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CLT UPDATE
Friday, July 7, 2017
Legislature passes $40.2B late
budget in record time
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Top state budget negotiators from the House
and Senate announced a compromise Thursday, but they
declined to make public any details of how they will spend
roughly $40 billion in taxpayer dollars or close what could
be a $1 billion gap.
Seven days into the new fiscal year,
lawmakers in both Democrat-run chambers are expected to pass
the budget on Friday, sending it to Republican Governor
Charlie Baker to sign....
The Legislature provoked criticism earlier
this year when its members voted themselves a pay raise as
part of an $18 million package, even as state revenue growth
flattened out and, later, dropped. Baker said Thursday
during a radio interview that revenues had grown at less
than half the rate Beacon Hill leaders had assumed when they
crafted last year’s budget.
Outside economists agree that the revenue
projections used when Baker, the House, and the Senate wrote
their respective versions of this year’s budget will also
ultimately prove too optimistic.
To keep state government running while
deliberations dragged on, last month lawmakers passed and
Baker signed a $5.15 billion interim budget.
The Boston Globe
Friday, July 7, 2017
Legislature signals budget deal, but stays mum on the
details
House and Senate leaders agreed to a $40.2
billion budget that avoids tax increases and mostly holds
spending flat at state agencies for fiscal 2018, according
to two sources close to the negotiations, including one of
the legislators involved in the talks.
The bill, filed Friday at 9:40 a.m., and
scheduled for passage Friday afternoon reflects a new
forecast of fiscal 2018 tax revenues that is roughly $700
million below the projection the House and Senate used to
build their budget bills this spring, according to Sen.
Vinny deMacedo, a Plymouth Republican....
Aides to House Ways and Means Committee
Chairman Brian Dempsey and Senate Ways and Means Committee
Chairwoman Karen Spilka declined to answer any questions
about the bill right after dropping it off in the House
clerk's office Friday morning. The bill began circulating
online at about 10:40 a.m.
All six members of the conference committee
signed off on the document, according to the House clerk's
office.
Its passage appears a foregone conclusion.
Not only is the budget late, but dissent among legislators
appears to have lessened in recent years and bills worked
out by conference committee are routinely approved....
The chief budget negotiators, Rep. Brian
Dempsey (D- Haverhill) and Sen. Karen Spilka (D-Ashland)
indicated Thursday night that a deal was imminent and
expressed confidence that the branches would act on it
Friday.
State House News Service
Friday, July 7, 2017
Mass. budget accord reached, negotiators slash spending
Largely discarding spending plans they
approved in the spring, the House and Senate on Friday sent
Gov. Charlie Baker a $40.2 billion state budget that holds
state spending flat, includes higher employer health care
assessments, and, according to some Democrats, underscores
the need for higher taxes and new revenues.
The bill was rushed through the House on a
140-9 vote and then cleared the Senate 36-2. After the
votes, Democratic legislative leaders offered differing
points of view on their final product....
Rep. James Lyons, an Andover Republican,
said the budget is predicated on "hopeful" levels of revenue
growth, suggesting a 2.9 percent rate of growth is too
optimistic since collections over the past year have grown
by about 1.4 percent. "These revenue numbers are not going
to meet the expectations," Lyons said.
Another Republican, Rep. Shaunna O'Connell
of Taunton, said the rushed vote on the bill that was
released Friday morning made it "impossible" for legislators
to know for sure what was in the budget and what had been
left out.
Senate Democrats shot down a bid by Senate
Minority Leader Bruce Tarr to give senators more than a few
hours to read the budget before voting on it. Noting an
interim budget is in place for the month of July, Tarr said
the Senate could afford to postpone the vote until next
week.
"It is inappropriate for us at this time to
consider a document filed just a few hours ago," the
Gloucester Republican said. "It is more than 320 pages and
spends more than $40 billion, which members have had a
chance to review for only a very short period of time." ...
According to House officials, the budget is
predicated on tax revenues growing 2.9 percent rather than
the originally anticipated 3.9 percent, and the budget's
$40.2 billion bottom line is about $1 billion higher than
the budget approved at this time last year.
Projected fiscal 2017 spending is estimated
at more than $40 billion despite only a 1.4 percent increase
in tax revenues last fiscal year, a growth level that
prompted Gov. Charlie Baker to hold down agency spending and
raid trust funds for nearly $140 million....
Supporters of a proposed surtax on high
earners, a proposal marked for a 2018 ballot vote that could
generate $2 billion, say low tax revenue growth, rising
health care costs and spending demands, and the threat of
federal funding cuts are forcing the state to weigh new
revenues.
"The projected revenue shortfalls forced the
Legislature to abandon some of the modest investments their
earlier budgets had sought and led to even greater reliance
on temporary measures to balance accounts," Noah Berger,
president of the left-leaning Massachusetts Budget and
Policy Center, said in a statement. "Unfortunately, this
budget does not even begin to make the kind of major
long-term investments that would improve our economy and
quality of life by expanding educational opportunity for all
of our young people and enhancing our failing
infrastructure. Doing that would require fixing flaws in our
tax system that allow the highest income residents of the
state to pay the smallest share of their income in state and
local taxes."
Given the spending choices lawmakers were
forced to make, Dempsey said he and other House leaders
might be thinking differently about pursuing additional
sources of revenue through taxes or other means if it
weren't likely that voters will decide next year whether to
impose a 4 percent surtax on income over $1 million.
"If that were not out there, I think you'd
look at it a little bit differently," Dempsey said.
State House News Service
Friday, July 7, 2017
House, Senate rush overdue $40.2 billion budget to Baker
To the extent that the Fourth of July break
was supposed to be a timeout for House and Senate lawmakers
deadlocked over an annual state budget bill and legislation
regulating legal marijuana, it didn't quite work out that
way.
The smoke had no sooner cleared from the
fireworks over the Charles River than lawmakers returned to
work mid-week to find that tensions simmering behind the two
major issues before the Legislature were ready to bubble
over.
Deadlines had already been blown.
Speculation about sticking points was swirling. And
lawmakers were being asked to defend why Massachusetts, a
state prideful of bipartisanship, was one of just a handful
nationwide without a fiscal 2018 budget in place.
A $40.2 billion budget deal to fund the
government for the next eleven-plus months would eventually
emerge from the fracas and be sent to Gov. Charlie Baker for
his review, but not before a few punches were thrown....
House Ways and Means Chairman Brian Dempsey
tried to put a shine on the budget, which lowered tax
projections for next year by $733 million and forced
cutbacks throughout. He told House members before they voted
that most programs and agencies would still see an increase,
albeit one smaller than once envisioned.
Meanwhile, down in the Senate's temporary
meeting quarters Senate Ways and Means Chairwoman Karen
Spilka spoke about "pain," and Rosenberg would call it the
"harshest state budget since the last recession."
State House News Service
Friday, July 7, 2017
Weekly Roundup - Purple Haze
The Baker administration, which has refused
to disclose specifics about its budget-balancing efforts for
the fiscal year that ended a week ago, notified lawmakers
last week that it plans to raid scores of trust funds to
collect nearly $140 million.
Sweeps of more than two dozen trust funds,
which the administration plans to execute no sooner than
mid-August, will sap funds set aside for distressed
hospitals and water supply protection and divert funds set
aside for special purposes to the state's General Fund.
