Legislative Updates Newsletter

News & Updates from the MSCPA’s Government Affairs Team

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Massachusetts Legislature Adopts $48.1 Billion FY22 Budget

On July 9, the Massachusetts Legislature unanimously passed the $48.1 billion Fiscal Year 2022 budget reported from the bipartisan Conference Committee where it now awaits action from the Governor. The budget upgraded the tax revenue assumption by over $4 billion, from $30.1 billion to $34.35 billion, reflecting the continuously strong tax revenue collections for much of FY21.

Included in the Conference Committee budget is language related to:

SALT Deduction
The budget includes the language proposed within the Senate’s original budget proposal that would allow pass-through entities and other eligible businesses to pay state income tax at the entity level, which would collect an estimated $90 million in revenue. The credit will be available to qualified members in an amount proportionate to each qualified member’s share of the tax due multiplied by 0.9, much like the model used in Connecticut. Stay tuned for rules related to this provision to be issued by the Department of Revenue.
Film Tax Credit
Budget negotiators reached a compromise to permanently extend the credit by increasing the threshold to receive the credit, dictating that 75% of a production’s budget or prime photography must be spent and conducted in Massachusetts, up from 50%.
Early College Reimbursement and Dual Enrollment Funding
The budget designates $3.6 million of the $130 million Massachusetts State Scholarship Program line item for reimbursing higher education course credit costs for Early College programs. This line item was $120 million in the FY21 budget.

The budget increases the Dual Enrollment Grant and Subsidies line item from $4 million to $6 million. This line item has historically been used to pay for the higher education course credit costs for Early College participants.

The Society testified in support of these proposals as we have been longtime supporters of early college programs and have seen the direct impact of such programs in helping to create a more diverse and highly skilled talent pipeline. This funding will assure these valuable programs are expanded and provide additional career and college readiness programming to more students across the state.

The budget will not dip into the state’s Stabilization Fund, also known as the Rainy-Day Fund, which is projected to end in FY22 with over $5 billion, a forecast reflecting a 180-degree reversal in projections from this time last year and even at the start of this year.

The Massachusetts Taxpayers Foundation has a budget summary sheet, which you can view here.

Governor Baker has until July 19 to sign the budget and return it to the Legislature with vetoes or amendments.

Report: Preparing for the Future of Work in the Commonwealth of Massachusetts

Earlier this week, Governor Baker announced the findings of a report outlining what the future of work may look like in the near- and long-term and how the state should prepare the post-pandemic economy.

The report is divided into eight core insights that “could cause the most critical shifts impacting the future of work” and are summarized into four themes:

Changing ways of working – such as hybrid and remote work – may shift the center of gravity away from urban core, further reinforced if business travel decreases.
The pace, scale and breadth of reskilling needed for job transitions must be much greater than before the pandemic; creating the workforce of the future will require extensive, thoughtful preparation.
The pandemic has already exacerbated pre-existing inequities for many and as we look ahead, the future of work will not be experienced equally across the Commonwealth.
The risk of future job growth moving outside Massachusetts is rising due to the high costs of living and doing business in the state.

A few of the points outlined in the report and summarized in a MassLive article state that:

Remote work trends could lead to roughly 32% of white-collar workers working remotely one to three days a week and to a reduction of up to 15% in office space over time.
Business travel may fall up to 75% of pre-COVID travel in two years before climbing to levels seen prior to the pandemic.
The overall unemployment rate in Massachusetts stands at around 6.4%, while the unemployment rate for Black workers is more than double that at 13%.
The job recovery for women is expected to take an average of 18 or more months, and perhaps longer for workers with less traditional education and income.

To read the full report, click here.

Influx of Federal Aid to Trigger Spike in Single Audits

As of June 2021, over $5 trillion in federal COVID-19 relief funding has been allocated across the country, of which Massachusetts has received roughly $73 billion, including $13 billion through the American Rescue Plan Act (ARPA).

The American Institute of Certified Public Accountants (AICPA) estimates that such an influx of federal aid will lead to 10,000 new single audits. Renee Davis, CPA, a partner at Powers & Sullivan, LLC, and co-chair of the MSCPA Governmental Accounting & Auditing Committee, had some advice for how to handle these audits, which you can read in our July issue of SumNews.

To read the article, click here.

COVID-19 Temporary Emergency Paid Sick Leave Program

In May, Governor Baker signed An Act Providing for Massachusetts COVID-19 Emergency Paid Sick Leave, which requires employers to make paid leave time available to employees for COVID-related illnesses, quarantine and vaccinations, and then may apply for reimbursement from the state.

Applications for reimbursement opened on July 8, and are open until either September 30 or the exhaustion of $75 million in program funds as determined by the Commonwealth. Employers may apply for reimbursement of the costs of providing emergency paid sick leave, consistent with the program parameters described above. The application is available through the Department of Revenue’s MassTaxConnect website.

For more information on the Temporary Emergency Paid Sick Leave Program and the reimbursement process, click here.

CPA Firm Renewal Affidavit Forms Due August 1

CPA Firm Renewal Affidavit Forms are due by August 1. Please note: The Division of Professional Licensure recommends that licensees use Internet Explorer, Mozilla, Firefox or Safari to renew licenses.

To access the 2021 Firm Affidavit Form, click here.

DOR & IRS Updates

Guidance for Paycheck Protection Program (PPP)

If you have anything you'd like to share, or if we can help you in any way, please reach out to Zach Donah at zdonah@mscpaonline.org or 617.303.2411, or Larry Liuzzo at lliuzzo@mscpaonline.org or 617.303.2405.

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