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CLT UPDATE
Friday, January 25, 2019

Baker opens the tax floodgates


Gov. Charlie Baker filed a $42.7 billion budget on Thursday that features the biggest overhaul to public education funding in decades and proposes new taxes on electronic nicotine products and on pharmaceutical manufacturers to help pay for opioid addiction services.

The education reform, which Baker teased in his inaugural address earlier this month, proposes to spend an additional $200 million on public education this year and increases the baseline amount of money that school districts must spend on education by $1.1 billion over the next seven years.

The plan, according to the administration, would "fully" implement the recommendations of a special commission that three years ago found the state's education funding formula insufficient to meet the growing costs of health insurance, special education and services for English language learners and low income students....

The budget would increase spending by 1.5 percent over the current fiscal year, according to the administration, and includes $133 million in new revenue from anticipated recreational marijuana sales, $28 million from taxes on short-term housing rentals and $6 million from an expansion of tobacco excises taxes to e-cigarettes and vapor products....

The state already requires large online retailers that sell directly to Massachusetts customers to collect sales taxes, but the administration estimates that the new application of the sales tax could generate $42 million in revenue, and help local retailers compete with online shopping.

The governor has also put forward a revamped proposal to accelerate the process for large retail retailers to remit sales taxes to the state in a more timely manner, shifting the monthly collection process earlier and netting $306 million in fiscal 2020 in one-time additional revenues that will be put toward school safety, scholarships and school water deleading.

Baker's reliance on tax and fee increases to help finance some of his investments early in his second term has come as a surprise to some on Beacon Hill who have heard the governor time and again tout his opposition to broad-based tax increases.

"The bottom line is from the beginning we've said, if we're leveling the playing field...or we're creating new services that we believe, on a targeted basis, are important, then we're going to propose those," Baker said, when asked about the taxes.

State House News Service
Wednesday, January 23, 2019
Baker taxes help fuel $42.7 Billion budget bill


An old battle has been reignited by Gov. Charlie Baker this week. Tuesday, the Baker-Polito administration filed a bill that would allow police to pull drivers over for not wearing their seat belts, ban drivers from touching their phones and include other measures intended to improve road safety....

In reality, the bill would allow police to pull drivers over for myriad reasons. We do not need more justifications for law enforcement to be inside our cars....

There is no need for more seat belt legislation either, though proponents have been excitedly pushing the cause for decades. “The primary seat belt law has been a Triple-A top priority for many years,” AAA spokeswoman Mary Maguire told the Herald. “These are proposals that would save lives and prevent injuries and what’s better than that?”

The fact is that more people are buckling up on their own without an onerous law. In the past year, seat belt use in Massachusetts rose by 8 percent, from 73.7 percent to 81.6 percent, according to a study by the University of Massachusetts Traffic Safety Research Program. That is the largest increase the state has ever seen, officials said.

The trend is moving in the right direction and though we agree that seat belts save lives, there are already a slew of laws and regulations regarding seat belts, child safety seats and the like....

As far as seat belts, it is not the government’s place to protect us from ourselves. The decision not to wear a seat belt solely affects the person choosing not to wear it.

What most of these new rules would do ultimately is force interactions between citizens and law enforcement. Drivers will essentially be suspects by default, pending the officer’s verification that they are in compliance.

It is generally wise to use a seat belt and almost always unwise to operate a cellphone while driving, but clunky, overreaching laws are not the fix — they will merely be an additional problem. Gov. Baker’s conservative ideology should be calibrated to default to the right of the individual. One wonders what other surprises 2019 will bring.

A Boston Herald editorial
Thursday, January 23, 2019
No to Baker’s cellphone slippery slope


House Speaker Robert DeLeo, who for four years has been an ally of Gov. Charlie Baker's on taxes, said he was "having a little fun" with the Republican governor on Thursday after Baker put out a budget this week stuffed with targeted tax hikes, but the speaker did not rule any of them out.

Baker, who explained that he's alright with using taxes to "level the playing field" or regulate a new industry, has proposed a real estate transfer tax increase to pay for climate adaptation and a tax on opioid sales to pay for addiction treatment.

He's proposed to extend the tobacco tax to vaping products and the sales tax to third-party sales through online marketplaces like Etsy. And after agreeing to taxes on short-term rentals and retail marijuana sales, he's now proposed to legalize and tax sport betting.

