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CLT UPDATE
Friday, May 12, 2017

"Groundhog Day" on Beacon Hill


Slow-growing tax collections have eroded the base of revenue expected to fund state government, and the House budget chief thinks it is probable that the revenue figure built into the fiscal 2018 budget will need to be lowered.

"We're going to have those conversations. I would say it's likely," House Ways and Means Chairman Brian Dempsey told the News Service on Wednesday when asked if he thought the revenue number would need to be adjusted. "I don't have a number, but I would say it's likely that we would have to come in and make some additional reduction around what we're projecting currently."...

Legislative budget-writers and Administration and Finance Secretary Kristen Lepore in January agreed that fiscal 2017 would end with $26.056 billion in tax revenue, and predicted that tax revenues would grow 3.9 percent in fiscal 2018 bringing the total tax haul to $27.072 billion.

However a $462 million tax shortfall ten months into fiscal 2017 has lowered prospects for collections in the fiscal year that ends June 30. If fiscal 2017 revenue comes in significantly short of projections, fiscal 2018 tax revenue would need to climb more steeply to reach the $27.072 billion projection from January, which House lawmakers used as the foundation of the $40.4 billion budget they approved in late April....

Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, said the projected fiscal 2018 revenue growth "looks unlikely," and she anticipates fiscal 2017 revenues will come in below earlier expectations.

Top officials in the legislative and executive branches huddled in the speaker's office on Monday, and afterward Senate President Stan Rosenberg said he was comfortable putting together the Senate budget using the consensus revenue figure agreed to in January.

"We'll look forward to the conference process to iron out any difficulties," Rosenberg said.

State House News Service
Thursday, May 11, 2017
Revenue base eroding as annual budget talks ramp up


April showers are supposed to bring May flowers, but very little was coming up roses this week for state budgeteers who saw their hopes of avoiding another scramble to balance state finances washed away in a torrent of economic floodwaters.

Tax collections in April, when millions of Bay Staters file their returns, were, if all went according to plan, supposed to put the budget back on track.

The $220 million shortfall in revenue through March - again, if all went according to plan - would become much more manageable when the cash came pouring in during the largest month for tax collections in the year.

Not only did that not happen, but the exact opposite occurred.

New reports showed an economy contracting in the first quarter, business confidence is on the decline and the revenue gap more than doubled to $462 million when April revenues not only failed to live up to expectations, but dropped off $83 million from last year....

But it's hard to blame the governor and not put a good chunk of the responsibility for the current situation on the Democrat-led Legislature.

Democrats scoffed when Baker vetoed $265 million in spending last summer and warned that the budget was unbalanced, promptly restoring most of the money to the budget with assembly-line efficiency. Then they howled in December when he cut $98 million in December for the same reasons, calling it a "premature" move by a Republican overeager to shrink the size of government.

Now they want Baker to resolve the mess that slow-revenue growth has created, throwing their hands in the air and suggesting none of this could have been predicted.

State House News Service
Friday, May 5, 2017
Weekly Roundup - Cloudy with a chance of rain


The Legislature last July steamrolled most of Gov. Charlie Baker's budget vetoes, putting spending back into a budget that Baker warned was imbalanced. Then in December, House Speaker Robert DeLeo and Senate President Stanley Rosenberg balked at Baker's unilateral spending cuts, asserting they were made prematurely.

Now, with less than two months left in the fiscal year and the budget tilting out of balance, legislators are turning to Baker to solve the immediate problem and operating with creeping doubts about the structural integrity of fiscal 2018 budgets since tax revenues are not coming in at the pace they anticipated.

The House has already put its budget to bed, although its relevance seems to have been diminished in the wake of the latest tax revenue reports.

State House News Service
Friday, May 5, 2017
Advances - Week of May 7, 2017


Baker has been a staunch opponent of new broad-based tax hikes; DeLeo has been as well for the most part, but he backs the proposed income-tax hike on millionaires heading for the November 2018 ballot.

But when I interviewed Rosenberg, a consistent voice for new taxes, the other day, he pointed out that even the roughly $2 billion the millionaires tax might bring in could be wiped out by Trumpcare, which if enacted could cut our federal Medicaid funding by about that same amount.

So here’s the question – are you ready to pay higher taxes, not just the millionaires, you, even though chances are you haven’t been getting fat raises?

And if you aren’t, what do you want the Big Three to start cutting?

WBZ CBS-Boston
Monday, May 8, 2017
Keller @ Large: What Should They Cut?
By Jon Keller


Whether you’re a public employee or retiree, or just a taxpayer, the state of state and local pensions in Massachusetts impacts you, so Pioneer Institute has created a website that will allows people to educate themselves about this critical issue. Masspensions.com grades systems based on the number of years they have left before achieving full funding. It includes measures like a fund’s assumed rate of return, asset allocation and investment performance based on the most recent publicly available data. It also shows the number of active and retired members in each system....

Over time, state and local governments have routinely decided to fund more immediate priorities and failed to live up to their responsibility to adequately fund their pension plans.

Despite the promises made, future government leaders were left to figure out how to fund the pensions. Part of the financial challenge is a result of past liabilities. Many jurisdictions enacted plans to pay down unfunded liability over time, but when things got tight and budgets need to be balanced, they extended the funding schedules or used inflated assumptions in an attempt to mask the problems....

Based on the assumptions in place at the time, the average Massachusetts public pension plan was just over 70 percent funded at the end of 2008. Thanks to factors like adopting more realistic investment assumptions, that percentage was barely above 60 percent at the end of 2015. That translates to a collective statewide unfunded liability of over $49 billion — nearly 25 percent more than the commonwealth’s annual budget.

In 2015, public pension plans in Massachusetts spent close to $400 million on management, consulting and custodial fees. Far from a light at the end of the tunnel, there now appears to be a pension tsunami hurtling toward our shores.

As citizens, we must make it known that such imprudence will not be tolerated. Never again should a pension funding schedule be extended - and overall costs dramatically increased - to balance a current operating budget.

