Gov. Charlie Baker signed a $3.8-billion economic development bill into law on Nov. 10, about three months after the end of the legislature’s formal session. The bill directs $545 million to hospitals and nursing homes, $540 million to clean energy programs, $410 million to affordable housing, and $80 million to community health centers — a category that includes Outer Cape Health Services.
The bill also allocates $153 million for small business grants to be administered by the Mass. Growth Capital Corp., including specific set-asides for hotels and for small movie theaters. A prior round of MGCC grants sent a total of $4.4 million to 86 Outer Cape businesses in 2021, and the new law indicates that some businesses that applied then but did not receive funding might get grant money now.
What the bill doesn’t include are several major provisions that were in a July version of the economic development package.
Notably missing are $500 million in direct payments to frontline workers in the state and $501 million in tax code changes, including an expanded tax deduction for renters, an expanded earned income tax credit, and an increase to the child tax credit. An adjustment to the estate tax that would have exempted properties worth up to $2 million was also left out.
Gov. Baker also made some significant vetoes to the November version of the bill that the legislature will not be able to override. Among the items nixed was funding for a commission to study the proposed release of radioactive wastewater into Cape Cod Bay (see story.)
The $3.8-billion bill is a successor to a more than $4-billion bill that the legislature was preparing to pass when a July 27 article in Commonwealth magazine alerted legislative leaders and the public to the fact that state tax revenues were far in excess of caps that had been put in place by a citizen’s initiative back in 1986 known as Chapter 62F.
That meant nearly $3 billion would need to be refunded directly to taxpayers.
Chapter 62F had previously been triggered just once, in 1987, when $29 million was rebated. According to subsequent reporting by Commonwealth, the State House News Service, and the Boston Globe, legislators including House Speaker Ron Mariano were furious that Baker’s team had not alerted them that revenue caps were likely to be exceeded this year, triggering the $2.9 billion in rebates.
Progressive legislators including State Sen. Julian Cyr have said that had they known about the excess revenues in April they would have worked to cap rebates to a few thousand dollars.
As it stands, based on Dept. of Revenue data, households making $1 million or more could receive 62F credits of over $28,000, while nearly 53 percent of tax filers with incomes under $25,000 will not receive a 62F credit, according to the Mass. Budget and Policy Center, a Boston-based think tank focused on economic justice.
What’s Included This Time
After the July 27 article, Mariano put the economic development bill on hold, even though earlier versions of it had passed both chambers unanimously. The legislature ended its formal session on Aug. 1 without allocating all of post-rebate excess revenues they could have under the 62F formula.
The legislature can still pass bills during its “informal session” by unanimous consent, however, which is how this newer economic development bill arrived at Baker’s desk this November.
There is a total of $1.4 billion for health care in the bill, of which the largest line items include $350 million for hospitals, $80 million for community health centers, $195 million for nursing homes, and $225 million to raise pay for human service workers.
Many kinds of care workers are employed by local nonprofits but are ultimately paid with state money, including large portions of the elder care and disability care industries. The Independent previously reported that Cape Abilities, which offers daytime support services for people with disabilities, had to close its Eastham location in April, with leaders citing the state’s fixed payment rate of $18 an hour as the primary reason it could not retain enough staff to remain open.
The bill also directs $540 million to some of the state’s clean energy initiatives, including $50 million for rebates on electric vehicles, $50 million for EV charging stations, and $100 million to upgrade the ports of New Bedford, Somerset, and Salem to “support emerging clean energy industry clusters” such as offshore wind farms.
The housing titles of the bill total $410 million. Historically, the state has offered very little support for the production of median income housing, but as the housing crisis has grown into a statewide issue, funding for median income units is ticking upward. In addition to $100 million for the state’s affordable housing trust fund and $100 million to support below-market ownership opportunities, there is also $100 million specifically for workforce housing for people earning 60 percent to 120 percent of area median income.
Both Provincetown and Truro have created year-round market-rate rental housing trusts specifically to support median and just-above-median income earners, and Provincetown is currently looking at how to incorporate median income apartments into its upcoming housing development at 26 Shank Painter Road (see story).
Other major titles include $150 million for early education and child-care providers, many of which had to scale back or close entirely during the pandemic, and $75 million to improve broadband access.
The $153 million in small business grants is divided up into several pots. The largest chunk, $75 million, is specifically for hotels that applied for previous rounds of state relief money through the MGCC but were not funded. Eighteen hotels on the Outer Cape received MGCC grants during a $650 million round of small business relief in 2021, according to reports requested by the Independent, but MGCC has not reported how many businesses applied for grants then and were not funded.
Another $3 million is earmarked for movie theaters, with a priority for venues with four screens or fewer. A further $45 million is set aside for businesses that focus on underserved markets or are owned by women, minorities, veterans, or first-generation immigrants, and the remaining $30 million is available to small businesses generally.
A Not So Collaborative Move
During its “informal session,” the legislature cannot override the governor’s vetoes.
This is part of why Speaker Mariano was angry with Baker about 62F, according to reporting in the Boston Globe — because Baker had “boxed in” the legislature by not alerting them to the $3 billion overage until the formal session was nearly over and the legislature had effectively lost its power to override.
A Dept. of Revenue procedure to accelerate the timing of 62F rebates, which the agency began in April and which was reported by the State House News Service in late July, was proof to many lawmakers, including Sen. Cyr, that Baker knew an overage was coming and deliberately chose not to alert them.
“It’s deeply disappointing,” said Cyr. “We’ve had a very collaborative relationship with this administration, but it appears that 62F is something they were anticipating and planned to move forward with, with no notification to the legislature.”
Besides the veto on further study of radioactive wastewater, another Baker veto changed the terms of which money, exactly, the economic development bill will be spending. He said no to a title limiting American Rescue Plan Act spending in the bill to $510 million, arguing that the legislature’s choice to hold back another $1.7 billion of ARPA money for next year was a mistake.
This veto, he said, “will allow the Commonwealth to allocate federal dollars first,” Baker wrote in his signing statement. “The same money will remain unallocated, but it will be state money, and it will not expire.”
State money does not expire — but as this fall’s 62F experience has shown, it can be sent back to taxpayers — and so far without any limit.
It will apparently be up to the next governor to determine whether it is ARPA money or state tax revenues that this $3.8 billion bill is actually spending.