CLT UPDATE
Friday, June 3, 2011
On Beacon Hill "The Dealing Starts"
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Sen. Stephen Brewer and Rep. Brian Dempsey,
freshman Ways and Means Committee chairs working under former budget
chieftains Therese Murray and Robert DeLeo, were named Tuesday to
lead a six-member conference committee charged with developing a
single budget out of the roughly $30.5 billion plans passed by the
House in April and the Senate last week.
Other conference committee members are Reps.
Stephen Kulik (D-Worthington) and Viriato deMacedo (R-Plymouth) and
Sens. Steven Baddour (D-Methuen) and Michael Knapik (R-Westfield).
Conference committees, with the recent exception
of one that hammered out changes to the criminal offender record
information law, typically vote to hold their meetings in private.
State House News Service
Tuesday, May 31, 2011
Budget negotiators named in both branches
Massachusetts Senate leaders, breaking their
silence over one of the most hotly debated issues on Beacon Hill,
will release a plan today to curb the collective bargaining rights
of teachers, police officers, and other municipal workers in an
effort to save money for struggling cities and towns.
The plan, which will be released as part of the
Senate’s budget proposal, follows a vote in the House last month
that made it the first Democratic-led chamber in the nation to
reduce public employee bargaining rights. Governor Deval Patrick has
offered his own version of the legislation aimed at controlling the
escalating cost of health insurance for cities and towns.
The Senate’s proposal, obtained by the Globe,
attempts to give more relief to unions. Unlike the House plan, which
caused a firestorm among labor leaders, this version could give
union workers more of the savings from health care changes and more
of an opportunity to appeal management decisions they oppose. It was
unclear late yesterday whether those changes will be enough to
satisfy union officials....
But the Senate plan creates a new way to resolve
such disputes, empowering the governor. If the sides do not agree,
the dispute would go to a three-member review panel: with one union
representative, one management representative, and a crucial
tie-breaking vote appointed by the governor’s budget chief.
If the panel determines that the changes proposed
by management at least match the health benefits given to state
workers, the review panel would be required to approve them. If not,
the panel would have discretion to consider union alternatives or to
give more of the savings from insurance plan changes back to
workers.
Regardless of what the panel decides, the Senate
measure allows as much as one third of the cost savings from health
changes to go back to municipal workers, whereas the House plan
gives workers between 10 percent and 20 percent of that savings, but
only in the first year.
The Boston Globe
Wednesday, May 18, 2011
Senate plan gives more to unions
Would pass on savings in health care costs
A public employee committee would include
weighted representation from all local unions, but cities and towns
would not be required to adopt Chapter 19 coalition bargaining to
pursue plan design.
Those negotiations would include plans for how to
distribute a portion of the savings among employees to offset the
shift in health care costs to workers.
Unlike the House plan, if an agreement cannot be
reached the Senate suggests the matter be handed over to a
three-person review panel.
That panel would be made up of one labor
representative, one management representative and a third mutually
selected person from a list provided by the Secretary of
Administration and Finance of professionals with expertise in
dispute resolution, municipal finance, or municipal health
insurance.
The secretary would have the authority to appoint
the third review panel member if both sides cannot agree on an
individual.
State House News Service
Wednesday, May 18, 2011
Senate muni-health plan features 40-day process to achieve savings
Yes, Senate President Therese Murray and her team
deserve credit for wading into the municipal health insurance
thicket that Democratic lawmakers, in deference to their union
patrons, have avoided for years.
But in releasing their version of the budget
yesterday, Senate leaders passed up an opportunity to issue a bold
challenge to those unions on behalf of taxpayers who foot the
insanely high cost of providing health insurance for municipal
employees. The earlier House proposal on municipal health care is
both bolder and better....
If the 30 days expires without an agreement, the
House would grant the city or town immediate power to implement
those modest, cost-saving plan changes — a strong model that unions,
so accustomed to calling all the shots, hate.
The Senate, on the other hand, turns to a process
that vaguely resembles arbitration, with a three-member, outside
review panel making the final call (albeit in an expedited fashion).
The Senate plan also kicks more of the savings — at least a third —
back to the employees instead of the taxpayers (the House capped
that payback at 20 percent in the first year).
The Senate makes its route to savings needlessly
complicated. The House version should prevail.
A Boston Herald editorial
Thursday, May 19, 2011
Senate short on health
Massachusetts revenue officials say a
surprisingly large increase in tax collections from
investment income helped fuel a 43 percent increase in
April tax collections compared with a year ago.
The Department of Revenue said
Tuesday the state collected $2.5 billion in taxes last
month, $758 million more than in April 2010. Last
month's total was also nearly $600 million above revised
monthly benchmarks.
Associated Press
Tuesday, May 3, 2011
Mass. tax collections up 43 percent in
April
Senate Minority Leader Bruce Tarr, calling the
sales tax increase in 2009, which brought the rate to 6.25 percent
from 5 percent, the “single most damaging change to the tax code,”
pushed for a two-step reduction to return the rate to 5 percent.
Tarr said the state would be more competitive, attract businesses
and make up some of the loss in economic productivity.
But Brewer again countered that the loss of what
he estimated would be $461 million next fiscal year and $979 million
the year after that would be too much for state programs to bear.
The amendment failed 10-28.
Republicans also hoped to woo support for a plan
to cut the income tax rate from 5.3 percent to 5 percent, the same
rate voters called for in a 2000 ballot initiative that lawmakers
never fully implemented. Although Democrats crushed the proposal on
a 5-33 vote, they noted that economic conditions appeared to be
improving at a rate that will trigger an automatic reduction in the
state income tax to 5.25 percent.