The Salem News
Wednesday, May 3, 2017
Preparing for the 'pension tsunami'
Mary Z. Connaughton and Charles Chieppo


Hoping to alleviate this problem, two North Shore lawmakers want health officials consider a subsidy for low-income families with children under 2, to cover what some call the “diaper gap.” ...

It’s not that anyone disputes the need to put a clean diaper on a baby. Families with tight budgets resort to difficult measures to stretch their diaper dollar — washing and reusing them, if possible. Others find savings by reusing cloth diapers, though that can get expensive, too....

“There’s no question that diapers are an absolute health necessity for babies, and some parents can’t afford it,” said state Sen. Joan Lovely, who with state Rep. Paul Tucker suggested the state study a diaper subsidy. Both are Democrats from Salem.

While we can agree with the cause, if not the solution, it’s worth recognizing the large effort to put babies in clean diapers that takes place outside of government....

Diaper duty is fun for no one, and the impulse to help parents is noble. But it shouldn’t take a new government program to do it.

A Salem News editorial
Wednesday, May 3, 2017
Look for other ways to close the 'diaper gap'


The bill sponsored by Sen. Jason Lewis and Rep. Kay Khan (H3329 / S1562) could raise $368 million, according to the lawmakers, and encourage people to choose drinks that don't contribute to obesity and other ailments.

While supporters acknowledge the tax would hit low-income communities harder than other, they say the revenue could be used to fund programs, drinking fountains, and other nutritional programs that would benefit them.

State House News Service
Wednesday, May 10, 2017
Baker no fan of proposed soda tax


The Constitutional Convention where lawmakers plan to eventually vote on a surtax on household incomes above $1 million has recessed until June 14 at 1 p.m.

Senate President Stanley Rosenberg, a supporter of the so-called millionaire's tax, gaveled the convention to order at 1:04 p.m. Wednesday, but lawmakers immediately recessed without acting on any proposals on the convention calendar....

The constitutional amendment, which supporters say could yield $1.6 billion to $2.2 billion in new revenue, needs affirmative votes from the Legislature in two consecutive sessions to reach the 2018 ballot.

On May 18, 2016, the convention - a joint meeting of the House and Senate - advanced the petition 135-57. Because the amendment is a citizens' petition, it requires only 50 votes to advance each session.

Opponents of the measure say it could lead to a graduated income tax structure in which over time more people will be grouped in different tax brackets and taxed at different rates.

State House News Service
Wednesday, May 10, 2017
Income surtax up first at June 14 Constitutional Convention


Senate President Stanley Rosenberg seemed to slam the door Tuesday on tackling significant education reform before the 2018 election, telling advocates that it would be a "mistake" to do anything that would distract from efforts to pass a ballot law next year to raise taxes on income over $1 million....

Asked specifically about legislation backed by the state's largest teachers union that would put a moratorium on testing to evaluate student and teacher performance, Rosenberg urged advocates to put their focus elsewhere.

"So there are a lot of bills floating around on education and my opinion at this point is that we need to focus on the Fair Share ballot questions that's coming up in November of '18 because the $2 billion or so that will be raised will be a major source of funding for the future of education, and anything that distracts from that debate and divides us and doesn't allow us to move forward successfully on that is, I think, a mistake," Rosenberg said.

The Amherst Democrat is backing a proposed constitutional amendment that would impose a surtax of 4 percent on incomes over $1 million. The question requires just one more vote in the Legislature where there is broad support for putting it before voters in 2018.

State House News Service
Tuesday, May 9, 2017
Non-tax education reform efforts a "mistake," Rosenberg says


[Stuart Saginor, executive director of the Community Preservation Coalition] was among about a dozen of people who testified Monday before the Joint Committee on Revenue in support of legislation (H2615 and S1504) that would raise the Registry of Deeds filing fees that feed the trust fund to a level sufficient to ensure all CPA communities will receive state match of at least 50 percent in their first round distribution each year.

State House News Service
Monday, April 10, 2017
Frayed Community Preservation partnership in danger of collapsing


Just as state officials are in a struggle with the federal government over revenue sharing, the battle for local aid in Massachusetts marches on between the state, its cities and towns, and its counties.

Duxbury Rep. Josh Cutler is hopeful about progress this session on a bill (H1499) with bipartisan support that would allow counties to keep 30 percent of the revenue generated at the registries of deeds that they operate, including fees associated with property sales.

State House News Service
Sunday, April 30, 2017
Rep looks to curb state's money grab from counties


When your back-to-school shopping costs a little more this August, remember to thank Massachusetts lawmakers for the untimely demise of the sales tax holiday. Held in 12 of the past 14 years, the tax-free weekends typically fell in August, giving families loading up on new clothes and school supplies a reprieve from the state’s 6.25 percent sales tax.

A Salem News editorial
Thursday, May 4, 2017
No holiday this August


Chip Ford's CLT Commentary

No "sales tax holiday" again this year folks, the second year in a row.  A "cost" of $20 million in uncollected revenue is too high a price if it benefits only taxpayers and the economy.  But the $18 million/year obscene pay grab the Legislature stuffed into their own pockets in January its first order of business this session, snatched within two weeks was quite affordable and just fine with them.  Funny how that works, eh?  We don't call them "The Best Legislature Money Can Buy" lightly.

The latest self-imposed "fiscal crisis" is "worsening."  This can mean only one thing:  The next tax hikes are right on schedule.

The recurring "fiscal crisis" strategy over the decades is well-documented on the CLT website.  This is but the latest iteration on the longstanding formula.

Look back to 2002, in this CLT Update ("'Fiscal crisis' and other boondoggles").  A Boston Herald editorial on April 3, 2003 ("Romney: Tax hikes add up") noted:

. . . Romney on Tuesday released figures compiled by the state Department of Revenue on the effect of last year's $1.14 billion tax increase on the average taxpayer.

The department says an average family of four making $70,000 will pay an additional $162 in state taxes for 2002. The reduction in the personal exemption for married couples filing jointly from $8,800 to $6,600 and axing of the charitable deduction account for the increase.

