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Post Office Box 1147 ●
Marblehead, Massachusetts 01945 ●
(781) 639-9709
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
45 years as “The Voice of Massachusetts Taxpayers”
— and
their Institutional Memory — |
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CLT UPDATE
Saturday, February 9, 2019
Trust is
the hurdle
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Despite continued economic growth, state
government fell into an even deeper financial hole in
January when tax collections missed their target by $195
million leaving state finance officials staring at a $403
million gap more than half-way through the budget year.
Budget monitors had been hoping to see a
rebound after a dismal December for state revenues, but
income tax collections continued to lag the state's
projections, which were only recently revised upward.
Tax collections for the year of $16.1
billion, which covers about 40 percent of state spending for
the year, are currently 2.4 percent less than projected, and
only 1.3 percent higher that the same seventh-month period
last fiscal year.
January collections were down 6 percent from
the same month in 2018....
Despite back-to-back bad months, Gov.
Charlie Baker did not seem ready to panic yet. Massachusetts
is also not alone among states experiencing a downturn in
the middle of the fiscal year that has been attributed to
changing behavioral patterns as a result of the 2017 federal
tax reform law.
"I think we're fine," Baker told the News
Service prior to the release of the official figures, which
the governor said he had not yet seen.
After the January figures were published,
Baker's office issued a statement indicating it would
"continue to closely monitor revenue collections over the
next few months." ...
In late January when he released his $42.7
billion budget for fiscal 2020, Baker said he was still
bullish on the economy.
"Our employment numbers still look really
good and withholding and sales and estate taxes all still
look really good," Baker said....
Income tax collections in January missed
their monthly benchmark by $230 million, and withholding
collections were $27 million under benchmark, while sales
tax collections beat their target by $3 million and
corporate and business taxes were $28 million over
estimates, a increase of 60 percent over last year.
State House News Service
Tuesday, February 5, 2019
Revenue slide leaves state $400 Mil behind benchmark
A 6 percent year-over-year drop in January
tax collections should be a "yellow light" for lawmakers as
they draft plans for new spending in fiscal 2020, a
business-backed state watchdog group said.
Massachusetts Taxpayers Foundation President
Eileen McAnneny said Wednesday that with revenues trailing
fiscal 2019 budget benchmarks by $400 million with five
months left in the fiscal year, the state this year may be
on track to make a smaller deposit into its rainy day fund
than expected. That is because lower than expected capital
gains tax revenues, which officials say may be
underperforming, will automatically cut into an expected
$489 million transfer.
Gov. Charlie Baker on Wednesday predicted
the state will be "fine," despite tax collections that are
not coming in at levels needed to support spending in this
year's budget....
Baker's $42.7 billion fiscal 2020 budget is predicated on
tax collections growing 2.7 percent.
State House News Service
Wednesday, February 6, 2019
MTF: Collections throw up "yellow light" on spending
The turbulent financial markets of 2018 were
a bummer for many investors and the state pension fund did
not escape the damage, which amounted to $4.5 billion in the
fourth quarter.
Meeting in Boston on Thursday, members of
the Pension Reserves Investment Management Board's
Investment Committee were briefed on the reasons why the
pension fund's balance dropped last year to $69.3 billion.
State employees, teachers and many municipal employee
retirement funds in Massachusetts are invested through
PRIM....
Constance Everson, the managing director of
Capital Markets Outlook Group and a member of the PRIM
Investment Committee, offered her outlook on global markets.
She said recent data has gone beyond showing a slowdown and
"slipped into contraction" among "some key bellwether export
economies."
"And if you're, like us, trying to export to
these economies, contraction is way different than just
slowdown," she said. "That can take a slow-moving slowdown
and make it more severe faster."
State House News Service
Thursday, February 7, 2019
State pension fund tumbled $4.5 Billion in fourth quarter
State campaign finance regulators are
proposing to close what critics have derided as a "union
loophole" by reducing the amount of money a union can
contribute to a candidate for public office from $15,000 to
$1,000.
The Office of Campaign and Political Finance
proposed the change in a draft regulation released Monday
that will now become the subject of public hearings.
"We're definitely pleased that the agency
adopted our recommendations with just a few minor tweaks,"
said Pam Wilmot, executive director of Common Cause
Massachusetts. "We look forward to looking more thoroughly
at the details, and the process will continue, but we think
it's the right decision based on the statute, the law and
good public policy."
Campaign finance regulators began revisiting
the current rules at the request of Common Cause after the
Supreme Judicial Court last year questioned the legal
strength of the so-called "union loophole" in a ruling
against the Massachusetts Fiscal Alliance upholding the
state's ban on corporate political donations.
Under the current rules, unions are allowed
to contribute up to $15,000 to individual candidates in a
single cycle.
That practice stemmed from a 1988 bulletin
exempting unions from contribution limits that apply to
individuals and political action committees. Opponents
argued that this rule gave organized labor unfair influence
over the electoral process.
The draft rule would hold unions to the same
contribution limits of individuals, including $1,000 to a
candidate, $500 to a political action committee (PAC) and
$5,000 to a political party. Unions would also be forced to
register as a PAC if they exceeded $15,000 in donations in a
year.
Jacob Ventura, an Attleboro Republican, told
OCPF Director Michael Sullivan in December that
had he known in 2017 about the union loophole he
never would have run in a special election
against Sen. Paul Feeney, who Ventura said
raised over $70,000 in union loophole donations,
putting Ventura at a significant disadvantage....
The union loophole is also being challenged in
the U.S. Supreme Court by businesses owned by
MassFiscal founder Rick Green and board member
Mike Kane.
State House News Service
Monday, February 4, 2019
Draft rule would cut union contributions to candidates
State campaign finance regulators want to
rein in the money labor unions can give their preferred
candidates each year, under a newly released proposal that
could dramatically alter Massachusetts’ political
fund-raising landscape.
Labor unions are currently allowed to give
up to $15,000 annually to a single candidate. But draft
regulations quietly released Friday by the Office of
Campaign and Political Finance would slash the limit to
$1,000, as well as cap donations to political action
committees at $500 and to a political party’s committee at
$5,000.
