Tax Refunds, Cuts, Included in $4.2 Billion Spending Plan | Boston

BOSTON — The state House of Representatives on Thursday passed a $4.2 billion spending bill that includes a buffet of rebates and tax cuts, as well as new spending for economic development, the environmental protection, health care and housing.

The proposal, which was approved by a 154-0 vote in the Democratic-controlled House with bipartisan support, calls for tapping into $500 million in federal pandemic funds and state surplus to expand existing tax credit programs for low-income workers, seniors and families. and overhaul the inheritance or “death” tax.

A centerpiece of the legislation calls for spending an additional $500 million in one-time $250 rebates for about two million Massachusetts taxpayers.

“There is a lot in this bill and a lot to take home to our constituents in terms of the gains for our economic growth and continued recovery from a once-in-a-generation pandemic,” said the chairman of the ways and means committee of the House, Aaron Michlewitz, D-Boston, in remarks before the bill passes.

“This will help support key sectors of our economy and make us more competitive with other states,” he added.

On economic development, the bill would spend $350 million to help financially distressed hospitals, $165 million for nursing home workforce development and $80 million to support community health centers. It also includes $500 million for water and sewer projects and other environmental infrastructure.

Additionally, there is $100 million for affordable housing, $75 million for minority-owned developments, and $25 million to address food insecurity.

Rep. Jerry Parisella, D-Beverly, chairman of the Legislature’s Economic Development and Emerging Technologies Committee, said the plan “puts the Commonwealth in a strong position to continue growing and bouncing back from the global pandemic. “.

Over two days of debate, House lawmakers pushed for additional funding or changes to state policy through nearly 900 amendments to the spending package. Many were rejected or withdrawn, while others were consolidated into large packages that were approved or rejected in a single vote.

Decisions on which amendments made it into the final bill were made in closed meetings with legislative leaders while the chamber was temporarily recessed.

Overall, House lawmakers added nearly $500 million in new spending to the bill before passing it.

Much of the new spending was local allocations, including $8 million for downtown redevelopment in Haverhill, $100,000 for Open Door in Gloucester, $50,000 for Ateneo Dominicano Del Merrimack Valley in Lawrence to “maintain Dominican culture in the Merrimack Valley” and $25,000 for the North. Andover Merchants Association.

An amendment, filed by Michlewitz, calls for spending $25 million to build a new community center in his North End legislative district.

Under the refund plan, which is also part of the tax relief program, individual taxpayers would receive a check for $250, while married couples filing joint returns would receive $500. Payments will be distributed by the end of September.

Eligibility for payments will be based on income in 2021, under the proposal, capped at $100,000 for single filers and $150,000 for joint filers.

Taxpayers with taxable income of $38,000 or less in 2021 will not be eligible for relief payments. Legislative leaders say it’s because this subset of low-income workers has already received relief in the form of one-time $500 relief checks.

Several Democrats lobbied to eliminate the $38,000 floor, arguing that low-income residents need more relief, but the amendments were defeated.

Beacon Hill has come under pressure to provide relief amid rising costs, 40-year high inflation, supply chain issues and the impact of sanctions on Russia for its war in Ukraine, which drove up consumer costs for everything from gas to groceries.

Admittedly, Massachusetts is sitting on a pile of excess revenue from collecting excess taxes — estimated at more than $3.6 billion this year — and money from the $5 billion share of the American Rescue Plan Act Federal Funding Status.

A key proposal in the tax cuts part of the bill would overhaul inheritance tax, which is charged to a deceased’s estate when its assets pass to beneficiaries. It would double the threshold triggering the tax for assets valued at more than $2 million.

Massachusetts is one of only twelve states to charge the tax, which currently applies to an estate worth more than $1 million. Assets include stocks, life insurance policies, boats, vehicles and other land-based property.

Lawmakers said doubling that threshold would save more than $207 million to about 2,500 taxpayers.

The House proposal would also increase the state child and dependent tax credit from $180 to $310 per child and eliminate the cap on the number of dependents. The plan would cost about $130 million in benefits to 700,000 families.

It would also increase the earned income tax credit to 40% of the federal credit, which would benefit about 400,000 taxpayers with incomes below $57,000 a year, costing the state $91.5 million.

The plan also includes raising the main circuit breaker tax credit from $750 to $1,755, which would affect about 100,000 senior taxpayers.

Another provision would increase the annual rent deduction cap from $3,000 to $4,000, benefiting about 881,000 residents at a cost of $35 million.

Several of those proposals were included in a $700 million tax relief package proposed by Republican Gov. Charlie Baker, but lawmakers did not pick up on the governor’s plan to cut the tax rate on the most -short-term values ​​from 12% to 5%. Democrats complained the plan was geared toward the wealthy.

The House bill now goes to the state Senate, which must approve the plan before sending it to Baker’s office for review. Lawmakers must agree on a final bill by July 31, when formal legislative sessions end.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group newspapers and websites. Email him at [email protected]