That mechanism was put in place when lawmakers in
2003 froze the income tax rate at 5.3 percent, arguing the state
needed the revenue and would gradually reduce the rate as economic
conditions improved.
Sen. Steven Tolman (D-Brighton) withdrew a plan
to extend the state sales tax to online retailers, a proposal
supported by retailers and advocates for increased revenue. He said
that pending lawsuits led him to hold off on making a push for his
amendment but said he hoped to revisit the issue....
Tarr said fiscal year-to-date tax collections are
running $1.9 billion ahead of the same period in fiscal 2011. The
Gloucester Republican said he hoped the infusion of new revenues
would not spark a spending binge ...
State House News Service
Wednesday, May 25, 2011
Senate Dems turn down tax cuts, including expanded break for seniors
Sen. Tarr said this seeks to reverse perhaps the
single most damaging change to the tax code. Before Aug. 1, 2009,
the sales tax was 5 percent. It rose to 6.25 percent and created a
widespread disincentive for the purchase of goods. In recognition of
the constraints outlined, we would go to 5.6 and then to 5.0. This
has widespread implications for the creation of jobs. Sen. Brewer
presented the caveat that unless we saw changes, we would face a
serious situation. This simply repeals the 6.25 percent and return
us over two years to 5 percent. This would pay dividends in budget
after budget. . . .
AMENDMENT 9: Tarr sales tax rollback.
BY A ROLL CALL VOTE OF 10-28, AMENDMENT
REJECTED
Sen. Hedlund said we heard discussion of the will
of the voters when we discussed the sales tax measure that was
defeated. This was approved by the voters. There have been efforts
to regain the trust of the voters. This is a three-step reduction to
get us to the traditional 5 percent rate, from 5.3 percent. On Jan.
1, 2012 it would drop to 5.2 for 2012. On Jan. 1, 2013, 5.1 percent
for 2013. It would go to 5.0 on Jan. 1, 2014. It is a prudent
phase-in of the reduction. It would clearly fulfill the will of
voters who approved the measure now 11 years ago. In the lean times
we did not push this to the extent we have in other years. When the
income tax was raised there was a clear promise that that would be
temporary. I am not sure what your definition of the word temporary
is. My definition is not a generation, not 11 years. We think the
time is right to address this. . . .
AMENDMENT 12 – Tarr income tax reduction.
BY A ROLL CALL VOTE 5-33, AMENDMENT
REJECTED
State House News Service
Senate Budget Session, Wednesday, May 25, 2011
Only weeks ago, those same union leaders were
accusing House Speaker Robert DeLeo of trying to gut the
collective bargaining process by siding with mayors and
selectmen on the issue of health plan design. But the response
to a Senate plan that, like DeLeo's, would leave the ultimate
decision on plan design to municipal executives as long as costs
and benefits were similar to those offered state employees, has
been much more muted.
Some in the labor movement may have sensed
they'd gone too far in attacking DeLeo and other Democratic
House members who'd opted for fiscal sanity over fealty to their
union friends. But the acceptance of the Senate version may also
signal a recognition that the current cost of health benefits
offered by cities and towns — which have been increasing at a
far higher rate than those offered by private employers or the
state — are indeed unaffordable.
Neither the House nor Senate versions of next
year's budget includes a tax increase. But the lack of new
revenues will require substantial cuts in spending on social
services and local aid.
Voters will not abide tax increases of any
kind until they're convinced wages, benefits and appreciation
for same are on somewhat equal footing in the private and public
sectors. Perhaps some previously resistant to compromise are
starting to recognize this essential fact.
A Salem News editorial
Thursday, May 26, 2011
Progress on plan design reflects new reality
Oh, to be a member of the conference
committee when it begins negotiations over a final $30 billion
state budget (behind closed doors, naturally).
The House and Senate have each produced
balanced plans that attempt to make up for $1.5 billion in
federal stimulus money that will vaporize in fiscal 2012. They
dip into the rainy-day fund, without depleting it (amazing what
passes for positive news these days). There are no new taxes.
But perhaps most critical, a final budget is
almost guaranteed to include a plan to relieve the burden on
local property taxes, by giving cities and towns more power to
design health plans for their employees. The cost of insuring
municipal workers and retirees today is crowding out spending on
all manner of basic government services.
This is a unique opportunity for meaningful
reform and the House plan, we’ll repeat, is superior to the one
offered by the Senate. It took political courage for Speaker
Robert DeLeo and House Democrats to challenge the state’s
powerful labor unions, who threatened to make life miserable for
anyone who voted in favor of their plan.
The Senate accepted the municipal health
insurance challenge as well, but their plan needlessly
complicates the process. In the end both branches say they can
deliver $100 million in savings to cities and towns, but House
leaders are in it this deep, they ought to fight to maintain
their proposal in the final budget.
A Boston Herald editorial
Tuesday, May 31, 2011
The dealing starts
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Chip Ford's CLT
Commentary
In the hidden recesses on Bacon Hill the
sausage-making machine is smoking along. The House/Senate conference
committee is now working behind closed doors to come up with a
compromise budget from among the two proposals. When it does, the
sausage will need to be approved by both chambers then be accepted
and signed or rejected by the governor.
Good news: There are no new taxes proposed
in either budget.
With fiscal year-to-date tax collections running
$1.9 billion ahead of the same period last year, there shouldn't
be!