The move, while effectively bringing unions
under the same limits imposed on individuals, would
eliminate a decades-old advantage labor organizations have
enjoyed in state and local elections in Massachusetts. The
higher donation limit, set in the 1980s, applies to unions
and nonprofits that aren’t corporate-funded.
And in a state where labor unions still
wield substantial power — and often use it to back and fund
Democratic candidates — the change stands to affect those in
the State House’s majority party far more than Republicans
and others....
Derided as a loophole by critics, the
$15,000 cap survived a challenge before the Supreme Judicial
Court in September, when it upheld the longstanding ban on
direct corporate gifts. But even then, the court implied —
in a footnote — that the campaign finance office should
review the regulation.
“We just feel that all campaign finance
limits should be the same for all kinds of organizations,
and any exceptions should have a really clear reason,” said
Pam Wilmot, executive director of Common Cause
Massachusetts. “The public can’t have confidence in our law
if it looks like one set of players is favored above the
others.” ...
The donations can have a greater impact
further down the ballot. In 2017, for example, state Senator
Paul Feeney, a Foxborough Democrat and former labor
official, collected $35,000 from just five union donations,
or about 25 percent of the $130,000 he raised before winning
a special election that fall, records show.
The Massachusetts Fiscal Alliance, the
conservative nonprofit whose founder, Rick Green, was behind
the lawsuit to eliminate the corporate donation ban,
applauded the proposed regulations. Green and Mass. Fiscal
Alliance board member Michael Kane are petitioning the
Supreme Court to take up its case after the SJC ruled
against its challenge.
“We are pleased to see the union loophole
get dramatically smaller,” said Paul Craney, a spokesman for
the group. “This will result is more competitive elections.”
Several labor groups submitted comments
challenging a cut to the $15,000 limit. The Massachusetts
Teachers Association went further, urging the agency to
index the limit to inflation — which would allow the $15,000
cap to gradually increase.
The Boston Globe
Tuesday, January 5, 2019
Mass. may reduce how much money unions can donate
to back political candidates
The Fiscal Alliance Foundation . . . today
released the result of a poll conducted on the proposed hike
of the Massachusetts Real Estate Excise Tax....
It surveyed the views of residents in the
districts of House Speaker Robert DeLeo, Senate President
Karen Spilka, Senate Minority Leader Bruce Tarr, and House
Minority Leader Brad Jones.
Overall, it found that 70.77% of those
surveyed felt Governor Baker should continue to hold the
line on new taxes, while 60% of respondents would have a
“strongly less favorable” view of their lawmaker if they
supported the 50% increase in the Real Estate Excise Tax.
Fiscal Alliance Foundation
Wednesday, February 6, 2019
Fiscal Alliance Foundation Releases Poll on Real Estate
Excise Tax Proposal
Data Shows Broad Opposition to Proposed Housing Tax
A majority of Massachusetts voters oppose
Gov. Charlie Baker's proposal to hike real estate taxes, a
linchpin of his plan to drum up more money for climate
change-related initiatives, according to a new poll from a
conservative group that is seeking to kill the proposal.
The survey by the Fiscal Alliance
Foundation, an offshoot of the right-leaning Massachusetts
Fiscal Alliance, found more than 70 percent want Baker to
"hold the line on new taxes" when asked if they think the
"Republican governor should be proposing new and higher
taxes" without referencing his plans to spend the money on
climate change....
The poll asked respondents if they "would
have a more or less favorable opinion" of their legislators
"if they supported a 50 percent increase to the real estate
excise tax, which would drive up the cost of housing by $1
billion over the next 10 years."
"The hard working residents of the
commonwealth have always been very generous with their tax
dollars, but on an issue as fundamental as putting a roof
over the heads of their family, they clearly have no
patience for this modern-day gabelle," Paul Craney, a
spokesman for the group, referencing the unpopular tax on
salt in Medieval France.
Baker’s proposal would increase the deeds
excise rate, which is paid when a property is sold, from $2
per $500 of value to $3.
That's expected to raise an estimated $137
million a year, which Baker wants to deposit into a fund
called the Global Warming Solutions Trust Fund....
Environmental groups have praised the
proposal, meanwhile, and want Baker to brush aside such
criticism and push it through the Legislature this year.
"We were expecting Realtors and home
builders, who are doing pretty good in this economy, to push
back against his plan," said Jack Clarke, director of public
policy at the Massachusetts Audubon Society. "But we think
the state is financially stable enough to absorb this, and
the need for climate change adaptation at the local level is
critical."
Elizabeth Turnbull Henry, president of the
Environmental League of Massachusetts, called the poll
"misleading" and said it detracts from real public concerns
about climate change.
The Salem News
Wednesday, February 6, 2019
Baker's tax plan opposed
Group's survey targets climate change initiatives
The juxtaposition was hard to miss:
Republican Gov. Charlie Baker was testifying in Washington,
D.C, Wednesday, urging federal lawmakers to finally confront
climate change and its potentially disastrous effects on
people and property. Meanwhile, back in the Bay State, the
conservative-leaning Massachusetts Fiscal Alliance was
releasing the results of a poll that purported to show
widespread opposition to the governor's plans to confront
the problem at home....
The poll revealed that 70 percent of
Massachusetts voters want Baker to "hold the line on new
taxes." Just a few weeks earlier, of course, Baker proposed
hiking the real estate transfer tax to pay for a 10-year, $1
billion program to help prepare Massachusetts communities
for the effects of climate change. The Massachusetts
Association of Realtors has already come out against the
proposal.
Let's set aside for a second the skewed
nature of the Mass Fiscal poll, which made no reference to
climate change but was nonetheless used to argue against
Baker's proposal. (Who wouldn't, for example, answer in the
negative to such an open-ended question as to whether they
would be happy if their legislators "supported a 50 percent
increase to the real estate excise tax, which would drive up
the cost of housing by $1 billion over the next 10 years.")
The real question -- one unasked by Mass
Fiscal, and one that is important to consider in the months
and years ahead -- is whether Bay State residents grasp the
seriousness of the challenge facing their communities. Other
polling indicates that they do. A 2017 poll by WBUR, for
example, showed 88 percent of the state's registered voters
said they were concerned about climate change, up from 77
percent in 2011. Of those polled, a mere 6 percent say
Massachusetts is "very prepared" to deal with climate
change." ...