On top of that, the average taxpayer is paying about $140 more in 2003 than he would have if the income tax rate had fallen to 5 percent as called for by the voter-approved income tax cut law.

Romney also is showcasing a February Cato Institute study on the negative long-term impact of high taxes on economic growth.

Of course, Democratic legislators were quick to pounce on Romney's assertions, pointing out, correctly, that Romney had not proposed cutting taxes in his budget, and instead incorporated the new revenue.

They neglect to mention that they left him little choice. By raising taxes last year, the Legislature papered over the state's significant structural deficit, exacerbating the budget crisis and leaving Romney with a $3 billion hole to fill. Romney has pledged to cut the income tax to 5 percent as the voters demanded and he should be aggressive about fulfilling that promise.

But the priority in this budget must be to cut spending to sustainable levels and fundamentally restructure state government. If lawmakers fail to do so, Romney argues, "the people of Massachusetts will have to accept yearly tax increases to pay for the inefficient, wasteful structure now in place." On all counts, Romney has the better argument.

Our memo to the Legislature and CLT News Release of October 6, 2005 ("The economy in numbers") warned:

To: Members of the General Court
October 6, 2005
Re: The economy in numbers

16 – The number of years since the Legislature passed the “temporary’ income tax hike to cover the 1989 fiscal crisis, caused by overspending during the Dukakis presidential campaign.

5 – The number of years since the voters, 59-41%, told you to “keep the promise” that the tax hike of 1989 would be temporary, and roll the income tax rate back to its traditional 5%.

4 – The number of years since the last fiscal crisis caused by overspending, caused by the “temporary” tax hike of 1989 that was carried through the high point of the economic cycle in the ‘90s.

2 – The number of years that the income tax rate should have been 5% if you had done what the voters mandated.

10 – The number of years it usually takes to recover from a fiscal crisis and, using that crisis’ continuing tax hike, spend us into another fiscal crisis.

8 – The number of years remaining til the next fiscal crisis and its next new “temporary” tax hike.

0 – The deserved credibility of legislators who ignore economic realities, lie about new taxes being temporary, break promises, create fiscal crises, and disrespect the voters.

9 out of 10 – The level of foolishness of the Massachusetts Taxpayers Foundation as it makes recommendations for efficiency and accountability while fighting the tax cuts that would make reforms necessary.

25 – The number of years since Proposition 2½ was passed by the voters and respected by the Legislature, to the benefit of taxpayers, the commonwealth’s image, and the state economy.

Apparently it's not "The Best Legislature Money Can Buy" but just over-paid buffoons who epitomize the definition of insanity:  Doing the same thing over and over, expecting a different result.  Or, they just hope taxpayers and voters will forget the lessons of history.

The State House News Service reports (Non-tax education reform efforts a "mistake," Rosenberg says):

Senate President Stanley Rosenberg seemed to slam the door Tuesday on tackling significant education reform before the 2018 election, telling advocates that it would be a "mistake" to do anything that would distract from efforts to pass a ballot law next year to raise taxes on income over $1 million....

Asked specifically about legislation backed by the state's largest teachers union that would put a moratorium on testing to evaluate student and teacher performance, Rosenberg urged advocates to put their focus elsewhere.

Sounds like Sen. Rosenberg is telling the teachers union to focus on taking more taxpayers’ money "for the children," then come back and lower education standards.  As we know, on Beacon Hill the teachers unions tell Democrat legislators when to jump and in unison those legislators respond "How high, master?"

Last May the sixth and latest incarnation of a Graduated Income Tax constitutional amendment supported and primarily funded by the Massachusetts Teachers Association flew through the Legislature's constitutional convention by a lopsided vote of 135-57.  The so-called "Millionaires Tax," aka, "The Fair Share Amendment," is expected to do the same next month in the second constitutionally required vote before going onto the November 2018 ballot.  Senate President Rosenberg is asking them to not be too greedy, to think strategically or they could lose the voters on their big cash grab.  One thing at a time, then come back later to disembowel education results.

There's more legislation in the works to hike the deeds excise (tax) on property transactions to fund the Community Preservation Act with more, more, always more of our money.  More Is Never Enough (MINE) and never will be, until they have it all.

Shortly after its passage Barbara Anderson described the CPA best in her April 2001 column, "The Community Preservation Act Explained"

. . . Well, heaven forbid that some communities have a tax that other communities don't have, even if those communities have dirt soil and lots of water, or no open space left anyhow. So inevitably the new tax became available for everyone as a surcharge on property owners' property tax bill. If some communities don't have open space left to buy they can use the money for historic preservation or affordable housing. In fact, they have to use at least 10 percent of it for each of the three categories.

The affordable housing part is especially important because as open space is removed from the market, housing becomes more expensive. Thus the requirement that some of the money raised be used to build affordable housing, presumably on what was once open space. Are you following this so far?

Once upon a time there was lots of affordable housing, at least for most people, since most people seemed to afford to live somewhere. And then there were zoning laws that required new homes to have one or two acres of land around them, and rent control in some cities, and prohibitions against mobile homes or commercial buildings, and environmental restrictions regarding loosely-defined wetlands.

So the question is this: do we want open space, or do we want affordable housing? The government wants both. So it taxes us so it can preserve land, and taxes us so it can use land, and hopes we won't notice that our efforts are canceling themselves out.

It's important that we not notice this, since we have to vote to accept the Community Preservation Act and tax ourselves. Then as we vote to raise taxes, more local citizens who live in small affordable houses or own open space can't afford the taxes and sell their property to developers, who tear down the small houses and build large ones that are no longer affordable, and build affordable housing somewhere that was open space. . . .

Have you noticed a pattern here?  "The more things change the more they remain the same."  Legislators our elected alleged "representatives" seem incapable of learning from past mistakes, or conveniently forget how "fiscal crises" are created.  It's as if Beacon Hill denizens are stuck in a "Groundhog Day" loop of repetition, always ending up where they started off.

