Massachusetts state senators approved a $56 billion budget for the fiscal year 2024 last week, forwarding along for final debate a package that preserves many of the central features of Gov. Maura Healey’s landmark tax relief package.
Senators followed in step with their counterparts in Massachusetts’ House in approving a package along the lines of that pitched by Healey in February, featuring several major tax relief proposals focused on the middle class.
The governor’s plan, which included a $600 child tax credit and measures to help senior citizens, renters and small businesses, as well as the reduction of the short-term capital gains rate, came into question after state revenue collections showed a 31% year-over-year dip in April.
Bloomberg News
Amid the falling figures, the governor’s legislative opponents questioned if the state could afford tax cuts expected to trim $1.1 billion from revenue over two years. Tax officials cited falling short-term capital gains collections and the negative impact of a pass-through entity tax for the dip.
Healey’s office accounted for both tax factors when crafting the proposal, said Matthew J. Gorzkowicz, secretary of the Massachusetts Executive Office for Administration and Finance, and the administration stood by the plan as it enters the latest leg of the approval process.
“We do not believe it’s necessary at this time to revisit our FY24 consensus revenue estimate because it already accounts for decreasing capital gains and PTE credit usage,” he said. “Our budget proposal remains affordable for the state; that includes the governor’s tax relief package which we believe is essential for delivering urgently needed economic relief to families, seniors, and renters and improving Massachusetts’ economic competitiveness.”
Republican Sen. Pat O’Connor, who helped draft the Senate bill, echoed the assessment, and said Massachusetts “would be able to “withstand this and move forward and “was “well prepared” for the revenue hit, with large reserves and other strong tax sources. The legislature is dominated by Democrats, and Healey is a Democrat.
Like Healey’s plan, the Senate budget increases education spending, including higher funding for state universities and an additional $400 million for the state’s School Building Authority’s grant infrastructure program. It also allocates $500 million to boost the transportation budget.
It also features the institution of a ‘millionaire’s tax,’ levying a 4% surcharge on incomes over $1 million which the state estimates will net $1 billion in extra revenue.
The budget now sits with a bicameral budget committee for debate and approval before returning to the governor’s desk. Gorzkowicz expects the tax package to remain intact.