Asked about the governor's embrace of new revenue streams in his budget proposal, DeLeo said, "I was having a little fun with him on that actually, talking about that."

DeLeo, in the past, spearheaded a major hike in the state's sales tax, and has raised the cigarette and gas taxes, but for the majority of his decade in the speaker's office, the Winthrop Democrat said he's been "basically opposed" to hiking broad-based taxes to pay for services and programming.

That said, he's not ruling out adopting what Baker has proposed, or going further to raise taxes....

"I have to take a look at all of the provisions to really give an opinion as to the governor's proposal but I will say this. I think what's good about it is the fact that in this session we have the governor the Senate president, myself .... all working together to get something done," DeLeo said.

State House News Service
Thursday, January 24, 2019
Baker's evolution on taxes provides "a little fun" for DeLeo


There’s a growing consensus that the state’s public schools need a funding boost — this year. And if differences as minor as those between rival proposals to do so can’t be bridged, it’d be a terrible outcome for students and a disturbing indication of Beacon Hill’s ability to reach compromises.

You might not know it from the rhetoric of some critics, but the House, Senate, and Governor Charlie Baker appear close to being on the same page. Baker and legislators all want a funding increase north of $1 billion, based on the findings of a 2015 state commission that studied funding shortfalls.

The sticking points lie in the details: exactly how much to spend, exactly how fast to phase it in, and exactly how to assure that new money brings results....

Legislators took their best guess in 1993, when they passed a trailblazing education reform law, but the formulas they put in place underfunded some aspects, like the cost of educating English language learners. Lawmakers still don’t know precisely what the right amount is. Even Chang-Diaz doesn’t have a specific dollar figure in mind for what schools need. As in 1993, Beacon Hill will have to make a political decision on a spending level.

A Boston Globe editorial
Friday, January 25, 2019
Getting to yes on Mass. school funding


Gov. Charlie Baker has unveiled his new budget, which Democrats will cheer and Republicans should fear. Taxes are a major theme in this proposal.

A “modest” increase in the excise tax on real estate sales is included. The excise rate, which is paid by the seller of a property, would jump from $2 per $500 of value to $3, amounting to $137 million annually toward the Global Warming Solutions Trust Fund. With the extra revenue, Baker is proposing to spend $75 million on climate adaption programs, which are meant to incentivize cities and towns to invest in “climate-smart infrastructure.”

Former Gov. Deval Patrick would have visions of tax increases to combat global warming dancing in his head but Baker, the Republican governor, is bent on making this progressive dream come true....

The median price for a single-family home in December in Massachusetts was $375,000, according to the MAR, which would bring the tax from $1,710 to $2,565 on that home under the proposed law.

That is real money for a lot of people, but Gov. Baker has the climate on the mind....

In fact, we are meant to think of the tax increase not as a penalty but an investment, something in our own best interests. “This is an excise tax that’s basically about property and the proposal we’re making here is to protect property,” he said. “We think, in the long run, the cost/benefit on this one is a good deal for Massachusetts residents.”

In addition to the increase on excise tax through property sales, Baker is proposing an expansion of the cigarette excise tax to include e-cigarettes, which is expected to bring in $6 million.

He’s also suggesting a sales tax on online marketplaces like Amazon, eBay and Etsy for deliveries to Massachusetts customers, which would bring in $42 million in new revenue.

There was a time when Charlie Baker was fundamentally opposed to most taxes but those days are over. Unfortunately, so may be the days of the hard-working people of Massachusetts keeping their own hard-earned money.

A Boston Herald editorial
Friday, January 25, 2019
Baker budget boasts bevy of taxes


Last week Governor Baker proposed increasing the tax on real estate sales to generate about $1 billion over a decade for a fund to invest in projects that protect cities and towns from the impacts of climate change.

Baker’s proposal is an important first step in recognizing the dire impacts of climate change and planning for the investments in resilience needed to protect life and property. The scale of the challenge, however, will require more substantial resources alongside funding mechanisms that spread the burden fairly and equitably, while providing appropriate incentives....

Moving forward will require political will and courageous leadership. There is no silver-bullet solution — we need multiple funding sources and collaborations with the private sector to generate the required resources, spread the burden fairly, and promote market-oriented solutions. Raising taxes is never popular, of course, but the billions needed for climate adaptation also present a unique opportunity to reshape our cities and renew our infrastructure in ways that promote sustainable growth and equity for the communities of the region.