Baker has spent much of his two-plus years
in office arguing against tax increases and maintaining the
state does not have revenue problems. The trust fund sweeps
show both that there are still major pockets of revenue
available within state government and that state officials
are hungry for revenue to balance the budget, since tax
collections are trickling rather than pouring in despite a
low unemployment rate....
The proposed sweeps total $139,258,319.
Usually set up for a specific purpose with dedicated revenue
streams, trust funds sometimes serve as piggy banks for
state officials to crack open when in need of some cash.
State House News Service
Friday, July 7, 2017
Baker plans to raid trust funds to balance last year's
budget
As foes of the so-called millionaires tax
prepare for a fight before the state Supreme Judicial Court,
they may have an ally who knows the court well.
Margaret Marshall, the SJC’s former chief
justice, was given top billing at a recent strategy session
arranged for the Massachusetts High Technology Council at
the Boston law office of Goodwin Procter.
Mass. High Tech has retained Goodwin to
handle the case against the “Fair Share Amendment,” which
would impose an extra 4 percentage points on an individual’s
income tax for earnings over $1 million. The tax proposal
appears headed for the ballot in 2018.
The best hope among opponents — which
include the Massachusetts Competitive Partnership and
Associated Industries of Massachusetts — is a challenge at
the SJC.
That could be where Marshall comes in,
although her exact role isn’t clear. A spokesman for the law
firm where she works, Choate, Hall & Stewart, declined to
comment or to make Marshall available for an interview.
Mass. High Tech president Chris Anderson declined to discuss
his group’s strategy sessions....
The union-backed coalition leading the
charge for the Fair Share Amendment includes legal
powerhouses, too. Northeastern University professor Peter
Enrich, a constitutional law expert, wrote the proposed
constitutional amendment. And Kate Cook, who was chief legal
counsel to former governor Deval Patrick, is leading a team
at Sugarman Rogers to work with Enrich on a pro bono basis
to defend against the business groups’ legal attack.
The Boston Globe
Thursday, July 6, 2017
Ex-chief justice weighs in
A Libertarian running for governor in New
Hampshire is pitching her state as an alternative to
Massachusetts, where voters next year are scheduled to
decide whether to impose a 4 percent surtax on incomes over
$1 million.
Jilletta Jarvis, who plans to kick off her
campaign for the 2018 gubernatorial contest on Saturday,
wrote on New Hampshire Patch websites that she would
"happily connect anyone with a couple amazing real estate
agents" if the potential tax had millionaires and business
owners looking to relocate.
"By moving your home and company to New
Hampshire you could save in housing costs, and no longer pay
any state income tax at all," Jarvis wrote. "New Hampshire's
cost of living is less than that in Massachusetts. More than
33,000 millionaires call New Hampshire home already. With at
least 11 towns boasting a median income for the entire town
of over $100,000, there are plenty of beautiful homes to
choose from."
Citing office park availability and "willing
employees waiting," Jarvis appealed in her post to Bay State
companies Staples, Biogen and eCom Corp.
In addition to lacking a state income tax,
New Hampshire also does not charge a sales tax, which Bay
State retailers say puts them at a disadvantage with
competitors based just over the northern border....
The Massachusetts Taxpayers Foundation ...
has cautioned that if one-third of the 900 tax filers
projected to make more than $10 million annually were to
relocate, total income tax revenues would drop by
approximately $750 million, including $410 million in taxes
from the current rate and $335 million projected under the
surtax.
State House News Service
Thursday, July 6, 2017
Beautiful homes, lower taxes awaits Mass. millionaires, N.H.
gov candidate says
As Massachusetts lawmakers debate new taxes
on marijuana of anywhere from 8 to 28 percent, public health
advocates say there’s another drug that needs a tax hike:
alcohol.
Drinkers in Massachusetts pay just pennies
per glass in state taxes, one of the lowest rates in the
country, despite reams of research showing that higher
alcohol prices lead to fewer car crashes and other harms.
Advocates concerned about alcohol’s toll see
a renewed opportunity to press for tougher regulations and
higher taxes, as a task force formed by state Treasurer
Deborah B. Goldberg conducts a soup-to-nuts review of
alcohol laws and regulations.
The Boston Globe
Thursday, July 6, 2017
Advocates see a chance to raise Mass. alcohol tax
As lawmakers negotiate a compromise budget
at the State House this week they’ll surely be discussing
whether to extend a sales tax holiday to Massachusetts
consumers, which has become a summer tradition.
Well, it was a summer tradition,
until last year, when an unanticipated drop in revenue
prompted Beacon Hill to suspend the sales tax-free
weekend....
We point it out for the zillionth time: The
current, 6.25 percent sales tax in Massachusetts was enacted
to help the commonwealth patch its way through the Great
Recession. The 25 percent hike in the tax (up from 5
percent) has remained in place ever since. Every time a
consumer pays tax on a new microwave oven or a set of jumper
cables the 1.25 percent “extra” tax is a reminder of Beacon
Hill’s refusal to undo the damage it occasionally inflicts,
if it means sacrificing even a modest source of revenue to
fund its spending priorities.
That the commonwealth might suspend the
sales tax holiday this year — the year that lawmakers
granted themselves massive pay increases — would be the
ultimate insult.
A Boston Herald editorial
Thursday, July 6, 2017
Restore the tax holiday
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Chip Ford's CLT
Commentary
I've been holding off all week on this Update, waiting for a
belated conclusion on the state's overdue budget. Finally it
has arrived.The House passed its initial version of the
new fiscal year budget on April 25.
Its bottom line was $40.8 billion. On May 16 the Senate
passed its initial version, with
a bottom line of $40.3 billion. The 2018 fiscal
year began last Saturday, July 1, with no budget as the
House/Senate conference committee continued to wrestle with finding
a compromise that would satisfy both chambers. In
its place, the Legislature passed and the governor signed a
stopgap "1/12th budget" of $5.15 billion to keep the
government open, get the state through a month with no real
budget in place.
The Legislature — a week
past deadline and into the new fiscal year —
finally passed its compromise budget this afternoon and sent it
to the governor. The bottom line: $40.2 billion.
● The conference committee budget agreement bill was
released on this morning at 9:40 a.m. Until then,
nobody but the six conferees knew what it contained.
● Five hours later the House was called to order at
2:54 p.m. It took a roll call vote at 3:30 p.m., 140-9
to pass the budget. It took the House a total of 36
minutes to pass a $40.2 billion budget and send it to the
Senate.
● The Senate was called to order eight minutes
later, at 3:38 pm. It took a roll call vote at 4:32
p.m., 36-2 to pass the budget. It took the Senate a
total of 54 minutes to pass a $40.2 billion budget and send
it to the the governor.
● It took the Legislature just six hours after the
budget was released by the conference committee to adopt it
and send it on to the governor.
According to State House News Service reports,
This $40.2 billion budget deal is "to fund the government
for the next eleven-plus months."
From another SHNS report: "DeLeo put his own spin on the
late budget, crediting Bay State lawmakers with the
'foresight' to pass a $5.15 billion interim budget to carry
state government into the start of the fiscal year."
