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CLT UPDATE
Wednesday, July 8, 2015
Taxpayers dodge a tax-hike
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The final budget did not include either the
Senate's freezing of the income tax rate at 5.15 percent or an
increase in taxes on flavored tobacco. The Senate had initially
envisioned that an increase in the earned income tax credit could be
funded by a freeze on the income tax, which is expected to ratchet
down to 5 percent in future years because of economic triggers.
Funding the benefit for low-income workers to the
repeal of a tax credit benefitting large multinational corporations
is somewhat similar in style to Baker's own proposed financing of an
earned income tax credit increase. Baker, who disfavored freezing
the income tax rate, had proposed paying for the earned income tax
credit by repealing the film tax credit - a move opposed by House
leaders.
The budget also requires passage of a special act
of the Legislature before any public funds can be spent to benefit
the proposed 2024 Boston Olympics.
State House News Service
Tuesday, July 7, 2015
Tax changes, MBTA control board featured in budget accord
One major point of contention: whether to expand
the earned income tax credit, designed to help the working poor, and
how to pay for it.
Baker proposed funding an expansion, in part,
through eliminating the controversial tax break for the film
industry. The Senate, instead, sought to freeze an expected
incremental decline in the state’s income tax from the current 5.15
percent to 5 percent. Both funding plans ran into stiff opposition.
In the end, House and Senate negotiators agreed
to expand the credit by repealing a big corporate tax deduction. The
deduction has never gone into effect — it has been delayed every
year by the Legislature.
The earned income tax credit expansion, however
funded, is a victory for Senate President Stanley C. Rosenberg and
his left-leaning chamber — and was lauded by some advocates.
The Boston Globe
Tuesday, July 7, 2015
State budget will provide for T oversight panel
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Chip Ford's CLT
Commentary
By the end of today it is likely that the
Legislature's FY2016 budget will be on Governor Baker's desk.
He'll have ten days to sign, veto in entirety, line-item veto, or
amend what he receives.
The six-member House/Senate conference committee
delivered their compromise budget to the clerk's office "about two
minutes before an 8 p.m. deadline" last night.
"Freezing" the voters' income tax rollback to 5
percent ran into "stiff resistance" within the committee.
Funding to increase the so-called earned income tax credit was
instead provided by repeal of a tax credit benefitting large
multinational corporations "that has never gone into effect."
That sounds like a good solution to me!
It appears that our elected representatives
— for the most part
— decided to respect their
constituents' mandate on the 2000 ballot and allow the roll back of
the "temporary" income tax hike of 1989 to proceed. I like to
think that we at CLT — the staff and
you the membership — had something to
do with the conference committee's decision.
Bill H.3650
An Act making appropriations for the fiscal year 2016 for the
maintenance of
the departments, boards commissions, institutions and certain
activities of the Commonwealth
Congratulations taxpayers!
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Chip Ford |
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State House News Service
Tuesday, July 7, 2015
Tax changes, MBTA control board featured in budget accord
By Andy Metzger
The annual state budget compromise agreed to Tuesday by a six-member
conference committee would eliminate a corporate tax break that has
been suspended every year since its inception to pay for increased
tax credits to low-income workers.
The $38.1 billion bill (H 3650) would also suspend for three years a
law requiring a vetting process before privatization of services at
the MBTA, giving Gov. Charlie Baker a partial win on a key reform he
proposed for the transit agency.
At a briefing in her office Tuesday night, Senate Ways and Means
Chairwoman Karen Spilka said the budget increases spending by 3.5
percent, less than the predicted 4.8 percent consensus on revenue
growth. Spending growth in last year's budget required midyear cuts
and a budget-balancing bill. Spilka also said she did not anticipate
layoffs would be required to accommodate slower spending growth.
The Ashland Democrat said the budget increases funding for rental
vouchers by about $20 million and also provides additional funds to
emergency shelter including $2 million in new funding for housing
and services for unaccompanied homeless youth.
Increasing unrestricted local aid by $34 million and local education
aid by $111.2 million, the budget also establishes a bulk purchasing
program for Narcan, an emergency medication to treat drug overdoses.
The bill, which was brought to the clerk's office about two minutes
before an 8 p.m. deadline, has 213 outside sections. The House and
Senate are both meeting in formal sessions Wednesday when the
compromise budget is expected to shipped to Gov. Baker's desk.