To be sure, there can be -- and should be --
robust debate over how to pay for such work. Baker's
suggested funding mechanism may not be the best route. But
to suggest the work doesn't need to be done, or to attempt
to stop the debate in its tracks, is to ignore the problem.
"The magnitude of the impacts from climate
change requires all of us -- at the federal, state and local
levels -- to put politics aside and work together," Baker
told members of Congress Wednesday. "That is the path we
have taken in Massachusetts."
Whether everyone remains willing to walk the
same path remains to be seen, now that the bill for ignoring
the problem for so long is coming due.
A Salem News editorial
Friday, February 8, 2019
Confronting the cost of climate change
Representatives and senators all make an
equal base salary of $66,257.09 in 2019, but will also soon
receive substantial stipends for committee appointments and
leadership positions.
Under a pay-raise law passed in 2017 — over
a veto by Gov. Charlie Baker — leadership positions,
committee chairmanships and committee vice-chairmanships
carry with them additional pay between between $5,200 and
$65,000 per year.
As the wait for assignments stretches into a
second month, Treasurer Deborah Goldberg's office told the
News Service on Tuesday that no additional pay will be
granted for those positions until they are formally filled,
and once they are, the full stipend will be paid out over
the remainder of the year....
Only a handful of lawmakers have begun
receiving higher pay due to stipends, according to public
data available on the state comptroller's website. They
include Senate President Karen Spilka and House Speaker
Robert DeLeo, who each earn $80,000 for their leadership
roles on top of the base salary, as well as a handful of
Republicans in the House, where Minority Leader Brad Jones
has made his committee appointments. All six Republicans in
the Senate hold leadership positions and receive stipends.
The 2017 pay-raise legislation significantly
boosted the total value of stipends to $2.8 million. Chairs
of the House and Senate Ways and Means Committees receive
$65,000 for holding those positions, while the smallest
stipend offers $5,200 to committee vice chairs.
House and Senate lawmakers can only receive
compensation for chairing one committee and for two
positions overall.
Under the legislation, Baker's office is
also required to certify an adjustment every two years to
the the annual base salary received by all lawmakers based
on changes to the median household income across
Massachusetts. Base pay for legislators jumped from
$62,547.97 to $66,257.06 this year.
State House News Service
Tuesday, February 5, 2019
Dems will get full stipends once assignments are made
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Chip Ford's CLT
Commentary
Uh oh, anticipated state revenue
is faltering – by $403
million halfway through the budget year. Darn, why
does this always have to happen sooner or later?
But not to worry, the situation is under control we are
assured. Gov. Baker said he thinks things are just
fine.
How will the state adapt to this
miscalculation – will it
cut spending or increase taxes?
The state's government employees pension
fund's balance dropped last year by $4.5 billion, down
to $69.3 billion. The drop "rivaled quarterly
losses last seen in 2010 and 2011," when the country was
beginning to climb out of the throes of a real estate
collapse, major bank failures and The Great Recession.
Probably nothing to concern ourselves
with here either, folks. This is probably "fine"
too.
Finally someone has noticed that it's
not very democratic to allow unions to contribute up to
$15,000 to a candidate's campaign during an election
cycle while restricting individuals to $1,000 and PACs
to $500. The Office of Campaign & Political
Finance is looking at changing this to level the playing
field. The State House News Service reported:
"The draft rule would hold unions to the same
contribution limits of individuals, including
$1,000 to a candidate, $500 to a political
action committee (PAC) and $5,000 to a political
party. Unions would also be forced to register
as a PAC if they exceeded $15,000 in donations
in a year."
Though the current law permits $15,000
contributions from unions, it bans all corporate
political donations. Though upheld by the state
Supreme Judicial Court, that ruling is being challenged
in the U.S. Supreme Court by businesses owned by Massachusetts Fiscal
Alliance's founder Rick Green and board member
Mike Kane.
The State House New Service provided an
example of how this obscene advantage affects candidates
not favored by unions' largesse:
"Jacob Ventura, an Attleboro Republican, told
OCPF Director Michael Sullivan in December that
had he known in 2017 about the union loophole he
never would have run in a special election
against Sen. Paul Feeney, who Ventura said
raised over $70,000 in union loophole donations,
putting Ventura at a significant disadvantage."
Naturally the Massachusetts Teachers
Association is pushing in the opposite direction,
seeking even greater advantage. The
teachers union wants that $15,000 cap on unions indexed
to inflation allowing it to gradually reach higher
amounts.
This week the Fiscal Alliance Foundation
released a poll showing overwhelming opposition to Gov.
Baker's proposed 50 percent increase in the deeds
transfer excise tax. According to the poll, 70.77
percent want Baker to "hold the line on new taxes" and
"60% of respondents would have a 'strongly less
favorable' view of their lawmaker if they supported the
50% increase in the Real Estate Excise Tax."
A Salem News editorial opined:
"Let's set
aside for a second the skewed nature of the Mass
Fiscal poll, which made no reference to climate
change but was nonetheless used to argue against
Baker's proposal. (Who wouldn't, for example,
answer in the negative to such an open-ended
question as to whether they would be happy if
their legislators 'supported a 50 percent
increase to the real estate excise tax, which
would drive up the cost of housing by $1 billion
over the next 10 years.')
"The real question
– one unasked by Mass Fiscal,
and one that is important to consider in the
months and years ahead – is whether Bay State
residents grasp the seriousness of the challenge
facing their communities. Other polling
indicates that they do. A 2017 poll by WBUR, for
example, showed 88 percent of the state's
registered voters said they were concerned about
climate change, up from 77 percent in 2011. Of
those polled, a mere 6 percent say Massachusetts
is 'very prepared' to deal with climate change."
It is generally conceded that climate
has and does change, as it always has over the eons.
The debate continues on anthropogenic climate
change – how much if any do
human activities contribute to the change of climate.
