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BOSTON (State House News Service) - Gov. Maura Healey doubled down on her tax relief plan on Friday, insisting that a shortfall in state revenue that has plunged this year's state budget into the red was predicted and accounted for in her fiscal 2024 budget.
"We put together our budget and our tax relief package -- we did so knowing that there was likely to be some drop in revenue. We've seen a drop. And you know, I just want folks to know we've accounted for that. And it remains the case that our tax relief package that we propose we stand by, we think it's really important," she told four reporters who were able to ask her a few questions after a State House event Friday afternoon.
Massachusetts collected $4.782 billion in taxes in April, a drop of $2.163 billion or 31.2 percent from the same month a year earlier and $1.435 billion or 23.1 percent below the most recent monthly benchmark projection, the Department of Revenue announced Wednesday.
Despite collecting $703 million less than budget chiefs forecast Massachusetts would have hauled in at this point, Healey said on Friday that the number is "not unexpected" and that "we know a little bit about what happened in April," citing a dip in receipts from capital gains and pass-through-entities.
"It's not to say it's not an insignificant number, but again, it's accounted for in next year's budget proposal and in the tax relief package," she said.
Healey's comments closely echo what her budget chief, Administration and Finance Secretary Matthew Gorzkowicz, said in a statement on Wednesday.
April's revenue swing is causing a reexamination of the affordability of pending spending measures and tax relief proposals, and may force Healey's team to come up with a creative package to balance the state budget over the last eight weeks of fiscal 2023.
The governor ran on a campaign of promising tax relief, and singled the issue out during her election night victory speech and inaugural address.
"We'll make Massachusetts more competitive and affordable so that people will come here, stay here, and grow their businesses here. We'll cut taxes, fix road and bridges, invest in education and job training, and we'll take on the climate crisis and create great clean energy jobs," she said on election night. At her inauguration, "This will mean real relief for the people who need it most. I want to work, let's get it done."
Healey's tax package combines relief for caregivers, renters and seniors with substantial estate and capital gains tax reforms long sought by business leaders. Its costs are estimated at nearly $1 billion per year. It would give taxpayers $600 per year for each dependent including children younger than 13, disabled adults and seniors. The plan would also effectively triple the threshold at which the estate tax kicks in from $1 million to $3 million and slash the short-term capital gains tax rate from 12 percent to 5 percent.
Even as some in the state are questioning whether tax relief is still feasible, Healey insisted the policy is "absolutely essential."
"The April numbers bear further analysis obviously, there was an impact there in terms of some revenue around capital gains and some other things so that will bear more analysis. And I'm sure discussions will continue through the Legislature about actual impact for this fiscal year -- but what's important is that we're talking about our next budget, for next year. We're talking about a tax relief package that is absolutely essential to lowering the cost of living, making life more affordable for people in Massachusetts, and also making Massachusetts more competitive so that we're able to keep our residents here," she said.
Senate Democrats plan to roll out and then approve their own budget bill this month, and have avoided committing to a timeline for a tax relief debate.
Written By Sam Drysdale/SHNS
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