House Speaker Ron Mariano speaks to reporters on July 29, 2022 as the state legislature's formal sessions were winding down. State House News Service photo / file

As the election nears, Democrats who control the House and Senate remain unable to agree on how to revive stalled economic development and tax relief plans they highlighted as essential over the summer, pointing to rampant inflation and rising interest rates as factors complicating their decisions.

Budget chiefs for both branches and House Speaker Ron Mariano shed little light Wednesday on the outlook for the bills they first approved months ago, and muddied the waters further by suggesting they have not made decisions on whether to stand by a planned tax rebate program that the top Senate negotiator said last week would “probably not” survive in the final accord.

The legislature’s economic development bills contain a huge range of earmarks for local projects, including several real estate developments in areas outside Greater Boston’s urban core like Lupoli Cos.’ conversion of a disused Littleton office park into an extension of the town’s center commercial district. Policy measures were included, too – the Senate’s version legalized accessory dwelling units on single-family lots larger than 5,000 square feet statewide.

It’s been 69 days since Gov. Charlie Baker publicly announced he expected state government would need to return $2.965 billion to taxpayers under a decades-old law tying allowable state tax revenues to the growth in wages, 20 days since Auditor Suzanne Bump certified the amount due back as $2.94 billion, and 19 days since the Baker administration outlined its plans to ship out checks and direct deposits starting in November with individual refunds.

Mariano said Wednesday that lawmakers still need more time to work through the impact of the law known as Chapter 62F.

“What do you mean it’s been settled?” Mariano said of 62F. “It’s been settled in the mind of the governor. It hasn’t been settled in our minds. What that was was an increase in spending that we hadn’t accounted for, so it forced us to go back and reevaluate some of the decisions we had made prior to finding out about 62F and then looking forward, how we’re going to deal with an additional $3 billion in expense.”

Economic Storm Clouds Threaten

Although state tax revenues smashed expectations, soaring more than 20 percent in one year, and produced a surplus north of $5 billion, the speaker cautioned about potential storm clouds on the horizon.

“The inflation rate is going up, interest rates are going up. All signs are trying to slow the economy down, so that was an additional $3 billion – people seem to forget that – we hadn’t planned on and was dumped in the lap of these guys as they were putting a budget together,” the Quincy Democrat said.

Baker has suggested action on the bill, which originally carried a bottom line of more than $4 billion combining surplus, American Rescue Plan Act aid and bond authorizations, might come in October.

Lawmakers shed no light Wednesday on a timeline for action. Senate Ways and Means Committee Chair Michael Rodrigues said he is “confident that we’re going to get it done in the very near future.”

Asked what he meant by “near future,” Rodrigues replied, “The near future.”

Legislative leaders have just about one month left if they hope to get their work on the bill complete before all 200 seats in the House and Senate are up for election, and House Ways and Means Committee Chairman Aaron Michlewitz said that the Nov. 8 election date is not a pressure point in the slow-moving talks.

“I don’t think it’s determinant on whether it’s before or after the election. I think we don’t have an agreement,” Michlewitz said. “Until we have an agreement, we can’t make any determination on when exactly that’s going to be ready. We’re working diligently, as the senator said, talking almost every day about this and we’re hopeful to get it done as soon as possible.”

“We take our jobs very seriously and responsibly,” Rodrigues added. “We’re talking about billions of dollars of taxpayers’ money. We want to make sure we do reach an agreement on what is the best investment of those taxpayer dollars.”

Rebates ‘Probably Not’ Included

The economic development bills, which the House and Senate both approved in July before Baker went public with his expectations about the mandatory 62F relief, featured about $500 million in permanent tax breaks for renters, seniors, parents and caretakers, plus changes to the estate tax.

It also would have spent $500 million on one-time rebates for middle-income earners, providing $250 checks to qualifying single taxpayers and $500 checks to qualifying married filers.

With taxpayers across the income spectrum now in line for payments of varying size under Chapter 62F, Democrats have not made clear if they plan to also recommend sticking with the rebates they previously approved as a way to help Bay Staters manage the pressures of inflation and high gas prices.

Rodrigues told WBSM’s South Coast Tonight last week those checks would “probably not” feature in the revived economic development bill “because $3 billion worth of checks are going out” thanks to 62F.

Michlewitz, who spoke to reporters standing next to Rodrigues and Mariano, on Wednesday gave a less definitive answer about the fate of those middle-income rebates.

“We’re still working on that. It goes back to the fact that you take the $3 billion out of the discussion point, it changes the equation, the math that we were dealing with. We have to account for that,” he said. “We’re trying to figure out right now working together on exactly what we can and can’t afford. With regard to 62F, that money is going back to the taxpayers at some point, so people will be getting checks. Will we have additional money in an economic development bill? I think we have to decide whether or not, what we can and can’t afford before we make that determination.”

State House News Service staff writer Sam Drysdale contributed to this report.