The bill emerged from secret talks a week into fiscal 2016, and
Baker will have 10 days to review it before signing it and
announcing amendments and vetoes. The jacket of the conference
report was signed by all six members of the House and Senate
negotiating team, including the two Republicans.
"This bill includes a very promising start to the overall effort of
fixing the MBTA. I want to thank Speaker [Robert] DeLeo and the
House for their early adoption of the reforms necessary to increase
the system's efficiency as well as the House and Senate conferees
for including these reforms in this legislation," Baker said in a
statement. Baker's spokesman Tim Buckley said, "The Governor was
pleased to offer a solution to the $1.8B inherited deficit that
invested in critical areas like public education, transportation and
the department of children and families without raising taxes on the
people of Massachusetts and he looks forward to reviewing the
legislature's proposal soon."
The three-year suspension of the privatization law at the T deals a
blow to Senate President Pro Tem Marc Pacheco whose championing of
the 1993 legislation led to it being called the Pacheco law.
The budget bill also gives the secretary of transportation the
authority to hire an MBTA general manager, increases the size of the
state Transportation Board and creates a temporary fiscal and
management control board for the T.
At the budget briefing, Senate President Stanley Rosenberg said he
had not yet talked to Pacheco about the final version of the budget
suspending his signature law.
Under the Pacheco law, the auditor must first sign off on whether
privatization will result in savings without reducing service.
Spilka said under the compromise budget, the inspector general would
review outsourcing contracts after they are complete.
The repeal of a corporate tax break known as FAS-109 would wipe from
the books legislation that has never gone into effect. That repeal
is linked to an increase of the earned income tax credit from 15
percent of the federal tax credit to 23 percent. Both Baker and
Rosenberg have pushed for the credit's expansion.
The $76 million in annual revenue that would be gained by
permanently removing the corporate tax break is "almost exactly" the
same amount as the cost of increasing the earned income tax credit,
Rosenberg's counsel David Sullivan told reporters.
Suspension of the tax break led the Supreme Judicial Court to deem
the budget passed by the House a "money bill," which means that
actions the Senate later took around tax policy in its version were
constitutional.
The final budget did not include either the Senate's freezing of the
income tax rate at 5.15 percent or an increase in taxes on flavored
tobacco. The Senate had initially envisioned that an increase in the
earned income tax credit could be funded by a freeze on the income
tax, which is expected to ratchet down to 5 percent in future years
because of economic triggers.
Funding the benefit for low-income workers to the repeal of a tax
credit benefitting large multinational corporations is somewhat
similar in style to Baker's own proposed financing of an earned
income tax credit increase. Baker, who disfavored freezing the
income tax rate, had proposed paying for the earned income tax
credit by repealing the film tax credit - a move opposed by House
leaders.
The budget also requires passage of a special act of the Legislature
before any public funds can be spent to benefit the proposed 2024
Boston Olympics.
The final budget did not include language directing MassHealth to
contract with a provider organization for a Medicaid accountable
care organization, an amendment that sparked a war of words between
Steward Health Care and the Massachusetts Association of Health
Plans.
Spilka said the budget "unfortunately" did not increase income
eligibility requirements for home care assistance, which advocates
said would avoid the need for costly nursing home service.
A House provision to increase the conservation land tax credit -
which Rosenberg initially seized on to argue that the House budget
was a "money bill" - was also not included in the final version,
according to Spilka. Challenging the constitutionality of tax
amendments adopted by the Senate, the House this year sought
guidance from the Supreme Judicial Court. The court opined that the
House's suspension of FAS-109, which had been a regular feature of
budget bills, made it a money bill where tax policy could be
changed. The state's constitution requires money bills to originate
in the House. The full repeal would mean that next year the House
would not have to send the Senate a money bill if it wanted to once
again postpone the tax break.
The FAS-109 repeal and the earned income tax credit would both have
a somewhat delayed effect.
"People would be filing in 2017," Spilka said.
House Ways and Means Chair Brian Dempsey issued a joint statement
with Spilka, and did not attend the press briefing held in her
office or hold his own budgetary press conference on Tuesday.
Spilka told reporters they should not read anything into Dempsey's
absence, and said that the conference process had been beneficial in
allowing her to learn more about the House's priorities. Without
specifying any sticking points, Spilka said neither side got
everything it wanted and praised the final product.