Gov. Baker and others seem not to concern themselves so
much with the latter debate as to the observable effects
of climate change itself. The Salem News editorial
concludes with a recognition:
"Whether everyone remains willing to walk the
same path remains to be seen, now that the bill
for ignoring the problem for so long is coming
due."
In its report "The
Seven Stages of Public Opinion" the research group
Public Agenda explains how public opinion evolves.
Concerning what to do about climate change and its
perceived effects, we seem to be at its Stage 3:
Stage 3: Reaching for Solutions
In
the third stage, the public begins to look at
alternatives for dealing with issues, converting
free-floating concern into calls for action.
Often, the public's attention focuses on choices
that experts or policy-makers have crafted
without being helped to understand the
implications.
Since people do not fully understand the choices
presented to them, stage three is a period of
stunningly false endorsements, that is, the
public expresses support for a proposal but
backs down as soon as the costs and trade-offs
are clarified.
In
the health care debate, for example, people
favor broad expansion of health care coverage
for children, low-income workers and others, but
support wavers when people consider the likely
costs.
What to do about any problem is tied
directly to the extent of the perceived problem, the
offered solution(s), and the cost of doing something to
theoretically solve it. I believe the Fiscal
Alliance intended its poll as a counter-balance to those
who advocate just the problem without attaching a
specific means or cost to solving it, as in the referenced
WBUR poll
(which suggested raising "your monthly energy bill by
ten dollars . . . if greenhouse gases were significantly
reduced").
When enough of the public is aware of
all factors, recognizes and rallies around a problem,
and accepts the proposed solution and is willing to
share the burden of its cost, then we will have
consensus.
When enough have confidence that the
cost will be directed where intended
– and only there
– we will have trust.
That is what I suspect is most lacking.
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Chip Ford
Executive Director |
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State House News
Service
Tuesday, February 5, 2019
Revenue slide leaves state $400 Mil behind
benchmark
By Matt Murphy
Despite continued economic growth, state
government fell into an even deeper financial
hole in January when tax collections missed
their target by $195 million leaving state
finance officials staring at a $403 million gap
more than half-way through the budget year.
Budget monitors had been hoping to see a rebound
after a dismal December for state revenues, but
income tax collections continued to lag the
state's projections, which were only recently
revised upward.
Tax collections for the year of $16.1 billion,
which covers about 40 percent of state spending
for the year, are currently 2.4 percent less
than projected, and only 1.3 percent higher that
the same seventh-month period last fiscal year.
January collections were down 6 percent from the
same month in 2018.
"While most major categories of revenue continue
to perform generally as expected, Massachusetts,
like a number of other states, experienced
below-benchmark performance in the category of
non-withheld income in both December and
January, particularly in individual estimated
payments," Department of Revenue Commissioner
Chris Harding said in a statement.
Harding said Massachusetts experienced a shift
in estimated payments from December into January
but they still trailed the monthly benchmark by
$191 million, or 21.6 percent, and were 25.3
percent off last year's pace.
Harding attributed the worsening shortfall to
"volatile capital gains," which are paid on
investment earnings.
The state's two largest tax categories –
withholding and sales – continue to show growth,
according to DOR. Withholding collections are up
3.2 percent for the year and sales taxes are up
5.3 percent over fiscal 2018.
"These categories are associated with overall
economic conditions in the state, which continue
to show solid growth," Harding said.
Historically, January tax collections account
for about 10 percent of overall revenues for the
year. Revenues of $2.79 billion for the month
were down $180 million from last year.
Despite back-to-back bad months, Gov. Charlie
Baker did not seem ready to panic yet.
Massachusetts is also not alone among states
experiencing a downturn in the middle of the
fiscal year that has been attributed to changing
behavioral patterns as a result of the 2017
federal tax reform law.
"I think we're fine," Baker told the News
Service prior to the release of the official
figures, which the governor said he had not yet
seen.
After the January figures were published,
Baker's office issued a statement indicating it
would "continue to closely monitor revenue
collections over the next few months."
"The Baker-Polito Administration has increased
the balance of the Rainy Day Fund to its highest
point in a decade, closed a billion dollar
budget deficit without raising taxes and while
much of the recent shortfall appears to be
related to a decline in revenue from capital
gains, the Commonwealth has a statutory
mechanism in place to buffer the state from such
volatility," spokeswoman Sarah Finlaw said.
The state's policy on capital gains collections
is to deposit anything in excees of roughly $1
billion into the state's "rainy day" account to
both build up reserves and guard against over
reliance on capital gains.
In late January when he released his $42.7
billion budget for fiscal 2020, Baker said he
was still bullish on the economy.
"Our employment numbers still look really good
and withholding and sales and estate taxes all
still look really good," Baker said.
He continued, "The big question mark that was
created in December was around estimated payment
and there are a lot of states and a lot of
experts that believe the estimated payments
issue is a timing question."
Income tax collections in January missed their
monthly benchmark by $230 million, and
withholding collections were $27 million under
benchmark, while sales tax collections beat
their target by $3 million and corporate and
business taxes were $28 million over estimates,
a increase of 60 percent over last year.
State House News
Service
Wednesday, February 6, 2019
MTF: Collections throw up "yellow light" on
spending
By Michael P. Norton
A 6 percent year-over-year drop in January tax
collections should be a "yellow light" for
lawmakers as they draft plans for new spending
in fiscal 2020, a business-backed state watchdog
group said.
Massachusetts Taxpayers Foundation President
Eileen McAnneny said Wednesday that with
revenues trailing fiscal 2019 budget benchmarks
by $400 million with five months left in the
fiscal year, the state this year may be on track
to make a smaller deposit into its rainy day
fund than expected. That is because lower than
expected capital gains tax revenues, which
officials say may be underperforming, will
automatically cut into an expected $489 million
transfer.
Gov. Charlie Baker on Wednesday predicted the
state will be "fine," despite tax collections
that are not coming in at levels needed to
support spending in this year's budget.
McAnnenny voiced general agreement, but said the
collections, which show revenues up just 1.3
percent this year, serve as a warning signal.
