals in these contexts. I give him credit for putting something out there.”

Businessman Chris Doughty, a Republican running for governor, said Monday he is disappointed the House voted against Frost’s gas tax amendment.

“I wish legislators would recognize that the people need relief more than the state needs the money,” Doughty said. “It is time to give drivers a break. As the next Governor, I will make affordability a top priority.”