The Boston Globe
Friday, January 25, 2019
Baker’s climate plan is an important first step — but more is needed
By David L. Levy


Chip Ford's CLT Commentary

"There was a time when Charlie Baker was fundamentally opposed to most taxes but those days are over. Unfortunately, so may be the days of the hard-working people of Massachusetts keeping their own hard-earned money."

I considered stopping my commentary right here.  "What more can I add to that Herald editorial?" I wondered.  But then the previous day's Boston Herald editorial's open question beckoned:

Gov. Baker’s conservative ideology should be calibrated to default to the right of the individual. One wonders what other surprises 2019 will bring.

An op-ed column in today's Boston Globe by a professor at the University of Massachusetts Boston, David L. Levy, provided a preview.

Charlie Baker has opened the door, paved the way and the insatiable Takers have enthusiastically snapped up his invitation and raced through the gap.

If you ever needed further convincing that More Is Never Enough (MINE) and never will be, this column provides it in its title alone:  "Baker’s climate plan is an important first step but more is needed."

Let's next look at Gov. Baker's "biggest overhaul to public education funding in decades."  The State House News Service reported:

"The plan, according to the administration, would "fully" implement the recommendations of a special commission that three years ago found the state's education funding formula insufficient to meet the growing costs of health insurance, special education and services for English language learners and low income students...."

In its editorial today The Boston Globe admitted:

Legislators took their best guess in 1993, when they passed a trailblazing education reform law, but the formulas they put in place underfunded some aspects, like the cost of educating English language learners. Lawmakers still don’t know precisely what the right amount is.

There is no precise "right amount" because it keeps growing, expanding.  Remember the December 19 State House News Service report, "Bay State population growth tops in New England"?  It helps explain why funds are "insufficient to meet the growing costs of ... special education and services for English language learners and low income students."

"Population growth in Massachusetts is outpacing that of other New England states, according to the U.S. Census Bureau, and Secretary of State William Galvin is now predicting that the state should be able to hold on to all nine seats in Congress with an accurate head count in 2020.

"New data released on Wednesday showed that the population in Massachusetts grew by 38,903 people to 6.9 million between July 1, 2017 and July 1, 2018. The 0.6 percent growth rate equaled the population growth in the country, and ranked Massachusetts 22nd among all other states and first in New England.

"Galvin said that while the state continues to lose residents to other states, those loses are more than offset by international immigration. 'These numbers show how important it is that we ensure every person in Massachusetts is counted in the 2020 Census, whether or not they are United States citizens,' Galvin said."

Productive taxpaying citizens are bailing out of Massachusetts, but they are being more than replaced by "international immigrants."  Do you suppose these immigrants are providing an offsetting amount of revenue to the state, that they are not instead making more demands on the state's taxpayer-funded "safety net" than we emigrants ever did?  Such a demographic disruption creates unavoidable fiscal consequences.

If you wonder why the exodus out of The People's Democratic Republic of Taxachusetts, on Wednesday the Washington, DC-based Tax Foundation released its latest report, "How High Are State and Local Tax Collections in Your State?"

I doubt it will surprise you to learn that Massachusetts was rated the fifth-highest taxed per capita state in the nation in "State and Local Tax Collections per Capita, Fiscal Year 2016," behind only New York, Connecticut, New Jersey and strangely North Dakota  (which generates much of its tax revenue from severance taxes on oil and natural gas, not by picking its citizen' pockets).  Massachusetts is followed by Hawaii (#6), Minnesota (#7), and California (#8) Massachusetts taxpayers' burden is heavier than even Californians'!

#1 New York $8,957
#2 Connecticut $7,220
#3 New Jersey $6,709
#4 * North Dakota $6,630
#5 Massachusetts $6,469
#6 Hawaii $6,467
#7 Minnesota $6,090
#8 California $6,077
     
#38 Kentucky $3,823
     
* North Dakota generates a substantial share of its tax revenue from severance taxes on oil and natural gas.

My newly-adopted "sanctuary state" of Kentucky scores at #38.  Florida comes in at #46, Alabama at #50.
 