We hope citizens, taxpayers, voters are paying attention when it comes time to elect qualified legislator not people who will spend them into oblivion.

I know we sure are.

Chip Ford
Executive Director


 
State House News Service
Thursday, May 11, 2017

Revenue base eroding as annual budget talks ramp up
By Andy Metzger


Slow-growing tax collections have eroded the base of revenue expected to fund state government, and the House budget chief thinks it is probable that the revenue figure built into the fiscal 2018 budget will need to be lowered.

"We're going to have those conversations. I would say it's likely," House Ways and Means Chairman Brian Dempsey told the News Service on Wednesday when asked if he thought the revenue number would need to be adjusted. "I don't have a number, but I would say it's likely that we would have to come in and make some additional reduction around what we're projecting currently."

On Monday, Gov. Charlie Baker said he did not believe the fiscal 2018 tax revenue estimate needed to be changed before the Senate debates its budget - the Senate is scheduled to release its spending plan on Tuesday, May 16 and debate it beginning May 23.

Even if the state hits its May and June tax revenue targets on the nose, tax receipts would need to grow by 5.77 percent in fiscal 2018, significantly greater than any of the projections experts presented to state policymakers at a revenue forecasting hearing last year.

"It's hard to see how the economy can grow fast enough to yield that kind of tax revenue growth," said Robert Nakosteen, a professor at the UMass Amherst Isenberg School of Management and executive editor of the economic journal MassBenchmarks. He said, "Tax revenue growth has to be generated by growth in the economy absent changes in tax policy, and I just don't see that kind of growth in our future."

An official at the Massachusetts Taxpayers Foundation confirmed that if May and June revenues hit benchmarks, the state would need 5.77 percent growth in tax receipts to meet its target in fiscal 2018. Doug Howgate, director of policy and research for the business-backed group, said the last time the state exceeded that level of growth was in fiscal 2015 when tax revenues grew 7.8 percent.

When lawmakers solicited input on revenue projections for the fiscal 2018 budget in December, the Beacon Hill Institute provided the rosiest projections of the bunch, estimating growth of roughly 5.2 percent in fiscal 2018 over fiscal 2017. The institute's analysts also exceeded others' estimates in the amount of tax dollars they expected the state would receive by the end of fiscal 2017.

Legislative budget-writers and Administration and Finance Secretary Kristen Lepore in January agreed that fiscal 2017 would end with $26.056 billion in tax revenue, and predicted that tax revenues would grow 3.9 percent in fiscal 2018 bringing the total tax haul to $27.072 billion.

However a $462 million tax shortfall ten months into fiscal 2017 has lowered prospects for collections in the fiscal year that ends June 30. If fiscal 2017 revenue comes in significantly short of projections, fiscal 2018 tax revenue would need to climb more steeply to reach the $27.072 billion projection from January, which House lawmakers used as the foundation of the $40.4 billion budget they approved in late April.

"It's obviously going to be a very high hill to climb, and I guess we'll have to see what happens. We know that the odds are probably against us that we're going to be in that neighborhood," Warren Rep. Todd Smola, the ranking Republican on House Ways and Means, told the News Service.

Smola anticipated some challenging work ahead for the future budget conference committee - a group of six lawmakers from the House and Senate that meet to negotiate a compromise between the budgets passed by either branch. It's possible that major spending decisions, those stretching beyond the usual push and pull of annual budget talks, will be made secretly by that conference.

Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, said the projected fiscal 2018 revenue growth "looks unlikely," and she anticipates fiscal 2017 revenues will come in below earlier expectations.

Top officials in the legislative and executive branches huddled in the speaker's office on Monday, and afterward Senate President Stan Rosenberg said he was comfortable putting together the Senate budget using the consensus revenue figure agreed to in January.

"We'll look forward to the conference process to iron out any difficulties," Rosenberg said.

Dempsey declined to weigh in on how senators should approach their budget when they take it up later this month. He said state officials have a track record of addressing financial problems, which have been a perennial issue in recent years.

"For us to come together last year after both the House and the Senate passed its budgets and come in and reduce that figure by $750 million was significant and I think sends a very strong message to the bond-rating agencies that we are going to make sure that we're fiscally prudent and fiscally responsible," the Haverhill Democrat said.

Lawmakers have looked to Gov. Charlie Baker, who has the power to unilaterally cut spending, to address the fiscal 2017 revenue shortfall.

Massachusetts is not alone in facing budgetary problems. Connecticut Gov. Dannel Malloy reportedly announced a plan Wednesday to tap into reserves, divert money intended for municipalities and cut $33.5 million in spending. Officials in Rhode Island reportedly identified a $60.1 million revenue shortfall in their current budget year.

Sluggish tax revenue growth dates back to former President Barack Obama's administration but has continued under President Donald Trump.

While saying state officials "can't afford to wait" to respond to the shortfall, Dempsey theorized that laggard receipts could be the result of investors and businesses delaying their own actions as they wait for potential federal tax cuts from Capitol Hill. He said, "It appears that a lot of what's happening nationally is really investor-related activity. I think folks are hitting pause to determine what happens in Washington with respect to a potential tax package. And it appears that decision-making is on hold until the business community determines what level of taxation they'll see with a proposed tax package."

Rep. Jay Barrows, a Mansfield Republican, is also looking to Washington, D.C. for potential solutions to the state's budget woes. Barrows said he is hoping Massachusetts will be granted authority to take into consideration assets in addition to income to determine eligibility for MassHealth, the health care safety net that is the primary driver of state spending growth.

"Hopefully there will be some help on that and we can get the cost curve to come down," Barrows told the News Service.

State House News Service
Friday, May 5, 2017

Weekly Roundup - Cloudy with a chance of rain
By Matt Murphy


April showers are supposed to bring May flowers, but very little was coming up roses this week for state budgeteers who saw their hopes of avoiding another scramble to balance state finances washed away in a torrent of economic floodwaters.