The Boston Globe
Tuesday, July 7, 2015
State budget will provide for T oversight panel
By David Scharfenberg and Joshua Miller
In a victory for Governor Charlie Baker, lawmakers are poised to
approve a $38.1 billion budget Wednesday that includes a modified
version of his controversial MBTA overhaul.
The legislation gives Baker a variant of the T oversight board he
has sought for months and temporarily opens the door to greater
privatization of services at the public transit agency.
Baker said in a statement the budget “includes a very promising
start to the overall effort of fixing the MBTA.”
The spending plan, unveiled Tuesday night after negotiations by
House and Senate lawmakers, works to close a projected $1.8 billion
shortfall that helped define the first six months of the governor’s
tenure.
It holds the line on taxes and fees for residents, legislators said,
and expands a tax credit for more than 400,000 low-income workers.
The debate over taxes and spending, though, has been overshadowed by
maneuvering over how to fix the Massachusetts Bay Transportation
Authority, which repeatedly shut down during this winter’s historic
storms.
Baker proposed changes in April that included a fiscal and
management control board designed to right the troubled transit
agency. He also wanted to permanently remove restrictions on
privatization imposed by what’s known as the Pacheco law, which
requires state agencies to prove that outsourcing would save money
before it can go forward.
The legislation unveiled Tuesday tinkers with Baker’s proposed
control board, tethering it more closely to the state’s broader
transportation system, and removes Pacheco restrictions for the T
for three years.
This may not be the end of the debate over the MBTA. A separate
transportation bill is still winding its way through the
Legislature.
And Baker administration officials said Tuesday they would push for
other changes they have sought, such as greater leeway to raise
fares and a shift in the way contract disputes are settled with T
unions.
Eileen McAnneny, president of the business-backed Massachusetts
Taxpayers Foundation, which has pressed for the T changes championed
by Baker, said, “We’re certainly pleased that there are meaningful
reforms that will help the MBTA get on sound financial footing, and
we look forward to additional reforms.”
If the T has been the primary flashpoint this budget season, there
have been other conflicts as well.
One major point of contention: whether to expand the earned income
tax credit, designed to help the working poor, and how to pay for
it.
Baker proposed funding an expansion, in part, through eliminating
the controversial tax break for the film industry. The Senate,
instead, sought to freeze an expected incremental decline in the
state’s income tax from the current 5.15 percent to 5 percent. Both
funding plans ran into stiff opposition.
In the end, House and Senate negotiators agreed to expand the credit
by repealing a big corporate tax deduction. The deduction has never
gone into effect — it has been delayed every year by the
Legislature.
The earned income tax credit expansion, however funded, is a victory
for Senate President Stanley C. Rosenberg and his left-leaning
chamber — and was lauded by some advocates.
Noah Berger, the president of the liberal-leaning Massachusetts
Budget and Policy Center, said the earned income tax credit increase
“will help hundreds of thousands of working families pay for basic
necessities like clothing and nutritious food for their kids.”
He pointed to studies that he said show “when the income of low-wage
families increases, there are long-term positive effects on the
children: They do better in school and earn more as adults.”
The budget, which Senate Ways and Means chairwoman Karen E. Spilka
said would boost spending 3.5 percent over last fiscal year,
includes modest increases in several areas.
Lawmakers would provide millions of new dollars to combat the opioid
crisis that has torn through the state and more money to address
homelessness.
They would also boost funding for the University of Massachusetts by
about 4 percent, according to a school spokesman’s calculations,
though student costs are still expected to rise for the academic
year that begins in September.
One way the budget works to bridge the estimated $1.8 billion gap is
by curbing the sharp growth of the state’s health care program for
the poor.
Earlier this year, in another effort at filling the fiscal hole, the
Legislature passed an early retirement program designed to trim the
state’s payroll and save $172 million after costs. About 2,475
employees took advantage of the pension-sweetening deal and left
state government last month.
Baker unveiled his proposed budget in March. The House and Senate
subsequently passed their own plans and reconciled them in a
committee composed of members of both chambers.
Rosenberg told reporters he is confident the full Legislature will
approve the latest plan.
“I believe that the budget will be on the governor’s desk very
soon,” he said Tuesday night, “but not before breakfast.”
Baker will have 10 days to take action on the spending plan. Among
his options: signing it into law or vetoing all or part of it.
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
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