Chip Ford
Executive Director


 

State House News Service
Wednesday, January 23, 2019

Baker taxes help fuel $42.7 Billion budget bill
By Matt Murphy


Gov. Charlie Baker filed a $42.7 billion budget on Thursday that features the biggest overhaul to public education funding in decades and proposes new taxes on electronic nicotine products and on pharmaceutical manufacturers to help pay for opioid addiction services.

The education reform, which Baker teased in his inaugural address earlier this month, proposes to spend an additional $200 million on public education this year and increases the baseline amount of money that school districts must spend on education by $1.1 billion over the next seven years.

The plan, according to the administration, would "fully" implement the recommendations of a special commission that three years ago found the state's education funding formula insufficient to meet the growing costs of health insurance, special education and services for English language learners and low income students.

The budget and the companion education legislation are highlights of what has been an expansive early agenda for the Republican governor in his second term. Baker has also put forward proposals to legalize sports betting, toughen seat belt law enforcement, ban hand-held cell phone use while driving, address the impacts of climate change, and enable judges to consider someone's full criminal record when deciding whether to release them before trial or hold them as a danger to society.

The budget would increase spending by 1.5 percent over the current fiscal year, according to the administration, and includes $133 million in new revenue from anticipated recreational marijuana sales, $28 million from taxes on short-term housing rentals and $6 million from an expansion of tobacco excises taxes to e-cigarettes and vapor products.

The bill would increase funding for the MBTA by at least $88 million to $1.3 billion, and the governor also wants to boost funding for the Department of Public Utilities' pipeline safety division by $5.5 million to better ensure utility compliance with safety regulations after the Merrimack Valley natural gas disaster.

"It's fiscally responsible and increases investments in our schools and our communities and supports efforts to combat the opioid epidemic, address the housing crisis, improve our transportation infrastructure and protect our state from the impacts of climate change," Baker said at a press conference.

In addition to his plan to raise the real estate transfer tax to pay for climate change mitigation, Baker is also proposing to force online marketplaces like Amazon, Ebay and Etsy that allow third-party vendors that sell through their websites to collect and remit sales taxes on those transactions with Massachusetts customers.

The state already requires large online retailers that sell directly to Massachusetts customers to collect sales taxes, but the administration estimates that the new application of the sales tax could generate $42 million in revenue, and help local retailers compete with online shopping.

The governor has also put forward a revamped proposal to accelerate the process for large retail retailers to remit sales taxes to the state in a more timely manner, shifting the monthly collection process earlier and netting $306 million in fiscal 2020 in one-time additional revenues that will be put toward school safety, scholarships and school water deleading.

Baker's reliance on tax and fee increases to help finance some of his investments early in his second term has come as a surprise to some on Beacon Hill who have heard the governor time and again tout his opposition to broad-based tax increases.

"The bottom line is from the beginning we've said, if we're leveling the playing field...or we're creating new services that we believe, on a targeted basis, are important, then we're going to propose those," Baker said, when asked about the taxes.

Some of those one-time sales tax revenues will also become part of a $297 million deposit into the state's stabilization account, which officials said would boost the "rainy day" fund to $2.8 billion by the end of fiscal 2020 as economists warn about a slowdown and public officials prepare for an eventual recession.

Baker expressed confidence in the experts that have said the downturn in state revenue collections in December that wiped out a mid-year surplus was a "timing issue," but Massachusetts Taxpayers Foundation President Eileen McAnneny said she doesn't necessarily share his optimism.

"I certainly don't want to be Henny Penny here, but there are some pre-recession warning signs. I think January revenues will be critically important because if it is just a timing issue, that's great. If it's not though we'd want to understand what's causing the softness in those numbers," McAnneny said.

After working in his first term to pass two significant bills to fight back against the opioid addiction epidemic, Baker's budget includes $266 million for treatment and other services, a $48 million increase over this year that includes almost $50 million to expand MassHealth addiction treatment services through a federal Medicaid waiver.

To help pay for that investment, the governor is proposing a 15 percent tax on opioid manufacturers on gross receipts from the sale of opioid products. The tax is expected to net $14 million.

Asked if he was worried about the tax being passed on to consumers, Baker said, "It's charged to the manufacturers. I can't do anything about how they actually run their books, but the manufacturers have a lot to do with creating the crisis that we all are paying for every day and creating a mechanism in which they put something in to help pay for the carnage they've created, I think, is important."