I wonder if the FY 2018 budget that just passed
includes that $5.15 billion "interim" budget, or if that
$5.15 billion is in addition to the $40.2 billion?
I've got to think the "interim" amount is accounted for in
that $40.2 billion of spending —
don't I?
Meanwhile, the governor is
redirecting "scores of trust funds to collect nearly $140
million" to balance last year's budget debt, which
closed on June 30.
Already Massachusetts millionaires are being invited
— enticed even
— to evacuate Taxachusetts and
relocate in New Hampshire. When you think about it,
anyone effected by this proposed abomination has much more
to gain than just avoiding the 4% increase. That would
be just the straw that breaks the camel's back.
Not only would a millionaire save that potential 4%
surtax, but they'd also save the entire 5.1% income tax we
all pay. And New Hampshire —
our neighbor a few miles to the north
— also has no sales tax whatsoever. If I was a
millionaire this would require no thought. I'd be
packed up and gone in a blink.
It's nice to have allies once in a while with deep
pockets. The Massachusetts High Tech Council, who were
critical CLT allies going back to our 1980 campaign for
Proposition 2˝, is leading the court
challenge of the proposed Graduated Income Tax (aka, the
"millionaire's tax," aka, "The Fair Share Amendment"), and
has brought in
Margaret Marshall, the state Supreme Judicial Court’s former
chief justice, retired from the court and now in private
practice.
CLT has borne the financial burden of such legal challenges
in the past and there's no way we could afford this one
at this time. CLT and its members bore the cost of the
successful campaign we led to defeat the last Grad Tax
assault in 1994, and even doing that again in the
year ahead will be a financial challenge.
They're back trying to hike taxes
on alcohol
again. Here we go with another round of
been-there-done-that-already redundancy. The Takers never give
up, never surrender, never take no for an answer, and never
go away.
"Government's view of the
economy could be summed up in a few short phrases:
If it moves, tax it. If it keeps moving, regulate
it. And if it stops moving, subsidize it."
President
Ronald Reagan
August 15, 1986
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Chip Ford
Executive Director |
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The Boston Globe
Friday, July 7, 2017
Legislature signals budget deal, but stays mum
on the details
By Jim O’Sullivan
Top state budget negotiators from the House and
Senate announced a compromise Thursday, but they
declined to make public any details of how they
will spend roughly $40 billion in taxpayer
dollars or close what could be a $1 billion gap.
Seven days into the new fiscal year, lawmakers
in both Democrat-run chambers are expected to
pass the budget on Friday, sending it to
Republican Governor Charlie Baker to sign.
House budget chair Brian Dempsey and Senate
budget chair Karen Spilka said in a joint
statement late Thursday that they had “reached
an agreement to resolve all differences between
the House and Senate versions,” and that they
would file the budget Friday morning. That
timing leaves precious few hours for members to
review what is perennially state government’s
largest bill.
The statement did not disclose the budget’s
bottom line or how lawmakers had dealt with a
complicated health care package that Baker had
requested last month in the spending blueprint.
Legislative negotiators have also been at an
impasse over changes to the marijuana
legalization law passed by voters last November.
House Speaker Robert DeLeo called Wednesday for
talks over the marijuana bill to cease until a
budget deal was reached.
The Legislature provoked criticism earlier this
year when its members voted themselves a pay
raise as part of an $18 million package, even as
state revenue growth flattened out and, later,
dropped. Baker said Thursday during a radio
interview that revenues had grown at less than
half the rate Beacon Hill leaders had assumed
when they crafted last year’s budget.
Outside economists agree that the revenue
projections used when Baker, the House, and the
Senate wrote their respective versions of this
year’s budget will also ultimately prove too
optimistic.
To keep state government running while
deliberations dragged on, last month lawmakers
passed and Baker signed a $5.15 billion interim
budget.
Tensions between the House and Senate, not
uncommon during budget season, crescendoed this
week.
On Wednesday, DeLeo issued a statement saying he
had “asked” House conferees on the marijuana to
suspend their talks with the Senate until budget
negotiations had wrapped. Less than an hour
later, Senate President Stanley C. Rosenberg
released his own statement, alleging that
unnamed “mischief makers are once again at work”
and maintaining that the “Senate has not and
will not link the budget and marijuana
negotiations,” but would work on both bills
“simultaneously.”
On Thursday, Rosenberg told reporters that there
had never been discussion about intertwining the
negotiations and mocked DeLeo’s suspension of
the marijuana talks.
“I’ve been in this building for about 40 years.
That’s about the most absurd thing that I have
ever seen,” he said.
The work on both measures was conducted largely
in secret, with details of negotiations unknown
even to many members.
“I’m not aware of any of the inner workings of
the Ways and Means Committee or the conference
committee,” said Representative Paul Donato, the
Medford Democrat and second assistant House
majority leader who presided over Thursday’s
informal House session.
As if to punctuate the Legislature’s level of
inactivity, even its website had crashed late
Thursday.
Baker last week had adopted a laissez-faire
approach to budget negotiations, calling it “not
that big a deal” if lawmakers were a week late
with the budget. But on Thursday, he ramped up
the pressure slightly, saying during a WGBH
radio appearance, “It’s my hope and expectation
that some time in the not too distant future
we’ll get a budget from them and we can put this
all to bed.”
—Joshua Miller
of the Globe staff contributed to this report.
State House News Service
Friday, July 7, 2017
Mass. budget accord reached, negotiators slash
spending
By Andy Metzger and Matt Murphy
House and Senate leaders agreed to a $40.2
billion budget that avoids tax increases and
mostly holds spending flat at state agencies for
fiscal 2018, according to two sources close to
the negotiations, including one of the
legislators involved in the talks.
The bill, filed Friday at 9:40 a.m., and
scheduled for passage Friday afternoon reflects
a new forecast of fiscal 2018 tax revenues that
is roughly $700 million below the projection the
House and Senate used to build their budget
bills this spring, according to Sen. Vinny
deMacedo, a Plymouth Republican.
A separate source close the negotiations said
the conference committee agreed to $733 million
in budget fixes, including about $400 million in
direct cuts from the bills the House and Senate
approved this spring. Further explanations about
the budget fixes and the 327-page bill, which
includes 153 outside sections and was crafted
behind closed doors of the past month, were not
available as lawmakers who crafted the spending
plan were not available to discuss it.
Fiscal 2017 spending is projected to be $40.183
billion, according to the most recent
information statement made public by the state.
It does not appear that budget negotiators cut
local aid level that cities and towns had been
anticipating, with $4.75 billion scheduled to be
delivered to local schools and $1.06 billion
appropriated in unrestricted local aid.
The compromise budget, according to the same
official, does not include the specific
MassHealth reforms that Gov. Charlie Baker
presented to the conference committee last month
for inclusion in the budget, but does
incorporate an increase in the Employer Medical
Assistance Contribution paid by employers to
help cover the cost of Medicaid. That measure
marks a new strategy to help the state pay its
rising MassHealth tab.
Departmental budgets often increase year-to-year
to keep pace with rising salaries and others
costs. The fiscal 2018 budget generally keeps
spending flat from fiscal 2017, according to
deMacedo.
"There's going to be a lot of disappointment in
that reality, but we have a responsibility to
put together a budget that's going to be
balanced, and we've done that," deMacedo said.
