Governor Unveils Budget with No Tax Increase
Budget, Tax, & Finance
| October 14, 2020
By: Brooke Thomson
Governor Charlie Baker today unveiled a $45.5 billion budget for Fiscal Year 2021 that balances the state’s books without increasing taxes on struggling businesses or individuals.
The blueprint proposes to manage through the fiscal uncertainty caused by the COVID-19 pandemic by concentrating on stabilizing the economy, tapping the state’s reserve fund and anticipating federal relief funding. Massachusetts is currently operating on a three-month budget through the end of October and the full budget would run through July 31, 2020.
It also would commit $100.7 million in new funding to a small business recovery programs that would invest $35 million in small business grants targeted at minority-, women-, and veteran-owned businesses, $35 million for community financial institutions and $15 million for small business capital improvements.
Governor Baker said at a press conference this afternoon that the budget reflects the realities of life with COVID-19.
“And it does not raise taxes,” he said. The idea of going back to the taxpayers given the current level of economic distress, the governor said. “just didn’t seem like the right thing to do.”
Associated Industries of Massachusetts (AIM) commends the Governor’s decision to support commonwealth businesses, many of whom continue to hang by a thread during the worst recession in almost a century.
“The Governor’s budget wisely recognizes that Massachusetts employers need support, not new taxes as the commonwealth attempts to recover from the COVID-induced economic downturn,” said John Regan, President and Chief Executive Officer of AIM.
“It’s a prudent approach that will allow employers to get back on their feet and hire back some of the 400,000 Massachusetts residents who remain out of work because of the public-health emergency.”
AIM urged policymakers earlier this week that increasing the tax burden on employers will prolong the economic devastation that has already boosted the state unemployment rate to 11.3 percent and cut economic output by 44 percent. The largest business association in Massachusetts said that state must seek solutions beyond the reflexive options of raising taxes or slashing important programs.
A new AIM survey of Massachusetts employers to be released next week underscores the uniquely fragile nature of the economy, even for companies that have operated throughout the pandemic as essential businesses. Two-thirds of companies surveyed report that sales for 2020 remain below projections. Many are planning layoffs, furloughs, reduced hours or pay reductions as the rising cost of complying with state regulations makes continuing operation unprofitable.
The Baker administration is now forecasting that tax revenues will total $27.6 billion, or $3.6 billion below those initial projections. If Congress provides additional stimulus funding for states, the administration could look to adjust its draw on reserves.
If you would like to learn more about these issues or get more involved with the AIM Taxation Committee please contact your Engagement Director or contact email@example.com or 617-262-1180. (Click here for the Engagement Team)
Massachusetts employers may also make sure their voices are heard with key policy leaders at two upcoming AIM events:
October 22 – Commonwealth Conversation with Secretary Michael Heffernan, Administration and Finance – Register here
November 13 – AIM Executive Forum with Governor Charlie Baker – Register here