BOSTON – A deal to increase tax collection estimates by more than $ 4.2 billion and spend nearly $ 48.1 billion in fiscal 2022 was reached on Thursday with lawmakers in the House and Senate tabling a compromise budget that would also make the state’s controversial film tax credit permanent.
The budget deal, according to House and Senate officials, explains the increase in tax revenue over the past six months that has far exceeded projections agreed by legislative leaders and the Baker administration at the start of the year .
The wait for additional tax revenue was used by budget negotiators, in part, to create a $ 350 million trust fund that could be used in years to come to help cover the cost of a bill. $ 1.5 billion school funding reform passed in 2019, known as the Student Opportunities Act.
The budget tabled Thursday evening (H 4002) also reflects the decision of negotiators to cancel a planned withdrawal from state reserves of at least $ 1.5 billion and proposes to make an additional deposit of $ 250 million in the state pension system.
Ways and Means House Speaker Aaron Michlewitz and Senate Speaker Michael Rodrigues announced the compromise Thursday afternoon, and leaders of both branches hope to pass the budget on Friday and send it to Gov. Charlie Baker for his review.
Massachusetts is one of four states in the country that began its fiscal year on July 1 and does not have an annual budget in place. Although the budget is already eight days behind schedule, the Legislative Assembly and Governor Baker have put in place a temporary budget totaling $ 5.4 billion to maintain funding for government operations until July.
The legislature and Baker have postponed the implementation of the school funding reform act for seven years during the COVID-19 pandemic, but the new budget increases Chapter 70 school aid by $ 219.6 million in the during fiscal year 2022 to $ 5.5 billion. The spending puts the state back on track to meet the state’s funding commitment over the next six years, and a budget official said the new trust fund will protect against future setbacks.
In addition to resolving disagreements over spending, executives from both branches reached an agreement that would permanently extend the state film production tax credit in Massachusetts, which supporters have championed as the creator of jobs but critics have called too expensive.
The compromise plan provides for the cancellation of the tax credit sunset in January 2023, but would increase the eligibility threshold for a production company by requiring that at least 75% of its filming budget be spent or at minus 75% of primary shooting days to take place in Massachusetts.
The House had voted to simply remove the expiry date for the tax credit, while the Senate proposed a four-year extension tied to an increase in the minimum number of shooting days by 50 percent, a cap on wages eligible for $ 1 million and a ban on credit transfer.
The salary cap and the ban on transferability were not included in the final compromise.
The compromise budget also abandoned a Senate-backed plan to increase fees on Uber and Lyft trips to generate new funds for municipalities, MBTA, regional transit authorities and other infrastructure needs.
The House has voted in favor of gradual increases in fees for transmission network companies in the past, but Governor Baker has vetoed them and the branch has not included the fee in its budget proposal this year.
After fearing the worst at the start of the pandemic, legislative budget drafters largely avoided having to deal with the massive slowdown in tax collection predicted by economists at the start of the pandemic.
Instead, Democratic leaders were faced with the opposite challenge – how to allocate billions in unbudgeted revenue.
After agreeing in January on an estimate of $ 30.12 billion in taxes, Michlewitz and Rodrigues agreed in the budget tabled Thursday to increase the tax revenue projections for fiscal year 2022 to 34, $ 35 billion, a whopping increase of $ 4.23 billion.
The new projection reflects what the House and Senate budget official described as an increase of $ 362 million, or about 1%, above preliminary fiscal estimates for fiscal 2021 of about $ 34 billion. dollars. The Revenue Department has yet to release final tax revenue figures for fiscal 2021, but lawmakers expect a large surplus to be spent after executives verbally rejected Baker’s call for a tax holiday. two month sales tax.
The new flexibility of the FY2022 budget allowed negotiators to fund accounts at all levels above what was recommended by the House or Senate, adding about $ 300 million in additional spending to the 47, 7 billion budgets adopted by the two branches this spring. .
This step led to bigger results for higher education, nursing homes, local health services, mental health programs, and first educator salaries.
The conference committee also agreed to increase funding for some accounts beyond what had previously been proposed, including an additional $ 17 million for the Workforce Competitive Trust Fund, $ 18 million for technical institutes of career and $ 9.5 million for one-stop career centers.
House Speaker Ron Mariano’s initiative to encourage training for jobs in the offshore wind industry was also included with a boost from $ 10 million to $ 13 million, and a new consortium of cybersecurity will work with community colleges and state universities to create career opportunities in cybersecurity.
In addition, the compromise bill, officials said, would reverse a planned withdrawal of at least $ 1.5 billion from the state’s “rainy days” fund and project a deposit into the reserve account for more. $ 1.1 billion in capital gains taxes that would bring the emergency fund balance to $ 5.8 billion by the end of fiscal 2022.
Other highlights of the compromise budget include one-time increases of around $ 20,000 for sheriffs, the extension of a historic rehabilitation tax credit, a new tax credit for hiring workers disabilities and converting a child care tax deduction into a refundable credit that would allow more low-income families to qualify.
The final compromise also removed a provision described in a letter from 40 House lawmakers last week as an “anti-worker” measure added to the Senate budget that would have overturned state law demanding triple damages in lawsuits over wages and hours.