"While there remains room to maneuver in the
fiscal 2019 operating budget, this is a yellow
light for fiscal 2020 and comes at the expense
of building up the Stabilization Fund," McAnneny
said in a statement. "With April being the
largest month for tax collections, it is
unlikely policymakers will have significantly
more information about tax revenue available
before the House and Senate budgets are
published in the spring. As a cautionary
measure, budget writers may want to revisit the
tax growth assumptions before the fiscal 2020
budget is adopted."
Baker's $42.7 billion fiscal 2020 budget is
predicated on tax collections growing 2.7
percent.
State House News
Service
Thursday, February 7, 2019
State pension fund tumbled $4.5 Billion in
fourth quarter
By Michael P. Norton
The turbulent financial markets of 2018 were a
bummer for many investors and the state pension
fund did not escape the damage, which amounted
to $4.5 billion in the fourth quarter.
Meeting in Boston on Thursday, members of the
Pension Reserves Investment Management Board's
Investment Committee were briefed on the reasons
why the pension fund's balance dropped last year
to $69.3 billion. State employees, teachers and
many municipal employee retirement funds in
Massachusetts are invested through PRIM.
The fund, which is supervised by a nine-member
board, has 45 employees and works with
professional investment firms, was stung by a
dismal fourth quarter that rivaled quarterly
losses last seen in 2010 and 2011.
Pension fund executive director Michael Trotsky
put a positive spin on fund's performance, which
shed 1.8 percent in value for the year, noting
it's been seven years since a selloff like the
fund experienced in the fourth quarter.
"These kinds of selloffs are not too unusual, as
I mentioned we had similar quarterly losses in
2010 and '11, and in fact we've had 23 large
quarterly losses since the Great Depression back
in the '30s," he said. "Twenty-three of them in
90 years, so that means on average we get a
selloff of this magnitude once every four years
or so. And it's been seven years since the last
quarterly selloff so perhaps we were due."
Still, the annual loss sticks out and helped
drop the fund's three-year return rate to 7.7
percent, its five-year return to 6.4 percent and
its 10-year return to 9.1 percent, according to
numbers released Thursday.
Calling 2018 a "challenging, volatile year,"
Trotsky outlined the fund's performance with
gains of 0.6 percent in the first quarter, 1.1
percent in the second quarter, and 2.8 percent
in the third quarter.
The fourth quarter was punctuated by a December
that Trotsky, who is also the fund's chief
investment officer, called "the worst month
since the global financial crisis," and the
pension fund absorbed a 6 percent loss.
The fund ended the third quarter with a $73.8
billion balance, which fell to $69.3 billion on
Dec. 31.
Pension fund officials for weeks have declined
to release information about the fund's
performance in 2018 but on Thursday were quick
to point to overall market performance in
January, and contrast it with actual fund
results.
Trotsky said the fourth quarter was "dismal" but
told the committee that there was "some good
news."
"Since the December lows, things have rebounded
quite strongly and since the December lows the
S&P is up 16.7 percent, developed international
markets up 9.6 percent, emerging markets 10.7
percent, bonds are up a point and a half and the
60/40 mix of stocks and bonds is up 10.5
percent," Trotsky said, omitting the fund's own
performance since the December lows. "So we
pretty much gained all those losses back."
Trotsky said investment committee members have
noted that the past four major market
corrections since 2000 have all occurred with an
economic slowdown or contraction, and gave voice
to warning signals ahead.
"While the U.S. is still relatively strong, but
slowing, Europe, China and Japan are slowing to
a point where we begin to worry about
contraction," he said. "But even in the U.S.,
manufacturing is weakening -- a good economy has
more than twice the manufacturing production
increases that have been posted recently."
He continued, "Housing is weak, consumer
confidence is eroding from an 18-year high,
industrial material prices are weak and global
dollar liquidity is tight. There were
vulnerabilities in the global economy before
there were tariffs. Tariffs and trade
escalations are an additional negative for
global growth."
Constance Everson, the managing director of
Capital Markets Outlook Group and a member of
the PRIM Investment Committee, offered her
outlook on global markets. She said recent data
has gone beyond showing a slowdown and "slipped
into contraction" among "some key bellwether
export economies."
"And if you're, like us, trying to export to
these economies, contraction is way different
than just slowdown," she said. "That can take a
slow-moving slowdown and make it more severe
faster."
Everson said that German factory orders are
showing a year-over-year decline of 7 percent,
but that the turning point came in the fourth
quarter of 2017, before the first new tariffs
were imposed. She said the tariffs were an
additional drag on economies that had already
begun to decelerate.
"To the question of whether the U.S.A. can avoid
a slowdown that has taken hold among trading
partners, it would be a first," Everson said.
"One-third of American industrial orders are for
export ... but that portion so far has not been
enough to keep the U.S.A. growth rate unimpeded
if trading partners are slowing down."
Trotsky acknowledged that the outlook for global
markets "may sound very dire," but he said that
he believes the pension fund is "appropriately
positioned" for a weakening global equity
environment.
"Our main focus, as you remember, during the
past several years has been to reduce our global
equity exposure," he said. "Remember: we've
reduced our global equity position from 50
percent eight years ago to a target of 39
percent today."
He later added, "Please take comfort in the fact
that we have been preparing for it as much as
possible."
Later during Thursday's meeting, a team from
PRIM presented a proposal to de-risk the fund by
reducing the fund's reliance on global equity by
3 percent and value-added fixed income by 2
percent, all while increasing exposure to core
fixed income by 3 percent, and private equity
and portfolio completion strategies by 1 percent
each.
The investment committee also recently took a
dim view of the state of politics in Washington
D.C. Trotsky said political gridlock "has become
a reality and most think that it will last for
at least another two years."
"We've recently endured one of the longest
government shutdowns in history as Congress and
the president tried to work out border security
and immigration policy differences. And who
knows if that issue is really behind us,"
Trotsky said. "President Trump warned of a
'warlike atmosphere' in Washington during the
midterm elections and really both sides have
delivered."
–Colin A. Young
contributed to this report
State House News
Service
Monday, February 4, 2019
Draft rule would cut union contributions to
candidates
By Matt Murphy
State campaign finance regulators are proposing
to close what critics have derided as a "union
loophole" by reducing the amount of money a
union can contribute to a candidate for public
office from $15,000 to $1,000.
