Most lawmakers want to help state residents who have been hit with higher costs on everything from groceries to gasoline, according to Sen. Julian Cyr. This is the strategy on which they differ, such as the suspension of the gasoline tax.
The Senate rejected a bill to temporarily suspend the state’s 24-cent/gallon tax on gasoline on March 24. The Republican-led bill was defeated 29-11.
All three Republican senators and eight Senate Democrats voted to suspend the tax. The measure included suspending gasoline tax collection until September 5. The Department of Revenue would have had 30 days to notify the state comptroller of the amount of tax revenue lost during this period. The monitor would have been authorized to transfer this same amount to the Commonwealth Transportation Fund.
Proponents of the bill said it would provide temporary relief to drivers and would follow similar measures in border states. Connecticut has lifted its 25 cents/gallon gasoline tax through June. New Hampshire and Rhode Island are considering waiving their tax of 23 cents/gallon and 34 cents/gallon respectively.
Continued:Mass. Senate rejects gas tax suspension
But Cyr said the suspension would do more harm than good because of the impact it could have on government bond ratings. Currently, the Gas Tax-affiliated government special bond is rated AA by Standard & Poor’s (S&P) and Fitch. Double A ratings are considered the second highest behind AAA ratings.
Eliminating the gas tax would have resulted in a $400 million drop in revenue for the Transportation Fund, he said. This fund is the Commonwealth’s source of revenue to borrow money to build and repair transport-related infrastructure, including roads and bridges.
“I saw it as a negative impact on our bond rating,” Cyr said. “It would hurt our ability to borrow money.”
He said bond rating agencies could raise the cost of borrowing. And the more it costs to borrow, the less the state can do bond-related transportation projects. “Our borrowing capacity allows us to repave Route 28, bypass the Sagamore and Bourne bridges,” he said.
“We’ve been serious in the Senate about giving tax relief in a number of cases,” Cyr said.
The Senate took the following steps to help the state’s most needy: extended the $16 million Child Tax Credit to 85,000 families; made certain federal grants and loans tax-free, including PPP loans and restaurant revitalization grants; made hundreds of Massachusetts Growth Capital Corporation small business grants tax-free; excluded the first $10,000 of unemployment from tax for those earning less than 200 percent of the federal poverty level; and used ARPA funds to send $500 checks to 500,000 low-wage workers.
Contact Denise Coffey at [email protected] Follow her on Twitter: @DeniseCoffeyCCT.