Tax collections in April, when millions of Bay Staters file their returns, were, if all went according to plan, supposed to put the budget back on track.

The $220 million shortfall in revenue through March - again, if all went according to plan - would become much more manageable when the cash came pouring in during the largest month for tax collections in the year.

Not only did that not happen, but the exact opposite occurred.

New reports showed an economy contracting in the first quarter, business confidence is on the decline and the revenue gap more than doubled to $462 million when April revenues not only failed to live up to expectations, but dropped off $83 million from last year.

"It's hard for us to really figure out what's happening because our unemployment rate is low, the economy is very well in Massachusetts, the jobs are there. We're sitting back saying what is stymieing our benchmark figures?" Rep. Paul Donato, second assistant House majority leader, said.

Gov. Charlie Baker does not seem to have hit the panic button yet, and suggested he and his budget team have been preparing for the possibility of a shortfall for some time. The governor said he was working on a solution to preserve local aid and critical services for taxpayers, and House and Senate lawmakers were in agreement on one thing - hands off the "rainy day" fund.

But Revenue Commissioner Michael Heffernan said the numbers should give state leaders pause.

Heffernan said that not only will revenue this fiscal year fall short of projections, but he recommended rethinking the 3.9 percent growth lawmakers are counting on for fiscal 2018.

The House has already passed its budget plan for next year, and with the Senate preparing to take its turn this month, House Speaker Robert DeLeo said he wasn't ready to junk the work of the House quite yet. "The assumptions for FY18, I think, were based upon conservative estimates," he said. "So I'm hopeful we won't have to come back and do the exercises we had to do this year."

Except that's exactly what he and others said last year, only to find themselves in the very same predicament.

The budget woes played fittingly into the early 2018 gubernatorial election dynamics that could pit one former state budget chief against another.

Jay Gonzalez, who ran Gov. Deval Patrick's budget office for roughly four years, used the budget news to prod Baker, who has built a reputation as a nuts-and-bolts governor, for letting things get out of hand.

"We've got a governor whose whole case for being governor is he's a great manager. And he is failing at that," Gonzalez, one of two Democrats officially in the race, told the Boston Globe. Gonzalez's own budget management during the Patrick years bears dissecting as well, but maybe for another time. For now, suffice it to say budgeting chops could become a major issue in next year's election, and how Baker pulls this rabbit out of his hat could be a big theme.

But it's hard to blame the governor and not put a good chunk of the responsibility for the current situation on the Democrat-led Legislature.

Democrats scoffed when Baker vetoed $265 million in spending last summer and warned that the budget was unbalanced, promptly restoring most of the money to the budget with assembly-line efficiency. Then they howled in December when he cut $98 million in December for the same reasons, calling it a "premature" move by a Republican overeager to shrink the size of government.

Now they want Baker to resolve the mess that slow-revenue growth has created, throwing their hands in the air and suggesting none of this could have been predicted.

"I know that Ways and Means is, I don't want to say disappointed, but they're just sitting back shrugging their shoulders as we have," Donato said.

Whether it's overspending, a tax code that has failed to keep up with the modern economy or simply bad estimating, the chorus from elected leaders of both parties this week made it seem like the budget problems currently facing the state would be child's play compared to what will happen if the American Health Care Act becomes law.

The GOP-led House in Washington successfully pushed through a revised replacement for Obamacare with the slimmest of margins, but while D.C. Republicans celebrated, Massachusetts officials blanched.

Baker said he was "disappointed" with the proposed law that could jeopardize $1 billion or more in federal Medicaid funding for Massachusetts, and urged the Senate to reject the bill as written. Democrats offered more vivid and dire prognostications.

All of this taken together will surely light a fire in the coming weeks under lawmakers who believe that government has a revenue problem, not a spending problem. But apart from broad support for the surtax on millionaires headed toward the ballot in 2018, there remains little appetite for tax changes.

It's no wonder progressives are feeling a little left out these days on Beacon Hill.

Some progressives gathered at the State House week to try to figure out why with Democratic supermajorities in both branches they can't get more of their agenda accomplished.

"Something's been missing," said Harmony Wu, who serves on the Progressive Massachusetts board.

Wu posited that one cause of stagnation on Beacon Hill is the lack of grassroots organizing with a singular voice, but another problem is often money.

A group of liberal senators led by Sen. Sal DiDomenico released its "Kids First" agenda this week that called for raising wages for early educators, eliminating the waiting list for early education and care, ensuring access to after-school and summer programs, and expanding state education aid to cover younger children.

The House has often been painted as the obstacle to priorities like these in the Senate, but Speaker DeLeo and other House Democrats would likely embrace the goals if someone could just tell them how to pay for it.

STORY OF THE WEEK: Another year, another budget crisis.


State House News Service
Friday, May 5, 2017

Advances - Week of May 7, 2017


The Legislature last July steamrolled most of Gov. Charlie Baker's budget vetoes, putting spending back into a budget that Baker warned was imbalanced. Then in December, House Speaker Robert DeLeo and Senate President Stanley Rosenberg balked at Baker's unilateral spending cuts, asserting they were made prematurely.

Now, with less than two months left in the fiscal year and the budget tilting out of balance, legislators are turning to Baker to solve the immediate problem and operating with creeping doubts about the structural integrity of fiscal 2018 budgets since tax revenues are not coming in at the pace they anticipated.

The House has already put its budget to bed, although its relevance seems to have been diminished in the wake of the latest tax revenue reports.

As Senate Ways and Means Committee Chair Karen Spilka assembles a proposed fiscal 2018 budget, she and other state leaders face a triple threat.

In addition to tax collections continuing to fall well shy of their expectations, insurance costs associated with the massive MassHealth program are surging beyond state government's ability to pay and with Friday's U.S. House vote to pass a new health care law, state officials are bracing for the possibility that the American Health Care Act, if it can pass the Senate and reach President Donald Trump's desk, will remove critical federal funding and force wholesale reevaluation of the Bay State health care system.

