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CLT UPDATE
Friday, May 22, 2015

Senate Tax Hike

The Massachusetts Senate unanimously passed a $38.1 billion budget early Friday that one lawmaker said will “lift all families and invest in our future.”...

Differences with the House on an array of items must be reconciled before the budget sees final legislative votes and goes to Baker for his action....

Another amendment that senators approved this week — with much more controversy — would increase the state’s earned income tax credit, which benefits low-income workers, increase the personal exemption available to all taxpayers, and aim to pay for it by freezing the state’s income tax at its current rate of 5.15 percent.

Under current law, the tax rate is set to incrementally decline to 5 percent if the state meets certain economic growth thresholds.

In 2000, voters passed a ballot initiative knocking the rate down from 5.85 percent to 5 percent in steps. The first ticks downward took place at the beginning of 2001 and 2002. But then the state Legislature, facing rough economic times, froze the final tax cut and set up a much slower diminution.

Baker supports expansion of the earned income tax credit, but proposed pairing it with an elimination of the state’s controversial film tax credit. The governor opposes freezing the income tax rate.

The Boston Globe
Friday, May 22, 2015
Mass. Senate passes $38.1 billion budget

“Fairness matters.”

So said Sen. Benjamin Downing (D-Pittsfield), as the state Senate on Tuesday debated a “freeze” of the voter-mandated rollback in the state’s income tax rate.

Or as anyone with a long memory would understand the subject of the debate — a tax hike.

Downing was one of a parade of liberal senators who rose to sell the tax plan as the key to reducing income inequality in Massachusetts. The Senate voted to halt an anticipated reduction in the income tax rate on Jan. 1 — from 5.15 percent to 5.1 percent — and to use the money “saved” to cover the cost of expanding the earned income tax credit for low-income workers....

“Legislation is not a static thing. It changes,” [Sen. Michael Rodrigues, D-Westport] said. “When the voters voted in 2000, 15 years ago, many of my colleagues were not in the Legislature. Some of my colleagues might not even have been old enough to vote 15 years ago.”

So because the Legislature has dragged its feet for a decade and a half, refusing to follow through completely on a clear order from the people who elect them, the order itself is meaningless?

Too often on Beacon Hill, that’s what passes for logic and respect for the voters.

For what it’s worth, we know of at least one of Rodrigues’ colleagues, on the House side, who was indeed in the Legislature in 2000 — House Ways and Means Chairman Brian Dempsey, a Democrat who at the time was listed publicly as a supporter of the tax rollback.

I take that as a hopeful sign that a Senate tax increase — and it *is* a tax increase — won’t survive budget negotiations.

The Boston Herald
Friday, May 22, 2015
Senators have eye on your wallet
On Beacon Hill, no shame in ignoring will of voters
By Julie Mehegan

Chip Ford's CLT Commentary

With the editorials and columns of the past couple of days. my job commenting on Beacon Hill gymnastics is sure getting easier; what more can I add to Julie Mehegan's Boston Herald column?

Now we move on to the House/Senate conference committee.  Will the House permit the Senate to usurp its prerogative and impose a tax increase in a "money bill" that constitutionally must originate in the House of Representatives?  Will the joint House/Senate conference committee agree to a tax hike despite the will of their constituents, the voters?

If the conference committee complies with the Senate, will this be a violation of tax law (creating a backdoor, de facto graduated income tax) that the state Supreme Judicial Court will overturn?

It's interesting.  Stay tuned.

Chip Ford
 

The Boston Globe
Friday, May 22, 2015

Mass. Senate passes $38.1 billion budget
Measure backs Baker stance on $1.8b shortfall
By Joshua Miller

The Massachusetts Senate unanimously passed a $38.1 billion budget early Friday that one lawmaker said will “lift all families and invest in our future.”

In its broadest sweep, the Senate budget matched the contours of the spending plans passed by the House last month and proposed by Governor Charlie Baker in March, though there are differences in emphasis.

The spending plan, which was approved 40-0, is set to be reconciled with the House’s budget in a conference committee with members of both chambers before going to the governor.

While the most contentious Beacon Hill debate over the Senate budget centered on the creation of a special board to oversee the troubled MBTA — an amendment that was OK’d by the chamber — and questions of taxation, senators spent much of Tuesday, Wednesday, and Thursday talking about less controversial amendments on the chamber’s floor or hashing out agreements behind closed doors.

But the Senate’s final product — like that passed by the House — embraced the core of Baker’s analysis: that the state is facing a projected $1.8 billion shortfall in the fiscal year that begins July 1, and state government must increase spending at a lower rate than it has.

The agreement is a turnaround for the Baker administration as it seeks to take control of the embattled agency.

The spending plan proposed last week by the Senate’s budget-writing committee — before the amendments — would have increased spending by about 3.1 percent.

Senator Karen E. Spilka, chairwoman of the Senate budget-writing committee, said in a statement that the spending plan “builds on the themes and investments of the Senate Ways and Means recommendations to lift all families and invest in our future.”

She said she is proud of the “spirited, thoughtful debate this week.”

On Thursday night, as midnight drew closer and budget deliberations remained unfinished, some senators gathered for vanilla and chocolate ice cream in the office of Senate President Stanley C. Rosenberg. Bleary-eyed staffers and lobbyists made their way around the State House.

The passage of the Senate’s budget tees up the final acts of a fiscal drama — increasingly grim projections of the gnawing budget gap faced by the state — that has slowly unfolded since Baker was elected the Commonwealth’s 72d governor in November.

