Weekly Roundup – Taxing and Spending

Article Source: State House News Service

Author: Matt Murphy

Welcome to post-pandemic Beacon Hill, where the political fights over how vaccine doses should be distributed have been replaced by quarrels over who gets to decide how to spend surfeits of money, and where to potentially get more.

If you extended your holiday weekend and are just tuning in, Gov. Charlie Baker and the Legislature got into a bit of a tiff this week over who should have the final say over how $5.28 billion in federal relief money gets spent, with four cities – Chelsea, Everett, Methuen and Randolph – caught in the middle.

This happened as Senate President Karen Spilka and House Speaker Ron Mariano scheduled a vote for next Wednesday on the $2 billion “millionaires’ tax” and Department of Revenue Commissioner Geoffrey Snyder released live images of himself swimming in money, DuckTales-style.

(Ok, the latter didn’t really happen, but it almost could have.)

It all started Tuesday morning as legislators and staff were sifting through Memorial Day weekend email and Spilka and Mariano announced that they planned to move the state’s full American Rescue Plan Act allowance into a separate fund from which the Legislature, and only the Legislature, could appropriate it.

Baker quickly threw a flag on the power play, stating that not only was it not necessary, but it could slow down the state’s ability to quickly put that money to use stimulating the economy.

Furthermore, he had promised, at the urging of members of the Congressional delegation, to give the aforementioned four cities $100 million that they had been short changed due to federal funding formulas. If the money was moved into a segregated fund, he could no longer transfer the money and the cities would have to wait, he said.

“If he says that he has that authority, then he could have cut a check a week ago,” Rep. Dan Hunt, chairman of the House Committee on Federal Stimulus and Census Oversight, responded. The Dorchester Democrat was referencing the fact that the money had apparently arrived from the feds on May 19.

And as it turned out, a senior administration official said Baker had been planning to announce the release of the funds the next morning in Chelsea, but cut it from the script rather than risk antagonizing legislative leaders.

Baker responded to questions about the money at his Chelsea event by indicating that he would raise the issue with Mariano and Spilka, adding, “I hope they see it the way we do.”

They didn’t.

The two Democrats suggested they were the ones with the sense of “urgency” to rush to rescue of Chelsea, Everett, Methuen and Randolph, but they offered no timeline to appropriate the money and referenced a “robust legislative process,” which is almost never confused with urgency.

So, Baker on Friday went ahead and released the money anyway, and the total was $109 million.  Sens. Elizabeth Warren and Ed Markey and Rep. Ayanna Pressley applauded the move, and Mariano and Spilka said they were “glad” the four cities would be receiving the additional funds.

“The Senate and House look forward to working with the Administration and the public in an open and transparent process to equitably distribute federal funds,” Mariano and Spilka concluded.

But while the saga of the $109 million may be over, Democratic leaders are still moving ahead with plans to seize control of the funds, and this may not be the last clash over how to handle billions of uncommitted cash.

With an election year around the corner, DOR announced that the state took in $4 billion in taxes in May, beating estimates by more than $2.1 billion and putting the state on track to collect nearly $4 billion more than it expected on the year. Hence, Snyder’s metaphorical coin dive.

While some of that has to do with the fact that the tax filing deadline was moved this year from April to May, it still marked the continuation of a trend that has state leaders contemplating a sizable surplus at the end of the fiscal year.

That, too, will need to get spent, or saved, or perhaps returned in the form of tax relief.

Spilka and Mariano did not foreclose the idea that federal relief funds “may potentially be spread out over a number of years to ensure our continued economic vitality,” which could form a bridge between today and the day millionaires start paying higher income taxes.

The two Democrats announced that they planned to call a vote next Wednesday on a constitutional amendment to impose a new 4 percent surtax on income over $1 million, with the intention of spending it on transportation and education.

It’s the second and final vote required before the question would be put to voters on the 2022 ballot, and it is expected to pass despite the current strength of the state’s financial footing. Advocates still believe the new funding sources will be needed long-term to address learning gaps, public transit and traffic congestion.

As for that visit to Chelsea, Baker still made the short drive north to the city’s always-crowded Market Basket and announced a new partnership with the grocery chain.

For three days this week and three days next week, pop-up vaccine clinics will be run in Market Basket parking lots in Chelsea, Fall River, Lawrence, Lynn and Revere and anyone getting a shot will receive a $25 gift card for groceries.

The promotion is part of the administration’s newest strategy to reach the remaining pockets of unvaccinated residents by making the COVID-19 vaccines more accessible, including in hard-hit communities of color and to other groups showing signs of vaccine hesitancy.

Baker has also reached out to Treasurer Deborah Goldberg to inquire about the logistics of setting up a vaccine Lottery, as states like Ohio and California have done, and vaccine promotions are being run at venues like Polar Park in Worcester.

The targeted approach means a winding down of the mass vaccination sites that were so central to the early phases of the administration’s vaccine program.

Gillette Stadium was the first mass vaccination site to open in January and it will be the first to close on June 14. The site at the old Circuit City in Dartmouth will be the last to close July 13.

STORY OF THE WEEK: One hundred million dollars between friends.

SONG OF THE WEEK: You know what they say about having mo money. It brings mo problems.