Bad news: There are no tax cuts in either,
as usual.
As
in the House earlier, the voters' income tax rollback was again
shot down in the Senate by the Democrat majority.
Once again, "now is not a good time" to finally
keep the promise and roll back the income tax, "temporarily" hiked
in 1989 — 22-years ago.
It's not the time to even "unfreeze it"
a tad.
Senator Brewer said "Come October as we reach this growth in our
economy, a trigger would take another $54 million out of our coffers
and give it back."
Oh sure, "maybe in the fall" we're promised,
again. We've been hearing "maybe later" since the voters'
mandated rollback in 2000 was "temporarily frozen" at 5.3 percent in
2002 -- 9 years ago. More likely the thaw will arrive
when hell freezes over.
A trigger would "take another $54 million out of
our coffers" and "give it back"?
Senator, no. Our money would never
reach your coffers. You wouldn't be giving back
anything — you'd just be taking less
from us, as was promised by the Legislature almost a quarter-century
ago.
The public employee unions
seem awfully quiet since the Senate's version of health insurance
reform was introduced. You may recall in late April when an
apoplectic Robert Haynes, Massachusetts AFL-CIO president, wrote to
House members:
“You are either on
the side of collective bargaining for the workers who have
been willing to compromise on this issue, or you are against
those collective bargaining rights and want to reward
intractable, uncompromising management advocates like the
MMA. All votes relating to the matters discussed in this
letter may be considered Labor Votes and calculated into
Labor Voting Records upon which endorsements and levels of
support are determined.”
Optimists like the Salem News hope "acceptance of
the Senate version may also signal a recognition that the current
cost of health benefits offered by cities and towns ... are indeed
unaffordable."
We cynics sit back and wait to taste the sausage
before judging its flavor.
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Chip Ford |
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The Boston Globe
Wednesday, May 18, 2011
Senate plan gives more to unions
Would pass on savings in health care costs
By Noah Bierman and Michael Levenson
Massachusetts Senate leaders, breaking their silence over one of the
most hotly debated issues on Beacon Hill, will release a plan today
to curb the collective bargaining rights of teachers, police
officers, and other municipal workers in an effort to save money for
struggling cities and towns.
The plan, which will be released as part of the Senate’s budget
proposal, follows a vote in the House last month that made it the
first Democratic-led chamber in the nation to reduce public employee
bargaining rights. Governor Deval Patrick has offered his own
version of the legislation aimed at controlling the escalating cost
of health insurance for cities and towns.
The Senate’s proposal, obtained by the Globe, attempts to give more
relief to unions. Unlike the House plan, which caused a firestorm
among labor leaders, this version could give union workers more of
the savings from health care changes and more of an opportunity to
appeal management decisions they oppose. It was unclear late
yesterday whether those changes will be enough to satisfy union
officials.
The plan also throws some of the thorniest decisions into the
governor’s hands as he is trying to make himself a national
spokesman on health care issues.
Patrick has tried to mollify both sides in the contentious debate
over health benefits, saying he believes unions deserve a place at
the table, but should not be allowed to block money-saving changes.
The Senate proposal, like the House one that preceded it, would give
local governments 30 days to reach an agreement with their unions on
significant health plan changes. In the case of a deadlock, the
House plan allows mayors and town managers to set copayments and
deductibles unilaterally.
But the Senate plan creates a new way to resolve such disputes,
empowering the governor. If the sides do not agree, the dispute
would go to a three-member review panel: with one union
representative, one management representative, and a crucial
tie-breaking vote appointed by the governor’s budget chief.
If the panel determines that the changes proposed by management at
least match the health benefits given to state workers, the review
panel would be required to approve them. If not, the panel would
have discretion to consider union alternatives or to give more of
the savings from insurance plan changes back to workers.
Regardless of what the panel decides, the Senate measure allows as
much as one third of the cost savings from health changes to go back
to municipal workers, whereas the House plan gives workers between
10 percent and 20 percent of that savings, but only in the first
year.
Today’s proposal has been shrouded in secrecy, as labor and
municipal leaders have lobbied their senators since the House vote.
Senate President Therese Murray, who helped craft the plan, has
offered only hints of how aggressive her chamber would be in curbing
union power, but has said she agrees with Patrick’s philosophy that
unions should have a voice.
“I emphatically agree with the governor that labor has to be at the
table,’’ she told business leaders last month.
Senate leaders shared the plan yesterday with members of the
chamber’s budget committee and are set to unveil the measure
formally at a press conference this morning. It is scheduled for a
full debate next week, when senators will be allowed to propose
amendments.
Efforts to limit collective bargaining have gained prominence in the
Legislature amid skyrocketing health costs for cities and towns,
which have been forced to lay off workers and reduce services in the
down economy.
The issue has angered union leaders, who say the state is moving
toward stripping employees’ collective bargaining rights won over
decades. Proponents of the House and Senate measures say they are
moderate changes and necessary because unions have resisted past
efforts to rein in the high cost of benefits, which are more
generous than private-sector benefits, even as cities and towns
struggle financially.
State House News Service
Wednesday, May 18, 2011
Senate muni-health plan features 40-day process to achieve savings
By Matt Murphy
Weeks after labor leaders ripped a House plan to restrict their
bargaining rights over municipal health insurance plan details, the
Senate on Wednesday will roll out a counter-proposal that would give
unions a comparatively larger role in negotiations over plan changes
while still holding out the promise of $100 million in savings to
cities and towns.
