#2022-10 May 6, 2022

SJC Reviewing Income Surtax Ballot Summary; Other Ballot Initiatives

On Wednesday, the justices of the Supreme Judicial Court (SJC) began reviewing three issues that are expected to go before voters on the November ballot including the so-called “millionaire’s tax” surtax on households that earn more than $1 million. The state’s highest court is also considering challenges to ballot initiatives regarding app-based drivers and liquor licensing.

The first case on the docket and of most interest to our industry, Anderson v. Attorney General, addresses the information voters will get on the November ballot about how revenue from the proposed surtax on household income over $1 million could be spent. In particular, the current summary uses the phrase "subject to appropriation", and the justices appeared interested in whether voters will understand that that means state lawmakers retain ultimate spending authority.

Having successfully kept the so-called millionaire's tax off the ballot in 2018, the Massachusetts High Tech Council, a group of state representatives and other business groups filed the complaint alleging that the surtax summary prepared by Attorney General Maura Healey will mislead voters could lead to "the nightmare scenario of the Constitution being amended based not on the will of the people, but because the people were misled."

The suit seeks to have the SJC order that ballot materials tell voters that "the Legislature could choose to reduce funding on education and transportation from other sources and replace it with the new surtax revenue because the proposed amendment does not require otherwise" and order that Healey and Secretary of State William Galvin not put the question on the 2022 ballot without the added summary language.

As we have reported previously, the millionaire’s tax proposal shifts the state away from the flat income tax rate structure in the Massachusetts Constitution by subjecting any income above the first $1 million to an effective tax rate of 9 percent. According to the Center for State Policy Analysis at Tufts University, the surtax would add about $1.3 billion in annual revenue for the state.

The suit addresses one of the opponents' main arguments -- that the money raised by the surtax would not necessarily be used for transportation and education and that it may not result in actual increases in spending in those areas -- and argues that Healey's summary of the question and description of what a 'yes' vote would do misleads voters in that regard. Gov. Charlie Baker, who has been critical of the income surtax and whose budget chief called it "dangerous policy," nominated all seven of the high court's seven justices. Healey supports the surtax and is running for governor this year, leading that race in public opinion polls.

State Tax Collections $3 Billion Higher Than Last April

State tax revenues continued to increase in April as Department of Revenue (DOR) tax collectors collected $2 billion more than what was anticipated and more than $3 billion over the amount collected in April 2021. The increase gives Gov. Baker even more urgency to press the Legislature to consider his proposals to provide $700 million in tax relief to residents.

The April collections pushed the state at least $3.5 billion ahead of its year-to-date benchmark with just two months left in the fiscal year. April is historically the single-largest month for tax collections, and the windfall should be reason enough for lawmakers to share some of the money with the taxpayers, according to Baker. The Governor also noted that Massachusetts has "never been more protected against a downturn than we are right now," with a "rainy day" fund that could potentially top $6 billion by the end of this fiscal year, with more expected to be deposited into reserves through the fiscal year 2023 budget under consideration.

Now through 10 months of fiscal year 2022, tax receipts of $34.487 billion are more than $8 billion or 30 percent ahead of actual FY 2021 collections and are $4.241 billion or 14 percent above DOR's year-to-date benchmark. After adjusting for a pass-through entity excise that officials have said has affected comparisons, year-to-date tax collections are $3.573 billion or 12.3 percent above the year-to-date benchmark. The state took in $5 billion more than it was expecting in fiscal year 2021 and this year could be on a similar track, setting up the Legislature to dispense with an election year budget surplus.

Senate Budget Due Out Next Week, Debate Starts May 24

According to an order adopted by the Senate on Thursday establishing a timeline for the annual budget debate, Massachusetts residents should get their first look at the Senate Ways and Means Committee's proposed fiscal 2023 state budget next week, with debate on amendments taking place in the final full week of May. Senators have until 1 p.m. on Friday, May 13 to file amendments to the spending bill.

Like the House, the Senate typically spends three or four consecutive days working through budget amendments that add spending to the bill's bottom line with scores of earmarks and in some cases broaden its scope through policy changes. Once the Senate approves its bill, top Democrats will appoint a conference committee to negotiate a final version with the House, which last month approved a $49.7 billion budget for the fiscal year that begins July 1. Top

Executive Office of Housing & Economic Development Holding Workforce Roadshows

The Commonwealth of Massachusetts, including MassHire Career Centers and Workforce Boards and the Commonwealth Corporation, continues to host a series of 10 regional employer road shows through the beginning of June, with the goal of connecting employers to new and existing workforce supports from the Commonwealth.

The roadshows will be a unique opportunity to hear from MA workforce leaders and to share your perspective with them. Attendance will vary by event, but speakers may include Lt. Governor Polito, Housing and Economic Development Secretary Michael Kennealy, Labor and Workforce Development Secretary Acosta, and Education Secretary Peyser, among others.

The roadshows will be hosted by workforce partners, including community colleges and vocational training institutes. Each event will be approximately 1.5 hours and will have roughly the same agenda, which is detailed below:

Agenda

• Opening remarks by host and special guests
• Overview of Commonwealth workforce resources for employers
• Introduction to Market Makers and Business Service Representative
• Breakout sessions
  • Market Maker / MassHire Engagement Session.
    Learn about how the MassHire system can help your company build a pipeline of skilled employees. Meet your new Market Maker and hear how you can access more than $200M in workforce funding.
  • HireNow Workshop.
    Learn more about the new HireNow program - you can receive $4,000 per new hire to support hiring, training and retention.
  • Workforce Development Roundtable.
    Sit down with MA workforce leaders to share your perspective and discuss broader workforce trends in the state.
• (Optional) Tour of the facilities / meet the students To learn more and register for the events, click here.