The Office of Campaign and Political Finance
proposed the change in a draft regulation
released Monday that will now become the subject
of public hearings.
"We're definitely pleased that the agency
adopted our recommendations with just a few
minor tweaks," said Pam Wilmot, executive
director of Common Cause Massachusetts. "We look
forward to looking more thoroughly at the
details, and the process will continue, but we
think it's the right decision based on the
statute, the law and good public policy."
Campaign finance regulators began revisiting the
current rules at the request of Common Cause
after the Supreme Judicial Court last year
questioned the legal strength of the so-called
"union loophole" in a ruling against the
Massachusetts Fiscal Alliance upholding the
state's ban on corporate political donations.
Under the current rules, unions are allowed to
contribute up to $15,000 to individual
candidates in a single cycle.
That practice stemmed from a 1988 bulletin
exempting unions from contribution limits that
apply to individuals and political action
committees. Opponents argued that this rule gave
organized labor unfair influence over the
electoral process.
The draft rule would hold unions to the same
contribution limits of individuals, including
$1,000 to a candidate, $500 to a political
action committee (PAC) and $5,000 to a political
party. Unions would also be forced to register
as a PAC if they exceeded $15,000 in donations
in a year.
The fiscal alliance said the reduction in the
limit is welcomed, but the organization
continues to believe that unions, like
corporations, should be forced to set up PACs in
order to participate in politics.
"We are pleased to see the union loophole get
dramatically smaller. OCPF and MassFiscal came
to complete agreement on one issue today: the
$15,000 threshold should be eliminated. This
will result is more competitive elections and
more equality in campaign finance law," said
Paul Diego Craney, a spokesman for MassFiscal.
Craney, however, said he "can't be satisfied"
because he does not believe that OCPF has the
authority to set any limits for unions.
"The state legislature was very clear in their
legislation on this issue. Unions can donate to
candidates by forming a political action
committee. That’s what’s written in the law, and
that’s the position we will push OCPF to adopt
at their next hearing. Any other position is
lawlessness," Craney said.
Political action committees are currently
limited to giving $500 to a candidate's
committee. Forcing unions to register as PACs
would also trigger reporting requirements and
prevent them from making donations from their
general treasury.
Jacob Ventura, an Attleboro Republican, told
OCPF Director Michael Sullivan in December that
had he known in 2017 about the union loophole he
never would have run in a special election
against Sen. Paul Feeney, who Ventura said
raised over $70,000 in union loophole donations,
putting Ventura at a significant disadvantage.
A public hearing on the draft regulations has
been scheduled for March 5, and all comments are
due to OCPF by March 15. Final regulations are
expected by May 1.
The union loophole is also being challenged in
the U.S. Supreme Court by businesses owned by
MassFiscal founder Rick Green and board member
Mike Kane.
The Boston Globe
Tuesday, January 5, 2019
Mass. may reduce how much money unions
can donate to back political candidates
By Matt Stout
State campaign finance regulators want to rein
in the money labor unions can give their
preferred candidates each year, under a newly
released proposal that could dramatically alter
Massachusetts’ political fund-raising landscape.
Labor unions are currently allowed to give up to
$15,000 annually to a single candidate. But
draft regulations quietly released Friday by the
Office of Campaign and Political Finance would
slash the limit to $1,000, as well as cap
donations to political action committees at $500
and to a political party’s committee at $5,000.
The move, while effectively bringing unions
under the same limits imposed on individuals,
would eliminate a decades-old advantage labor
organizations have enjoyed in state and local
elections in Massachusetts. The higher donation
limit, set in the 1980s, applies to unions and
nonprofits that aren’t corporate-funded.
And in a state where labor unions still wield
substantial power — and often use it to back and
fund Democratic candidates — the change stands
to affect those in the State House’s majority
party far more than Republicans and others.
Regulators will hold a public hearing in early
March and accept comments until March 15 before
releasing a final version of the regulations on
May 1.
Jason Tait, a spokesman for the campaign finance
office, said regulators made the decision after
fielding comments from 15 individuals or
organizations, including labor unions and
business groups. The agency is independent, with
its director, Michael J. Sullivan, appointed to
a new six-year term in November by a commission
that includes the secretary of state and the
chairs of the state Democratic and Republican
parties.
“The $1,000 limit was chosen because it’s a
reasonable number that is used in the statute
for caps on individuals,” Tait said. The rules
were reexamined following a Nov. 7 request from
the watchdog group Common Cause Massachusetts.
Derided as a loophole by critics, the $15,000
cap survived a challenge before the Supreme
Judicial Court in September, when it upheld the
longstanding ban on direct corporate gifts. But
even then, the court implied — in a footnote —
that the campaign finance office should review
the regulation.
“We just feel that all campaign finance limits
should be the same for all kinds of
organizations, and any exceptions should have a
really clear reason,” said Pam Wilmot, executive
director of Common Cause Massachusetts. “The
public can’t have confidence in our law if it
looks like one set of players is favored above
the others.”
Unions have at times used the advantage to pour
thousands of dollars into campaigns of
individual candidates,with a notable example
coming in the 2013 Boston mayoral race. That
year, now-Mayor Martin J. Walsh received nearly
$329,000 through just 22 donations from labor
unions, many of them hailing from out of state.
In 2014, Martha Coakley, the Democratic
gubernatorial nominee, collected nearly $65,000
through just eight donations from unions.
Governor Charlie Baker, then the Republican
nominee, took a $15,000 donation from the
Massachusetts Correction Officers Federated
Union during that race.
The donations can have a greater impact further
down the ballot. In 2017, for example, state
Senator Paul Feeney, a Foxborough Democrat and
former labor official, collected $35,000 from
just five union donations, or about 25 percent
of the $130,000 he raised before winning a
special election that fall, records show.
The Massachusetts Fiscal Alliance, the
conservative nonprofit whose founder, Rick
Green, was behind the lawsuit to eliminate the
corporate donation ban, applauded the proposed
regulations. Green and Mass. Fiscal Alliance
board member Michael Kane are petitioning the
Supreme Court to take up its case after the SJC
ruled against its challenge.