On the heels of the House plan, incorporation of the Senate plan
into its annual budget bill means Beacon Hill may be on the verge of
a breakthrough on an issue that’s gone unresolved for years and
which municipal officials claim represents their best shot at budget
savings during an era of local aid cuts.
The Senate proposal, a summary of which was obtained by the News
Service, would retain the local option for cities and towns to
pursue savings in their municipal health insurance plans while
laying out a 40-day process for achieving savings should local
government managers opt into the reform.
Employees would have the opportunity to share in more of the savings
achieved through changes to plans that would shift costs to workers
by empowering municipalities to increase co-payments and
deductibles.
As much as 33 percent of the first-year savings would have to be set
aside to mitigate the impact to municipal subscribers through
benefits such as health reimbursement accounts, with a particular
focus on capping or curbing increased costs to retirees, low-wage
earners and the heaviest users of health care.
“While providing this valuable new tool to the Commonwealth’s cities
and towns, the Committee proposal also preserves a meaningful voice
for municipal employees and retirees in determining their health
care costs,” the summary of the Ways and Means Committee plan
explains.
The Senate has approved municipal health plan reforms in each of the
past two years, with its proposals dying in the House. Senate
President Therese Murray has said she agrees with Gov. Deval Patrick
that labor needs to have a “meaningful role” in negotiations.
Under the proposal, following a vote of the local governing body to
enter negotiations, representatives from municipal unions, including
retirees, would be given a 30-day window to bargain with management
over health plan design changes or a transfer to the state’s Group
Insurance Commission.
A public employee committee would include weighted representation
from all local unions, but cities and towns would not be required to
adopt Chapter 19 coalition bargaining to pursue plan design.
Those negotiations would include plans for how to distribute a
portion of the savings among employees to offset the shift in health
care costs to workers.
Unlike the House plan, if an agreement cannot be reached the Senate
suggests the matter be handed over to a three-person review panel.
That panel would be made up of one labor representative, one
management representative and a third mutually selected person from
a list provided by the Secretary of Administration and Finance of
professionals with expertise in dispute resolution, municipal
finance, or municipal health insurance.
The secretary would have the authority to appoint the third review
panel member if both sides cannot agree on an individual.
The review board created by the Senate would be required to approve
any health insurance plan changes proposed by management that do not
exceed the benchmarks of those benefits received by state employees,
defined as the median co-payment and deductible levels for GIC
health plans.
If the proposed changes do shift a greater amount of cost onto
employees than the GIC, the panel could consider union alternatives.
The proposal also states that cities and towns would be guaranteed
two thirds of any cost savings, but the panel would have 10 days to
review and approve the mitigation plan to protect workers and
retirees most affected by the cost-shifting.
This procedure differs significantly from the House bill that would
give management the unilateral authority to make plan design changes
if negotiations break down in exchange for a 20 percent share of the
savings going back to employees in the first year instead of 10
percent.
Like the House plan, the proposal from Senate Ways and Means would
give cities and the towns the local option of implementing plan
design changes or joining the GIC to achieve savings. Supporters of
the local option claim many municipal managers would be eager to
pursue savings-minded reforms.
Following passage of the House version, Gov. Patrick said he felt
that any reform should mandatory, pointing to his own proposal that
required municipalities to seek savings through health plans
comparable to the ones offered state workers, or risk being forced
to join the GIC.
Like the House bill, the Senate will also propose a mandate that all
eligible municipal retirees be enrolled in Medicare, and the bill
would prohibit the GIC from making mid-year cost sharing changes to
its health plans unless triggered by emergency budget cuts by the
governor.
To accommodate the potential of many cities and towns electing to
join the GIC rather than negotiate over their own health plans, the
Senate would open up GIC plans to rolling admissions for fiscal
2012.
The Boston Herald
Thursday, May 19, 2011
A Boston Herald editorial
Senate short on health
Yes, Senate President Therese Murray and her team deserve credit for
wading into the municipal health insurance thicket that Democratic
lawmakers, in deference to their union patrons, have avoided for
years.
But in releasing their version of the budget yesterday, Senate
leaders passed up an opportunity to issue a bold challenge to those
unions on behalf of taxpayers who foot the insanely high cost of
providing health insurance for municipal employees. The earlier
House proposal on municipal health care is both bolder and better.
Senate leaders say their proposal will achieve the same $100 million
in savings for cities and towns as the House bill, and the proposals
share similarities.
But at the heart of it all is who decides whether municipal workers
will have to share more of the cost of their insurance — and if so
how much.
The House gives more power to municipal managers. The Senate, on the
other hand, introduces a review panel and “mitigation plans” and,
inexplicably, could even get the state secretary of administration
and finance involved in what should be an entirely local decision.
If a community opts in to this new process, labor and management
would get 30 days to negotiate a cost-saving agreement. Employees
might shift into the Group Insurance Commission (which covers state
employees), or be asked to bear more of the cost of their health
plan, through higher co-payments and deductibles.
If the 30 days expires without an agreement, the House would grant
the city or town immediate power to implement those modest,
cost-saving plan changes — a strong model that unions, so accustomed
to calling all the shots, hate.
The Senate, on the other hand, turns to a process that vaguely
resembles arbitration, with a three-member, outside review panel
making the final call (albeit in an expedited fashion). The Senate
plan also kicks more of the savings — at least a third — back to the
employees instead of the taxpayers (the House capped that payback at
20 percent in the first year).
The Senate makes its route to savings needlessly complicated. The
House version should prevail.
