BOSTON — Democrats on Beacon Hill are moving to again delay a tax deduction for donations that voters approved more than two decades ago, over Gov. Charlie Baker’s objection.
House lawmakers on Wednesday voted mostly along party lines to override Baker’s veto of a provision in the nearly $48 billion state budget that would delay the deduction another two years. Republicans voted to allow the tax deduction to take effect.
The Democratic-led Senate followed on Thursday, overriding the veto by a 34-6 vote. Sen. Diana DiZoglio, D-Methuen, joined the chamber’s GOP minority in voting against the override.
Baker has said the state’s improved financial situation means the deduction shouldn’t be delayed any longer.
But House Ways and Means Chairman Aaron Michlewitz, D-Boston, said on Wednesday that legislative leaders worry about the lingering effects of the pandemic, despite a recent windfall of unexpected tax revenue.
“While the state is running a healthy surplus at the moment, we are still at the mercy of the virus,” Michlewitz said in remarks on the House floor. “Nonprofits around the commonwealth have been struggling, and this delay is only temporary.”
Baker said he was “deeply disappointed” by the Legislature’s decision.
In a statement Wednesday he noted it will “deny front-line organizations a crucial opportunity to generate the resources they need to help families keep food on the table, address substance use and behavioral health challenges, support survivors of domestic violence, and more.”
“Massachusetts’ local charities have helped our most vulnerable residents through the pandemic, and as the commonwealth has a significant budget surplus and billions of dollars in federal aid available, it is time to finally deliver this charitable deduction that voters approved decades ago,” he said.
House Republicans sided with Baker and ripped Democrats for again delaying the deduction.
“This isn’t just for rich people who want to claim tax breaks,” said Rep. Lenny Mirra, R-Georgetown. “This law would provide funds for charitable groups that could really use the money right now.”
Jim Klocke, CEO of the Massachusetts Nonprofit Network, said the delay will deprive hundreds of thousands of low- and middle- income taxpayers of a tax break that was expected to incentivize giving to charity.
“Individual donations are a critical form of support for nonprofit organizations — from food pantries to shelters, child care and youth centers, human service organizations, and others working every day to meet the basic needs of residents,” Klocke said in a statement.
Under the law, individuals would’ve been allowed to claim charitable contributions against their Part B adjusted gross income on their state tax returns. The deduction could not be used for donations of household goods or clothing.
Voters approved the deduction in 2000 as part of a referendum rolling back the state’s personal income tax rate to 5%. The referendum passed with the support of more than 70% of voters.
Two years later, the Legislature froze the state’s personal income tax rate at 5.3% to plug budget shortfalls. At the same time it created a mechanism to reduce the tax rate to 5% as long as revenues grew.
As part of those changes, lawmakers froze the deduction for charitable giving until the income tax rate dropped to 5%.
The state had planned to allow the deductions starting this year, since the income tax rate has finally dropped to 5%. That was until lawmakers decided to delay it instead.
For the just-started fiscal year, budget writers estimated that postponing the deduction for two more years would free up about $64 million.
However, the Baker administration says state accounts are healthier than expected, and the delay isn’t needed.
Rep. Brad Hill, R-Ipswich, who sides with the Baker administration, said voters who supported the tax deduction should be “outraged” at Democrats for the delay.
“Right now we’re debating how to spend $5.3 billion in federal relief money, and our revenues are coming in stronger than we ever expected,” he said. “There is absolutely no reason that this law shouldn’t be moving forward.”
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at email@example.com