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THE MALDEN ADVOCATE–Friday, Fabruary 4, 2022 Page 7 Baker files FY 2023 budget and tax relief proposals O n January 26, 2022, the Baker-Polito Administration fi led its Fiscal Year 2023 (FY23) budget proposal, a $48.5 billion plan that continues to support economic growth across Massachusetts and sustains eff orts to address the COVID-19 pandemic – while fully funding the Student Opportunity Act and making key investments in other critical areas, including housing and health care. Alongside this fi scally responsible and balanced budget proposal – submitted as “House 2” in the Massachusetts House of Representatives – the Baker-Polito Administration is fi ling a comprehensive tax proposal to provide relief for housing and childcare costs, eliminate the income tax for hundreds of thousands of low-income taxpayers and maintain Massachusetts’s competitiveness. The proposed changes would allow nearly $700 million to remain in the hands of taxpayers on an annual basis starting immediately in tax year 2022. “Our Fiscal Year 2023 budget will help position Massachusetts strongly for the future by making key investments to support economic growth, sustain our nation-leading educational system, and support the health and wellbeing of our residents,” said Governor Charlie Baker. “At the same time, we are able to grow our reserves to historic levels and off er a tax relief proposal that will provide substantial relief for low-income seniors and working families. We look forward to working with our legislative colleagues to adopt a spending plan for FY23 that supports a strong and equitable economic recovery across the Commonwealth.” “The FY23 budget recommendation maintains our Administration’s strong support for cities and towns with another increase in local aid consistent with tax revenue growth alongside other substantial investments to help the economic growth and development of Massachusetts communities,” said Lieutenant Governor Karyn Polito. “This plan takes advantage of our strong fi scal position to increase opportunity for individuals and families and continues our work in priority areas including treatment and prevention of substance addiction, sexual assault and domestic violence, promoting equality and diversity, and increasing access to education, job skills training, and high-value careers.” “The Baker-Polito Administration is proud to submit an FY23 budget that is fi scally responsible, brings the Rainy Day Fund to record levels, and makes signifi cant investments to support those who need it most, all while aff ording tax cuts that will help hundreds of thousands of taxpayers across the Commonwealth,” said Administration and Finance Secretary Michael Heffernan. “We look forward to collaborating with the Legislature in the coming months to fi nalize a spending plan that continues to support growth, opportunity, and recovery across the state while limiting future budgetary risk.” Tax relief proposal The comprehensive tax relief plan filed alongside the FY23 budget includes proposals that will provide $700 million in tax relief to low-income families and residents and maintain Massachusetts’s competitiveness. With a strong revenue picture and the budget projecting a signifi cant deposit in to the Stabilization Fund, the Commonwealth can aff ord to provide this relief for working families and seniors. The plan proposes to: • Double the maximum Senior Circuit Breaker Credit to lower the overall tax burden for more than 100,000 low-income homeowners aged 65-plus • Increase the rental deduction cap from $3,000 to $5,000, allowing approximately 881,000 Massachusetts renters to keep approximately $77 million more annually • Double the dependent care credit to $480 for one qualifying individual and $960 for two or more, and double the household dependent care credit rate to $360 for one qualifying individual and $720 for two or more – to benefi t more than 700,000 families • Increase the Massachusetts Adjusted Gross Income (AGI) thresholds for “no tax status” to $12,400 for single fi lers, $24,800 for joint fi lers and $18,650 for head of households, which will provide direct relief to more than 234,000 low-income fi lers • Double the estate tax threshold and eliminate the current “cliff eff ect” that taxes the full amount below the threshold • Change the short-term capital gains tax rate to 5% to align the Commonwealth with most other states House 2 Fiscal Overview The proposed FY23 budget is based on the $36.915 billion consensus tax revenue estimate, which anticipates a 2.7 percent growth in total collections over revised FY22 tax estimates. House 2 recommends a total of $48.5 billion in authorized spending and transfers, excluding the Medical Assistance Trust Fund transfer, which is approximately 0.5 percent above FY22. Through fi scally responsible policies and in close collaboration with the Legislature, the Baker-Polito Administration has brought the budget into structural balance and built up fi nancial reserves to historic high levels. With a current balance of $4.64 billion, the Stabilization Fund is already more than four times greater than its balance at the start of the Administration. The House 2 budget includes a $749 million increase to the Stabilization Fund, which, in combination with projected FY22 transfers, will grow the fund to an all-time high of $6.64 billion by the end of FY23. Providing record investments in Massachusetts students In the House 2 budget, an increase of $591.4 million is recommended to fully fund the Student Opportunity Act, including $485 million in Chapter 70 funding, with a focus on school districts serving low-income students, for a total of $5.989 billion. The FY23 proposal also includes a $41 million increase over FY22 for special education circuit breaker reimbursement for cities and towns, and a $64.8 million increase in charter school reimbursement funding. House 2 recommends $31.1 million to scale up college and career pathway programs for high school students with a focus on equity and recruitment of high-need student populations. This funding will allow more than 17,100 students, representing six percent of all Massachusetts high schoolers, to enroll in these programs. The FY23 budget proposal also includes a $1.45 billion investment for college readiness, aff ordability and degree completion. This funding includes more than $155 million (M) in fi nancial aid grants, including $18M to support an expansion of the MASSGrant Plus program that will enable all low-income, instate undergraduate students to attend public higher education without incurring debt for mandatory tuition and mandatory fees – the largest increase in fi nancial aid in over two decades. Investing in housing stability The COVID-19 pandemic has intensifi ed the state’s existing housing challenges and brought further economic instability for many across the Commonwealth. In House 2, the Administration proposes historic reforms and investments in rental assistance, rehousing benefi ts and housing vouchers to expedite recovery and create long-lasting improvements in housing stability and access to homeownership. Building on the Eviction Diversion Initiative (EDI), which has distributed more than $500M in state and federally funded rental assistance to individuals, families and landlords in crisis, House 2 signifi - cantly expands state funding and eligibility for the Residential Assistance for Families in Transition (RAFT) and HomeBASE programs, with the goal of reducing evictions and homelessness. The budget recommends $80M for RAFT, an increase of $58M (264 percent) above FY22, which will support a permanent benefi t limit increase to $7,000 over 12 months, versus $4,000 pre-pandemic, and serve an estimated 15,000 households, up from 5,000 to 6,000 previously. For HomeBASE, $56.9M is recommended, a $30.9M (119 percent) increase above FY22, to serve more than 4,100 families in FY23, versus a projected 1,885 in FY22. It will also support an increase to the maximum benefi t from $10,000 over one year to $20,000 over two years, which will allow for more extensive and fl exible support to households. House 2 also proposes reforms to the Massachusetts Rental Voucher Program (MRVP) to maximize utilization of mobile vouchers and align benefi ts with federal rental assistance programs operated by the same local housing authorities. In FY23, $145.6M is projected to be available for MRVP, an increase since FY15, which will support a reduction in tenant rent share from 40 percent to 30 percent, projected to benefi t more than 9,000 households across the Commonwealth – and a shift to a new payment model to give families more housing choice and fl exibility. 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