Associated Press
Tuesday, May 3, 2011
Mass. tax collections up 43 percent in April
BOSTON—Massachusetts revenue officials say a surprisingly large increase
in tax collections from investment income helped fuel a 43 percent
increase in April tax collections compared with a year ago.
The Department of Revenue said Tuesday the state collected $2.5 billion
in taxes last month, $758 million more than in April 2010. Last month's
total was also nearly $600 million above revised monthly benchmarks.
The state had expected increased April income tax payments due to the
improving economy. Also, severe flooding delayed the April 2010 filing
deadline until May in several counties.
Officials were not as quick to explain the hike in revenues from
interest and dividends and capital gains. They say it appears many
taxpayers chose to cash in some of their investments during 2010 and are
now paying taxes on those gains.
State House News Service
Wednesday, May 25, 2011
Senate Dems turn down tax cuts, including expanded break for seniors
By Kyle Cheney
The state Senate on Wednesday rejected a succession of Republican
efforts to cut taxes, staving off bids by the GOP’s four-member
minority party to reduce the sales and income taxes, implement a
permanent sales tax holiday weekend and a six-day meals tax holiday,
and retain a $46 million corporate tax break that Democrats plan to
delay by a year.
In defeating the proposed cuts, Democrats also emphasized that
taxpayers may be in line for a 0.05 percent reduction in the income
tax rate, if economic indicators continue their upward trend into
the fall.
In early action on the Senate budget, members also defeated Sen.
Susan Fargo’s attempt to expand a tax credit for seniors 9-29 and
overwhelmingly backed a proposal to send an additional $3 million to
pay for youth jobs in 28 communities across Massachusetts.
During debate on the tax proposals, Republicans argued that a
permanent sales tax holiday would provide guaranteed annual relief,
particularly to retailers on the New Hampshire border. But Democrats
countered that forfeiting more than $20 million in sales tax each
year – an estimate offered by Senate Ways and Means Chair Steven
Brewer – without a chance to review the plan would be unwise.
Businesses could be “shut down” as a result of a permanent sales tax
holiday, argued Sen. Steven Baddour (D-Methuen), who suggested
consumers would postpone major purchases in anticipation of the
holiday. But Republicans rejected that suggestion, noting that the
state has approved sales tax holidays in seven of the last eight
years, leaving little doubt among consumers that the holiday is an
annual event.
“It’s not a national security secret,” said Sen. Michael Knapik
(R-Westfield).
The amendment failed on a 4-34 party line vote.
Republicans also charged Democrats with breaking a promise to the
business community by pushing to delay a scheduled $46 million tax
deduction for Massachusetts companies. Knapik said Massachusetts is
in the “competitive fight for its life” and said the state was
reneging on part of a “deal” it made with businesses when it passed
a law increasing their tax burden by instituting a combined
reporting system.
Brewer argued that the state needed the $46 million to balance its
budget and would implement the tax break in full next year and over
the six years to follow.
Senate Minority Leader Bruce Tarr, calling the sales tax increase in
2009, which brought the rate to 6.25 percent from 5 percent, the
“single most damaging change to the tax code,” pushed for a two-step
reduction to return the rate to 5 percent. Tarr said the state would
be more competitive, attract businesses and make up some of the loss
in economic productivity.
But Brewer again countered that the loss of what he estimated would
be $461 million next fiscal year and $979 million the year after
that would be too much for state programs to bear. The amendment
failed 10-28.
Republicans also hoped to woo support for a plan to cut the income
tax rate from 5.3 percent to 5 percent, the same rate voters called
for in a 2000 ballot initiative that lawmakers never fully
implemented. Although Democrats crushed the proposal on a 5-33 vote,
they noted that economic conditions appeared to be improving at a
rate that will trigger an automatic reduction in the state income
tax to 5.25 percent.
That mechanism was put in place when lawmakers in 2003 froze the
income tax rate at 5.3 percent, arguing the state needed the revenue
and would gradually reduce the rate as economic conditions improved.
Sen. Steven Tolman (D-Brighton) withdrew a plan to extend the state
sales tax to online retailers, a proposal supported by retailers and
advocates for increased revenue. He said that pending lawsuits led
him to hold off on making a push for his amendment but said he hoped
to revisit the issue.
Brewer and Tarr launched the Senate's annual debate of the fiscal
2012 budget Wednesday morning.
Brewer said the $30.5 billion budget, if adopted, would cut the
state’s structural deficit by 75 percent, to just over $400 million,
positioning the state well for the future. Pointing to recovering
jobs numbers and state tax collections, he also identified
replenishing the state’s rainy day fund as a top priority, noting
its balance is projected to fall to about $670 million from a high
of $2.3 billion.
Tarr said fiscal year-to-date tax collections are running $1.9
billion ahead of the same period in fiscal 2011. The Gloucester
Republican said he hoped the infusion of new revenues would not
spark a spending binge and called on Senate Democrats to advance
health care cost containment legislation, saying it’s overdue and
could help businesses grow jobs, and the state’s tax base, by
addressing a big cost driver.
Senate President Therese Murray’s office on Wednesday morning
forecast a final vote on the budget Thursday night and the Senate,
having handled only about 60 of its 599 amendments during the day on
Wednesday, planned to continue its session into the evening
Wednesday.
State House News Service
Senate Budget Session, Wednesday, May 25, 2011
[Excerpt]
AMENDMENT 9: Tarr sales tax rollback.