Spilka's panel plans to release its fiscal 2018 budget on Tuesday, May 16 and senators have been advised to expect budget deliberations to begin Tuesday, May 23 and run through May 26, if necessary.


WBZ CBS-Boston
Monday, May 8, 2017

Keller @ Large: What Should They Cut?
By Jon Keller


BOSTON (CBS) – Governor Baker, Senate President Rosenberg, and House Speaker DeLeo will meet Monday afternoon at the State House and they have a lot to talk about.

For instance: what on earth is going bad with our local economy, and how much worse things could get in the very near future.

Tax receipts for the fiscal year that ends June 30th are coming in way below the projections the budget was based on.

And according to the most recent report by Mass Benchmarks, a consortium of local experts who track the state economy, our gross domestic product and overall economic growth are lagging well behind the nation, a complete reversal of the trend in recent years.

Despite all the profits employers have been pocketing during the boom times, according to Mass Benchmarks, “wage and salary growth in Massachusetts has stalled in the last two quarters.”

Which brings us back to this meeting of the Big Three on Beacon Hill.

Baker has been a staunch opponent of new broad-based tax hikes; DeLeo has been as well for the most part, but he backs the proposed income-tax hike on millionaires heading for the November 2018 ballot.

But when I interviewed Rosenberg, a consistent voice for new taxes, the other day, he pointed out that even the roughly $2 billion the millionaires tax might bring in could be wiped out by Trumpcare, which if enacted could cut our federal Medicaid funding by about that same amount.

So here’s the question – are you ready to pay higher taxes, not just the millionaires, you, even though chances are you haven’t been getting fat raises?

And if you aren’t, what do you want the Big Three to start cutting?


The Salem News
Wednesday, May 3, 2017

Preparing for the 'pension tsunami'
Mary Z. Connaughton and Charles Chieppo


Moody’s Investors Service estimates that total U.S. state and local government pension unfunded liability will reach $1.75 trillion this year, and the commonwealth is hardly immune from this alarming trend. The Massachusetts Teachers Pension Fund pays out more than $2.6 billion in annual benefits and has barely half the money it needs to meet its long-term obligations. Many of the commonwealth’s more than 100 local pension systems are in a similar condition, and the MBTA Retirement Fund is worse.

This isn’t just a nightmare for the commonwealth, local governments and state taxpayers; more than 10 percent of all adults in Massachusetts are members of these various systems.

Employees were promised that if they performed public service, a significant portion of their overall compensation would come in the form of a defined benefit pension. The deal was that the workers would contribute part of their wages and the commonwealth or local governments would make up the difference between employee contributions and the cost of funding their pensions. That amount would be based on a variety of assumptions, including mortality rates, pension fund investment returns and length of service the workers would provide.

Whether you’re a public employee or retiree, or just a taxpayer, the state of state and local pensions in Massachusetts impacts you, so Pioneer Institute has created a website that will allows people to educate themselves about this critical issue. Masspensions.com grades systems based on the number of years they have left before achieving full funding. It includes measures like a fund’s assumed rate of return, asset allocation and investment performance based on the most recent publicly available data. It also shows the number of active and retired members in each system.

Because its pension plan won’t be funded until 2031, the City of Salem received a ‘D’ grade on our MassPensions site.

Over time, state and local governments have routinely decided to fund more immediate priorities and failed to live up to their responsibility to adequately fund their pension plans.

Despite the promises made, future government leaders were left to figure out how to fund the pensions. Part of the financial challenge is a result of past liabilities. Many jurisdictions enacted plans to pay down unfunded liability over time, but when things got tight and budgets need to be balanced, they extended the funding schedules or used inflated assumptions in an attempt to mask the problems.

You can revise assumptions based on a higher anticipated rate of return on pension investments, but you can’t make those returns materialize. Similarly, you can push out the time by which a fund is expected to be fully funded, but doing so is like an interest-only mortgage; reducing short-term cash outflow, but costing taxpayers more over time.

Based on the assumptions in place at the time, the average Massachusetts public pension plan was just over 70 percent funded at the end of 2008. Thanks to factors like adopting more realistic investment assumptions, that percentage was barely above 60 percent at the end of 2015. That translates to a collective statewide unfunded liability of over $49 billion — nearly 25 percent more than the commonwealth’s annual budget.

In 2015, public pension plans in Massachusetts spent close to $400 million on management, consulting and custodial fees. Far from a light at the end of the tunnel, there now appears to be a pension tsunami hurtling toward our shores.

As citizens, we must make it known that such imprudence will not be tolerated. Never again should a pension funding schedule be extended - and overall costs dramatically increased - to balance a current operating budget.

As is the case in so many areas, putting off necessary action on public pensions exponentially increases the magnitude of the problem. Masspensions.com is a tool taxpayers can use to tell their elected leaders that when it comes to this issue, procrastination and the additional costs it creates are no longer acceptable.

Mary Z. Connaughton is director of government transparency and Charles Chieppo is a senior fellow at Pioneer Institute, a Boston-based think tank.


The Salem News
Wednesday, May 3, 2017

A Salem News editorial
Look for other ways to close the 'diaper gap'


Any parent knows the endless call of diaper duty. It invariably comes at inopportune times, and if you’re outside the house, you’re lucky to have remembered to pack a fresh one.

Parents also know how fast their babies plow through diapers — a healthy child fills six to 10 per day — and how expensive it all can get. Wrapping clean diapers on your baby can set you back $800 to $1,000 per year, according to the National Diaper Bank Network. That’s a pile of money, and 1 in 3 mothers say at some point they’ve been hard pressed to afford it, according to the network of more than 300 local groups that distribute diapers to families in need.

Hoping to alleviate this problem, two North Shore lawmakers want health officials consider a subsidy for low-income families with children under 2, to cover what some call the “diaper gap.” Should it come to pass, the benefit may resemble a California plan that sends $50 monthly diaper vouchers to welfare recipients with young children.

This seems to be one of those ideas born of good, though misplaced intentions. The expense looming over low-income families is better handled in Washington by addressing the underlying issue — benefits programs that cannot be used for diapers. That, after all, seems to be the rub behind this case of diaper rash.

