Guv's Sales Tax Holiday Bill Looks D.O.A. Appearances Are Deceiving.

Sunday, August 6, 2017

Given the hand-in-glove nature of the relationship between the governor and legislature, it’s hard to believe Charlie Baker introduced a bill last week to establish a sales tax holiday on the weekend of August 19-20 if he had any doubts it would be enacted promptly.  Yet, at this point, it appears that the governor’s plan to suspend the state’s 6.25 percent sales tax the weekend after next is in serious trouble. 

The bill was filed on Wednesday, August 2, and, the day after, it was sent by House leaders to the Joint (House-Senate) Committee on Revenue, whereupon Rep. Jay Kaufman of Lexington, the House co-chair of the committee, said it would be a “colossal mistake” to have a sales tax holiday because of how hard it is going to be to balance the state budget this fiscal year.

According to Department of Revenue estimates, the state would forego around $25 million if no taxes were collected on the sale of goods during the third weekend of this month.  (Only purchases of $2,500 or less would be covered by the proposed law.)

In 11 of the past 13 years, there has been a sales tax holiday in August, each authorized year to year by a special act of the legislature.  Bricks-and-mortar retailers, pummeled by online competitors, have practically been begging the Commonwealth to turn that into a 12-of-14 record.  With Amazon getting bigger by the week, how can a Republican governor not feel their pain?

There were already bills before legislative committees to establish permanent two-day sales tax holidays when the governor came up with his bill for a 2017-only holiday. 

House Speaker Robert DeLeo was quoted last Wednesday by the State House News Service as saying “it makes little sense” for the governor to have filed his own bill at this juncture.  That was a typically careful comment from the leader of the lower branch.  DeLeo did not say he was opposed to the bill.  He did not say it made no sense. He only implied that, at first blush, he was puzzled by the governor’s strategy in putting it forward now. 

Puzzlements are like rumors: made to be dispelled…and there’s no one like the nation’s most popular governor at this time (and member of the Bob DeLeo fan club) to do the dispelling.

The governor’s bill looks now to be dead on arrival in the Revenue committee.  This is a money bill and only the House can initiate a money bill; therefore, Chairman Kaufman’s opposition would seem to be dispositive, as the lawyers like to say. 

I’m focusing on how Senate leaders have not yet concurred in the referral of the bill to Revenue.  Senate President Stan Rosenberg and Speaker DeLeo, working quietly together, could now decide to pull the bill from Revenue and send it instead to the Joint Committee on Economic Development and Emerging Technologies, whose House co-chair, Joe Wagner of Chicopee, is known to favor sales tax holidays.

Wagner could then become the point man in the House for moving the bill, sparing Kaufman from having to disavow his colossal mistake comment as he retreats to the pool of unanimous support for the bill willed suddenly into existence by the Speaker.

The legislature is in recess until September and is holding only informal sessions once or twice a week in August.  Under legislative rules, only “non-controversial” items may be taken up during informal sessions.  If even one member present during an “informal” objects to voting on a bill, it must be immediately tabled, killing the possibility of any action on it that day.

I think the governor had the tacit support of Speaker DeLeo and President Rosenberg when he filed the sales tax holiday bill last Wednesday or was exceedingly confident of winning their support once it was filed.  Baker of course knows that the leaders of both branches can make things happen smoothly and quickly if they want to, and that each leader could secure the acquiescence of any reluctant member of his Democratic caucus on an issue as popular as making taxes disappear for a spell, no matter how short.  (No Republican would think of voting against a deal like this.)  

For two-and-a-half years, Baker, Rosenberg and DeLeo have formed a team as cohesive and as mutually respectful as any could be with players from different parties with different agendas.

We should keep in mind that, just about now, Rosenberg and DeLeo owe Baker one.  Before recessing, the legislature rejected a major initiative dear to the governor’s heart, a package of Medicaid reforms strongly supported by business groups.  To avoid a fight with the legislature, the governor reluctantly signed into law the measure wherein the Medicaid reforms were rejected and accepted a kind of fuzzy offer from the legislature to consider the reforms slowly and deliberately over the next few months.   Business groups, which had been calling for the governor to veto the measure, did not hesitate to criticize him publicly for not vetoing it.  The National Federation of Independent Businesses, for instance, said it was “incredibly disappointed” in Baker.

Baker can begin to mend fences with his natural constituencies in private enterprise by getting a sales tax holiday done in a hurry.  The Democrats who run the legislature can help him do that because they like and respect Baker and value the relationship they have with him.  At the same time, they’ll help their party by giving voters a break at the cash registers on August 19-20.  This colossal mistake will become no big deal in no time. 

Guess what.  Twenty-five million in lost tax revenue in an overall state budget of nearly $40 billion isn’t  a big deal. 

Baker’s new Secretary of Technology Service and Security, Mark Nunnelly, for example, could save at least $25 million by eliminating the state’s 1980s-style, grab bag approach to procuring computer and telecommunications systems and replacing it with the mindset and methods in evidence at scores of successful Massachusetts businesses, universities and medical centers.