Sen. Tarr said this seeks to reverse perhaps the single most
damaging change to the tax code. Before Aug. 1, 2009, the sales tax
was 5 percent. It rose to 6.25 percent and created a widespread
disincentive for the purchase of goods. In recognition of the
constraints outlined, we would go to 5.6 and then to 5.0. This has
widespread implications for the creation of jobs. Sen. Brewer
presented the caveat that unless we saw changes, we would face a
serious situation. This simply repeals the 6.25 percent and return
us over two years to 5 percent. This would pay dividends in budget
after budget.
Sen. Tarr requested support for a roll call and there was support,
once Sen. Knapik and Ross found their ways to their chairs.
Sen. Brewer said the hit to the budget would be $461 million
and $979 million next year. I’d like to know where we’re going to
find that billion dollars for programs. The public had the chance to
roll this back to 3 percent in November and they rejected that.
People understand that you need to have revenues to educate your
children, protect your environment. Our state taxes as a proportion
of personal income are lower than the national average. I have more
figures. To use Taxachusetts is simply words. We are no more
Taxachusetts than any other state. We are somewhere in the middle on
45 of 50 areas. We ought to put the alliteration to bed.
Sen. Candaras said a lot of state Legislatures have almost
been paralyzed by the financial straits. They have been unable to
move forward as states. Some states are slapping taxes on galloping
horses, as my colleague said. We haven’t done that in Massachusetts.
We made critical choices. We were not paralyzed by the fact that we
could not do everything. This amendment is simply unaffordable.
Rolling back the sales tax would require devastating cuts. Our sales
tax on businesses is actually very low – 30 other states have a
higher state sales tax than we do in Massachusetts. We have all
worked collectively to make very hard choices. When you start taking
a $150 clothing allowance for children who have no one and nothing,
that we can’t afford that for the poorest children in the
Commonwealth, when you can’t do that I am not sure we can afford to
do this.
Sen. Tarr said until we become competitive and increase jobs
we will need to make cuts like this to take away that clothing
allowance. We are going to lose Congressmen as we will with
redistricting. We are going to have to come to this chamber with a
declining base of taxpayers and argue about what little is left year
after year. We can’t afford not to do this. Ultimately it would
create 10,000 jobs according to a dynamic analysis of increasing
disposable income. We can continue to use linear analyses and talk
about revenue foregone as if it’s the only dimension, and to talk
about cutting clothing allowances. It’s interesting the gentleman
from Ways and Means referenced the vote. If it had been 5 percent
rather than 3 percent, the result would have been different. That’s
speculation but we know about the polling. The books are out. We
have had significant job loss up until recently. We are losing a
Congressman because of population changes. We’ve got to do something
to increase the employment base and we’ve got to stop thinking that
we will come to the chamber and by reconfiguring the resources that
we will build a better future. That’s the way that we paper things
over and get from one year to the next.
BY A ROLL CALL VOTE OF 10-28, AMENDMENT
REJECTED
* * *
AMENDMENT 12 – 5 PERCENT INCOME TAX: Tarr
income tax reduction.
Sen. Hedlund said we heard discussion of the will of the
voters when we discussed the sales tax measure that was defeated.
This was approved by the voters. There have been efforts to regain
the trust of the voters. This is a three-step reduction to get us to
the traditional 5 percent rate, from 5.3 percent. On Jan. 1, 2012 it
would drop to 5.2 for 2012. On Jan. 1, 2013, 5.1 percent for 2013.
It would go to 5.0 on Jan. 1, 2014. It is a prudent phase-in of the
reduction. It would clearly fulfill the will of voters who approved
the measure now 11 years ago. In the lean times we did not push this
to the extent we have in other years. When the income tax was raised
there was a clear promise that that would be temporary. I am not
sure what your definition of the word temporary is. My definition is
not a generation, not 11 years. We think the time is right to
address this. Some amendment have been called gimmicks. There has
been talk of certainty. This can show we are serious about
attracting businesses. The overall tax burden, housing, fuel costs
are all considerations of businesses. There has been study done by
interest groups. Beacon Hill Institute estimates increased
investments in fiscal ’13 of $6 million and increased investments of
$9 million in the third year. It would keep more money in the hands
of residents and consumers - $236 million for the state economy. It
is our desire to seek a roll call.
Sen. Hedlund requested a roll call and there was support.
Sen. Brewer said he hopes the amendment is not adopted. This
fiscal year the hit on our budget is $116 million. You can be the
judge, as you are, as to whether you want to find $116 million in
cuts. Come the fall I expect a discussion about the trigger for
reducing the tax anyway. Some will want to freeze the trigger and
some will want to honor the trigger. This Legislature has voted for
almost 50 different tax cuts. When we can afford tax cuts the
Democratic majority votes for them. It’s not one size fits all. Come
October as we reach this growth in our economy, a trigger would take
another $54 million out of our coffers and give it back. We are
honoring that commitment today.
Sen. Hedlund said two points. Since that fiscal year we have
seen on average the state budget increase about a billion a year,
over $10 billion in increased spending. We think the time has come
where we can give some of that back to the taxpayers of
Massachusetts. We have seen 1,600 new state employees added. The
triggers cited were artificially placed in 2002 to get around
allowing us to honor the commitment we made when we had surpluses.
If you want to talk about triggers, triggers to avoid us honoring a
pledge we made, we are offering a great trigger, an entire Howitzer.
Sen. Candaras said she hopes the amendment is not adopted. I
don’t know how we can know that this is a good time to lower taxes.
