BOSTON (AP) — Charlie Baker is looking for a grand bargain on Beacon Hill.
The Republican governor told reporters this week he’s working with the backers of several ballot questions and with leaders of the Massachusetts House and Senate to hammer out a deal before the questions go to voters in November.
One reason is basic math. At least two of the questions could have a profound effect on state revenues.
One question being pushed by the Retailers Association of Massachusetts would reduce the state’s 6.25 percent sales tax to 5 percent — at a loss of roughly $1 billion in annual state revenues. Another proposed constitutional amendment, dubbed the “millionaire tax,” would impose a 4 percent surtax on any portion of an individual’s annual income that exceeds $1 million.
Raise Up Massachusetts, a coalition of community groups and unions that backs the question, says it could raise an extra nearly $2 billion each year for public education and transportation.
Baker has been largely mum whether he supports or opposes the questions.
It’s not certain all the initiatives will reach the ballot. The state’s highest court, the Supreme Judicial Court, is weighing a challenge to the “millionaire tax.”
If that question were blocked and the sales tax cut approved by voters, Baker and Beacon Hill lawmakers could end up facing a nearly $1 billion hole.
“I’ve said all along that my hope is that we end up finding a way to work with a number of the folks who have ballot questions pending to come up with what I would describe as sort of a grand bargain,” Baker told reporters this week.
The parameters of any such bargain remain a mystery.
“I know there have been conversations going on with both the House and the Senate and with folks in our administration with proponents on a number of these different questions and those conversations have been pretty productive,” Baker added.
Democratic leaders on Beacon Hill say they don’t anticipate taking action to reduce the sale tax this year.
“I don’t think our body is going to agree on lowering the sales tax,” Senate President Harriette Chandler said. “We’re concerned about revenue.”
The sales tax cut and millionaire tax aren’t the only questions that could affect the state’s economy.
Raise Up Massachusetts is pushing two other questions — one that would raise the state’s minimum wage from the current $11 an hour to $15 an hour by 2022 and another that would require paid family and medical leave for all workers.
House Speaker Robert DeLeo said that the last time lawmakers raised the minimum wage, they also tried to provide some relief to businesses.
“What you don’t want to do is to have the minimum wage increase and then start to lose jobs,” DeLeo said.
Yet another issue is whether the state should set aside a sales-tax free weekend each August — a requirement that is included in the sales tax ballot question.
The Legislature has not authorized a sales tax holiday for the past two years, citing budget woes.
Baker said he hopes to persuade DeLeo and Chandler to approve a sales-tax free weekend this year. The two made no promises.
Retailers have a large stake in future decisions, according to a draft report from a special commission that spent months taking the temperature of the state’s retail sector.
“Factors such as the disparate tax treatment of brick-and-mortar retailers versus online retailers, the lack of a sales tax holiday, and the Massachusetts-New Hampshire border are contributing to a competitive sales tax disadvantage for Massachusetts retailers,” the report said.
New Hampshire has no sales tax, making it especially difficult for stores near the border, the commission said.
Of the 45 U.S. states that impose sales taxes, Massachusetts has the 13th highest. But the report noted that the state drops to 35th when sales taxes imposed at the local level are factored in.
Associated Press writer Bob Salsberg contributed to this report