Bill makes significant investments across the state, includes economic relief rebates and permanent tax breaks and funds to improve Everett Square
BOSTON – Rep. Joe McGonagle, along with his colleagues in the Massachusetts House of Representatives, last week passed an economic development bill that uses American Rescue Plan Act (ARPA) Fiscal Year 2022 surplus funds, and bonds, to make significant investments across several vital sectors of the economy, and to give back to low- and middle-income Massachusetts residents 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. The bill includes $600,000 for the design and construction of a new park in Everett Square to improve pedestrian access and safety and create opportunities for outdoor dining, farmers’ markets and other activities.
The bill passed the House of Representatives 154-0 and now goes to the Senate for their consideration.
“While we can’t fix inflation overnight, this bill takes great steps towards addressing the effects we are feeling in the Commonwealth,” said McGonagle. “In addition, it makes great investments in critical areas such as healthcare, the environment and housing, which are all things relevant to us here in Everett right now. We were also able to secure money to put towards renovating Everett Square and making it a more functional space for our community. I’m grateful to my colleagues for their hard work on this bill, especially Speaker Mariano, Chair Michlewitz and Chair Parisella. As our legislative session inches towards a close, I am confident that the House is prepared to tackle our highest priorities.”
“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.”
“I’d like to thank Speaker Mariano, Chairman Michlewitz, and my colleagues in the House for all their hard work in passing this session’s $4.2 billion economic development bill. This legislation will ensure Massachusetts continues its strong economic growth and puts us in solid footing to rebound from the pandemic,” said Representative Jerry Parisella (D-Beverly), who is the House Chair of the Legislature’s Joint Committee on Economic Development and Emerging Technologies. “Some highlights include providing a boost to our local theaters, giving our academic institutions the ability to lead the nation in fields like artificial intelligence, advanced manufacturing, cyber security and robotics; and also provide funding to create thousands of units of housing throughout the Commonwealth.”
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 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 the state’s personal income tax.
Permanent tax changes
The bill that was passed 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.
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 Massachusetts Association of Early Education & Care Executive Director William J. Eddy.
One-time targeted investments
Health and Human Services
- $350 million (M) for financially strained hospitals
- $165M for nursing facilities workforce needs
- $100M for supplemental rates for human service providers
- $80M for community health centers
- $30M to support rest homes across the Commonwealth
- $25M to address food insecurity across the Commonwealth
- $15M for grants to reproductive rights providers for security, workforce and educational needs
- $15M for grants to nonprofits and community-based organizations to address gun violence and gun violence–related trauma
- $175M for state parks and recreational facilities upgrades, with $25M for communities of color
- $125M for environmental justice communities
- $100M for marine port development
- $100M for the Clean Water Trust Fund
- $300M for the Unemployment Insurance Trust Fund
- $125M for small businesses, with $75M for minority-owned businesses
- $50M for broadband investments in underserved communities
- $75M in grants to hotels across the Commonwealth that saw financial losses during the pandemic
- $100M for the Affordable Housing Trust Fund
- $75M for minority-owned housing development
The House bill also includes $1.26 billion in bond allocations to greater support the economic growth and stability of the Commonwealth. Highlights:
- $400M for the MassWorks Infrastructure Competitive grant program to support municipalities and other public entities to support and accelerate housing production
- $200M for the Technology Matching Grants program that supports various organizations to help compete for federal innovation grants
- $95M for ADA compliance projects
- $73M for the Housing Stabilization and Investment fund