State News:
AG Announces Drop in Workers Compensation Rates
Attorney General Andrea Campbell has announced an agreement with the Workers’ Compensation Rating and Inspection Bureau and the State Rating Bureau that will lower workers’ compensation insurance rates by an average of 10 percent beginning on July 1.
The rate reduction is expected to save Massachusetts businesses about $130 million. The insurance industry had requested a rate decrease of 4 percent, but the amount was reset to 10 percent after a rate-setting hearing.
House-Approved Tax Reform Legislation
On April 13th, the Massachusetts House of Representative passed their tax reform legislation that differs from the bill proposed by Governor Healey. Their bill reduces the current 12% tax rate on short-term capital gains to 8% for the first year and to 5% in year-two. Governor Healey had recommended the reduction to 5% without the two-year phase in language. The bill also increases the estate tax threshold from $1 to $2 million and eliminates the current language that applies the estate tax to the first dollar once the threshold is met. Under this proposal the estate tax would be assessed only on the amounts above the $2 million threshold. Governor Healey had proposed a new estate tax threshold of $3 million.
The House also established a single sales factor apportionment for companies located in Massachusetts that operate in other states. The corporate income tax will be based solely on in-state receipts, matching how 39 other states calculate the tax. The House believes this change will make Massachusetts more attractive to multi-state companies and encourage more companies to locate their headquarters in Massachusetts. Most businesses in Massachusetts that operate in other states are currently subject to a three-factor apportionment tax formula based on their location, payroll, and receipts.
The House bill also increases the rental deduction credit from $3,000 to $4,000 per year, which is expected to benefit 881,000 Massachusetts taxpayers. The Senior Circuit Tax Credit will also be increased from $1,200 to $2,400. This change is expected to impact over 100,000 taxpayers.
The House did not include the Governor’s recommendation to double the amount of the septic tax repair tax credit from the current $6,000 per home to $12,000. They also failed to include the Governor’s proposal to increase funding for the Housing Incentive Tax Credit Program that provides credits for developers to build market rate housing in 26 designated gateway cities. The Governor proposed increasing the current $10 million annual credit allocation to $50 million for one year with a permanent annual funding level of $30 million.
The House also changes how any future income tax rebates are returned to the taxpayers. The current law relative to the repayment of excess tax collection requires the rebated to be paid back to taxpayers in proportion to the amount they paid. This proposed change would adjust the credit to be paid in equal measure to all taxpayers. Every taxpayer would therefore receive the same tax reimbursement amount. The House bill has been sent to the Senate, which will propose a bill that differs from the House, which will require the two branches to negotiate a compromise before it is sent to the Governor for her consideration.
Issues Update
Governor Announces Funding for 450 New Affordable Housing Units
Gov. Maura Healey has announced funding for 450 new affordable housing units across Massachusetts as part of the Permanent Supportive Housing Grant Awards. The awards total more than $62 million and will support 12 affordable projects that offer specialized services to residents. All the new housing units will be reserved for low-income households, including 317 allocated for very low-income residents. The Governor said she was proud to support projects in every region of our state that are providing permanent supportive housing for families, seniors, veterans, young people, and people experiencing homelessness. She noted that this is the type of housing production that she wants to help build across the state to lower costs and address the states severe housing crisis. The $62 million in direct subsidies includes federal ARPA funding, as well as state and federal housing tax credits which will create an additional $74 million in equity for projects. The new funding is earmarked for projects in Boston, Chelsea, Dennis, Greenfield, Lynn, North Adams, Pittsfield, Springfield, and Worcester.
Maine Jury Clears the Way for Mass.-Critical Transmission Project
A Maine jury has ruled unanimously that an electric transmission corridor project that will be used to transmit renewable energy to Massachusetts can proceed a year and a half after that state’s voters approved a measure to halt the project The decision clears the way for Central Maine Power to resume work on a transmission project that will carry hydroelectric power from Quebec to Massachusetts. The jury’s verdict affirms the prior rulings of the Maine Supreme Judicial Court that the New England Clean Energy Connect project may lawfully proceed. A spokesperson for Avangrid Energy said the NECEC project remains the best way to bring low-cost renewable energy to Maine and New England while removing millions of metric tons of carbon from our atmosphere each year
The transmission lines would fulfill part of a 2016 Massachusetts clean energy law, which directed Bay State utilities to procure about 1,200 megawatts of hydroelectric power as part of an effort to green the grid. In a lengthy legal fight that led to the jury decision, developers argued that they should be allowed to proceed because they had already spent $450 million on the work, which had been fully approved by Maine regulators before the ballot question’s passage.