Baker Proposes Tax Relief Measures, Major Rainy-Day Fund Deposit
iBerkshire.com reports Governor Bake is asking the Legislature to approve tax relief to residents based on the state's surplus revenues.
The legislation filed Friday by the Baker-Polito administration will also make a deposit to the so-called "Rainy Day" fund to bring the fund balance to $3 billion, the highest balance ever.
These proposals are part of a $651 million supplemental budget bill that also makes investments in a wide range of areas including infrastructure, education and support for cities and towns.
The proposal calls for setting the 2020 Part B income tax rate at 5.0 percent — bypassing the remaining revenue tests that the state otherwise would be required to pass before the rate is reduced to that level.
Because the Fiscal 2020 budget already assumes a reduction to 5 percent, there would be no budgetary impact from the change. By statute, the rate will remain at 5 percent, and there would be no trigger tests in future years.
The bill also proposes a doubling of the income tax exemption for dependents, from $1,000 per dependent to $2,000, resulting in a direct additional benefit for 1 million taxpayers who have children, or care for dependent relatives who are elderly or have a disability, of approximately $50 per dependent.
To support the increase, the budget calls for a one-time deposit of $175 million from the Fiscal 2019 surplus into the Tax Reduction Fund and a change to ensure that Massachusetts military veterans who are permanently disabled won't face a tax liability as a result of a federal program to cancel their federal student loan debt.
In addition to the tax measures and Stabilization Fund transfer, the bill calls for $100 million in education investments, including $50 million for targeted assistance for school districts with high concentrations of low-income students to implement turnaround strategies.
The supplemental budget also provides more than $100 million in overall infrastructure spending, including $50.5 million in grants to cities and towns for local road and bridge improvements and more than $60 million in investments related to clean drinking water, including funding for PFAS testing and mitigation.
In addition to those investments, the administration previously announced a proposal to use $50 million from the FY19 surplus to fund the acceleration of MBTA capital construction and infrastructure projects. T
The proposal recommends $5 million to address trafficking of the synthetic opioid fentanyl, which according to recent Department of Public Health data was present in 92 percent of opioid-related overdose deaths in Massachusetts in the first three months of 2019 in which there was a toxicology screen. The funding would support regional fentanyl interdiction programs focused on investigating major criminal enterprise and criminal activities related to fentanyl trafficking.
The supplemental budget also includes $16.4 million in funding to improve services for men who are civilly committed for substance use treatment under Section 35 of Chapter 123 of the General Laws.