We talk about the Zakim bridge chart and not having enough in our
rainy day fund and we talk about uncertainty in our revenues. There
are a number of things swirling around. There is a fair possibility
that sooner rather than later this October the statutory trigger
might be set off and this amendment might be moot. Additionally by
October we may know a little bit more about our revenues, the answer
about May. We will know a little bit better.
Sen. Tarr said the voters thought this was going to be
resolved when they voted on it. They have learned a lot in ensuring
years about mechanisms of convenience that don’t resolve the issue
at all. We deal with something that solves our immediate need but
doesn’t make long-term sense. I was delighted to hear the gentleman
from Ways and Means talk about $116 million. We can choose to reform
Medicaid and save in excess of $500 million or not to provide this
kind of tax relief. We don’t vote for this and subsidize $500
million in lost savings. If you want to move toward more reform and
honor the voters, you vote yes.
Sen. Candaras said this would roll back the personal and the
capital gains tax. In the statute there is also a trigger where if
capital gains receipts reach a billion dollars, a trigger requires
some of that to go to stabilization. The better mechanism for a
rollback in taxes, something we would all love to do, is to let the
statute take effect. I voted for more than 42 tax cuts when I was in
the House. None of them benefitted the most distressed city in the
state, Springfield, in terms of investments and with the
unemployment rate.
Sen. Tarr said before we enacted those 42 tax cuts, we had a
two billion dollar deficit. Then we had a $2 billion surplus. Due to
the growth they spurred we had resources for when Springfield fell
on hard times. Not only does this effect capital gains, it would
help us in terms of subchapter S corporations that pay at personal
income tax rates.
Sen. Pacheco said, This is a rewriting of history. The Bush
administration took a surplus and made the United States the
greatest debtor nation on Earth. Our new Democratic president had to
step in without any votes from the minority party to help pass a
stimulus so that we wouldn’t go into a depression. We had a tough
time, yes. But I think it’s important to look at what our governor,
our Senate president, our speaker, our leadership team here in
Massachusetts has done. In light of all this, we as a state are
growing 4 percent. The average state is growing about 1.8. We’re
doing extraordinarily well. We need to make sure that we are
fiscally responsible. We just can’t spend ourselves into greater
debt. We need to be fiscally responsible and the existing statute
that we put in place is a fiscally responsible way to ensure that
the statutory provisions would allow us to get to the reductions
that all of us want to see. And if the trend continues through
January, we will automatically see a reduction to 5.25 percent. I
cannot sit here and listen to remarks that rewrite the history of
the nineties. I hear that taking place all the time. The greatest
growth in our economy, new jobs, a time in our history when
minorities, women, and yes the wealthy, all groups, we all shared in
the prosperity. I ask you to reject this particular amendment. It
would be extremely harmful to our budget and, I would submit, to our
economy.
Sen. Knapik said, You know, given the threat of the rapture I
did not prepare to speak on this amendment. That president the
gentleman cited had a Republican Congress. And he triangulated to a
moderate, middle-of-the-road guy. What was the response? America
developed in a way we had not ever seen since the immediate post
World War II era. States began to get the edge. It wasn’t the
formerly great states of America. It was almost everybody, Madame
President. That tax policy – it is under attack over and over and
over again. We put it all in place to keep a competitive edge. We
had strategic programs put in place to help keep that competitive
edge. Businesses in Western Mass did benefit from much of what had
been done, particularly in the financial services sector. The voters
voted to have it go to 5 percent. If you recall, in 1988, it went
from 5 percent to 6.25 percent, then down to 5.95 percent. The
voters took matters into their own hands in 2000 an said enough’s
enough. We were in one of those conundrums. So what could we do?
Could we continue to have it programmatically going down? It stopped
in 2002. Is it going to take another 22 years to get back to the
will of the people? I don’t know if I have the strength to be here
to save the commonwealth for the next 22 years. The 90s are a
halcyon age. We’re losing a congressman. For most of the years we
had a net outmigration. We did not have a net new number of jobs
created in the last decade. That’s not a barometer for tremendous
success. Some people cite the CNBC study. CEO magazine asked people
who owned businesses, would you come to Massachusetts? We fall to
the back of the pack. We’re the only state in America with a
universal mandate. We knew 2006 when Gov. Romney signed the bill,
things were going to change in the future. Make no mistake about it,
tax policy at the personal level and the corporate level are going
to be the barometer of our success going forward. The only way to
have a healthy budget is to have healthy growth in the economy.
Creating 200,000 jobs last month made headlines. In other
recoveries, it was not unusual to create 300 to 400,000 new jobs
nationally. We are in a slow-growth, slow-revenue scenario. Things
cannot continue to be the same. We want predictability in tax
policy. Texas creates 80 percent of all new jobs in America. Texas
has the 12th largest economy in America. 4,000 jobs for the month of
April is nothing to scoff at, but it is a long, long, long way for
this state to retain its preeminence. The growth in Hampden County
was from immigrants, new residents. Those people need jobs. I hope
the amendment passes. The trigger kicks in in October. We have got
to sharpen that pencil, Madame President. Unemployment in Boston is
6.8 percent. But that recovery has got to get to the other regions
of Massachusetts. I hope the amendment passes.
Sen. Spilka said, I wasn’t planning on speaking but I respect
my colleagues from Westfield tremendously, but I need to respond to
some of the statements. I was at a conference on the digital
economy. Time and time again they said that in the choice of
deciding where to go to start their company, they had Massachusetts,
New York and California. What I heard was they chose Massachusetts
to come and start their company and grow their company and be a
success story because of the strengths that we have. Income tax,
middle of states. But our education, quality of life, innovation for
outweigh anything else. Texas is the fastest growing state but we
have been consistently rated as number two. Massachusetts is doing a
great job of it. We shouldn’t settle on our status quo, but we are
doing well.