“We are pleased to see the union loophole get
dramatically smaller,” said Paul Craney, a
spokesman for the group. “This will result is
more competitive elections.”
Several labor groups submitted comments
challenging a cut to the $15,000 limit. The
Massachusetts Teachers Association went further,
urging the agency to index the limit to
inflation — which would allow the $15,000 cap to
gradually increase. “Unless the cap is indexed,
the ordinary course of inflation will ultimately
render meaningless what unions and nonprofit
organizations can lawfully contribute without
crossing the ‘political committee’ threshold,”
Ira Fader, the union’s general counsel, wrote
Nov. 30.
The Massachusetts AFL-CIO, whose president,
Steven A. Tolman, had submitted comments urging
the state to keep the current structure, did not
comment Monday.
Fiscal Alliance
Foundation
Wednesday, February 6, 2019
Fiscal Alliance Foundation Releases Poll on Real
Estate Excise Tax Proposal
Data Shows Broad Opposition to Proposed Housing
Tax
Boston - The Fiscal Alliance Foundation, a
non-partisan, non-profit 501(c)(3) organization
that seeks to educate the public on the benefits
to be derived from greater fiscal
responsibility, transparency, and accountability
in government today released the result of a
poll conducted on the proposed hike of the
Massachusetts Real Estate Excise Tax.
“Given the prohibitively high cost of housing in
the Commonwealth, the Foundation felt this would
be a great issue to explore and gather some data
on,” commented Paul Diego Craney, an advisor to
the Fiscal Alliance Foundation’s Board and
spokesman for the organization.
The poll was a live survey conducted by the DC
area based polling firm Advantage, Inc. It
surveyed the views of residents in the districts
of House Speaker Robert DeLeo, Senate President
Karen Spilka, Senate Minority Leader Bruce Tarr,
and House Minority Leader Brad Jones.
Overall, it found that 70.77% of those surveyed
felt Governor Baker should continue to hold the
line on new taxes, while 60% of respondents
would have a “strongly less favorable” view of
their lawmaker if they supported the 50%
increase in the Real Estate Excise Tax.
“The average rent for an apartment in the city
of Boston is sky rocketing. The same can be said
for housing costs across the state. The hard
working residents of the Commonwealth have
always been very generous with their tax
dollars, but on an issue as fundamental as
putting a roof over the heads of their family,
they clearly have no patience for this modern
day gabelle,” said Craney.
For a full breakout of the poll data, visit the
Fiscal Alliance Foundation’s website at:
www.FiscalAllianceFoundation.org.
The Salem News
Wednesday, February 6, 2019
Baker's tax plan opposed
Group's survey targets climate change
initiatives
By Christian M. Wade, Statehouse Reporter
A majority of Massachusetts voters oppose Gov.
Charlie Baker's proposal to hike real estate
taxes, a linchpin of his plan to drum up more
money for climate change-related initiatives,
according to a new poll from a conservative
group that is seeking to kill the proposal.
The survey by the Fiscal Alliance Foundation, an
offshoot of the right-leaning Massachusetts
Fiscal Alliance, found more than 70 percent want
Baker to "hold the line on new taxes" when asked
if they think the "Republican governor should be
proposing new and higher taxes" without
referencing his plans to spend the money on
climate change.
The poll specifically surveyed voters in key
legislative districts including those of House
Speaker Robert DeLeo, D-Winthrop; Senate
President Karen Spilka, D-Ashland; Senate
Minority Leader Bruce Tarr, R-Gloucester; and
House Minority Leader Brad Jones, R-North
Reading. The results showed strong opposition to
the plan on legislative leaders' home turf.
The poll asked respondents if they "would have a
more or less favorable opinion" of their
legislators "if they supported a 50 percent
increase to the real estate excise tax, which
would drive up the cost of housing by $1 billion
over the next 10 years."
"The hard working residents of the commonwealth
have always been very generous with their tax
dollars, but on an issue as fundamental as
putting a roof over the heads of their family,
they clearly have no patience for this
modern-day gabelle," Paul Craney, a spokesman
for the group, referencing the unpopular tax on
salt in Medieval France.
Baker’s proposal would increase the deeds excise
rate, which is paid when a property is sold,
from $2 per $500 of value to $3.
That's expected to raise an estimated $137
million a year, which Baker wants to deposit
into a fund called the Global Warming Solutions
Trust Fund.
Baker has said the money from the proposed
excise tax increase, which requires legislative
approval, would help cities and towns cover the
cost of upgrades to "storm water systems, dams
and flood controls, drainage and culvert
improvements, drought mitigation strategies and
nature-based solutions and adaptation
strategies."
The money would also help state and local
agencies protect assets including
infrastructure, critical care facilities, water
resources, and other key infrastructure, Baker
said.
"This is an excise tax that’s basically about
property and the proposal we’re making here is
to protect property," he told reporters
recently. "We think, in the long run, the cost
benefit on this one is a good deal for
Massachusetts residents."
To be sure, the pollsters didn't mention what
the funds would be used for. They only asked if
respondents supported increasing the state's
real estate transfer tax by "50 percent."
And the pollsters surveyed about 1,000
registered voters spread out across four
legislative districts -- only getting a few
hundred responses from each district.
But poll represents an early shot across the bow
from opponents in what promises to be a bruising
fight on Beacon Hill over the governor's climate
change plan.
Relators and home builders oppose the plan,
saying the proposed tax increase would drive up
housing costs, which are already among the
highest in the nation.
"We live in a high-cost state with record-low
housing inventory with prices near record
highs," said Eric Berman, spokesman for the
Massachusetts Association of Realtors. "All this
is going to do is make homes more expensive.
Sellers are either going to have to raise the
price of their home to cover the tax or lose
equity on their property."
Environmental groups have praised the proposal,
meanwhile, and want Baker to brush aside such
criticism and push it through the Legislature
this year.
"We were expecting Realtors and home builders,
who are doing pretty good in this economy, to
push back against his plan," said Jack Clarke,
director of public policy at the Massachusetts
Audubon Society. "But we think the state is
financially stable enough to absorb this, and
the need for climate change adaptation at the
local level is critical."