Differences with the House on an array of items must be reconciled before the budget sees final legislative votes and goes to Baker for his action. The Senate, for example, is set to fund the University of Massachusetts and the state’s Office of Dam Safety at slightly higher levels than the House-passed spending plan.

Baker could sign what he receives into law or veto all or parts of it.

Among the amendments that the Senate adopted this week are: more money for grants to councils on aging and higher funding for Prisoners’ Legal Services, and changes to a law on how long courts have to retain some old files.

Senators unanimously approved an amendment allocating up to $6.3 million to expand eligibility for subsidized home care — help for people who need assistance with the activities of daily living, such as bathing and dressing.

Al Norman, executive director of Mass Home Care, an association of nonprofits that help elderly people stay in their homes, said the amendment would mean people who make up to $35,000 a year, instead of the current $27,000, would be eligible for assistance.

“It expands the reach of home care for lower-middle class families who need a subsidy to afford it, and it slows down their need for costlier care, such as nursing homes,” he said, adding that the amendment uses federal dollars to pay for the eligibility expansion.

Senator Barbara L’Italien, an Andover Democrat and lead sponsor of the amendment, said expanding home care is “certainly more compassionate” and also “more cost-effective” than nursing homes.

Another amendment that senators approved this week — with much more controversy — would increase the state’s earned income tax credit, which benefits low-income workers, increase the personal exemption available to all taxpayers, and aim to pay for it by freezing the state’s income tax at its current rate of 5.15 percent.

Under current law, the tax rate is set to incrementally decline to 5 percent if the state meets certain economic growth thresholds.

In 2000, voters passed a ballot initiative knocking the rate down from 5.85 percent to 5 percent in steps. The first ticks downward took place at the beginning of 2001 and 2002. But then the state Legislature, facing rough economic times, froze the final tax cut and set up a much slower diminution.

Baker supports expansion of the earned income tax credit, but proposed pairing it with an elimination of the state’s controversial film tax credit. The governor opposes freezing the income tax rate.

The Boston Herald
Friday, May 22, 2015

Senators have eye on your wallet
On Beacon Hill, no shame in ignoring will of voters
By Julie Mehegan

“Fairness matters.”

So said Sen. Benjamin Downing (D-Pittsfield), as the state Senate on Tuesday debated a “freeze” of the voter-mandated rollback in the state’s income tax rate.

Or as anyone with a long memory would understand the subject of the debate — a tax hike.

Downing was one of a parade of liberal senators who rose to sell the tax plan as the key to reducing income inequality in Massachusetts. The Senate voted to halt an anticipated reduction in the income tax rate on Jan. 1 — from 5.15 percent to 5.1 percent — and to use the money “saved” to cover the cost of expanding the earned income tax credit for low-income workers.

But of course “fairness” is in the eye of the beholder — and to Downing and 28 of his fellow senators there is no similar duty to be fair to the voters who 15 years ago explicitly ordered the Legislature to return the personal income tax rate to 5 percent from the “temporary” rate of 5.95 percent.

In approving the tax plan by a vote of 29-11, those senators made little secret of their goal — to establish a more progressive tax structure in the commonwealth, without the inconvenience of amending the state Constitution, which prohibits a graduated income tax.

It wouldn’t be the first stab at doing so — then-Gov. Deval Patrick set about doing something similar in 2013.

“It is my hope that if we want to tackle inequality, if we want to tackle poverty, if we want to support work and not just wealth, that we will (approve the tax amendment),” Downing said during the debate Tuesday.

They even hashtagged it — #SharedProsperity.

But what’s curious about all this is that Republicans on Beacon Hill actually agree that an expansion of the earned income tax credit would be a very good thing — for the 400,000 families who are eligible for it and for the state’s economy. Gov. Charlie Baker has proposed eliminating the popular film tax credit (an estimated annual $80 million give-back to the film industry) to help pay for an even bigger expansion of the tax credit than the one the Senate approved. And Republican senators on Tuesday offered their own suggestions for covering the cost — none of which would involve telling the 1.5 million voters who supported the tax rate rollback in 2000 to pound sand.

Sen. Michael Rodrigues (D-Westport), chairman of the Revenue Committee, went to great lengths during the debate to explain why the new tax scheme doesn’t really violate the voters’ 2000 mandate, because it is “revenue-neutral” and thanks to an accompanying increase in the standard income tax exemption, taxpayers would still see a reduction in what they pay.

In fact, Rodrigues *guaranteed* that under the plan “every tax filer in the commonwealth will see a tax reduction next calendar year.”

For those who don’t buy that explanation — and why would they, since it’s so misleading — he had another one ready.

“Legislation is not a static thing. It changes,” Rodrigues said. “When the voters voted in 2000, 15 years ago, many of my colleagues were not in the Legislature. Some of my colleagues might not even have been old enough to vote 15 years ago.”

So because the Legislature has dragged its feet for a decade and a half, refusing to follow through completely on a clear order from the people who elect them, the order itself is meaningless?

Too often on Beacon Hill, that’s what passes for logic and respect for the voters.

For what it’s worth, we know of at least one of Rodrigues’ colleagues, on the House side, who was indeed in the Legislature in 2000 — House Ways and Means Chairman Brian Dempsey, a Democrat who at the time was listed publicly as a supporter of the tax rollback.

I take that as a hopeful sign that a Senate tax increase — and it is a tax increase — won’t survive budget negotiations.

Julie Mehegan is the Herald’s deputy editorial page editor.

 
 

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