Unemployment is low and the state's economy
continues to grow, but Beacon Hill officials
have been miffed by the slow growth rate of tax
collections.
The budget agreement nixes the Senate's plans to
hike taxes on flavored cigars, which would have
provided continued funding for prevention and
wellness programs around the state. The deal
also excludes a Senate-backed provision to tax
short-term rentals such as those booked through
Airbnb. House leaders are counting on Rep. Aaron
Michlewitz to put together a standalone bill
addressing that issue.
The conference report includes House-backed
language that would allow the Gaming Commission
to issue beverage licenses permitting casinos to
serve alcohol to patrons "who are actively
engaged in gambling" as late as 4 a.m. Senate
President Stan Rosenberg said in April that he
worried extending alcohol-serving hours at
casinos beyond the current 2 a.m. cutoff could
open the door to other changes to the state's
gambling law.
Arriving seven days into the fiscal year, the
compromise was the work of a six-member
conference committee that worked in secret over
more than a month.
Aides to House Ways and Means Committee Chairman
Brian Dempsey and Senate Ways and Means
Committee Chairwoman Karen Spilka declined to
answer any questions about the bill right after
dropping it off in the House clerk's office
Friday morning. The bill began circulating
online at about 10:40 a.m.
All six members of the conference committee
signed off on the document, according to the
House clerk's office.
Its passage appears a foregone conclusion. Not
only is the budget late, but dissent among
legislators appears to have lessened in recent
years and bills worked out by conference
committee are routinely approved.
The chief budget negotiators, Rep. Brian Dempsey
(D- Haverhill) and Sen. Karen Spilka (D-Ashland)
indicated Thursday night that a deal was
imminent and expressed confidence that the
branches would act on it Friday.
"On behalf of our fellow conferee's we would
like to announce that the Conference Committee
working on the FY2018 Budget, has reached an
agreement to resolve all differences between the
House and Senate versions," Dempsey and Spilka
said in a short statement. "The Conference
Report will be filed tomorrow morning and the
branches will act on the Conference Report in
session tomorrow."
State House News Service
Friday, July 7, 2017
House, Senate rush overdue $40.2 billion budget
to Baker
By Michael P. Norton
Largely discarding spending plans they approved
in the spring, the House and Senate on Friday
sent Gov. Charlie Baker a $40.2 billion state
budget that holds state spending flat, includes
higher employer health care assessments, and,
according to some Democrats, underscores the
need for higher taxes and new revenues.
The bill was rushed through the House on a 140-9
vote and then cleared the Senate 36-2. After the
votes, Democratic legislative leaders offered
differing points of view on their final product.
"In the midst of a tough fiscal climate we've
delivered a responsible budget that makes
targeted investments and protects our most
vulnerable citizens," House Speaker Robert DeLeo
said. "I am particularly proud of the work we've
done on early education and care - which will
have a lasting impact on both the workforce and
the Commonwealth's children - and supporting
those battling addiction."
Senate President Stanley Rosenberg took a more
dim view of the budget, calling it "the harshest
state budget since the last recession."
"It would have been somewhat better had it
contained the Senate's modest revenue proposals
including those on Airbnb, internet hotel
resellers, flavored cigars, film tax, and the
Community Preservation Act," he said. "We can
take some measure of pride in what we were able
to do for local aid, children, and veterans, but
too many were left behind."
Lawmakers put aside many investments they had
planned and settled for a budget with a bottom
line that roughly mirrors projected state
spending for last fiscal year. They did so
because tax revenue growth forced them to mark
down available revenues by $733 million.
"This budget is not without pain," Senate Ways
and Means Chairwoman Karen Spilka told
reporters. "It's clear that the state is facing
a shortfall in revenue that will have an impact
on real people's lives and there are cuts
throughout this budget."
Asked to identify some of the cuts she described
as painful, Spilka said there were reductions in
the Executive Office of Human Services and
lawmakers were unable to preserve full funding
for an account that helps cities and towns pay
special education costs.
Spilka said members of a conference committee
also pulled aside $104 million for a new reserve
fund to cover spending in county sheriff offices
and the Committee for Public Counsel Services,
the state's public defender agency. The revenue
gap was primarily covered through $502 million
in spending reductions, $205 million in
"efficiencies and reversions" and the $83
million in revenue from not meeting a trigger to
reduce the income tax rate, Spilka said.
House budget chief Rep. Brian Dempsey said the
revenue markdown forced $400 million in changes
to line items, but said he would hesitate to
describe them as cuts because he said in many
cases fiscal 2018 spending levels will be higher
than levels in the original fiscal 2017 budget.
"These reductions are never easy," Dempsey said.
The Department of Developmental Services will
receive a $57 million increase over last year's
budget, but not the $84 million increase the
House had initially proposed, Dempsey said.
The budget, Dempsey said, recognizes the problem
of "revenue growth slippage" -- Spilka called it
a "new fiscal reality" -- but still invests $40
million in unrestricted local aid, $119 million
more in school aid, and $15 million to address
the salaries of early education workers.
"I am very pleased that local aid was
maintained," said House Minority Leader Brad
Jones, who took issue with the budget
development process, which has been marked by a
high level of secrecy. Jones also suggested the
budget was balanced only by consciously
underfunding accounts.
Rep. James Lyons, an Andover Republican, said
the budget is predicated on "hopeful" levels of
revenue growth, suggesting a 2.9 percent rate of
growth is too optimistic since collections over
the past year have grown by about 1.4 percent.
"These revenue numbers are not going to meet the
expectations," Lyons said.
Another Republican, Rep. Shaunna O'Connell of
Taunton, said the rushed vote on the bill that
was released Friday morning made it "impossible"
for legislators to know for sure what was in the
budget and what had been left out.
Senate Democrats shot down a bid by Senate
Minority Leader Bruce Tarr to give senators more
than a few hours to read the budget before
voting on it. Noting an interim budget is in
place for the month of July, Tarr said the
Senate could afford to postpone the vote until
next week.
"It is inappropriate for us at this time to
consider a document filed just a few hours ago,"
the Gloucester Republican said. "It is more than
320 pages and spends more than $40 billion,
which members have had a chance to review for
only a very short period of time."
Sen. William Brownsberger said he viewed
Friday's vote as one of "do I want the state to
run or do I not want the state to run." He noted
that the Senate could have waited but that the
conference committee report could not be amended
regardless.
"We could do it later, but it's not going to
change. The deal's not going to change," he
said. "I have confidence in the Senate Ways and
Means team, I think they did the best they could
and it is what it is."
The budget features new assessments on employers
designed to generate $200 million to help the
state keep up with the rising costs of
MassHealth, the public health insurance program
that serves about one million people.
One assessment will boost a per-employee
assessment paid by employers from $51 to $77 per
year, while another will hit employers with up
to $750 per employee if their workers choose
MassHealth even though they have access to
insurance through their employers.
The new assessments are coupled with plans to
reduce the size of a scheduled increase in
unemployment insurance rates to $500 million,
from $850 million, but House and Senate
Democrats discarded MassHealth reforms that
Baker recommended in June and which employer
groups had hoped would be coupled with the new
assessments.
