#2022-1 January 7, 2022

2022 Begins with Virus Surge, State House Remains Closed

On Wednesday, the second half of the Legislature’s two-year session officially began, marking the start of a seven-month stretch of formal sessions where lawmakers will consider a state budget in addition to other priorities such as voting reform, mental health access and offshore wind energy.  The session also begins with a steep uptick in COVID-19 cases and concerns about the safety of in-person schooling, testing capacity, and booster vaccination rates.

House Speaker Ron Mariano (D-Quincy) this week questioned how the Baker administration was responding to the latest surge, and whether additional funding might be necessary for testing or the distribution of masks.  Senate President Karen Spilka (D-Ashland) has joined other members in calling for Baker to reinstitute a statewide indoor mask mandate.

Both branches met briefly on Wednesday morning, approving the steps necessary to get the second year of the session underway.  One of the first orders of business will be an agreement between legislative leaders and the Baker administration on an estimate of tax revenues for the next fiscal year.  This agreement, which must be completed by January 15, will inform budget decisions in the spring.

In the coming weeks, Governor Charlie Baker will deliver his final State of the Commonwealth address and before the end of the month file a budget for fiscal year 2023 that will be his last chance to shape the way the state invests billions of dollars in growing tax revenues.  The Legislature faces a February 2 deadline to report out any bills currently before them for consideration and lawmakers will most likely want to pass legislation setting a date for the primary elections later this year as soon as possible.

While neither Speaker Mariano nor President Spilka addressed their respective chambers to start the new year, many of their priorities are already known.  Speaker Mariano has identified the continued development of the offshore wind industry as a key goal as well as legislation to reform the oversight and management of the state’s two soldiers’ homes in Holyoke and Chelsea.  In a statement, President Spilka said that in addition to the ever-evolving response to the pandemic, she hopes in 2022 to see voting and mental health access legislation signed into law, both of which passed the Senate last year.

Legislators continue to adapt to new working conditions on Beacon Hill during the pandemic, with the State House remaining the last state capitol building in the country completely closed to the public and most staff and legislators continuing to work and vote remotely.  The emergence of the omicron variant has also slowed plans to reopen the building.

Tax Collections Beat Estimates Again in December; DOR Cites Payments from Pass-Through Entities

Earlier this week, the Department of Revenue (DOR) reported that the state collected $1.4 billion more in December 2021 than it had in December 2020, which is also $1.23 billion more than estimates for the month.  While DOR expects much of that money to be returned through refunds, the December tax collections still exceeded last year’s amount by $520 million, or 18.3 percent while beating estimates by $635 million.

DOR said many pass-through entities, or businesses that pass all income on to owners and investors, elected to pay excise taxes at the business entity level.  They will then be able to claim credits equal to 90 percent of the tax paid.  In addition, pass-through entity members who also paid taxes on their estimated business income will also be eligible for refunds.  Even after accounting for the expected refunds, fiscal 2022 year-to-date collections are $2.67 billion higher than the first six months of fiscal 2021 and trending $1.55 billion, or 10 percent, above budgeted projections.  Sales taxes totaling $771 million in December were up 33.5 percent from last year, and the $108 million in meals taxes were $27 million higher than projected and $44 million more than last December.