Troubling state budgetary practices have left the Commonwealth’s Stabilization Fund balance insufficient to meet the next fiscal downturn and immediate action is needed to increase and safeguard the fund for future use, according to a report released today by the Massachusetts Taxpayers Foundation (MTF).
Facing a midyear budget deficit, lawmakers and Gov. Charlie Baker in February rerouted those excess capital-gains revenues into the general fund. Massachusetts Taxpayers Foundation President Eileen McAnneny said fiscal 2015 capital-gains tax revenues have come in at about $1.6 billion, exceeding the amount anticipated from the February change.
“The fact that the rule changed very quickly and abruptly is problematic, particularly for Massachusetts, where we suffer from the perception that we have a negative tax climate,” McAnneny said. McAnneny signed the letter urging Baker to veto the measure, along with representatives of Associated Industries of Massachusetts, the Greater Boston Chamber of Commerce, and the Massachusetts Business Roundtable.
But just two months after passing the “tech tax,” as it had become known, Massachusetts repealed it. Opposition from the state’s business forces rained down pressure on lawmakers. The new law, they claimed, was putting them out of business. “It got very bruising,” says Andrew Bagley, research and public affairs director of the Massachusetts Taxpayers Foundation.
Leaders from groups like the Greater Boston Chamber of Commerce, Associated Industries of Massachusetts and the Massachusetts Taxpayers Foundation were joined by a handful of mayors from Revere, Gardner, Attleboro, Framingham, Braintree and Melrose.