"The proposed state budget fails to honor a
compromise reached with the business community
that promised reforms alongside any assessment
to close MassHealth budget gaps," Christopher
Carlozzi, Massachusetts state director of the
National Federation of Independent Businesses,
said. "The cost of healthcare is a top issue for
Massachusetts small business owners and adding
an additional assessment without reining in the
cost of a bloated MassHealth program is
irresponsible and guarantees the promise of
greater budget problems in years to come. The
legislature needs to understand that 'shared
responsibility' is not a one-way street that
consistently requires funds from the small
business community without addressing the
underlying cost drivers."
Democrats in the Legislature said the budget
requires Baker to extract $150 million in
savings at MassHealth, but took pride in ruling
out eligibility and benefit standard changes.
Rep. Christine Barber claimed Baker's plans
would have "undermined" the state's health care
coverage goals.
The compromise budget retains a planned $100
million deposit into the state's "rainy day"
fund, a commitment that Dempsey said could prove
important to credit rating agencies who have
questioned the strength of the state's reserves.
The deposit would bring the total balance in the
fund to $1.4 billion by the end of the fiscal
year, but about half of it is contingent on
capital gains tax revenues meeting projections.
Dempsey also noted that the House's marijuana
regulation bill, which is still tied up in
negotiations, includes $50 million for substance
abuse treatment from taxes on retail pot sales,
which the House proposed to tax at 28 percent,
but the Senate has favored a 12 percent tax.
"It's a tremendous opportunity, I think, to tax
an industry that ought to see a higher tax and
use that money really for the betterment of the
citizens of the commonwealth and treatment," he
said.
The consensus budget sided with the Senate on a
reserve for the implementation of the new
marijuana law, appropriating $2 million rather
than the House's approved $4 million.
Jim Borghesani, spokesman for the Yes on 4
Coalition and the Marijuana Policy Project, said
the $2 million reserve "falls far short of the
funding necessary to build an effective
regulatory structure in the time set by the
Legislature and the governor."
"The cost of licensing and tracking software
alone, which must be in place before
applications can be processed, is estimated at
$5.5 million," Borghesani said. "The Treasurer
requested $10 million for the year-one budget.
We take elected officials at their word that
there will be no more delays, and we hope
funding is set at the amount necessary to
prevent any more of them."
The final budget keeps the University of
Massachusetts system on track for what UMass
President Marty Meehan projected will be a 2
percent to 3 percent hike in student charges
this year, including the House's appropriation
of roughly $513 million. Higher education
advocates and UMass officials had hoped
negotiators would stick with the Senate's higher
figure of $534 million, which was about $4
million shy of the university's request.
The advocacy group Public Higher Education of
Massachusetts said the budget "hurts students
and families" by underfunding UMass by $30
million, with state universities and community
colleges faring "not much better."
The budget deal does not include a Senate
amendment that municipal officials urged the
conference committee to preserve in order to
rejuvenate the collapsing partnership between
the state and communities that have raised
property taxes under the Community Preservation
Act.
Lawmakers spared from cuts their planned
investments in local aid. "It is absolutely
clear that the Legislature looked to protect
cities and towns from the state's revenue
challenges," Geoff Beckwith, executive director
of the Mass. Municipal Association, said.
Spilka said budget conferees left out MassHealth
reforms recommended by Baker in June dealing
with eligibility and benefit changes because
they "rejected the notion that we should accept
the governor's health care proposal without the
necessary transparency."
"At a moment when we are rightly horrified by
the lack of transparency in the health care
debate on the national level, it's important
that we must stick to our principles and ensure
such an important proposal for Massachusetts and
its residents goes through the proper process,"
she said.
According to House officials, the budget is
predicated on tax revenues growing 2.9 percent
rather than the originally anticipated 3.9
percent, and the budget's $40.2 billion bottom
line is about $1 billion higher than the budget
approved at this time last year.
Projected fiscal 2017 spending is estimated at
more than $40 billion despite only a 1.4 percent
increase in tax revenues last fiscal year, a
growth level that prompted Gov. Charlie Baker to
hold down agency spending and raid trust funds
for nearly $140 million.
Sen. Sonia Chang-Diaz, a Jamaica Plain Democrat
who joined Webster Republican Sen. Ryan Fattman
in opposing the budget, told the News Service
afterward she was "still grappling" with her
vote.
"At some point I think you have to be willing to
recognize when you are the frog in a boiling pot
of water and say, 'This is not good enough,
there are some choices that we could have made
without adding a penny to the bottom line that
would have done better for the people of
Massachusetts,'" she said.
The budget includes "some painful cuts" to elder
services programs but does not "appear to
materially impair these services overall,"
according to Mass. Home Care executive director
Al Norman. More than $5.6 million was cut from
Executive Office of Elder Affairs line items,
according to Norman, who said there should still
be sufficient funding to avoid a waiting list
for home care services.
Supporters of a proposed surtax on high earners,
a proposal marked for a 2018 ballot vote that
could generate $2 billion, say low tax revenue
growth, rising health care costs and spending
demands, and the threat of federal funding cuts
are forcing the state to weigh new revenues.
"The projected revenue shortfalls forced the
Legislature to abandon some of the modest
investments their earlier budgets had sought and
led to even greater reliance on temporary
measures to balance accounts," Noah Berger,
president of the left-leaning Massachusetts
Budget and Policy Center, said in a statement.
"Unfortunately, this budget does not even begin
to make the kind of major long-term investments
that would improve our economy and quality of
life by expanding educational opportunity for
all of our young people and enhancing our
failing infrastructure. Doing that would require
fixing flaws in our tax system that allow the
highest income residents of the state to pay the
smallest share of their income in state and
local taxes."
Given the spending choices lawmakers were forced
to make, Dempsey said he and other House leaders
might be thinking differently about pursuing
additional sources of revenue through taxes or
other means if it weren't likely that voters
will decide next year whether to impose a 4
percent surtax on income over $1 million.
"If that were not out there, I think you'd look
at it a little bit differently," Dempsey said.
Newton mayor and Democratic gubernatorial
candidate Setti Warren released a statement
Friday afternoon expressing concerns with the
spending plan.
"By continuing the annual spectacle of using
one-time fixes, fiscal sleights of hand and
gimmicks to fix the budget, Beacon Hill has
decided we are a Commonwealth that will not
recognize the truth that state government needs
new revenue," Warren said. "If we don't fix this
broken budget process - if we don't stand up and
demand transparency and admit that we need new
revenue - the toll on the Commonwealth will only
get worse. The key question facing us is what
kind of Commonwealth we want to be. This budget
and the way it was developed and passed suggest
the Commonwealth we are becoming needs to
change."
Warren also criticized the conference
committee's omission of language directing
officials to study the feasibility of building a
high-speed rail line between Boston and
Springfield. The Senate had unanimously backed
the study, an amendment offered by East
Longmeadow Democrat Sen. Eric Lesser, saying it
train service would allow for a better link
between the economies of greater Boston and
western Massachusetts. Baker vetoed a similar
study from last year's budget.
—Matt Murphy,
Katie Lannan and Colin A. Young contributed
reporting.
State House News Service
Friday, July 7, 2017
Weekly Roundup - Purple Haze
Recap and analysis of the week in state
government
By Matt Murphy
Consider Beacon Hill's mello harshed.