The governor also wants to give MassHealth, which would see its total budget grow to $16.54 billion in fiscal 2020, the ability to negotiate directly with drug manufacturers over pricing of the costly pharmaceuticals. The reforms, the administration estimates, will help save $80 million in a program for which the cost to the state is expected to grow 4.3 percent in fiscal 2020.

The budget proposes to allow MassHealth to use a public rate-setting process to determine what it will pay for select high-cost drugs, and the Health Policy Commission would be allowed to require the disclosure of some pricing information, or to refer a case to the attorney general for review if the manufacture won't issue rebates to meet the target price.

Massachusetts Association of Health Plan CEO Lora Pellegrini said she was hopeful the governor's proposal would lead to lower drug spending, but MassBIO President Robert Coughlin, who represents the life sciences industry, blasted the idea.

"Governor Baker's proposal to force certain drug manufacturers to pay additional, supplemental rebates on incredibly effective drugs that MassHealth deems too expensive sends a message across the industry that government is going to punish success and that only it can be the final arbiter of drug pricing," Coughlin said, arguing that MassHealth is "already paying significantly less for the same drugs than private insurers."

Coughlin suggested that Baker, instead, target pharmacy benefit managers and the practice of "spread pricing" to generate savings at MassHealth. Baker's budget does call for pharmacy benefit managers to be more transparent about pricing spreads and rebates in contracts with managed care organizations and to limit their margins.

The governor's budget filing is the first step in a months-long process designed to culminate over the summer in a new annual spending plan for the fiscal year that starts on July 1. The governor said he hopes the Legislature could complete work on his education reform plan in the same timeframe.

"The success of this legislative session will be defined by our collective ability to take bold action on critical issues such as climate change and resilience, our transportation and housing needs, and funding our education system. I am encouraged to see so many of the Senate's shared priorities included in the Governor's budget proposal," Senate President Karen Spilka said in a statement, which cited priorities like prescription drug pricing, health care cost reduction for low-income seniors and lifting a cap on family welfare benefits.

Massachusetts Budget and Policy Center interim President Marie-Frances Rivera, however, said the governor's budget falls short in some areas.

"The Governor's proposal includes some new initiatives, acknowledging the need for additional resources, but it will be difficult for state lawmakers to make important investments without significant new revenue," Rivera said in a statement. "While additional revenue is helpful for investing in essential programs, most of these new revenue sources come from sales taxes, use taxes, and other consumption-related taxes that are not progressive. They will not help turn our state's upside-down tax system right-side up."

The budget includes 83 outside sections, many of which pertain to implementing the new excise taxes on vape and e-cigarette products. There are also proposals to allow the hunting of deer by bow and arrow on Sundays, and to limit the accrual of unused sick time to 1,000 hours for executive branch and public higher education employees.

Another proposal would expand the allowable use of money from the sale of carbon emission credits through the Regional Greenhouse Gas Initiative program to include greenhouse gas mitigation and climate change adaptation.


The Boston Herald
Thursday, January 23, 2019

A Boston Herald editorial
No to Baker’s cellphone slippery slope


An old battle has been reignited by Gov. Charlie Baker this week. Tuesday, the Baker-Polito administration filed a bill that would allow police to pull drivers over for not wearing their seat belts, ban drivers from touching their phones and include other measures intended to improve road safety.

As the Herald’s Mary Markos reported, the proposed legislation requires electronic devices to be used in “hands-free” mode and would forbid drivers to touch or hold an electronic device, “except to perform a single tap or swipe to activate, deactivate or initiate hands-free mode.” The bill would allow talking, texting and other tasks to be completed by voice commands.

In reality, the bill would allow police to pull drivers over for myriad reasons. We do not need more justifications for law enforcement to be inside our cars.

Besides, cellphone laws are hard to enforce and there are already distracted driving laws on the books.

There is no need for more seat belt legislation either, though proponents have been excitedly pushing the cause for decades. “The primary seat belt law has been a Triple-A top priority for many years,” AAA spokeswoman Mary Maguire told the Herald. “These are proposals that would save lives and prevent injuries and what’s better than that?”

The fact is that more people are buckling up on their own without an onerous law. In the past year, seat belt use in Massachusetts rose by 8 percent, from 73.7 percent to 81.6 percent, according to a study by the University of Massachusetts Traffic Safety Research Program. That is the largest increase the state has ever seen, officials said.

The trend is moving in the right direction and though we agree that seat belts save lives, there are already a slew of laws and regulations regarding seat belts, child safety seats and the like.

