Massachusetts governor releases $44.6B state budget proposal

BOSTON (AP) — Gov. Charlie Baker released a $44.6 billion state budget proposal Wednesday that would tack on an extra fee for ride-hailing trips and modernize the way the state collects taxes.

The spending plan for the 2021 fiscal year that begins July 1 would also create a new oversight board of the Massachusetts Bay Transportation Authority and make a significant deposit into the state's rainy day fund.

The ride-hailing proposal would increase the per-ride assessment from the current 20 cents to $1, with 70% of the total assessment of about $120 million going to the state and 30% going to cities and towns.

About $73 million of the state's portion will go to the MBTA to support the network of subways, buses and commuter rails that serve the metropolitan Boston area. Overall Baker's budget includes an increase of $135 million in operating funds for the MBTA for a total of $1.376 billion.

Baker said the number of ride-hailing trips has soared to about 100 million annually in Massachusetts.

“You’re talking about a wear and tear on our roads and bridges that needs to be supported through some other mechanism,” Baker said, referring to the proposed fee increase.

Democratic House Speaker Robert DeLeo said a similar increase in fees for ride-hailing trips “is actively being considered by the House for its own revenue debate.”

The Republican governor is also proposing a new seven-member board to replace the MBTA's existing Fiscal Management Control Board, which is set to come to an end this year.

The new board, largely appointed by the governor, would also include a representative from the communities who contribute to the MBTA through assessments.

The proposed budget would also update the way the state collects taxes.

Retail vendors are currently able to hold sales tax collections for up to 50 days after they are paid by a consumer. Under Baker's plan, the state's largest companies would be required to turn over to the state tax collections from the first three weeks of each month during the final week of that month.

By 2023, Baker's plan would have sales taxes for electronic transactions collected and remitted to the state daily.

Baker's budget would also deposit $310 million into the state's stabilization fund — known as the rainy day fund — with is used as a cushion in the event of a sharp economic downturn. The fund currently has an all-time high balance of $3.46 billion.

Among other proposals included in Baker's budget are several initiatives aimed at supporting people with disabilities. 2020 marks the 30th anniversary of the signing of the Americans with Disabilities Act.

Those proposals include a new disability employment tax credit for Massachusetts employers who hire and retain persons with disabilities.

To be eligible, businesses would have to hire an Massachusetts resident with a disability and continue to employ the person for at least 18 consecutive months. In return, the employer would become eligible for a tax credit of 30% of wages paid in that taxable year up to $2,000.

Eligible workers must be able to work independently, meet the definition of disability under the Americans with Disabilities Act, and be certified by the Massachusetts Rehabilitation Commission as having a physical or mental impairment that constitutes or results in a substantial impediment to employment.

Baker's budget also includes funding for the Massachusetts Commission for the Deaf and Hard of Hearing to support educational institutions that offer American Sign Language to help increase the state's interpreter workforce.

The budget assumes $35 million in sports betting revenues during the new fiscal year but a loss of revenue with the reduction of the state income tax rate from 5.05% to 5%. Another new source of revenue is a 75% excise tax on nicotine vaping products.

The governor's spending plan marks the start of the budget debate on Beacon Hill.

The House and Senate will release and debate their own versions of the budget before hashing out a single compromise version that must be approved by both chambers before being sent to Baker for his signature by the start of 2021 fiscal year on July 1.