House, Senate Have Several Key Differences to Settle
The Senate unanimously approved its version of legislation to stabilize the state’s unemployment system, offer tax breaks to businesses and workers, and create a COVID-19 sick leave program Thursday, and the two branches now face a tight timeline to resolve differences with looming tax deadlines.
After several hours of debate featuring complaints from some Democrats about the lawmaking process and the pace of relief efforts, the Senate voted 40-0 in favor of the wide-reaching bill.
House and Senate leaders will need to iron out how to structure tax breaks for low-income workers and the makeup of a panel studying the state’s unemployment system before they can send a final bill to the governor.
Without resolution by the end of the month, employers across Massachusetts face an average increase of nearly 60 percent in the taxes they pay to fund the state’s unemployment system.
Another time-sensitive wrinkle emerged Thursday: the relief bill is now the vehicle for language pushing back the tax-filing deadline until May 17 to mirror a federal change.
“This bill before the body today strikes an appropriate balance to help businesses and workers and helps jump-start our economy as we slowly emerge from this pandemic,” Senate Ways and Means Committee Chair Michael Rodrigues said while introducing the bill on the chamber floor.
Lawmakers rejected almost all amendments filed to the bill, turning back attempts to write in broader tax reforms or extend pandemic-era reforms such as a cap on third-party restaurant delivery fees.
Both the version the House unanimously approved last week (H 90) and the update that cleared the Senate on Thursday (S 35) would freeze the unemployment insurance rate schedule for 2021 and 2022, limiting the average increase in business premiums to 16 percent next year.
The bills also authorize $7 billion in borrowing to keep the state’s depleted unemployment insurance trust fund solvent and pay back federal loans that have kept the fund afloat, create a surcharge on employers to repay federal interest, exempt forgiven Paycheck Protection Program loans from state taxes, and allow workers to access paid time off to deal with the impacts of COVID-19, a benefit activists have been seeking for months.
While both versions aim to relieve the tax burden from unemployment benefits, they approach that goal in different ways.
The House bill would grant a tax credit worth 5 percent of unemployment earnings for taxpayers whose household income does not exceed 200 percent of the federal poverty level, capping the program at $30 million in 2020 and $20 million in 2021.
In the Senate’s version, workers instead could deduct the first $10,200 in unemployment benefits they received from their total income in 2020 and 2021. The relief, which the Senate Ways and Means Committee estimated would carry a $126 million price tag, would not be capped in either year.
The House calls for a 30-year period to pay back the bonds, while the Senate only suggests 10.
During Thursday’s debate, senators adopted an amendment that would create a 15-member special commission to study the unemployment insurance trust fund system and report by Dec. 10, 2021 on strategies to keep it solvent in the long term.
That contrasts from the 21-member commission called for under the final House version of the bill, which unlike the Senate bill also grants seats to groups such as the Greater Boston Chamber of Commerce, the Massachusetts Competitive Partnership and the Massachusetts Taxpayers Foundation.
As lawmakers look ahead to either informal talks or a formal conference committee to settle differences, Senate President Karen Spilka told reporters after Thursday’s vote that “both branches understand the need to get this bill done quickly.”
Since December, Gov. Charlie Baker has been pushing for the unemployment rate schedule freeze and borrowing authorization in both bills. However, it is unclear if he supports the several other provisions that lawmakers added such as the tax relief for low-income workers who collected jobless benefits.
The Senate Ways and Means Committee estimated that its baseline version of the bill would cost the state $351 million, divided into $75 million for the COVID-19 emergency paid sick leave program, $126 million to exclude unemployment benefits from taxes, and $150 million to exempt forgiven PPP loans from state taxes.
Rodrigues said the state could meet those costs from its own pockets and will not need federal funds as a result of robust tax collections that so far have raced past estimates.
But Sen. Becca Rausch, a Needham Democrat, said on the chamber floor that she believes the blow to state revenues would in fact be more than twice as high at $751 million.
She proposed an amendment that, as a temporary measure for 2021, would have increased the state corporate income tax to 9.5 percent, a move that Rausch said could generate $375 million to $450 million to help offset the costs of relief in the bill.
After no commentary in opposition to the amendment, the Senate rejected it on an unrecorded voice vote.
The bill headed back to the House also includes a tax day delay from April 15 to May 17, added into the Senate text via an amendment from Rodrigues.
House Speaker Ron Mariano and Senate President Karen Spilka announced Thursday morning before the debate began that they had reached an agreement on the move, which would bring Massachusetts in line with the change of dates the Internal Revenue Service announced in the hours leading up to Thursday’s session.
Several senators criticized leadership for that move, however, saying that members did not get enough notice about the major addition.
Growing complaints over sufficient timing to review bills before a vote
Sen. John Keenan, a Quincy Democrat, said senators had only several hours to read through the 31-page bill and suggest changes to it on Tuesday, only to learn through news coverage that the tax deadline would be part of Thursday’s debate.
“It seems over the course of the past several months that this has happened more frequently than not, where we get a comprehensive bill with little time to review it,” Keenan said. “We know that we had the police reform bill, and that it was a substantial, lengthy bill and we had minimal time to review it and we ended up voting for it at 4:30 in the morning. I could defend my vote in favor of that bill on the substance, but I could not defend our process, and I know that many people found our process to be lacking.”
Methuen Sen. Diana DiZoglio joined Keenan in criticizing the timeline, then said later during the session that “there’s been nothing democratic about our process lately.” She questioned the value of private Democratic caucuses, arguing that members often find out from media accounts beforehand what leadership is planning.
“For some of us, those caucuses seem like just another opportunity to get told what we’re going to do after the decision has already been made,” DiZoglio said. “Those do not seem like opportunities to discuss what is going to come up on the floor.”
Rodrigues replied to Keenan by saying that leaders have been publicly discussing the bill for about three weeks and during “three separate caucuses” with Democrats. Lawmakers only learned about the federal government’s tax-deadline change on Wednesday, Rodrigues said.
“You have to take the responsibility in this chamber upon yourself to become involved,” Rodrigues said. “I understand that there’s frustration by some members at times. We always provide as much time as possible.”
The Senate also shot down several proposed changes from DiZoglio, including one that would have created a new relief fund open to newer businesses who do not yet have the tax documentation needed to qualify for other forms of aid.
DiZoglio pushed for lawmakers to extend by two years the authorization for restaurants to offer cocktails to-go and to make permanent a 15 percent cap on the fees that delivery platforms such as GrubHub can charge restaurants.
Both measures are tied to the COVID-19 state of emergency, and DiZoglio said offering a clearer timeline would bring relief and stability to the hospitality industry that has been devastated by mandatory government closures and shifts in consumer behavior.
She “vehemently” disagreed with Sen. Eric Lesser’s argument that the Senate does not need to pursue extensions in the short term because the state of emergency is unlikely to end soon, slamming the Senate for taking several months to implement the ideas — popular with both businesses and customers — in the first place.
“Our restaurants do not need our sympathy, they need us to act,” DiZoglio said.
The cocktails to-go extension failed by a 9-30 vote and the permanent delivery cap by an 8-31 vote.
Voting 9-31, members also shot down an amendment from Minority Leader Bruce Tarr that would have increased the penalties for unemployment fraud.
