[Massachusetts voters approved an additional tax on incomes of
more than a million dollars. At least a billion extra dollars will
support transportation and education projects this year.]
[[link removed]]

WHAT THE NEW WEALTH TAX IN MASSACHUSETTS IS PAYING FOR  
[[link removed]]


 

Jared Brey
January 9, 2024
Governing
[[link removed]]


*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

_ Massachusetts voters approved an additional tax on incomes of more
than a million dollars. At least a billion extra dollars will support
transportation and education projects this year. _

The MBTA in Boston will receive $200 million to address maintenance
and salaries., JS O'Connor Photography/TNS

 

In Brief:

* New revenue from a 4 percent surtax on high-income earners is
helping to fund education and transportation projects in
Massachusetts.
* Legislators allocated $1 billion in related spending for FY 2024,
but the Department of Revenue expects the tax will bring in
substantially more than that.
* Every municipality in Massachusetts is getting additional funding
for road maintenance. All the state’s transit systems have received
additional funds as well.

Becket, Mass., is a small community in the Berkshires with a
population of about 1,700 people. Kathe Warden, the town
administrator, knows off the top of her head that it contains about 56
miles of roadway. About half the roads are paved and half are gravel.
Becket doesn’t have public water or sewer — “a blessing and a
hindrance,” Warden says — so maintaining roadways and culverts is
one of the biggest tasks of the town government.

In a typical year, Becket receives around $235,000 from the state
government for infrastructure maintenance. But this year, Becket,
along with every other municipality in Massachusetts, is getting a
boost — an additional $152,417, which represents a 65 percent
increase in the town's annual road maintenance budget.

The largesse comes thanks to a new tax on high-income earners, which
Massachusetts voters
[[link removed]]
approved in 2022. “It helps tremendously,” Warden says.

Barely a full year of taxes have been collected since voters approved
a 4 percent surtax on incomes over $1 million, known as the Fair Share
Amendment
[[link removed]].
The measure specified that additional revenue must be spent on
education and transportation initiatives.

The Massachusetts Legislature agreed to allocate $1 billion in Fair
Share money as part of its budget last year, based on a conservative
estimate of expected revenues. The Fair Share Amendment, which won
with 52 percent of the vote, is part of a growing interest in some
blue states to pass new taxes on the wealthy — a counter to the much
bigger trend of states cutting income and corporate taxes since the
pandemic.

"Wealthy folks need to pay their fair share for their communities —
things like education and health care and good roads, and not their
yacht clubs or golf clubs," says Jessie Ulibarri, co-executive
director of State Innovation Exchange (SiX), which advises legislators
on progressive legislation.

As a result of the measure, the Tax Foundation dropped Massachusetts a
total 12 places in its annual State Business Tax Climate Index
[[link removed]]
for 2024. Partly because of the millionaire’s tax, the state now
ranks as the fifth worst for business-tax competitiveness, according
to the foundation.

Some have attributed Massachusetts’ population loss to its tax
structure, others to the high cost of living. At least one notable
resident, former Boston Celtics player Grant Williams, cited the
amendment
[[link removed]]
as part of the reason he chose to relocate to Texas.

He now plays for the Dallas Mavericks. "$54 million in Dallas is
really like $58 million in Boston," Williams said
[[link removed]].
 

Allocating New Revenue

The Fair Share Amendment was planned for years before it was brought
to a vote in 2022. Debates over the proposal fell into a fairly
predictable mold: Proponents argued that new revenue would help
Massachusetts and its communities make needed public investments,
while detractors said it would make the state less competitive overall
and prompt wealthy people to move out.

The proposal that went before voters was a constitutional amendment,
specifying that the money could be spent only on education and
transportation. But the Legislature and Gov. Maura Healey had
substantial leeway over how to implement the law.

“It was one paragraph so that voters could understand it, and then
it is left to the Legislature to appropriate those dollars,” says
Phineas Baxandall, interim president at the left-leaning Massachusetts
Budget and Policy Center, which supported the amendment. “Some
people feared that the Legislature was going to pull a fast one and
not spend it on education and transportation, and to their credit they
created really transparent, accountable mechanisms so that you can
really see where the money is going.”

The state Department of Revenue now estimates the new surtax on top
incomes will bring in between $1.6 billion and $2.1 billion for fiscal
year 2024, and between $1.8 billion and $2.1 billion in fiscal 2025.
The state’s overall budget for the current year is about $56
billion.

Of the $1 billion in Fair Share spending included in the current
budget, adopted last summer, $523.5 million will be spent on education
and $476.5 million on transportation. That money is being distributed
across a broad range of initiatives.

On the education side, that includes free school meals across the
state, free community college tuition for students over the age of 25
and facility improvements at K-12 schools. The transportation portion
allocates $300 million for public transit — including $200 million
for the Massachusetts Bay Transportation Authority (MBTA) in Boston.
Like other big-city transit systems, MBTA has been plagued by
maintenance and staffing issues, as well as ridership losses. Across
the state, $100 million is set aside for maintenance of local roads
and bridges.

There is likely to be substantial variability in Fair Share
collections from year to year. “High incomes are volatile,”
Baxandall says. Surplus collections will be directed into one of two
funds: a reserve fund to help cover ongoing investments in lean years
and a capital and innovation fund that will pay for one-time projects.

Asked whether the Healey administration had tracked any instance of
people leaving the state to avoid paying the higher tax, a
spokesperson responded, “No.”

Avoiding Austerity

Even while providing substantial new revenue, the Fair Share Amendment
will fall far short of answering all the state’s education and
transportation needs. In Becket, for example, Warden says she recently
got an estimate that doing a full rebuild of a single, 1.5-mile road
would cost about $1.4 million, an amount that it would take years for
the town to accumulate even with the additional funding. But the extra
money is clearly going to fill some gaps.

For some regional transit agencies — the much smaller bus operations
that operate outside cities like Boston — new funding is enabling
long-sought improvements. Merrimack Valley Regional Transit Authority
saw ridership “fall off the map” during the early days of the
pandemic, says Noah Berger, the authority’s CEO. But it has more
than bounced back since then, up about 50 percent over pre-pandemic
ridership figures.

That’s in part because the system has eliminated fares permanently.
That move was made easier with funding from the Fair Share Amendment,
Berger says. The system also expanded hours on some of its
highest-ridership routes, and will soon add Sunday service for some
routes.

The authority has also invested in some seemingly little things, such
as improvements to the employee breakroom, which can go a long way for
a service fighting to attract and retain workers.

For some transit authorities, Fair Share revenue makes the difference
between investment and cuts, Baxandall says. Without the Fair Share
Amendment, he says, "We would be having an austerity conversation in
these areas and kind of panicking about how to make up for federal
funds. Instead, it’s a forward-looking conversation.”

===

Jared Brey [[link removed]]
Jared Brey is a senior staff writer for _Governing_. He can be found
on Twitter at @jaredbrey.

Stay on top of the latest state & local government news.
Sign up for Governing Daily. Delivered each morning to your inbox.

* Massachusetts Fair Share Amendment; State tax on high incomes;
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]

Manage subscription
[[link removed]]

Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]