The bill also features a reasonable provision aimed at curbing drunken driving. First-time drunken-driving offenders who apply for hardship licenses would be required to use a handheld breath-alcohol monitoring device for six months, which is electronically connected to a vehicle’s ignition. The Registry of Motor Vehicles would be able to penalize people who try to drive drunk.

Fair enough. However, more cellphone and seat belt laws are misguided. They will diminish individual freedoms while dangling cash-grab opportunities in front of municipalities. There are already laws that pertain to cellphone use on the books.

As far as seat belts, it is not the government’s place to protect us from ourselves. The decision not to wear a seat belt solely affects the person choosing not to wear it.

What most of these new rules would do ultimately is force interactions between citizens and law enforcement. Drivers will essentially be suspects by default, pending the officer’s verification that they are in compliance.

It is generally wise to use a seat belt and almost always unwise to operate a cellphone while driving, but clunky, overreaching laws are not the fix — they will merely be an additional problem. Gov. Baker’s conservative ideology should be calibrated to default to the right of the individual. One wonders what other surprises 2019 will bring.


State House News Service
Thursday, January 24, 2019

Baker's evolution on taxes provides "a little fun" for DeLeo
By Matt Murphy


House Speaker Robert DeLeo, who for four years has been an ally of Gov. Charlie Baker's on taxes, said he was "having a little fun" with the Republican governor on Thursday after Baker put out a budget this week stuffed with targeted tax hikes, but the speaker did not rule any of them out.

Baker, who explained that he's alright with using taxes to "level the playing field" or regulate a new industry, has proposed a real estate transfer tax increase to pay for climate adaptation and a tax on opioid sales to pay for addiction treatment.

He's proposed to extend the tobacco tax to vaping products and the sales tax to third-party sales through online marketplaces like Etsy. And after agreeing to taxes on short-term rentals and retail marijuana sales, he's now proposed to legalize and tax sport betting.

Asked about the governor's embrace of new revenue streams in his budget proposal, DeLeo said, "I was having a little fun with him on that actually, talking about that."

DeLeo, in the past, spearheaded a major hike in the state's sales tax, and has raised the cigarette and gas taxes, but for the majority of his decade in the speaker's office, the Winthrop Democrat said he's been "basically opposed" to hiking broad-based taxes to pay for services and programming.

That said, he's not ruling out adopting what Baker has proposed, or going further to raise taxes.

Before the Supreme Judicial Court knocked it off the 2018 ballot, DeLeo supported a constitutional amendment to impose a surtax on millionaires to raise about $2 billion for investments in areas like education and transportation. Many Republican lawmakers opposed the surtax while Baker did not take a position on it.

"I would say that when you take a look in terms of where that money would be going towards in terms of climate change or housing or whatever, again I think it's something for us to take a close look at," DeLeo said of Baker's tax proposals.

The speaker also said he was withholding judgment on Baker's seven-year plan to increase spending on public education by $1.1 billion by 2026, starting with $200 million more in state school aid this year.

"I have to take a look at all of the provisions to really give an opinion as to the governor's proposal but I will say this. I think what's good about it is the fact that in this session we have the governor the Senate president, myself .... all working together to get something done," DeLeo said.

Rep. Alice Peisch co-chaired the Education Committee last session, and was the lead negotiator for the House on legislation to update the funding formula, but those talks fell apart in the final hours of formal session in July.

Asked who would handle education for the House this session, DeLeo said, "Probably the chairman of education."

When it was then pointed out to him that he had changed the gender of the chair, DeLeo corrected himself. "Or chairwoman of education. Thank you. Chairperson of education, which hopefully we'll know in a relatively short period of time."

Peisch has been mentioned by Beacon Hill insiders as a potential candidate to become the next chair of the House Ways and Means Committee. DeLeo said he'd like to make committee assignments "within the next two or three weeks."


The Boston Globe
Friday, January 25, 2019

A Boston Globe editorial
Getting to yes on Mass. school funding


There’s a growing consensus that the state’s public schools need a funding boost — this year. And if differences as minor as those between rival proposals to do so can’t be bridged, it’d be a terrible outcome for students and a disturbing indication of Beacon Hill’s ability to reach compromises.

