WITH STATE GOVERNMENT sitting on a huge pile of cash, Gov. Charlie Baker is suddenly eager to spend it.
Early last week he proposed putting up $10 million in federal relief funding as prize money for a lottery game that would be free to play for anyone who is fully vaccinated.
Later in the week he called on the Legislature to let him quickly spend more than half of the $5 billion the federal government has passed along to Massachusetts.
And on Wednesday he raised the stakes in regard to the state’s annual sales tax holiday. With the state likely to end the year with $4 billion more in tax revenue than it had expected, Baker proposed using nearly a quarter of the excess cash to expand the sales tax holiday from a weekend in August to all of August and all of September.
“By returning money to taxpayers through a two-month suspension of the sales tax, we give every individual who purchases goods a welcome break while also encouraging the economic activity that is the lifeblood of retailers across the state,” the Republican governor said in a message to the Legislature.
The initial response from Democrats was dismissive. “Our local businesses need more workers and better infrastructure, not political gimmicks,” said Sen. Eric Lesser, a Democrat from Longmeadow. “Extra funds should be used to reduce class sizes, repair crumbling roads and bridges, improve broadband internet, or use to paydown debt.”
Jim Aloisi, the former secretary of transportation, tweeted that the $900 million could be used to make every unlinked bus trip in the state free or connect the Red and Blue subway lines. “Our priorities are really messed up folks,” he said.
Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts University, said Baker’s proposal is a typical Republican response to the state’s surplus cash situation – give it back to taxpayers. He sees the governor’s proposal as part of a larger struggle on Beacon Hill.
“This is part of the game between the governor and the Legislature about who controls spending and who makes these spending decisions,” he said, pointing out that proposing a sales tax holiday is a way to put public pressure on the Legislature.
There is a lot of money for Beacon Hill to spend — $4 billion in surplus tax revenues and $5 billion in federal aid – and all sorts of ideas about how it should be spent.
Baker has linked most of his spending proposals to the idea of stimulating the state’s economy as it emerges from the pandemic. Horowitz, however, urges caution, given the many supply bottlenecks right now and the prospect of short-term inflation. “The greater imperative is to stretch spending and stimulus plans across a longer timeframe, not concentrate them in a few summer months when the economy is still facing some real, transition-related limits,” he said.
Eileen McAnneny, the president of the Massachusetts Taxpayers Foundation, wasn’t enthusiastic about the governor’s two-month sales tax holiday. She thought the money could be better spent on job training or replenishing the unemployment insurance fund to reduce assessments on the state’s businesses.
Jon Hurst, the president of the Retailers Association of Massachusetts, applauded the governor for trying to turn the weekend sales tax holiday into a two-month extended vacation. “It’s a fair share progressive idea,” he said.
But Hurst admits the sales tax holiday proposal came out of left field. His organization didn’t lobby for a two-month holiday and the fact that he didn’t learn about the governor’s proposal until the day before it was announced suggests a lot of planning didn’t go into its development.