Sen. Candaras said, I am a relatively new chair of revenue,
but I’ve been learning a lot about the tax expenditure budget. It
came as a shock to me how much we give away to people in
corporations. On a $28 billion budget, the tax expenditure budget,
we return to the cities of the commonwealth, exempt, defer, allow a
deduction for, exclude or exempt a full $23 billion. It appears that
we defer, deduct, exempt or give credit for almost as much money as
we spend. The corporations in Massachusetts get tax-related
expenditures of more than $1.18 billion a year. Moreover, in 2010
facts and figures, Massachusetts was 36th in the country for overall
index rank. Sometimes mythology becomes reality. We are being lauded
by the bond rating agencies. We’re being lauded for what we did with
health care. We’re 36th in the United States in business tax
climate. We have to be doing something right to have come out of the
worst recession since the depression. We can always do better. Yes
we can. We are on the one-day-at-at-time program right now. That
statistics and evidence just do not support the idea that we are not
doing well by businesses and not doing well by our citizens.
BY A ROLL CALL VOTE 5-33, AMENDMENT
REJECTED
The Salem News
Thursday, May 26, 2011
A Salem News editorial
Progress on plan design reflects new reality
MBTA General Manager Richard Davey is right when he says public
employees in general, and his in particular, get a bad rap.
"The vast majority of people who work at the T work very hard," he
told directors of the North Shore Chamber of Commerce yesterday
morning.
But the fact that he has made improving customer service, along with
boosting employee morale, one of the agency's core missions tells
you something. Given the fact his agency for years had among the
most generous wage-and-benefit packages of any transit system in the
county — this was the place, after all, where you could retire after
23 years regardless of age, at near full pay and with fully paid
medical benefits — customer service shouldn't have been a problem.
But as a result of the leadership of enlightened managers and union
leaders, things may be changing.
Davey, on the job for a little more than a year, is working hard to
change the culture at the MBTA. And now there is evidence that the
AFL-CIO and its affiliated unions are changing their tune regarding
a proposal that would give cities and towns greater flexibility in
deciding what kind of health plans to offer their employees.
Only weeks ago, those same union leaders were accusing House Speaker
Robert DeLeo of trying to gut the collective bargaining process by
siding with mayors and selectmen on the issue of health plan design.
But the response to a Senate plan that, like DeLeo's, would leave
the ultimate decision on plan design to municipal executives as long
as costs and benefits were similar to those offered state employees,
has been much more muted.
Some in the labor movement may have sensed they'd gone too far in
attacking DeLeo and other Democratic House members who'd opted for
fiscal sanity over fealty to their union friends. But the acceptance
of the Senate version may also signal a recognition that the current
cost of health benefits offered by cities and towns — which have
been increasing at a far higher rate than those offered by private
employers or the state — are indeed unaffordable.
Neither the House nor Senate versions of next year's budget includes
a tax increase. But the lack of new revenues will require
substantial cuts in spending on social services and local aid.
Voters will not abide tax increases of any kind until they're
convinced wages, benefits and appreciation for same are on somewhat
equal footing in the private and public sectors. Perhaps some
previously resistant to compromise are starting to recognize this
essential fact.
The Boston Herald
Tuesday, May 31, 2011
A Boston Herald editorial
The dealing starts
Oh, to be a member of the conference committee when it begins
negotiations over a final $30 billion state budget (behind closed
doors, naturally).
The House and Senate have each produced balanced plans that attempt
to make up for $1.5 billion in federal stimulus money that will
vaporize in fiscal 2012. They dip into the rainy-day fund, without
depleting it (amazing what passes for positive news these days).
There are no new taxes.
But perhaps most critical, a final budget is almost guaranteed to
include a plan to relieve the burden on local property taxes, by
giving cities and towns more power to design health plans for their
employees. The cost of insuring municipal workers and retirees today
is crowding out spending on all manner of basic government services.
This is a unique opportunity for meaningful reform and the House
plan, we’ll repeat, is superior to the one offered by the Senate. It
took political courage for Speaker Robert DeLeo and House Democrats
to challenge the state’s powerful labor unions, who threatened to
make life miserable for anyone who voted in favor of their plan.
The Senate accepted the municipal health insurance challenge as
well, but their plan needlessly complicates the process. In the end
both branches say they can deliver $100 million in savings to cities
and towns, but House leaders are in it this deep, they ought to
fight to maintain their proposal in the final budget.
Both branches have also taken on the issue of reforming the state
system for providing legal services to the poor. While Gov. Deval
Patrick came out of nowhere with an absurd plan to add 1,000 lawyers
and 500 support staff to the state payroll (with requisite benefits
and pensions, too), a more modest division of labor is much more
appropriate. On that score the Senate has wisely inched toward a
more reasonable compromise with the House.
Senate President Therese Murray’s proposals to introduce more
accountability in state government ought to make it into the final
budget, along with the House repeal of the so-called “gift ban” that
unnecessarily limits contact between drug companies and physicians.
And conference negotiators could save themselves time by X’ing out
Senate efforts to engineer major policy changes, including a measure
to ban the use of aversive electric-shock therapy and a ban on
compensating members of nonprofit boards of directors. Neither
belongs in the budget.
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Citizens for Limited Taxation ▪
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