Well, that extra revenue is disappearing fast

Last week we learned that Massachusetts is going to have about $1.2 billion more state tax revenues this fiscal year than the $27.5 billion amount that lawmakers forecast in January.

Good news to be sure, but there’s a broad consensus that much of this extra money comes from sources like capital gains taxes that are subject to extreme fluctuations.  And some of the surplus is already spoken for, to shore up accounts that have been underfunded or to be deposited into the state’s rainy-day account.  The $1.2 billion is really more like $200 million – and there are certainly no guarantees that we’ll see another surplus next year.

But neither those cautionary notes nor the fact that there’s much legislative work left to do and only 23 days remaining have stopped House leadership from making a priority of saying yes to Governor Baker’s request for more and bigger tax credits for business. Permanent ones, too.

A bill being teed up for a vote in the House on Tuesday would give the Baker administration authority to spend $20 million dollars more, each year, every year, to soup up the current economic development incentive program to include (in their words) “extraordinary economic development opportunities,” in which businesses promise to expand within the state or relocate from outside the state and to meet a target of 200 to 400 new jobs. The discretion of the administration to designate such extraordinary development opportunities would be total, while the enforceability of the promise by a business to meet the jobs target would be nil. What’s not (for businesses) to like? So there goes $20 million of the so-called windfall for this year.

But wait, there’s more. The recently-enacted “grand bargain” bill provides for a minimum wage increase and a sales tax holiday for retailers, both to start next year.  Does anything happen this year?  Nobody’s talking about a minimum wage increase in the next six months, but the Speaker’s now looking favorably on a sales tax holiday this August. That’s another $25 million. And guess what – the Governor definitely approves.

 

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