Food stamps — or the Supplemental Nutrition Assistance Program — cannot be used to buy diapers. Neither will the Women, Infants and Children nutrition program. State-administered welfare benefits can be used to buy diapers, but advocates note those monthly checks are only $633 for a three-person family living in subsidized housing, while diapers cost upward of $80 per month. Also, only one-quarter of low-income families with children collect those benefits, called Temporary Assistance for Needy Families.

So, why not stretch the limits of these programs, particularly nutrition ones, to reach more families and allow parents to put money toward a must-have? Certainly parents use these benefits to buy formula and food for their babies. Why not diapers?

It would be a more practical, efficient solution than creating yet another government program.

It’s not that anyone disputes the need to put a clean diaper on a baby. Families with tight budgets resort to difficult measures to stretch their diaper dollar — washing and reusing them, if possible. Others find savings by reusing cloth diapers, though that can get expensive, too. In the meantime, babies forced to wait on a fresh diaper can develop health issues, from irritating rashes to more serious urinary tract infections.

“There’s no question that diapers are an absolute health necessity for babies, and some parents can’t afford it,” said state Sen. Joan Lovely, who with state Rep. Paul Tucker suggested the state study a diaper subsidy. Both are Democrats from Salem.

While we can agree with the cause, if not the solution, it’s worth recognizing the large effort to put babies in clean diapers that takes place outside of government.

The first diaper bank was created in 2000 in Tucson, Arizona, according to the national network. That helped to encourage a social worker in New Haven, Connecticut, to start one there. The model has since spread to 45 states, as well as the District of Columbia. The National Diaper Bank Network includes 13 organizations in Massachusetts that send out more than 1.3 million diapers a year. In New Hampshire there are two such groups. The big diaper-makers report making various charitable donations, as well.

Diaper duty is fun for no one, and the impulse to help parents is noble. But it shouldn’t take a new government program to do it.


State House News Service
Wednesday, May 10, 2017

Baker no fan of proposed soda tax
By Matt Murphy


Count the proposed soda tax among the revenue generating ideas that Gov. Charlie Baker is not willing to consider.

A day after proponents pitched legislation to levy an excise tax on sugary drinks as a way to both generate money for the state and promote good health, Baker dismissed the idea.

“I don't think we should be raising taxes, and I've said that before, especially not a tax that hits low-income people a lot harder than it hits everybody else,” Baker told reporters on Wednesday.

The bill sponsored by Sen. Jason Lewis and Rep. Kay Khan (H3329 / S1562) could raise $368 million, according to the lawmakers, and encourage people to choose drinks that don't contribute to obesity and other ailments.

While supporters acknowledge the tax would hit low-income communities harder than other, they say the revenue could be used to fund programs, drinking fountains, and other nutritional programs that would benefit them.


State House News Service
Wednesday, May 10, 2017

Income surtax up first at June 14 Constitutional Convention
By Michael P. Norton


The Constitutional Convention where lawmakers plan to eventually vote on a surtax on household incomes above $1 million has recessed until June 14 at 1 p.m.

Senate President Stanley Rosenberg, a supporter of the so-called millionaire's tax, gaveled the convention to order at 1:04 p.m. Wednesday, but lawmakers immediately recessed without acting on any proposals on the convention calendar.

Asked afterward when the convention would take up the tax amendment, Rosenberg said, "We will reconvene on June 14 and it's the first item on the calendar. We will see how the convention goes."

Asked if he planned to take up the amendment June 14, he said, "We'll be convening on June 14 for sure."

The constitutional amendment, which supporters say could yield $1.6 billion to $2.2 billion in new revenue, needs affirmative votes from the Legislature in two consecutive sessions to reach the 2018 ballot.

On May 18, 2016, the convention - a joint meeting of the House and Senate - advanced the petition 135-57. Because the amendment is a citizens' petition, it requires only 50 votes to advance each session.

Opponents of the measure say it could lead to a graduated income tax structure in which over time more people will be grouped in different tax brackets and taxed at different rates.

Rosenberg on Tuesday seemed to slam the door on tackling significant education reform within the Legislature before the 2018 election, telling advocates that it would be a "mistake" to do anything that would distract from efforts to pass the proposed income surtax.

"So there are a lot of bills floating around on education and my opinion at this point is that we need to focus on the Fair Share ballot questions that's coming up in November of '18 because the $2 billion or so that will be raised will be a major source of funding for the future of education, and anything that distracts from that debate and divides us and doesn't allow us to move forward successfully on that is, I think, a mistake," Rosenberg said.


State House News Service
Tuesday, May 9, 2017

Non-tax education reform efforts a "mistake," Rosenberg says
By Matt Murphy


Senate President Stanley Rosenberg seemed to slam the door Tuesday on tackling significant education reform before the 2018 election, telling advocates that it would be a "mistake" to do anything that would distract from efforts to pass a ballot law next year to raise taxes on income over $1 million.

Rosenberg spoke at a policy luncheon hosted by Education Reform Now in downtown Boston where he focused on the Senate's "Kids First" initiative, which has aimed to put together an updated policy blueprint for education from infancy through college.

Asked specifically about legislation backed by the state's largest teachers union that would put a moratorium on testing to evaluate student and teacher performance, Rosenberg urged advocates to put their focus elsewhere.

"So there are a lot of bills floating around on education and my opinion at this point is that we need to focus on the Fair Share ballot questions that's coming up in November of '18 because the $2 billion or so that will be raised will be a major source of funding for the future of education, and anything that distracts from that debate and divides us and doesn't allow us to move forward successfully on that is, I think, a mistake," Rosenberg said.

The Amherst Democrat is backing a proposed constitutional amendment that would impose a surtax of 4 percent on incomes over $1 million. The question requires just one more vote in the Legislature where there is broad support for putting it before voters in 2018.