To the extent that the Fourth of July break was
supposed to be a timeout for House and Senate
lawmakers deadlocked over an annual state budget
bill and legislation regulating legal marijuana,
it didn't quite work out that way.
The smoke had no sooner cleared from the
fireworks over the Charles River than lawmakers
returned to work mid-week to find that tensions
simmering behind the two major issues before the
Legislature were ready to bubble over.
Deadlines had already been blown. Speculation
about sticking points was swirling. And
lawmakers were being asked to defend why
Massachusetts, a state prideful of
bipartisanship, was one of just a handful
nationwide without a fiscal 2018 budget in
place.
A $40.2 billion budget deal to fund the
government for the next eleven-plus months would
eventually emerge from the fracas and be sent to
Gov. Charlie Baker for his review, but not
before a few punches were thrown.
The post-Fourth of July pyrotechnics got started
early Wednesday evening when, after the branches
broke for the day without agreement on marijuana
or a budget, sources close to the negotiations
told the News Service that talks over both
issues had become intertwined.
The mere suggestion that House and Senate
leaders might be using items in one bill as
leverage for a deal on the other drew swift and
forceful denials from both House Speaker Robert
DeLeo and Senate President Stanley Rosenberg.
But at times it became unclear whether the top
Democrats were denying that attempts at
cross-topic horse-trading had taken place, or
simply their own involvement.
Rosenberg chalked up the talk of linkage between
the two conference committee negotiations to
"mischief makers" looking to spoil the stew, but
DeLeo took it one step further. Despite his
disavowel that the House would ever stoop to
such politics, he suspended the House's
participation in talks over marijuana regulation
to remove "distractions" and focus on getting an
already-late budget to Gov. Baker's desk.
That move sparked an array of increasingly
agitated responses from his Senate counterpart.
Rosenberg early Thursday, with a smile on his
face, proclaimed himself "puzzled" by the
manuevering before suggesting the Senate the can
"walk and chew gum at the same time" and
inviting the House to do the same.
But when it became clear that a budget deal was
imminent and that, just maybe, DeLeo's posturing
achieved its intended result, the leader from
Amherst, this time a bit more wide-eyed,
declared it "absurd" that the pot-talk
suspension had anything to do with the budget
compromise or that negotiations might have been
linked prior.
"Whoever made up those rumors and spread them
had an intention, a nefarious intention. There
were never any discussions linking the two. It
was b.s.," he told reporters. It was a rather
unusual outburst for typically good-natured
leader who's hallmark has been decorum.
The talk of linkage between pot and the budget
clearly struck a nerve throughout the building.
But in some ways legislative leaders played a
role in inviting those types of leaks and
speculation about motives and gamesmanship as
they insist on a level of secrecy that leaves
even the governor guessing about what goes on
behind closed doors, where the important
decisions about the major bills are made.
Seven hours and 56 minutes after House and
Senate leaders filed their compromise budget
bill with the House clerk, the voting was done
and the fiscal 2018 budget - a slimmed down
version of what lawmakers passed this spring -
was on its way to Baker.
House Ways and Means Chairman Brian Dempsey
tried to put a shine on the budget, which
lowered tax projections for next year by $733
million and forced cutbacks throughout. He told
House members before they voted that most
programs and agencies would still see an
increase, albeit one smaller than once
envisioned.
Meanwhile, down in the Senate's temporary
meeting quarters Senate Ways and Means
Chairwoman Karen Spilka spoke about "pain," and
Rosenberg would call it the "harshest state
budget since the last recession."
"It would have been somewhat better had it
contained the Senate's modest revenue proposals
including those on Airbnb, internet hotel
resellers, flavored cigars, film tax, and the
Community Preservation Act," he said in a
statement after the budget's passage.
Baker held back from any snap assessments on the
budget that legislative Republicans lamented
they had little time to review before being
asked to vote, but he did vow to "continue to
pursue" MassHealth reforms left on the cutting
room floor. Legislative leaders, perhaps
ironically given their processing of the budget
on Friday, said they felt rushed to decide how
to handle the proposal put on their desks just
weeks ago.
"As requested by the Legislature, the
administration proposed a comprehensive package
that was carefully developed and supported by
leading members of the health care and business
communities to control spending, protect
taxpayers and preserve the health care safety
net. The administration will continue to pursue
the reforms necessary to stabilize the health
care safety net and protect taxpayers from
picking up the tab for more worker's health
coverage," Baker spokesman Billy Pitman said in
a statement.
Lawmakers accepted Baker's recommendation for a
new two-tiered assessment on employers that will
ask businesses over the next two years to
contribute $200 million to help pay for rising
MassHealth expenses.
But Dempsey suggested a more "public process" to
consider the eligibility and benefit reforms
sought by the administration that were an
integral part in winning the backing of
employers, and the reason major business groups
came out in opposition to the final budget plan
asking employers to foot more of the Medicaid
bill.
"Without these reforms, the state budget and the
state economy will continue to buckle under the
weight of health care cost growth," the business
groups wrote to lawmakers in a last ditch
appeal.
When the dust had settled, only 11 lawmakers,
including just one Democrat, voted against the
budget compromise.
And as the lawmakers streamed toward the exits
and their weekends, the DeLeo suspension was
lifted and pot negotiators got back to work.
SONG OF THE WEEK: Lately things they don't seem
the same, actin' funny, but I don't know why....
State House News Service
Friday, July 7, 2017
Baker plans to raid trust funds to balance last
year's budget
By Andy Metzger and Michael P. Norton
The Baker administration, which has refused to
disclose specifics about its budget-balancing
efforts for the fiscal year that ended a week
ago, notified lawmakers last week that it plans
to raid scores of trust funds to collect nearly
$140 million.
Sweeps of more than two dozen trust funds, which
the administration plans to execute no sooner
than mid-August, will sap funds set aside for
distressed hospitals and water supply protection
and divert funds set aside for special purposes
to the state's General Fund.
Baker has spent much of his two-plus years in
office arguing against tax increases and
maintaining the state does not have revenue
problems. The trust fund sweeps show both that
there are still major pockets of revenue
available within state government and that state
officials are hungry for revenue to balance the
budget, since tax collections are trickling
rather than pouring in despite a low
unemployment rate.
According to a letter obtained by the News
Service, the administration intends to sweep up
to $23.5 million out of the Distressed Hospital
Trust Fund, $3 million out of the Regional
Tourism Councils Trust, and $320,903 out of the
Racing Stabilization Trust Fund.
"This list of accounts has been shared with
state agencies to ensure that they are aware of
my office's intent to sweep these trusts,"
Administration and Finance Secretary Kristen
Lepore wrote to lawmakers last Friday, the last
day of fiscal 2017.
According to the administration, the trust-fund
exercise is still in development until the
fiscal 2017 books are closed this fall.
State law enables the secretary to direct the
comptroller to carry out trust fund sweeps,
requiring a report to the House and Senate Ways
and Means committees 45 days before the
transfer.
The law states, "The request shall certify that
the secretary, in consultation with the
comptroller, has determined that the balance, or
a specified part of the balance, is not
necessary for the purposes for which it was made
available."
The proposed sweeps total $139,258,319. Usually
set up for a specific purpose with dedicated
revenue streams, trust funds sometimes serve as
piggy banks for state officials to crack open
when in need of some cash.
