Massachusetts House Passes $4.2 Billion Economic Development Bill

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Bill makes significant investments across the state; includes economic relief rebates and permanent tax breaks

BOSTON – Monday, July 18, 2022 – Last week, the Massachusetts House of Representatives passed an economic development bill, which utilizes American Rescue Plan Act (ARPA), Fiscal Year 2022 (FY22) surplus funds, and bonds to make significant investments across several vital sectors of the economy, and to give back to low and middle-income residents in Massachusetts by providing one-time rebates and significant tax relief beginning in 2023. Funded at $4.2 billion, the legislation addresses disparities exacerbated by the COVID-19 pandemic through one-time investments in health and human services, the environment and climate mitigation, economic development, housing, and food insecurity.

“As Massachusetts residents continue to face severe inflation and economic uncertainty, I’m proud of the action taken by the House today that will provide low and middle-class taxpayers with much needed financial relief,” said House Speaker Ronald J. Mariano (D-Quincy). “Included in this legislation are several significant tax relief proposals, over $2.5 billion worth of one-time industry targeted investments, economic relief rebates for qualifying taxpayers, and a newly established source of revenue to fund the state’s early education and care system. These are vital forms of real, tangible economic relief. I want to thank Chairs Michlewitz, Cusack, Parisella, Gregoire, and Hunt, as well as all my colleagues in the House, for the hard work required to put this ever-important economic development package together.”

"By passing this session's $4.2 billion economic development bill, the House has taken significant steps to provide relief to residents across the Commonwealth,” said Representative Tackey Chan (D-Quincy). “This package will, amongst other things, increase the rental deduction, increase the amount of earned income tax credit, reform estate taxes, update the senior circuit tax credit permanently, invest in our healthcare system, and encourage development of new affordable housing units. This legislation provides the state with the permanent tools to invest in our state's low and middle-income communities as well as the sectors who have been the most impacted by the pandemic. I am grateful to the Speaker and my colleagues for passing this wide-reaching economic development package together."

“This economic development bill is a historic investment in our communities and in the lower- and middle-class families that help drive our economy,” said Representative Bruce Ayers (D-Quincy). “The financial relief it provides individuals across the Commonwealth will help us continue to recover from the impacts of COVID-19. The investments it makes in our cities, towns, hospitals, community health centers, and in our environment will keep Massachusetts moving forward in a strong, fiscally responsible manner.”

Earlier this session, the Massachusetts Legislature passed a bill appropriating $4 billion in ARPA and FY21 surplus funds. Just over $1 billion remains in ARPA funds, which must be allocated by 2024 and spent by 2026.

Taxpayer Energy & Economic Relief Fund

Following $500 million worth of premium pay bonuses for low-income workers that were issued in March and June of 2022 under the Legislature’s Essential Employee Premium Pay Program, the economic development bill passed today by the House includes one-time rebates of $250 for a taxpayer who files an individual return, and $500 for married taxpayers who file joint returns that will be issued before September 30, 2022. These rebates are expected to be issued to about two million Massachusetts residents who reported earning between $38,000 and $100,000 for individual filers, and between $38,000 and $150,000 for joint filers in 2021. The one-time rebates will not be subject to state’s personal income tax.

Permanent tax changes

The bill passed today makes significant changes to the Massachusetts tax code to provide structural relief to millions of residents across all income levels. These include:

  • Increasing the Child and Dependent Care Credit from $180 per child to $310 per child, as well as eliminating the current cap of $360 for two or more children. This is expected to impact over 700,000 families.

  • Increasing the Earned Income Tax Credit (EITC) from 30 percent to 40 percent of the federal credit. This is expected to impact about 396,000 taxpayers with incomes under $57,000.

  • Increasing the Senior Circuit Breaker Tax Credit from $750 to $1,755. Currently, the Department of Revenue caps this credit at $1,170 due to cost-of-living adjustments over the $750 set in statute. Increasing it to $1,755 in statute is expected to impact over 100,000 taxpayers who own or rent residential property in Massachusetts as their principal residence.

  • Increasing the rental deduction cap from $3,000 to $4,000. This is expected to impact about 881,000 taxpayers.

  • Increasing the estate tax threshold from $1 million to $2 million and eliminating the “cliff” effect which would tax just the value of the estate that exceeds $2 million, not the entire estate. This is expected to impact about 2,500 taxpayers.

Online Lottery

In an effort to raise revenue for early education and care, Representatives adopted an amendment that would allow the Massachusetts Lottery to sell some of its products online. The new revenue collected from online sales will go to prizes for winners, for the administration and operations of the lottery, and to fund an Early Education and Care Fund. Revenue for the new Early Education and Care Fund would be used to provide long-term stability and develop a sustainable system for high-quality and affordable care for families. This will include significant funding for subsidy reimbursement rates, workforce compensation rate increases, and support for state-wide early education and care initiatives, among others. The amendment requires the Massachusetts Lottery to use age verification measures to ensure that any users are over the age of 18.

“House leadership’s efforts to create a new sustainable funding source for Early Education through a new online state lottery revenue is not surprising, but rather is indicative of the House’s continued long-term leadership and commitment to the early education field and the children & families we serve,” said William J. Eddy, Executive Director of the Massachusetts Association of Early Education & Care.

One-time targeted investments

Highlights include:

Health and Human Services

  • $350 million for financially strained hospitals

  • $165 million for nursing facilities workforce needs

  • $100 million for supplemental rates for human services providers

  • $80 million for community health centers

  • $30 million to support Rest Homes across the Commonwealth

  • $25 million to address food insecurity across the Commonwealth

  • $15 million for grants to reproductive rights providers for security, workforce, and educational needs

  • $15 million for grants to non-profits and community-based organizations to address gun violence and gun violence related trauma

Environment

  • $175 million for state parks and recreational facilities upgrades, with $25 million for communities of color  

  • $125 million for environmental justice communities 

  • $100 million for marine port development

  • $100 million for the Clean Water Trust Fund

  • $750,000 for the dredging of Quincy Bay and beach restoration in the Merrymount neighborhood

Economic Development

  • $300 million for the Unemployment Insurance Trust Fund

  • $125 million for small businesses, with $75 million for minority-owned businesses  

  • $50 million for broadband investments in underserved communities

  • $75 million in grants to hotels across the Commonwealth who saw financial loses during the pandemic

Housing

  • $100 million for the Affordable Housing Trust Fund

  • $75 million for minority-owned housing development

Bonding

The House bill also includes $1.26 billion in bond allocations to greater support the economic growth and stability of the Commonwealth. Highlights include:

  • $400 million for the MassWorks Infrastructure Competitive grant program to support municipalities and other public entities support and accelerate housing production

  • $200 million for the Technology Matching Grants program that supports various organizations to help compete for federal innovation grants

  • $95 million for ADA compliance projects

  • $73 million for the Housing Stabilization and Investment fund

The bill passed the House of Representatives 154-0 and now goes to the Senate for their consideration.

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