January 31. 2025

Gov. Healey Files $62B FY26 State Budget Plan:
Proposes Sales Tax on Candy, New Synthetic Nicotine Tax

Last week, Gov. Maura Healey released her FY26 State Budget Recommendation, which proposes to spend more than $62 billion in the upcoming fiscal year that begins on July 1, a spending increase of 7.4% over the bottom line of the FY25 budget she signed into law in July.  As she did last year, the Governor again this budget cycle is seeking to pair her plan with a separate municipal tax package that would allow cities and towns to increase local option taxes on room occupancy, auto excise, and meals, but that bill has yet to be filed.
 
Gov. Healey also filed a supplemental spending bill, H.51, making appropriations in the current fiscal year, FY25, utilizing excess surtax, or “Millionaire’s Tax,” revenue left unspent from FY23 and FY24.  The $1.32 billion supp divides the spending between $858 million for transportation needs and $462 million towards education items.
 
The proposed FY26 budget, now H.1, includes a few specific tax policy changes of interest to RAM members, including:

• Section 42 Taxation of Products Containing Synthetic Nicotine - subjects products containing synthetic nicotine to the same excise tax as smokeless tobacco products.
• Sections 46 & 47 Removing Sales Tax Exemption for Candy and Confectionary Products - eliminates the sales/use tax exemption for candy and confectionary products, making them subject to the 6.25% sales tax.

RAM will actively engage in opposition to both provisions.  Under current law, candy and confectionary products are exempt from the sales tax under the broad exemption for food products.  Removing candy from this exemption will open up a litany of questions as to what is candy and what is not.  Now is not the time for the state to pile on additional costs to our already elevated food and grocery prices. 
 
The House and Senate Committees on Ways and Means will next hold a series of public hearings on the budget, broken out by subject matter, over the next few months.  The House will then release and debate its budget plan in April.

Healey Administration Agrees to UI Deal to Resolve $2.5B Mistake:
Employers Will Pay

The looming $2.5 billion UI liability question that had been hanging over employers’ heads for over 18 months has been answered, with news of a deal between the state and the federal government.  Under the recent agreement negotiated by the Healey Administration, employers will be required to pay back $2.1 billion over the next decade, to correct an error made during the Baker Administration when federal funds were incorrectly spent.  The agreement was signed on one of the last days of the Biden administration.  RAM reacted:
 
“It’s discouraging we have to pay for this,” RAM President Jon Hurst said of the latest settlement. “The fact that we have what is frankly a collapsing system even without this additional $2.1 billion, and adding to the fact we’re still paying the $2.7 billion from the prior administration, and now this, all for claims [related to pandemic-era mandatory shutdowns] that were really the government’s fault, not the employers’ fault, it’s a tough thing, it’s very costly.”  On the plus side, Hurst said he’s hopeful “that it appears there’s some willingness to talk about reforming the system. . . . Maybe this will be a tradeoff that employers will see as worthwhile.”
 
RAM will continue to advocate for the state to cover some of the costs associated with this mistake and will continue to push for meaningful UI reforms this legislative session.

Massachusetts Pay Transparency Law

 
RAM members are reminded that the first phase of the new Massachusetts Salary Range Transparency Law requires certain large employers to submit copies of their Equal Employment Opportunity (EEO) data reports to the Commonwealth by Monday, February 3^rd.  The filing requirement applies to employers who are already subject to federal reporting of workforce data information to the Equal Employment Opportunity Commission, and who have more than 100 Massachusetts employees at any time during the preceding calendar year.  For more information, the Massachusetts Executive Office of Labor and Workforce Development has issued compliance guidance in the form of a Frequently Asked Questions document, and the Secretary of the Commonwealth has set up an online portal with instructions on how to file and a link for submitting the required reports online. 
 

Advocacy Request:
Business Sign-on Letter in Support of Credit Card Competition Act