In 2012, the Patrick administration softened the
blow of MBTA fare hikes by sweeping $51 million
from the motor vehicle inspection trust fund
into the transit agency.
Baker has been laconic about his efforts to
manage the roughly $40 billion fiscal 2017
budget as revenues dribbled in $439 million
below expectations through May, describing his
budget-balancing efforts as "nipping and
tucking."
The governor imposed hiring restrictions last
July. An April memo from Lepore informed Cabinet
secretaries and other state officials that she
was "once again suspending spending for
nonessential goods and services."
A list of 34 trust funds and the maximum amount
that may be transferred to the general fund
includes lesser known accounts, identified by
Lepore as the Upland Sandpiper Expendable Trust
Sweep, the Abandoned Vessel Trust Sweep and the
Route 3 Design/Build Trust.
The Massachusetts Taxpayers Foundation in June
predicted that trust fund balances might be eyed
to plug holes in the state budget.
"About $200 million in trust fund sweeps were
used to closeout FY 2016 and will likely be part
of the approach to end FY 2017 in balance;
however, because trust revenues have been relied
upon so heavily in recent years it means that
fewer are available for use in FY 2018," the
foundation reported.
The Boston Globe
Thursday, July 6, 2017
Ex-chief justice weighs in
By Jon Chesto
As foes of the so-called millionaires tax
prepare for a fight before the state Supreme
Judicial Court, they may have an ally who knows
the court well.
Margaret Marshall, the SJC’s former chief
justice, was given top billing at a recent
strategy session arranged for the Massachusetts
High Technology Council at the Boston law office
of Goodwin Procter.
Mass. High Tech has retained Goodwin to handle
the case against the “Fair Share Amendment,”
which would impose an extra 4 percentage points
on an individual’s income tax for earnings over
$1 million. The tax proposal appears headed for
the ballot in 2018.
The best hope among opponents — which include
the Massachusetts Competitive Partnership and
Associated Industries of Massachusetts — is a
challenge at the SJC.
That could be where Marshall comes in, although
her exact role isn’t clear. A spokesman for the
law firm where she works, Choate, Hall &
Stewart, declined to comment or to make Marshall
available for an interview. Mass. High Tech
president Chris Anderson declined to discuss his
group’s strategy sessions.
A spokesman for Goodwin also declined to
comment, although he identified the firm’s
lawyers on the case: partner Kevin Martin and
associates David Zimmer and Joshua Bone.
The union-backed coalition leading the charge
for the Fair Share Amendment includes legal
powerhouses, too. Northeastern University
professor Peter Enrich, a constitutional law
expert, wrote the proposed constitutional
amendment. And Kate Cook, who was chief legal
counsel to former governor Deval Patrick, is
leading a team at Sugarman Rogers to work with
Enrich on a pro bono basis to defend against the
business groups’ legal attack.
State House News Service
Thursday, July 6, 2017
Beautiful homes, lower taxes awaits Mass.
millionaires, N.H. gov candidate says
By Katie Lannan
A Libertarian running for governor in New
Hampshire is pitching her state as an
alternative to Massachusetts, where voters next
year are scheduled to decide whether to impose a
4 percent surtax on incomes over $1 million.
Jilletta Jarvis, who plans to kick off her
campaign for the 2018 gubernatorial contest on
Saturday,
wrote on New Hampshire Patch websites that
she would "happily connect anyone with a couple
amazing real estate agents" if the potential tax
had millionaires and business owners looking to
relocate.
"By moving your home and company to New
Hampshire you could save in housing costs, and
no longer pay any state income tax at all,"
Jarvis wrote. "New Hampshire's cost of living is
less than that in Massachusetts. More than
33,000 millionaires call New Hampshire home
already. With at least 11 towns boasting a
median income for the entire town of over
$100,000, there are plenty of beautiful homes to
choose from."
Citing office park availability and "willing
employees waiting," Jarvis appealed in her post
to Bay State companies Staples, Biogen and eCom
Corp.
In addition to lacking a state income tax, New
Hampshire also does not charge a sales tax,
which Bay State retailers say puts them at a
disadvantage with competitors based just over
the northern border.
In Massachusetts, the sales tax is 6.25 percent
and the income tax rate is 5.1 percent. Barring
a potential court challenge, voters next year
will decide whether to tack an additional 4
percent surtax on earnings over $1 million, with
the proceeds intended to fund education and
transportation.
Opponents of the surtax have said it could drive
high-income earners out of state, a claim
backers reject.
A Massachusetts Budget and Policy Center
analysis found state tax rates have "only a
minimal impact on interstate migration," and
millionaires are often "less mobile" than
households in lower income groups. The analysis
projects the millionaire population in
Massachusetts would drop by 0.6 percent if the
question passed, for a loss of $16 million in
direct annual income tax revenue and a net gain
of $1.88 billion from the new surtax.
The Massachusetts Taxpayers Foundation, however,
has cautioned that if one-third of the 900 tax
filers projected to make more than $10 million
annually were to relocate, total income tax
revenues would drop by approximately $750
million, including $410 million in taxes from
the current rate and $335 million projected
under the surtax.
When lawmakers debated the surtax on June 14,
Rep. Randy Hunt, a Sandwich Republican, raised
New Hampshire's proximity, saying a Boston
company could easily relocate less than 50 miles
to Nashua.
"It would be a shorter drive than I make to the
State House for business owners, engineers and
salesmen to conduct in-person meetings in
Boston," Hunt said. "To think that people of
means wouldn't move 50 miles to save, on
average, $100,000 a year, is naive."
Sen. Jason Lewis, a Winchester Democrat who
supports the tax, countered that the $2 billion
it is designed to generate would fund services
that make Massachusetts a more desirable place
to live.
"The overwhelming evidence, from study after
study of state tax policy, strongly suggests
that the vast majority of high-income households
and businesses will not leave the state simply
because of a higher marginal tax rate," Lewis
said. "As we know, there are many, many good
reasons to stay in Massachusetts."
The Legislature ultimately voted 134-55 in favor
of putting a constitutional amendment proposing
the tax on next year's ballot.
The Boston Globe
Thursday, July 6, 2017
Advocates see a chance to raise Mass. alcohol
tax
By Felice J. Freyer
As Massachusetts lawmakers debate new taxes on
marijuana of anywhere from 8 to 28 percent,
public health advocates say there’s another drug
that needs a tax hike: alcohol.
Drinkers in Massachusetts pay just pennies per
glass in state taxes, one of the lowest rates in
the country, despite reams of research showing
that higher alcohol prices lead to fewer car
crashes and other harms.
Advocates concerned about alcohol’s toll see a
renewed opportunity to press for tougher
regulations and higher taxes, as a task force
formed by state Treasurer Deborah B. Goldberg
conducts a soup-to-nuts review of alcohol laws
and regulations.
“Alcohol has caused a terrible burden for a very
long time,” said Dr. Timothy S. Naimi, a
specialist in alcohol policy at Boston
University and Boston Medical Center.
“Massachusetts has suffered under that burden
even more, relative to most other states. I feel
like it’s sort of been forgotten.”
The effort comes as binge drinking and heavy
drinking are on the rise, especially among
women, in Massachusetts and around the country.
