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Massachusetts state lawmakers handed a $56.2 billion fiscal 2024 budget to Gov. Maura Healey Monday, striking one major item from their legislative to-do list as they enter a month-long recess where mostly local bills move forward.
All eyes on Beacon Hill now turn to the status of a tax relief plan that has been stuck since mid-February in closed-door negotiations led by the same two men who struck a deal on the budget. Top Democrats have worked on some form of tax relief for over a year.
Senate budget chief Sen. Michael Rodrigues said producing a deal on tax relief is not “difficult at all” but there are a large “volume” of high-priority items on the chamber’s plate.
He did not offer a concrete timeline for a tax relief deal but said the Senate would return during their August break “if we need to do it by roll call” vote and the branch wants to do it “as soon as possible.”
“Democracy is painstakingly slow,” Rodrigues told reporters on Monday. “The deliberative process can be very slow at times. And I always quote Winston Churchill, who said democracy is the worst form of government, except for all the others.”
The Senate passed a $586 million tax relief plan in June that boosted several housing-related initiatives but steered clear of any significant changes to the state’s tax-cap law and short-term capital gains tax.
That came after a $654 million House version of the bill sailed through the chamber in April with a provision lowering the short-term capital gains tax from 12% to 5%. The reduction has been supported by Healey and leaders in the business community.
House Democrats also backed a change to Massachusetts’ tax-cap law known as Chapter 62F — which required the state to send billions back to taxpayers last year — that would see any excess tax revenue returned to residents be equal payments regardless of how much they paid into the system.
Senators proposed excluding estates valued up to $2 million from the estate tax, $1 million lower than Healey proposed but on-par with what the House approved. The Senate also increased the cap on rental deductions from $3,000 to $4,000.
The Senate plan boosted the statewide Housing Development Incentive Program cap from $10 million to $57 million before settling on $30 million annually. The House agreed with that change but did so in a separate spending bill passed earlier this month.
Revenue Committee Co-Chair Rep. Mark Cusack said the Legislature will “most likely” address tax relief after Labor Day.
“We’re in talks and we’ll see if we get to a compromise,” he told the Herald on Monday.
The fiscal 2024 budget passed Monday sets aside $581 million for a future tax relief deal. But when that deal might surface is likely only known to the six lawmakers negotiating the plan.
House and Senate Democrats took an extra four weeks past the start of the fiscal year to come to an agreement on the budget, making it the latest non-pandemic-era spending plan to hit a governor’s desk since 2001.
Michlewitz did not shy away from addressing the drawn-out budget negotiations as he introduced the compromise on the floor of the House.
“To quote the Grateful Dead, what a long, strange trip this has been,” the North End Democrat said. “… This has been a drawn out and complicated conference report to negotiate to say the least. Whether it was implementing the first year of the billion dollar fair share revenue, or being confronted with the number of the federal COVID era programs that Washington is no longer paying for, or if it was a leveling off of state revenues, this has been a challenging budget to get over the finish line.”
Healey gave lawmakers more time to come to a deal last week when she filed a $6 billion interim spending plan to keep the state running through August. The House and Senate quickly passed the bill Friday and Healey signed it into law on Monday.
The proposal before Healey does not include the House-backed legalization of online lottery sales. It does have Senate-approved language offering in-state tuition at state schools to undocumented high school graduates who have attended classes in Massachusetts for at least three years.
The bill divides $1 billion in revenue from a new income surtax by shuttling $477 million to transportation and $523 million to education.
That includes $69 million for schools to provide meals at no cost to students, $205 million for the MBTA, and $20 million for a program offering residents 25 or older the opportunity to obtain a degree or certificate through any public community college.
The state budget also includes a policy rider adding two more seats to the MBTA board of directors, one appointed by the mayor of Boston and the other by surrounding municipalities served by the agency.
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