Elizabeth Turnbull Henry, president of the
Environmental League of Massachusetts, called
the poll "misleading" and said it detracts from
real public concerns about climate change.
"We have 1,500 miles of coastline facing rising
seas. Most of our 351 cities and towns have old
stormwater infrastructure ill-equipped to handle
increasing rainfall intensity," she said. "In
poll after poll, the large majority of residents
across the state report that climate and
environment are priorities."
On Wednesday, Baker was in Washington D.C.
testifying before the House Natural Resources
Committee on the state's response to climate
change.
He touted bipartisan efforts to address the
threats of rising sea levels, devastating
storms, coastal erosion and other negative
impacts of a warming planet.
"The magnitude of the impacts from climate
change requires all of us – at the federal,
state and local levels - to put politics aside
and work together," Baker told congressional
panel, according to a transcript provided by his
press office. "That is the path we have taken in
Massachusetts."
The Salem News
Friday, February 8, 2019
A Salem News editorial
Confronting the cost of climate change
The juxtaposition was hard to miss: Republican
Gov. Charlie Baker was testifying in Washington,
D.C, Wednesday, urging federal lawmakers to
finally confront climate change and its
potentially disastrous effects on people and
property. Meanwhile, back in the Bay State, the
conservative-leaning Massachusetts Fiscal
Alliance was releasing the results of a poll
that purported to show widespread opposition to
the governor's plans to confront the problem at
home.
The poll revealed that 70 percent of
Massachusetts voters want Baker to "hold the
line on new taxes." Just a few weeks earlier, of
course, Baker proposed hiking the real estate
transfer tax to pay for a 10-year, $1 billion
program to help prepare Massachusetts
communities for the effects of climate change.
The Massachusetts Association of Realtors has
already come out against the proposal.
Let's set aside for a second the skewed nature
of the Mass Fiscal poll, which made no reference
to climate change but was nonetheless used to
argue against Baker's proposal. (Who wouldn't,
for example, answer in the negative to such an
open-ended question as to whether they would be
happy if their legislators "supported a 50
percent increase to the real estate excise tax,
which would drive up the cost of housing by $1
billion over the next 10 years.")
The real question -- one unasked by Mass Fiscal,
and one that is important to consider in the
months and years ahead -- is whether Bay State
residents grasp the seriousness of the challenge
facing their communities. Other polling
indicates that they do. A 2017 poll by WBUR, for
example, showed 88 percent of the state's
registered voters said they were concerned about
climate change, up from 77 percent in 2011. Of
those polled, a mere 6 percent say Massachusetts
is "very prepared" to deal with climate change.
Under Baker's plan, the money raised by the
excise tax increase would help cities and towns
upgrade "storm water systems, dams and flood
controls, drainage and culvert improvements,
drought mitigation strategies and nature-based
solutions and adaptation strategies." That kind
of work is critically important, especially as
New England faces more storms, more often — one
of the biggest effects of climate change on the
region that scientists have identified.
"We have 1,500 miles of coastline facing rising
seas. Most of our 351 cities and towns have old
stormwater infrastructure ill-equipped to handle
increasing rainfall intensity," Elizabeth
Turnbull Henry, president of the Environmental
League of Massachusetts, told Statehouse
reporter Christian Wade. "In poll after poll,
the large majority of residents across the state
report that climate and environment are
priorities."
The survey of 1,000 people released Wednesday
talked about none of that. It also targeted
voters in districts served by House and Senate
leaders — including Senate Minority Leader Bruce
Tarr, R-Gloucester, and House Minority Leader
Brad Jones, R-North Reading — in a blatant,
cynical attempt to pressure them into stifling
an increase in transfer taxes. We wonder how
Tarr, whose hometown was under water for much of
last January and March after a series of storms
brought ocean water deeper inland than seen
before, appreciates such efforts.
To be sure, there can be -- and should be --
robust debate over how to pay for such work.
Baker's suggested funding mechanism may not be
the best route. But to suggest the work doesn't
need to be done, or to attempt to stop the
debate in its tracks, is to ignore the problem.
"The magnitude of the impacts from climate
change requires all of us -- at the federal,
state and local levels -- to put politics aside
and work together," Baker told members of
Congress Wednesday. "That is the path we have
taken in Massachusetts."
Whether everyone remains willing to walk the
same path remains to be seen, now that the bill
for ignoring the problem for so long is coming
due.
State House News
Service
Tuesday, February 5, 2019
Dems will get full stipends once assignments are
made
By Chris Lisinski
Representatives and senators all make an equal
base salary of $66,257.09 in 2019, but will also
soon receive substantial stipends for committee
appointments and leadership positions.
Under a pay-raise law passed in 2017 — over a
veto by Gov. Charlie Baker — leadership
positions, committee chairmanships and committee
vice-chairmanships carry with them additional
pay between between $5,200 and $65,000 per year.
As the wait for assignments stretches into a
second month, Treasurer Deborah Goldberg's
office told the News Service on Tuesday that no
additional pay will be granted for those
positions until they are formally filled, and
once they are, the full stipend will be paid out
over the remainder of the year.
Only a handful of lawmakers have begun receiving
higher pay due to stipends, according to public
data available on the state comptroller's
website. They include Senate President Karen
Spilka and House Speaker Robert DeLeo, who each
earn $80,000 for their leadership roles on top
of the base salary, as well as a handful of
Republicans in the House, where Minority Leader
Brad Jones has made his committee appointments.
All six Republicans in the Senate hold
leadership positions and receive stipends.
The 2017 pay-raise legislation significantly
boosted the total value of stipends to $2.8
million. Chairs of the House and Senate Ways and
Means Committees receive $65,000 for holding
those positions, while the smallest stipend
offers $5,200 to committee vice chairs.
House and Senate lawmakers can only receive
compensation for chairing one committee and for
two positions overall.
Under the legislation, Baker's office is also
required to certify an adjustment every two
years to the the annual base salary received by
all lawmakers based on changes to the median
household income across Massachusetts. Base pay
for legislators jumped from $62,547.97 to
$66,257.06 this year. |
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only. For more information go to:
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