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BOSTON (WBZ NewsRadio) — It’s now Fiscal Year 2023, and the clock is ticking on Beacon Hill. As inflation soars, the Massachusetts Legislature is still considering key legislation, including the state budget and how to spend a surplus of tax revenue.
Gov. Charlie Baker has proposed using the surplus to fund tax cuts. But, that’s not the only option. The state could also invest in communities, fund tax credit programs, or even just send residents direct payments.
The governor says his $700 million tax relief proposal would help residents hard hit by inflation, including older adults who are on fixed incomes.
“With state tax revenues continuing to come in far above benchmark, state government can more than afford to give seniors and other residents hurt by inflation a tax break,” Gov. Baker said earlier this week.
However, Marie-Frances Rivera, president of the Massachusetts Budget and Policy Center, says tax cuts will not address inequities in the Commonwealth.
The center recently put out a report that says the term "tax surplus" can be misleading because "it does not mean that the state budget has already met the needs of the moment or that there is extra unneeded revenue."
Rivera says Massachusetts is a wealthy state, but that’s not the case for everyone. She pointed to a recently published report from the Greater Boston Food Bank that found 1 in 3 adults in the Commonwealth are food insecure.
She also says “tens of thousands of people are experiencing housing insecurity or are on the edge of it.”
“So, when we think about what we do with our resources here in Massachusetts, we have to think about what we do to address the critical and urgent societal challenges that our neighbors are experiencing every day,” Rivera said.
She says the state should invest in communities, either through tax credits or by putting money into things like schools in low-income districts or public transit.
The Massachusetts Taxpayers Foundation, however, agrees with the governor’s proposal.
“The tax cuts are warranted,” MTF President Eileen McAnneny said.
She says the package includes a number of tax breaks that would help modest and low-income earners, and make Massachusetts more competitive.
"We think that it is a great way to provide relief to a lot of people who suffered during the pandemic, and to position the Commonwealth for future growth,” McAnneny said. “So, we are supportive of that balanced approach.”
Earlier this week, MTF released an analysis on possibilities for the Fiscal Year 2023 budget. The foundation says they looked at "what type of tax revenue upgrade is appropriate, given recent collection trends."
Meantime, Maine is using its surplus money to send $850 inflation relief checks to its residents. It's just one of multiple states sending out direct payments. Earlier this week, California announced it would send out inflation relief payments. However, McAnneny says she hasn't "heard that option be entertained on Beacon Hill."
Following California's announcement, a number of economists told the Sacramento Bee that the relief checks could make inflation worse.
"One-off tax holidays or rebates which put more money in people's pockets without doing anything to boost supply are inflationary," Jared Walczak, vice president of State Projects at the Tax Foundation, told the paper.
But, Rivera says the priority should be making sure residents have food on their tables.
"Of course we can have back and forth academic debate all day about inflation, but it's here," Rivera said. "The reality is that people and kids are going hungry in our Commonwealth."
WBZ NewsRadio's Nichole Davis (@NicholeDWBZ) reports
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