You might not know it from the rhetoric of some critics, but the House, Senate, and Governor Charlie Baker appear close to being on the same page. Baker and legislators all want a funding increase north of $1 billion, based on the findings of a 2015 state commission that studied funding shortfalls.

The sticking points lie in the details: exactly how much to spend, exactly how fast to phase it in, and exactly how to assure that new money brings results.

Those are important questions, but none of them should be dealbreakers. Legislative leaders, including Education Committee chairs, need to be committed to getting to yes this session. Last year ended with an impasse, and that’s not an outcome that House Speaker Robert DeLeo and Senate President Karen Spilka can allow to be repeated.

Predictably, the biggest division is over whether to attach strings to new state aid.

The notion offends teachers’ unions, some local officials, and state Senator Sonia Chang-Diaz. In their view, the state has been underfunding districts — “owes” them money, as the emerging talking point goes — and can’t put conditions on repaying a debt.

That opposition didn’t fly with the House last year, and it’s a nonstarter with Baker, whose proposal released Wednesday plows money into schools, but introduces some accountability measures designed to ensure that the money is spent on proven education strategies to close the achievement gap. For instance, it sets up a $50 million School Improvement Trust Fund aimed at supporting programming in low-performing schools.

Most controversially, it also gives the state more power over schools deemed underperforming. The state would be able to withhold administrative funding from districts that have failed to make improvements to those underperforming schools.

The idea that the state “owes” districts might make for an appealing political narrative, but it’s not a helpful way to approach this debate. Legislators took their best guess in 1993, when they passed a trailblazing education reform law, but the formulas they put in place underfunded some aspects, like the cost of educating English language learners. Lawmakers still don’t know precisely what the right amount is. Even Chang-Diaz doesn’t have a specific dollar figure in mind for what schools need. As in 1993, Beacon Hill will have to make a political decision on a spending level.

Baker’s proposal needn’t be the last word. But closing the achievement gap is an important aim of this new round of funding, and some type of accountability measures would be appropriate in return for at least $262 million in new state aid this year alone. The state doesn’t owe districts a particular dollar figure, but it does owe students a good education — and the policies to make sure that state money goes toward providing one.


The Boston Herald
Friday, January 25, 2019

A Boston Herald editorial
Baker budget boasts bevy of taxes


Gov. Charlie Baker has unveiled his new budget, which Democrats will cheer and Republicans should fear. Taxes are a major theme in this proposal.

A “modest” increase in the excise tax on real estate sales is included. The excise rate, which is paid by the seller of a property, would jump from $2 per $500 of value to $3, amounting to $137 million annually toward the Global Warming Solutions Trust Fund. With the extra revenue, Baker is proposing to spend $75 million on climate adaption programs, which are meant to incentivize cities and towns to invest in “climate-smart infrastructure.”

Former Gov. Deval Patrick would have visions of tax increases to combat global warming dancing in his head but Baker, the Republican governor, is bent on making this progressive dream come true.

“It’s pretty clear that climate change is starting to have a very significant impact on our communities, on our infrastructure, on personal property, on real property and on community property, and this is a way for us to build a program that can generate about $1 billion over 10 years to invest in communities, to invest in resiliency, to invest in infrastructure, to protect people’s property and to protect community property,” Baker said last week.

As the Herald’s Mary Markos reported, some in the real estate industry are less enthusiastic, including Justin Davidson, general counsel and director of government affairs with the Massachusetts Association of Realtors.

“Our concern is that this could have one of two effects on the market: It could drive up the cost of housing even more in Massachusetts or strip equity from homeowners,” Davidson said. “It really comes down to a fairness issue. Everyone benefits from a better climate and everyone should contribute to a better solution. It shouldn’t be something that’s just put on the backs of homeowners and home-sellers.”

The median price for a single-family home in December in Massachusetts was $375,000, according to the MAR, which would bring the tax from $1,710 to $2,565 on that home under the proposed law.

That is real money for a lot of people, but Gov. Baker has the climate on the mind.

“There is no program in Massachusetts that’s going to put a billion dollars on the table to put the kind of resiliency programming in place that we’re going to need to deal with the intensity and frequency of storms,” he said last Friday.

In fact, we are meant to think of the tax increase not as a penalty but an investment, something in our own best interests. “This is an excise tax that’s basically about property and the proposal we’re making here is to protect property,” he said. “We think, in the long run, the cost/benefit on this one is a good deal for Massachusetts residents.”

