Editor’s Note – The following article was written by Brad MacDougall, Senior Vice President of Government Affairs at AIM, and Vasundhra Sangar, Associate Vice President.

The Massachusetts Senate and House of Representatives voted to pass a compromise version of the Fiscal Year 2021 (FY21) state budget on Friday afternoon.

AIM applauds the Legislature’s decision not to implement any broad-based taxes on resident businesses in the commonwealth while maintaining critical workforce-development funding, providing access to direct COVID-19 relief for municipalities, emphasizing the need for greater diversity and inclusion in the state, and shielding vulnerable non-profit employers from astronomical unemployment compensation bills originally due this month.

One of AIM’s consistent priorities throughout this year’s unique and historic budget process was an extension of the original grace period on unemployment insurance (UI) payments offered to non-profit employers through state legislation passed in May 2020.

The original legislation allowed reimbursing non-profits, those paying into the state UI system on a per-employee basis each time an employee claims benefits, a 120-day extension to pay back into the state fund. Given the persistent economic and financial challenges of this year, AIM is grateful to the Legislature for increasing this extension by another 180-days until June 30, 2021.

Recognizing the present and continuing public health threat of the COVID-19 pandemic, the final compromise budget includes significant funding for virus prevention and containment, including funds to communicate information to persons with disabilities; $1 million for the planning, oversight and implementation of the commonwealth’s vaccine-distribution program; and $1.975 million to help municipalities and local boards of health combat the pandemic in their immediate communities.

The Legislature remained true to the workforce-development priorities of AIM’s membership, fully funding the Workforce Training Fund and the Massachusetts Manufacturing Extension Partnership, supporting programs like FORGE and implementing a $4 million line item to aid in the development and operation of Career Technical Institutes in vocational technical schools in direct partnership with industry and community stakeholders.

The budget’s first section enumerates that all sums appropriated shall reflect equal opportunity for minority groups, women, and persons with disabilities. AIM applauds the $990,000 allocated directly for administration of the new Supplier Diversity Office to ensure businesses owned by women, minorities, veterans, persons with disabilities and members of the LGBTQ community are better able to compete for state contracts, promoting equitable practices and policies in the public marketplace.

The budget proposal does include sales-tax prepayment language that would accelerate the submission of sales tax (by companies that pay more than $150,000 per year in sales and use tax), local-option meals excise, and room occupancy tax.

The acceleration provides a one-time opportunity for the state to collect the same tax dollars more quickly, but it does not raise new taxes.

AIM expressed concerns regarding the language passed by the legislature that does not allow the taxpayer to provide a prepayment of taxes based on an estimate.  The language currently only provides for payment based on actual sales.

Further, the language now pending before the Governor adds unnecessary and burdensome regulations for many taxpayers with little time to adjust and provides no safe harbor for good faith mistakes. 

AIM appreciates that neither the House nor the Senate included the so-called Phase 2 “accelerated or “real time” sales tax proposal, which would have required certain taxpayers to remit sales tax to the state in a near real-time basis.   AIM commends the legislature for rejecting this proposal and various amendments that would have inserted the concept into the budget. 

The budget proposal now goes before Governor Charlie Baker for his signature or potential amendments and vetoes. AIM will continue to engage with both legislative and Executive Branch leadership to emphasize our member priorities and provide information to our members as quickly as possible on any upcoming changes.

To learn more about AIM’s budget priorities or engage further in AIM’s lobbying efforts on behalf of our membership, please contact a member of the AIM Government Affairs Team or call 617-262-1180.