After last year's bruising and divisive ballot campaign to expand charter schools fell in defeat, Rosenberg said he was hesitant to wade into another policy debate that could divide interest groups and jeopardize passage of the so-called Fair Share Amendment.

"From my point of view, we need to unify the education community. We had a rough time two years ago. We need to get ourselves together. We need to unify ourselves. Because we need that success. We don't have that money to invest in the Foundation Review Commission's recommendations and the 'Kids First' vision," he said.

"We can entertain other questions further down the road. And I'm not pulling any punches here. I said the same thing to the MTA, so pick your battles," Rosenberg said.

The Senate president's comments came a day before the Massachusetts Teachers Association is scheduled to hold a policy briefing at the State House on a bill (S 308) filed by Sen. Michael Rush, of West Roxbury, requiring hundreds of millions of dollars in new state funding to be poured into public education.

The bill would also put a a three-year moratorium on the use of high-stakes testing for graduation, district accountability and teacher evaluations.

MTA President Barbara Madeloni said the effort to generate new revenue for education should go "hand-in-hand" with debate over what Massachusetts residents want from their public education system.

"Divide is confusing to me, quite honestly, when we have so many sponsors, so that puzzles me, but young people and educators are in school right now and they are having experiences that matter and we have an opportunity to have meaningful conversations about what we want our schools to look like," Madeloni said.

One hundred and six House and Senate lawmakers have signed on to the Rush bill, which was co-sponsored in the House by Rep. Marjorie Decker. Madeloni said the Fair Share Amendment is a "huge part" of the MTA's agenda, but doesn't need the exclusive focus.

"We should be taking this opportunity, not waiting until the fall of 2018. We can do both of those things at the same time, and I think it serves the Fair Share Amendment and passage of the Fair Share Amendment to get people excited about talking about the future of their schools. I think that's going to bring more people to the polls to vote yes," she said.

Democrats for Education Reform, which stood on the opposite side of Rosenberg last year when the group backed the Question 2 charter school expansion, were encouraged by the Senate leader's remarks.

"We believe in holding students and teachers in schools to high standards and there has to be a way to measure whether we're meeting those standards," said former state Rep. Marty Walz, who now works with Democrats for Education Reform.

Walz, who once chaired the Education Committee, said accountability through standardized testing has contributed to the state's top ranking for education in the county.

Liam Kerr, the state director for Democrats for Education Reform, said the group backs the Fair Share Amendment as well as reforms in public education that would provide more accountability, which has put it at odds with unions. "The best way to get added resources is to show people we're spending the money well," Kerr said.

Rep. Alice Peisch, the House chair of the Education Committee, attended Tuesday's luncheon, but declined to respond directly to Rosenberg's comments. Instead, the Wellesley Democrat said the testing and evaluation pieces of the Rush bill also gave her pause.

"I have some serious concerns about some of the elements of the bill," Peisch said.

Rosenberg said the "Kids First" working group in the Senate plans to publish a second set of recommendations before the end of the year covering fourth grade through 12th grade followed by the third and final phase next year addressing post-secondary education.

Rosenberg said that despite ranking among the best public school systems in the country, many third graders still can't read at grade level affecting their future chances for success.

"There is a lot of progress we have made, and we should all pat ourselves on the back and take a bow, but that should last 10 seconds because we have a lot of work to do," Rosenberg said.


State House News Service
Sunday, April 30, 2017

Rep looks to curb state's money grab from counties
By Michael P. Norton


Just as state officials are in a struggle with the federal government over revenue sharing, the battle for local aid in Massachusetts marches on between the state, its cities and towns, and its counties.

Duxbury Rep. Josh Cutler is hopeful about progress this session on a bill (H1499) with bipartisan support that would allow counties to keep 30 percent of the revenue generated at the registries of deeds that they operate, including fees associated with property sales.

According to Cutler, the state currently takes about 90 percent of those monies, despite an original agreement to share a 50-50 split.

The bill's advancement would address an "unfair" practice, Cutler told WATD this month, and would help with the goal of delivering better regional services at the county level. "It's really a local aid bill," said Cutler.

Cutler expressed optimism, based on his conversations, about getting the bill out of the Revenue Committee. But he also identified a barrier for the bill. "It's a challenging conversation because no one wants to be the one to give up any revenue," he said.

Plymouth County Treasurer Thomas O'Brien, a former state representative, brought the issue to the attention of lawmakers and has been corraling support for the bill, according to Cutler.


The Salem News
Thursday, May 4, 2017

A Salem News editorial
No holiday this August


When your back-to-school shopping costs a little more this August, remember to thank Massachusetts lawmakers for the untimely demise of the sales tax holiday. Held in 12 of the past 14 years, the tax-free weekends typically fell in August, giving families loading up on new clothes and school supplies a reprieve from the state’s 6.25 percent sales tax.

The tax-free weekends were a boon for retailers because they nudged customers into their stores. They were especially helpful for Merrimack Valley businesses competing with shops unencumbered by sales tax on the other side of the border in New Hampshire.

Lawmakers who turned down a budget amendment to hold the next tax holiday cited its cost — that is, if one considers withholding money the state never had in the first place a “cost.” The tax-free weekends were said to hold back about $20 million that the state otherwise would have collected.

Questions about whether that big pile of unrealized tax justified the consumer spending it inspired long swirled around the tax holidays. And, certainly, if lawmakers had been truly interested in giving the taxpaying public a break, they’d have rolled back the sales tax 365 days a year — not just on two days in August.

But while a tax-free weekend could hardly be considered real budgetary reform, it can’t be encouraging that lawmakers have now closed the door even on that. The symbolism of its death shouldn’t be lost on those of us paying the state’s bills.

To be sure, the state House of Representatives has said it will study the issue, and Minority Leader Brad Jones has expressed hope the tax holiday can be brought off “life support.” Keep in mind that Jones is one of 34 Republicans in the House. For every one of them, there are more than three-and-a-half Democrats.

So, come late summer, don’t hold off on your back-to-school shopping in hopes of a tax-free deal.

 

NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml


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