By Bob Katzen
The House 157-0, Senate 38-0, approved a bill that would authorize the state treasurer to borrow billions of dollars needed to keep the state running through the end of June.
The funding is needed as a result of diminishing income tax revenues during COVID-19 when the Bay State moved the tax return filing deadline from April 15 to July 15 in addition to the loss of sales tax and other revenue as a result of business shutdowns. State tax collections dropped in April by more than $2.3 billion compared to April 2019.
The Legislature and the administration accomplished this by agreeing to engage in RANs — Revenue Anticipation Notes. This means that the state will borrow in fiscal 2020 the amount of money that was deferred or estimated to have been deferred by the movement of the tax filing date. Then the state would use fiscal year 2021 revenues to pay back the loan.
Supporters said they anticipate the borrowing could reach up to $3 billion in order to keep the state financially afloat. They said the state is obligated to pay its bills and has no other choice.
“The legislation that advanced today will help the commonwealth responsibly meet near-term budget challenges as we continue to address the impacts of COVID-19,” said Senate President Karen Spilka (D-Ashland).
“In order to protect the commonwealth’s taxpayers and maintain fiscal discipline during this public health crisis, the bi-partisan legislation passed by the Senate today authorizes the commonwealth to finance the recent extension of the 2019 state individual income tax filing deadline and provides a necessary bridge to help us get through the next few months until the next fiscal year,” said Sen. Mike Rodrigues (D-Westport), chair of the Senate Committee on Ways and Means. “The passage of this bill will allow the commonwealth to meet its fiscal obligations and pay its bills without negatively affecting our residents in the midst of this pandemic.”