Gov. files $840M supplemental budget, sets aside funds for tax relief

Looking to close the books on fiscal 2022, Gov. Charlie Baker announced today that he is filing a final supplemental budget bill that would allocate $840 million of the state’s considerable surplus.

The supplemental budget does not include, but accounts for, an additional $2.94 billion that would go out in refunds to taxpayers under a 1986 law known as Chapter 62F, which requires the state to return net state tax revenues when they exceed a certain cap. The Department of Revenue today submitted the $2.94 billion figure in its annual report to the state auditor for certification. By Sept. 20, the auditor must certify if the threshold under 62F has been met.

In early August, the Department of Revenue announced a preliminary fiscal 2022 surplus amount of $1.9 billion, after accounting for 62F refunds, but the governor said that the figure has now grown to $2.3 billion. Revenue in fiscal 2022 exceeded the previous year’s collections by 20.5%.

The governor’s supplemental budget proposal does not fully allocate the fiscal 2022 state surplus, leaving $1.5 billion available, which, in combination with $2.2 billion remaining in American Rescue Plan Act Funds, could be used to support the tax relief measures and other critical investments in an economic development bill pending in the Legislature.

The governor’s bill prioritizes investments in transportation, including $200 million proposed to support the MBTA’s work to comply with federal safety directives, and $10 million to address staffing challenges at the agency.

The proposal also recommends $37.3 million to support a number of school safety initiatives announced last week by the administration, including $20 million for matching grants that will enable security and communications upgrades in K-12 schools and $10 million for child care providers to support safety measures and emergency planning.

Other notable investments include:
• $108 million for a reserve to support ongoing and future potential costs related to COVID-19, including for personal protective equipment, testing, treatment and vaccines
• $50 million to support the construction, development and capacity of new provider-operated community housing options for individuals being discharged from skilled nursing facilities and psychiatric, chronic and rehabilitation hospitals
• $39 million to modernize the Commonwealth’s information technology infrastructure, improve cybersecurity and resiliency efforts and optimize space efficiency across Executive department offices
• $30 million to support the implementation of federal funding received through the Infrastructure Investment and Jobs Act in fiscal 2023, including for project design, permitting, real estate transactions and engineering
• $20 million to address the needs of immigrants and refugees, including temporary housing costs
• $20 million to establish regional low-threshold housing for homeless or housing unstable individuals with substance use disorder

Outside policy sections would make technical corrections for the implementation of various new statutes that became law earlier this month, including laws related to new offshore wind development tax credits and the 1% allocation of the retail sales price of marijuana based on social equity businesses.

State surplus revenues from fiscal 2022 have allowed for the deposit of $2.3 billion into the state’s stabilization account, bringing the balance to an all-time high of $6.9 billion.

• Link to the governor’s press release about the supplemental budget