Massachusetts state House and Senate leaders reached a deal on how to spend a $1 billion surplus late Wednesday night, passing a compromise bill after months of stalled, closed-door discussions.
The legislation arrived amid a terse exchange between lawmakers and the state comptroller, Andrew Maylor, who had set an afternoon deadline to move the extra funds to the state’s savings account should officials fail to reach an agreement, The Boston Globe reports.
Maylor’s self-imposed deadline prompted discord over his authority to do so from the House, setting the stage for a potential legal dispute that lawmakers have now, with a deal in hand, avoided, according to the newspaper.
Still, the supplemental budget doesn’t necessarily hit all the marks for some.
While most of the budget goes towards providing cash for deficient accounts to wrap up the 2019 fiscal year, House and Senate lawmakers opted to put forth $32 million for the MBTA — notably less than the $50 million requested by Gov. Charlie Baker.
Also absent is a corporate tax change that received support from Baker, the House, and local businesses.
“There was a lot within this budget,” Senate President Karen Spilka said, according to The State House News Service. “A few years back we had to cut almost a billion. This year we had a billion. It doesn’t always make it that much easier,”
In all, the bill proposes spending $541 million of the surplus and putting the remaining $587 million into a “rainy day” fund, the News Service reports.
Here’s what to know about the legislation:
Baker asked for $50 million for the MBTA. This bill would give the agency $32 million.
Days after an outside report slammed the MBTA, finding that “safety is not the priority at the T,” the spending bill passed Wednesday presents less funding for the agency than Baker requested — money he said would be partially used for improving safety oversight.
House Speaker Robert DeLeo said in a statement that the money in the bill still gives the T an “immediate infusion.” But he also said lawmakers are awaiting “clearer and more consistent” information about how the money will be spent, The Globe reports.
Baker first proposed the $50 million figure in June, and said at the time the money would fund a new team of bus operators, engineers, maintenance workers, and outside contractors for inspections and capital projects, according to the newspaper.
He also said that money would cover costs for increased train inspection frequency and preventative maintenance, the News Service reports.
Baker spoke Monday about funding safety oversight in wake of the critical report, adding that this would also not slow down capital projects.
“While we seek more precise information on the needs of the T, the House recommits itself to a transportation revenue debate in the coming months,” DeLeo said.
Spilka said the new number stems from the “give-and-take” of negotiations, according to The Globe.
“I believe that the T needs some funding, and that’s something we’re talking about,” Spilka said.
The Baker administration told the newspaper Wednesday it was still reviewing the bill, but referenced points Baker made earlier in the day when he said should the Legislature not provide the complete $50 million, “we’ll be back to them in January … to ensure that the T has the money it needs to implement that safety management system.”
Other needs in the $186 million put aside for discretionary spending included $15 million for the testing and handling of per- and polyfluoroalkyl chemicals known as PFAS or “forever chemicals” in local water supplies, according to The Globe.
A controversial corporate tax provision was cut.
When the Trump administration’s tax reforms passed in Congress in 2017, the law included a limit on the debt interest businesses could deduct from their federal taxes.
The new rule took hold in Massachusetts, where much of the state tax law follows federal law. Associated Industries of Massachusetts says that change could bump state corporate taxes by as much as an estimated 12 percent, according to The Globe‘s Jon Chesto.
Business groups were gunning for a provision in the supplemental budget that they say would essentially keep things as they were before the 2017 reforms, decoupling the state from federal code. Doing so would help grow jobs and business expansions, they said.
Critics have written it off as a tax break for corporations, saying it would cost the state $37 million.
Baker and the House had both backed the measure. The Senate did not.
“All bills have compromise,” Spilka told reporters after the deal was reached without the inclusion of the tax provision.
Cambridge state Rep. Mike Connolly called it a “victory.”
“At a time when the MBTA is literally on fire, we need to insist that large corporations and wealthy individuals pay their fair share in taxes,” he wrote on Twitter.
It’s not everyday that we defeat the big corporate lobby on Beacon Hill — but thanks to first-term Reps. @SabadosaMA, @MariaRobinsonMA + @TamiGouveiaMA, who spoke out about a proposed tax break for large corporations — tonight, after a long struggle, the progressives won! #Thread pic.twitter.com/dYYxvUPmnG
— Mike Connolly (@MikeConnollyMA) December 12, 2019
Lawmakers have avoided a dispute with the state comptroller over the lingering bill.
On Dec. 4, Maylor, the state comptroller, told lawmakers that if they did not have a deal worked out on the budget bill by 3 p.m. on Wednesday, he would transfer the $1.005 billion surplus to the state’s stabilization fund to close the books on fiscal year 2019, which ended in June.
There was a statutory deadline to close out the year on Oct. 31.
“I must underscore that because closing the books without closeout appropriations legislation is unprecedented in the recent history of the Commonwealth of Massachusetts, the full downstream consequences of leaving state accounts in deficiency are unclear,” he wrote in a letter to Baker, Spilka, DeLeo, and other Beacon Hill leaders last week.
Lawmakers seemed like they were headed that way most of Wednesday, until Maylor said that afternoon he would refrain from imposing his deadline because of “substantial progress” in negotiations, the News Service reports.
Maylor said he’d transfer the money on Thursday morning if lawmakers did not make “clear progress toward final enactment,” but didn’t give a specific deadline, according to the news outlet.
Still, amid the talks, House counsel Jim Kennedy wrote to the comptroller’s office, saying such an action would extend beyond the comptroller’s authority by writing it would be “repugnant to the Constitution,” according to the News Service.
He added that deficits would arise in some accounts if the total surplus was placed in the stabilization fund.
Maylor disagreed over Kennedy’s interpretation of the law and said he didn’t want to “litigate this issue in the press.”
“It is our hope that the Fiscal Year 2019 closeout process was a true anomaly and that the opinion of House Counsel does not foreshadow the reaction to future fiscal year closes, and the associated net surplus transfers which the Comptroller has already stated will happen no later than the statutory deadline,” Maylor said.
Baker has 10 days to review the legislation.
Maylor’s office said Thursday it is “pleased” with the bill’s advancement and will “allow appropriate time for the governor to review the bill,” according to the News Service.
House Minority Leader Brad Jones, before Wednesday’s agreement was announced, told the outlet that “there should be little or no cause for celebration or congratulations or adulation that (the budget) has been resolved.”
“It’s not the way it should work,” Jones said, referring to how officials significantly missed the Oct. 31 deadline. “The thing we can’t have happen has become the new normal.”