Massachusetts has a nearly $5 billion surplus. Now what? – The Boston Globe

Underneath the Baker administration’s accounting, a lot of the additional income would pay an estimated $3 billion refund due again to taxpayers ought to the state, as anticipated, set off a Nineteen Eighties-era legislation supposed to restrict state tax income progress to the expansion of complete wages and salaries.

After overlaying that credit score, the Baker administration stated, the state would have $1.9 billion in surplus income — itself a whopping determine.

Baker’s launch of the excess estimate served one other objective, too: It helped fortify his argument that the state has sufficient of a monetary cushion to soak up the price of each the shock tax credit score and a sweeping $1 billion tax aid package deal that, till final week, appeared on a glide path to his desk.

“The excess is a little bit bit bigger than we initially anticipated, even a pair weeks in the past,” stated Doug Howgate, government vice chairman of the Massachusetts Taxpayers Basis, a business-backed price range watchdog that, as lately as final week, estimated the excess might attain practically $4.7 billion. “It’s the very best I’ve ever seen.”

The Legislature had initially devoted no less than a part of the excess to serving to cowl a mammoth $4 billion financial improvement invoice that included plans for $250 rebates to probably hundreds of thousands of residents and greater than $500 million in everlasting tax aid, together with expanded tax breaks for seniors, low-income employees, and others.

However the invoice’s prospects faltered within the ultimate chaotic days of the legislative session — which ended Monday morning — after Baker introduced the probability of the state triggering the 1986 tax cap legislation generally known as Part 62F. The information shocked legislators; Home Speaker Ronald Mariano even accused Baker of conserving them in the dead of night about its probability for months, a cost that Baker aides denied. And negotiations over the package deal in the end fell aside amid doubts within the Home that the state might nonetheless afford the tax aid plans.

Thursday’s launch of the estimated price range surplus appeared to do little to assuage these fears.

In an announcement, Mariano emphasised that with the $3 billion tax invoice looming, the state nonetheless should navigate rising inflation and a possible financial downturn. “It’s completely essential that any further aid doesn’t deplete the Commonwealth’s monetary sources,” the Quincy Democrat stated.

State Consultant Aaron Michlewitz, the Home price range chairman, additionally preached warning, noting that whereas the excess is dramatic, it’s largely consistent with what lawmakers had been anticipating.

“The near $3 billion that may take impact from 62F definitely modifications how we needs to be spending the remainder of that cash,” the North Finish Democrat stated.

Just like Baker, state Senate leaders are much more bullish on the state’s capability to cross, and pay for, long-term tax breaks.

Senate President Karen E. Spilka stated the tax cap legislation’s credit score, which might be distributed proportionally to an individual’s earnings tax legal responsibility, shouldn’t cease the lawmakers’ plans for a extra “progressive tax aid package deal” that may largely goal low- and middle-income employees.

“The Senate is dedicated to working with our companions within the Home and the Administration to lastly ship the tax aid that residents deserve, as quickly as we are able to,” Spilka stated in an announcement.

The tax aid debate is way from the one place the place Baker is placing his stamp after the top of the legislative session. He additionally spiked a provision inside an almost $5.2 billion borrowing invoice that may put a five-year ban on the development of latest correctional amenities or the enlargement of present ones throughout the state.

The proposal included a carve-out for “accommodating” a switch of inmates as a result of one other facility is closed, however Baker administration officers had raised considerations a couple of moratorium probably tying their arms.

The Ripples Group, a state-hired consulting agency, additionally concluded final month that MCI-Framingham, the state’s solely ladies’s jail, must be changed, and that the state ought to construct a $40 million 150-bed medium safety facility.

In a letter to lawmakers, Baker stated state officers haven’t any intention of constructing new correction amenities “now or within the foreseeable future,” nor do they consider they’ll must increase the system’s capability with the state’s inmate inhabitants at a 35-year low. State officers say they plan to close down the maximum-security jail in Walpole over the subsequent two years.

However Baker argued that the invoice might restrict the state’s capability to switch different amenities and “maximize operational efficiencies.”

Senator Jo Comerford, a Northampton Democrat who sponsored laws to pause jail building, known as Baker’s selections a “setback, not an finish.” However regardless of having Democratic supermajorities in each chambers, Baker’s veto seems prone to stand.

Lawmakers didn’t cross the invoice till July 26, and on Monday they accomplished their ultimate formal session for the 12 months, which means they now can not override Baker’s veto exterior calling a particular formal session, a rarity on Beacon Hill.

Advocates for the moratorium argue lawmakers ought to nonetheless pursue that possibility.

Baker’s veto is “not shocking, and it’s additionally not acceptable,” stated Mallory Hanora, director of Households For Justice as Therapeutic. “We’re urging the Legislature to take motion and respect the need of the folks . . . and name a particular session. The Legislature left an excessive amount of enterprise on the desk that impacts folks’s day-to-day lives.”

Matt Stout could be reached at matt.stout@globe.com. Observe him on Twitter @mattpstout.