Question #5 would change the limit on state revenue collection, tying it to prior year collections plus average wage and salary growth, and provide for a rebate of revenue exceeding that limit.

First of all, what’s involved here is a complex scenario that is not easy to understand. To comprehend the impact of this proposal it is helpful to have a little bit of background on how the state budget works. The state appropriates the items it expends money on annually in about 1200 different line items. That is the expenditure side. On the revenue side the state receives revenues mostly from taxation, fees, and also from federal grants. The revenue side is more dynamic than one might think, and the revenues and expenditures don’t always match up precisely. 

Commonwealth Stabilization Fund

Because the Commonwealth (unlike the federal government) has to keep its budget balanced, depending on whether revenues are in surplus or in deficit, there has been established a Commonwealth Stabilization (or “Rainy Day”) Fund. Revenues are volatile, much more volatile than people think. Money is moved out of the Fund into other funds in order to keep things in balance.

The Stabilization Funds has really been used twice in the last couple of decades for significant  amounts:

1. Back during the 2001 recession, the Fund paid out about $1.7 billion in the 2002 and 2003 fiscal years;
2. Back during the 2007 banking crisis, the Fund paid out about $1.9 billion during the 2008, 2009 and 2010 fiscal years.

One time that the Fund did not need to be invoked (when it was expected that it would be invoked) is during the Covid crisis. We expected a massive draw down, but it turns out that was unnecessary because of (1) significant federal aid and (2) unexpected recovery in Massachusetts tax receipts.

And this is exactly how the Stabilization Fund is supposed to be used.

Chapter 62F

However, the Stabilization Fund also interacts with Chapter 62F of the General Laws which was the result of a 1986 ballot question. The chapter currently provides that state tax collections should not grow faster than the aggregate growth in wages and salaries earned in Massachusetts. In particular it:

• Establishes an annual ceiling on permissible state tax revenues, calculated using the growth in Massachusetts wages and salaries. The ceiling is not tied directly to inflation, population growth, or state spending.
• Requires the Department of Revenue to calculate revenues and the State Auditor to independently determine, by the third Tuesday in September, whether the Commonwealth exceeded its permissible revenue ceiling for the preceding fiscal year. 
• Establishes that if actual revenues exceed the ceiling, the entire excess must be returned to taxpayers through personal income tax credits. 

Keep in mind that (1) the growth formula uses a three-year average of annual wage-and-salary growth factors, rather than just the preceding year’s growth; (2) the allowable revenue ceiling also cannot decrease from one year to the next; and (3) the Chapter does not directly prohibit the Legislature from appropriating additional money. Rather, it establishes a statutory mechanism for returning excess tax collections to taxpayers.

Chapter 62F has been triggered exactly twice: in 1987 and in 2022. Both occasions resulted in refunds to Massachusetts taxpayers, but the economic circumstances, the size of the refunds, and the methods of distributing them were quite different.

In 1987 revenue collections exceeded the allowable limit  by 0.36% and resulted in $29.2 million in refunds (in 1987 dollars); in 2022 the excess was a much larger 7.03% excess resulting in $2.94 billion in refunds.

2022 is actually a very interesting story because it proves, in some ways, that both the Stabilization Fund and Chapter 62F are working as they should. It was anticipated, right after the apex of the pandemic, that revenue collections would fall off sharply. Instead, for various reasons, revenue collections did not fall off as much as anticipated and the Commonwealth received substantial funds from the federal government.

As a result, the Stabilization Fund was not triggered but Chapter 62F was, proving that revenue collections can be unanticipated both as a surplus and a deficit.

The Tag Team That Wasn’t

Further complicating this question is the fact that this question was initially paired with another question. You can see this by looking at the two petitions: H5006 (which became Question #5) and H5007, which the Supreme Judicial Court struck down as being in violation of Article 48. That proposal would have reduced the state income tax from 5% to 4%. 

The SJC struck this latter question in Finfer v. Attorney General, SJC-13885 (decided June 18, 2026) for reasons having to do with how the summary of the proposal was “materially misleading” about its effect on capital gains taxes.

Now, you can see in the majority and minority report of Question 5 as printed in the Information for Voters pamphlet that the Secretary of State sent out to each voting household in the Commonwealth. Both of those reports essentially treat the two questions (enhanced Chapter 62F and income tax reduction from 5% to 4%) as one question. But it no longer is that.

The Millionaire’s Tax

The final complication — as if we haven’t already described enough of these — is the Millionaire’s Tax, aka the “Fair Share Amendment,” which was enacted as Question #1 on the 2022 ballot questions. Unlike most other initiative petitions, this was one that actually amended the Massachusetts Constitution, so not one that can easily be rolled back.

The tax amended Article XLIV of the Massachusetts Constitution to impose an additional 4% income tax on annual taxable income exceeding $1 million, with that threshold adjusted annually for inflation.

The original (and conservative) estimate was that the amendment would generate approximately $1.2 billion annually. In FY2026, preliminary collections reached $3.38 billion, nearly three times that original estimate.

Among the major expenditures supported by Fair Share revenues are:

• Universal free school meals.
• Early education and child-care programs.
• Financial aid and tuition assistance at public colleges.
• MBTA operations, capital improvements, and safety.
• Regional transit authorities.
• Municipal roads and bridges, including Chapter 90-related assistance.

So relatively speaking, the Millionaire’s Tax has been successful, has funded what the people wanted it to fund, and has not led to a mass exodus of millionaires from the Commonwealth.

Why I’m Voting Against Question #5

I have a number of reasons why I’m voting against Question #5.

• First, the existing Chapter 62F is already doing what it is supposed to be doing. The proponents of Question 5 complain that it has only been invoked twice since its enactment. But that, my friends, is exactly how it is supposed to be working. It’s just like the Stabilization Fund: that has also only been invoked twice, when the Commonwealth was facing a serious revenue shortfall. That is also how that Fund is supposed to work. That does not suggest that it’s failing its task.
• Second, it turns out that there are reasons to believe that the question wouldn’t work as advertised. Those reasons are quite technical and they have to do with the delay in calculating the effect of any refunds on the Commonwealth’s balance sheet, and the feedback loop that might be created by those refunds. (If you’re interested in the details, I would refer you to the Tufts Center for State Policy Analysis, and their generally excellent non-partisan analysis of the Commonwealth’s state ballot questions. In addition, the Massachusetts Budget and Policy Center has a very detailed examination of both Question 5 and the now eliminated income tax reduction.)
• Third, it undermines the Fair Share Amendment, which was just adopted four years ago. That tax — which was approved by a majority of voters as a Constitutional amendment — has been successful in doing exactly what we wanted it to do. Under this current proposal a large share of the refunds would go back exactly to those same millionaires who just began paying their fair share.

While the proposal may seem innocuous and harmless — it would just insure that taxpayers get more frequent refunds, according to its proponents — in actuality it would cause quite a bit of chaos in the annual budgeting process.