At the same time, industry campaigns combined
with changing attitudes toward drinking have led
many states to update legislation first drafted
after the 1933 repeal of Prohibition.
In Massachusetts, representatives of the alcohol
industry are pleading to overhaul laws to remove
what they see as nonsensical barriers — such as
limits on small producers’ ability to let
visitors taste their wares — that can harm
businesses that play a vital role in the state’s
economy.
But public health advocates caution that
loosening the rules can have unintended
consequences.
About 1,500 Massachusetts residents die each
year from events attributed to alcohol, such as
car crashes, homicides, suicides, and chronic
illness, Naimi said. Among working-age adults,
ages 20 to 64, about 10 percent of all deaths
can be blamed on alcohol.
In comparison, 2,000 people died of opioid
overdoses in the state last year, a record high.
But, Naimi noted, “we’ve been having an
alcohol-death epidemic going on each and every
year for quite a long time.”
Alcohol is ingrained in American culture, and
most people who drink do so responsibly. But the
proportion of drinkers who consume excessive
amounts is growing, and these people do a lot of
harm to themselves and others.
According to a recent analysis of data from 2005
to 2012, the number of drinkers held steady, but
heavy drinking (an average of more than one
drink a day for women, two for men) soared by
17.2 percent, and binge drinking (four drinks on
a single occasion for women, five for men) went
up 8.9 percent.
Years of research have shown which practices
reduce underage drinking, motor vehicle
accidents, and other harms.
Limits on the availability of alcohol,
especially the number of licenses and the hours
of operation, make a critical difference, Naimi
said. Advocates said they will oppose any
proposals to lift the state’s cap on liquor
licenses or extend hours. They also want to roll
back the ability of small breweries and
distilleries to serve drinks on the premises, to
the dismay of producers whose taprooms and
tasting rooms have become a major source of
income.
But Massachusetts has only 15 investigators to
check on 24,000 licensees, the fifth-lowest
ratio in the nation. State and municipal police
also help enforce drunken-driving and
underage-drinking laws.
But the most potent tool, advocates say, is
taxes. Numerous studies have shown that when
alcohol taxes go up, excessive drinking and
alcohol-related troubles go down, including
motor vehicle crashes, violence, cirrhosis
deaths, and possibly even sexually transmitted
diseases.
Yet, alcohol excise taxes in Massachusetts
remain among the lowest in the country. The
excise tax on beer is 11 cents a gallon,
compared with $1.29 per gallon in the
highest-taxing state, Tennessee, according to
2016 data from the Tax Foundation, a nonprofit
concerned with tax policy.
The foundation’s data also show: The
Massachusetts tax on wine is 55 cents per
gallon, while in highest-taxing Kentucky the
rate is $3.30; distilled spirits are taxed at
$4.05 per gallon compared with $33.54 in
Washington, by far the highest tax rate on hard
liquor.
The tax is a flat amount based on volume, rather
than a percentage based on price. Because of
inflation, the Massachusetts tax has lost about
half of its value since it was last changed in
1978, according to Naimi.
By contrast, Massachusetts has the nation’s
fourth-highest cigarette tax, at $3.51 per pack.
Any talk of raising alcohol taxes in
Massachusetts is likely to face pushback from
businesses, which succeeded in repealing a
short-lived sales tax on alcohol in 2010 through
a ballot question heavily promoted by package
store owners and beer distributors. The 6.25
percent tax had been on the books only one year.
Now Massachusetts remains one of five states
that do not apply the sales tax to alcohol.
Frank Anzalotti, executive director of the
Massachusetts Package Stores Association, said
higher taxes would simply send customers across
the border to New Hampshire, putting many stores
out of business.
And higher taxes would needlessly throw sand in
the gears of the booming craft brewery business,
said Rob Burns, president of the Massachusetts
Brewers Guild. “It’s a really growing part of
the economy and bringing back manufacturing to
Massachusetts,” he said.
Craft brewers also point out that their
high-priced specialty products are not the
drinks of choice for those who overindulge.
But recent experience in another state shows the
positive effects of higher taxes. When Maryland
raised the sales tax on alcohol to 9 percent
from 6 percent in 2011, it brought swift
results. The number of alcohol-related motor
vehicle crashes in which people were killed or
hurt fell 6 percent each year.
Among people ages 15 to 34, crashes declined by
12 percent a year.
The state of Washington experienced the opposite
when it liberalized its alcohol laws in 2012,
leading to four times as many outlets selling
liquor, sometimes until 2 a.m.
In the 24 months after the change,
single-vehicle nighttime crashes, typically
attributed to alcohol, went up significantly
among people under 21, as did emergency
department visits associated with alcohol use,
according to Julia A. Dilley, a research
scientist with the Multnomah County Health
Department in Oregon. But the effects would have
been even worse, Dilley said, if it were not for
a key mitigating factor: New taxes led to higher
prices.
Steven L. Schmidt, senior vice president of
public policy and communications at the National
Alcohol Beverage Control Association, a
confederation of the states that operate their
own liquor stores, said three factors have
converged to prompt a regulatory overhaul in
many states: Big box chains such as Walmart,
Target, and Costco seeking the right to sell
alcoholic drinks with fewer restrictions; online
sales creating a need for new types of
regulation; and the growing craft brewery
industry bristling at requirements intended for
bigger companies.
Total Wine & More, a chain operating in
Massachusetts and 16 other states, is the most
active retailer working to loosen state laws,
Schmidt said. In Massachusetts, Total Wine is
campaigning for the right to offer coupons and
other discounts, which are currently illegal.
But alcohol is not orange juice, and advocates
say that higher costs and inconvenience are
necessary to prevent excessive use.
“This is a product that is very unique — a
product that can cause significant harm when not
used appropriately,” Schmidt said. “It holds a
unique place in the economy and the culture.”
The Boston Herald
Thursday, July 6, 2017
A Boston Herald editorial
Restore the tax holiday
As lawmakers negotiate a compromise budget at
the State House this week they’ll surely be
discussing whether to extend a sales tax holiday
to Massachusetts consumers, which has become a
summer tradition.
Well, it *was* a summer tradition, until last
year, when an unanticipated drop in revenue
prompted Beacon Hill to suspend the sales
tax-free weekend.
But we suspect that if they don’t bring it back
this year, it’s never coming back. So taxpayers
ought to insist that the state find room in its
budget to accommodate a modest break for
shoppers.
We point it out for the zillionth time: The
current, 6.25 percent sales tax in Massachusetts
was enacted to help the commonwealth patch its
way through the Great Recession. The 25 percent
hike in the tax (up from 5 percent) has remained
in place ever since. Every time a consumer pays
tax on a new microwave oven or a set of jumper
cables the 1.25 percent “extra” tax is a
reminder of Beacon Hill’s refusal to undo the
damage it occasionally inflicts, if it means
sacrificing even a modest source of revenue to
fund its spending priorities.
That the commonwealth might suspend the sales
tax holiday this year — the year that lawmakers
granted themselves massive pay increases — would
be the ultimate insult.
Sixteen states have announced sales tax holidays
of varying kinds this year, according to the
Federation of Tax Administrators, and more may
yet do so. Massachusetts needs to get itself on
that list. |
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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
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only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
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