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Revenue a Hot Topic; Not in Spending Debate

April 23, 2019 GMT

By Chris Lisinski and Michael P. Norton

State House News Service

BOSTON -- Rep. Mike Connolly last week talked up his budget amendment to increase the state’s capital gains tax, but the Cambridge Democrat decided to withdraw the measure Monday morning before his colleagues opened their annual budget deliberations, drawing the ire of progressive groups.

The amendment, one of the few revenue-generating amendments filed this year, would have increased the tax rate on long-term capital gains from 5.05 percent to 8.95 percent, a move Connolly said could have generated more than $1 billion annually. Connolly said last week that he was prepared to debate the topic.

In a statement to the News Service on Monday, Connolly thanked the 33 House colleagues who joined with him in sponsoring the amendment and said “the fact remains we did not have the votes to pass this amendment today, and since the public conversation on this proposal started literally last week, it makes sense for us to think of this amendment as the starting point for a continued effort.”

He said the decision to withdraw the amendment was made over the past 24 hours “with the support of the MTA [Massachusetts Teachers Association] and several of the House co-sponsors, and in discussion with several progressive advocates and constituents.”

Some advocates slammed the move, arguing the new revenue would have been a valuable resource for public areas in need, particularly given that a proposed surtax on personal income over $1 million cannot be implemented until 2023 at the earliest, if it is adopted at all.

“The House has once again failed to enact policies that the overwhelming majority of Massachusetts voters support,” Jonathan Cohn, Progressive Massachusetts’s issue committee chair, said in a press release. “When you’re stuck on a disabled train tomorrow or your child’s school announces that it is cutting its art and music programs at the end of this year, the blame for that rests solely with our state legislature.”

House Speaker Robert DeLeo and Ways and Means Committee Chair Aaron Michlewtiz had already made clear they do not want to have any major tax debates as part of the budget process. House leaders say there will be a revenue debate later this year.

While Connolly suggested the proposal would have failed on the House floor, progressive activists criticized Connolly’s amendment withdrawal as “cav[ing] to leadership.”

“This just reinforces a State House culture where debate is silenced, no one takes a stand and nothing gets done,” Erika Uyterhoeven, co-founder of Act On Mass, said in a press release. “The only way our representatives get away with being so out of step with their voters is by doing business behind closed doors with no record of who is responsible. If Rep. Connolly, who has been a progressive leader, won’t stand up and demand a public debate on crucial issues, who will?”

Connolly last week used social media to tout news coverage of his amendment. “As a representative of #Somerville and #CambMa, I am confronted with the need for new revenue on a daily basis -- particularly with regard to the MBTA and housing programs. Here’s a big proposal to do something about it,” he wrote.

On Monday morning, Connolly’s colleague, Rep. Mindy Domb of Amherst, tweeted, “Just hearing that the amendment to raise long term capital gains has been withdrawn. I’m hoping that this and other revenue generating measures via @MassBudget will be discussed and debated by the Joint Committee on Revenue.”

In his statement to the News Service, Connolly said “there’s a lot more work we can do in terms of organizing and outreach, and we know we will have several opportunities to put this new proposal to a vote this session. The Speaker has promised that we will debate a revenue bill this year, and in that context, it makes sense for us to treat this past week as an auspicious start of a new push for raising significant new revenue in the legislature.”

Connolly was not alone in withdrawing his revenue amendments.

Republican lawmakers pulled a handful of tax-related amendments. Minority Leader Brad Jones of North Reading withdrew his proposals to impose an excise tax on opioid manufacturers and extend the tobacco tax to e-cigarettes, both ideas Gov. Charlie Baker put forward as part of his budget recommendation.

Rep. Marc Lombardo, a Billerica Republican, withdrew his amendments that would lower the sales tax and income tax to 5 percent each, and one that sought to exempt municipalities from the gas tax.

House Revenue Committee Chairman Rep. Mark Cusack of Braintree told his colleagues at the opening of House budget deliberations that his committee planned to get “rocking and rolling” in the coming weeks with public hearings on hundreds of bills dealing with taxes and revenues.

“Obviously revenue is a major topic this session,” Cusack said. He added, “We are serious about looking at revenue this session.”

House Ways and Means Committee Chairman Rep. Aaron Michlewitz said the $42.7 billion fiscal 2020 budget proposal before the House was based on revenues that the House knows it can count on at a time when lawmakers are mindful of uncertainty within the federal government and wondering “what crisis we will have to deal with next.”

The House early Monday afternoon gave the House budget a vote of initial approval, as lawmakers privately debated education and local aid amendments.

Katie Lannan contributed reporting.