Massachusetts Tax Refund: How Much of the $3B State Surplus Could You Get?

Details about when and how money will flow back to residents remains unclear one week before the Sept. 20 deadline for Auditor Suzanne Bump to certify the Baker administration's estimate of $2.94 billion in excess tax revenue

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Massachusetts taxpayers struggling with sky-high inflation should expect to get their chunk of a nearly $3 billion state surplus pot "in the proportion that they paid in," a top Baker administration official said Tuesday.

However, details about when and how money will flow back to Bay Staters remain unclear one week before the Sept. 20 deadline for Auditor Suzanne Bump to certify the Baker administration's estimate of $2.94 billion in excess tax revenue that must be returned under the 1986 voter-approved law known as Chapter 62F.



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Addressing municipal officials at a meeting, Administration and Finance Secretary Michael Heffernan did not shed any light Tuesday on whether the relief would take the form of credits, rebates or something else.

"We think on or around the 20th, when she reports, that number, as I said, will be $2.94 billion that we will try to get back to taxpayers in the proportion that they paid in as quickly as possible. So stay tuned for more news on that," Heffernan told the Local Government Advisory Commission.

You may get even more funding if you've been making payments to your federal student loans during the pause that's been active since 2020.

The state's tax haul blew far beyond expectations for the past two years, allowing officials to bulk up the rainy day savings account balance to about $7 billion and appearing to trigger a 1986 voter-approved law.

"We are in phenomenal shape," Heffernan said. "On 62F, back in 1986, they passed a piece of legislation that if tax collections grew faster than the three-year average of wage growth, you're collecting too much in taxes and you should return it to the taxpayers, and that's exactly what we're going to do."

Gov. Charlie Baker last month filed a fiscal year 2022 closeout budget that sets aside $2.94 billion to be returned to taxpayers and leaves the Legislature about $1.5 billion in surplus dollars to spend. The bill remains before the House Ways and Means Committee.

"Kudos to the entire administration for leaving your successors with such a lot of cash. They should thank you deeply," Williamstown Select Board member Andrew Hogeland told Heffernan during the meeting.

Last year, lawmakers passed a law that they envisioned as a way to steer money to frontline employees who worked in-person during the COVID-19 state of emergency. The program the administration rolled out did not attach the aid to whether someone worked in-person or remotely. Baker vetoed a section of the December 2021 law that called for for launching a 28-member panel to design the premium pay program and determine eligibility, a move legislative leaders did not challenge.

Earlier this year, the Baker administration steered flat $500 checks to hundreds of thousands of low-income workers, with one round starting in February and another round starting in May. The roughly 500,000 workers in the first round qualified if they earned between $12,750 and $38,280 as a single filer in 2020, and another 330,000 workers qualified for the second round with single filer income between $13,500 and $38,640 in 2021.

Since Heffernan's remarks on Tuesday, Baker administration officials have declined to shed any light on how they intend to deliver the tax relief, or his comments about the "proportion."

A spokesperson who would communicate only on background did not make Heffernan available for an interview Tuesday evening or Wednesday morning.

Asked about his remark, the spokesperson said Heffernan was referring to a section of Chapter 62F that reads, "The credit shall be applied to the then current personal income tax liability of all taxpayers on a proportional basis to the personal income tax liability incurred by all taxpayers in the immediately preceding taxable year."

Asked if that meant taxpayers who paid more in taxes would receive a larger amount of relief under 62F, the spokesperson said that the way the statute reads is that the certified excess revenue would be distributed on a proportional basis to personal income tax liability in the immediately preceding tax year, "meaning that, in general, those that had higher income tax liability would receive a larger credit." Additional information about implementation of the tax relief will be shared if Bump certifies the overage amount, the official said.

The Department of Revenue in May opened a regulatory process to reexamine the method of delivering 62F relief, but officials say they did not receive any public comments and the administration so far has not outlined a recommended method for relief.

While the administration hasn't said how the tax relief will be delivered, the governor and his team have maintained that both the 62F relief and a more than $4 billion economic development bill are affordable.

Legislative Democrats in late July slammed the brakes on the economic development bill, which also includes about $1 billion in targeted tax relief, and have not yet revisited it. Lt. Gov. Karyn Polito and local officials used Tuesday's meeting to call once again for prompt action.

Polito noted that Massachusetts faces a December 2024 deadline to obligate about $2.3 billion in unspent American Rescue Plan Act funding, some of which was slotted into the shelved economic development bill.

"That will come upon the next administration rather quickly," Polito said. "With supply chain and labor and all of the -- the tale of COVID can delay even further some of those projects from moving forward, so we want to see the ARPA funds deployed."

Several municipal officials who spoke about the need for economic development investments took a diplomatic tone Tuesday, stopping short of lobbing any criticism at lawmakers who so far have failed to find consensus or blaming top Democrats for keeping the bill on the sidelines.

"Across the commonwealth, there are so many shovel-ready projects that are stuck in abeyance where there are real critical needs in infrastructure, in safe drinking water, in all sorts of things that just aren't being done," said Lexington Select Board member Jill Hai. "In Lexington, we have an aging and about-to-fail water tower project. That can't just wait forever. We have sidewalks in our historic district. We have historic structures that need to be updated to the 21st century that need to have any relevance and access to the public."

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