Supreme Judicial Court sides with Senate in budget dispute with House

Opinion states that for tax purposes, the state budget is now a "money bill"

BOSTON (State House News Service) – The state’s top court ruled in favor of the Senate on Monday, finding that proposed House policies had in fact made the fiscal 2016 budget bill a “money bill” and allowed the Senate to attach major tax reforms, including a suspension of the income tax rollback and an increase in tax credits for low-income families.

The advisory opinion, which was unsealed and read aloud by the clerk during Monday’s House session, clears the way for the Senate’s tax reform plan to become a part of ongoing budget negotiations between a six-member House and Senate conference committee.

The Supreme Judicial Court, in its opinion signed by all seven justices, found that the House’s decision in its version of the budget to delay the implementation of a business tax break and expand a tax credit for land conservation opened the door for the Senate to propose additional tax policy changes.

“We are of the view that the House bill was a money bill, and that the Senate did not improperly originate a money bill,” the justice’s wrote in a 28-page advisory opinion.

The House during its budget debate did not consider any of the major tax law changes adopted by the Senate, and the branches over the years have been reluctant to embrace major policies adopted in one branch but not considered in the other.

The Senate’s budget proposes to expand the earned income tax credit for low-income families to 22.5 percent of the federal credit, up from 15 percent, over three years. Senators also approved increases in personal tax exemptions that Democratic leaders said would result in a tax cut for all filers in Massachusetts.

To pay for the $140 million tax plan, the Senate voted to halt the gradual rollback to 5 percent of the state’s income tax. The income tax is currently 5.15 percent, but is currently expected to decrease to 5.1 percent in January if certain economic triggers are hit.

“The SJC made some clarity and now it’s into conference,” Rep. Paul Donato, a Medford Democrat who presided over the House session, told the News Service.

While it’s a significant opinion, the court’s verdict does not guarantee that any of the Senate’s tax policy changes will make it into the final budget that a conference committee hopes to send to Gov. Charlie Baker’s desk by the end of June.

House Speaker Robert DeLeo has said he considers the Senate’s freeze in the income tax rollback a new tax after earlier this year swearing off new taxes in the state budget.

“I thank the Supreme Judicial Court for delivering the prompt advisory opinion to the questions raised by the House. I appreciate the time and consideration the Court gave to this important matter. Work between members of the Conference Committee will proceed as we reconcile the House and Senate budgets,” DeLeo said in a statement Monday after the opinion was released.

Rep. Keiko Orrall, a Lakeville Republican, said that even if the Senate’s tax plan doesn’t survive conference talks the court’s opinion could shape the budget compromise in other ways between the House and Senate.

“The discussion has changed with the SJC decision,” Orrall said.

[Andy Metzger contributed reporting]

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