In addition to the increase on excise tax through property sales, Baker is proposing an expansion of the cigarette excise tax to include e-cigarettes, which is expected to bring in $6 million.

He’s also suggesting a sales tax on online marketplaces like Amazon, eBay and Etsy for deliveries to Massachusetts customers, which would bring in $42 million in new revenue.

There was a time when Charlie Baker was fundamentally opposed to most taxes but those days are over. Unfortunately, so may be the days of the hard-working people of Massachusetts keeping their own hard-earned money.


The Boston Globe
Friday, January 25, 2019

Baker’s climate plan is an important first step — but more is needed
By David L. Levy


Last week Governor Baker proposed increasing the tax on real estate sales to generate about $1 billion over a decade for a fund to invest in projects that protect cities and towns from the impacts of climate change.

Baker’s proposal is an important first step in recognizing the dire impacts of climate change and planning for the investments in resilience needed to protect life and property. The scale of the challenge, however, will require more substantial resources alongside funding mechanisms that spread the burden fairly and equitably, while providing appropriate incentives.

Last April, the Sustainable Solutions Lab at UMass Boston released a report, funded by the Barr Foundation, that examined options for financing projects to protect Boston from rising sea levels and more severe storms. The cost to the city could reach $2.5 billion over the next decade for public works such as seawalls and elevated roads. With constraints on municipal financing and ballooning federal deficits, our report suggested that the state might need to provide around one-third of this. Baker’s proposed $1 billion represents only a small down payment on statewide needs.

These costs are substantial, but the cost of doing nothing is far higher. Recent reports on climate adaptation in East and South Boston show that resilience investments pay high dividends in the form of avoiding damage to buildings and infrastructure and associated economic disruption.

Baker’s proposal envisages increasing the excise tax on real estate transfers by 50 percent, from $2 to $3 per $500 of property value. With the median price of homes in Boston at $600,000, this would increase the tax by $1,200 in a market that is already slowing. Although a property-based tax is broadly progressive, a transfer tax is narrow and arbitrary, since it only falls on those selling property. It also throws grit in the workings of the housing market because it raises the cost of moving, for example, for a new job. Moreover, cities will likely need to raise property taxes to pay their share of resiliency costs, adding to the overall tax burden on property.

There are better ways to raise the money. A statewide carbon tax would generate substantial revenues, spread the burden broadly, and provide an incentive to reduce carbon emissions. Several bills in the Legislature would recycle most of the revenues to taxpayers but also dedicate a portion to green infrastructure and clean energy.

Alternatively, raising the state gasoline tax by just 5 cents would generate an extra $150 million a year. The Massachusetts rate, at 26.5 cents per gallon, is among the lowest in the Northeast and mid-Atlantic: Rhode Island’s gas tax is 34 cents, Connecticut’s is 43.8 cents, and New York’s is 45.8 cents. This would also encourage consumers to consider more efficient cars and hybrid-electrics. Another option is a small “resilience fee” on water and sewer bills, similar to the one on electricity that pays for clean energy programs. One advantage is that everyone pays, unlike property taxes, from which many institutions are exempt.

Our report also examined other creative solutions that help markets price climate risks more accurately. For example, a New York state proposal envisages a small surcharge on all property and casualty insurance policies, raising several billion dollars over 10 years. This would align the cost burden with risk exposure and provide an incentive for property owners to reduce those risks.

These market-based approaches won’t eliminate the need for public infrastructure spending, but are a valuable complement that would reduce the strain on the public purse. Insurance companies are waking up to the idea. The Insurance Institute for Business and Home Safety FORTIFIED program has developed resilience standards for residential and commercial properties, and several southern states have developed programs that offer insurance discounts to property owners who meet the standards.

The future prosperity and security of the region’s businesses and communities demand large-scale investments to reduce the risk of major disruptions. Moving forward will require political will and courageous leadership. There is no silver-bullet solution — we need multiple funding sources and collaborations with the private sector to generate the required resources, spread the burden fairly, and promote market-oriented solutions. Raising taxes is never popular, of course, but the billions needed for climate adaptation also present a unique opportunity to reshape our cities and renew our infrastructure in ways that promote sustainable growth and equity for the communities of the region.

David L. Levy is a professor at the University of Massachusetts Boston and academic codirector of the Sustainable Solutions Lab.

 

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