Republican Massachusetts Gov. Charlie Baker's final fiscal 2021 supplemental budget proposal would implement a voter-approved income tax charitable deduction and provide tax relief for businesses that received assistance through COVID-19 pandemic relief programs.
The bill, H. 4078, was filed August 18 and referred to the Ways and Means Committee.
"The $1.568 billion supplemental budget would provide $1 billion in unemployment insurance relief for employers, support greater resources for local charities and nonprofits, and ensure that small businesses do not bear a tax burden for assistance received through pandemic relief programs," Baker said in an August 18 release.
According to the governor’s letter to the legislature the same day, Massachusetts tax collections exceeded fiscal 2021 projections by $5 billion, and there is a $4.63 billion stabilization fund balance. It noted that part of the surplus came from excess capital gains taxes and sales tax.
The proposed supplemental budget would implement, beginning in January 2022, an income tax deduction for charitable donations that was approved by voters in 2000.
“Given the Commonwealth’s strong fiscal situation, the proposal is fiscally responsible and would support greater resources for the local charities and non-profits who supported vulnerable populations through the pandemic,” according to Baker's release.
Baker in July vetoed a provision in the fiscal 2022 budget delaying the deduction on charitable donations, but the legislature voted to override the veto. The deduction's implementation has been delayed until at least 2023.
“The Commonwealth can afford it and the combination of strong state revenues and serious needs facing non-profits and charitable organizations necessitate this tax deduction's implementation,” Baker said in the letter.
The proposed measure would also allow forgiven Paycheck Protection Program loans, Shuttered Venue Operators grants, Economic Injury Disaster Loan advances, Restaurant Revitalization Fund grants, and Massachusetts Growth Capital Corp. grants to be nontaxable for all commonwealth recipients, which would be consistent with the federal tax treatment, according to the release.
The bill would also allocate $1 billion of the state surplus to the Unemployment Insurance Trust Fund and appropriate an additional $568 million to help fund critical programs to address housing insecurity and an increased need for human services
“Sufficient revenues are estimated to be available to finance the appropriation and other measures proposed in this legislation. I urge you to enact this legislation promptly to facilitate the closing of the books for fiscal year 2021,” Baker said in the letter.
Baker’s office did not respond to a request for comment by press time.