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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
Thursday, February 28, 2019
"A
billion here, a billion there"
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Ahead of this spring's state budget debate,
a non-profit research group that views the state tax code as
regressive outlined policy options under which the wealthy
would pay more in taxes and lower-income residents could
receive tax relief.
Lawmakers this year are trying to find
consensus for major, multi-year increases in education
spending, an attempt to face up to the realization that
funding has fallen more than $2 billion short of actual
increases in costs, especially in areas like special
education and health insurance.
The work is occurring when "pretty much
everyone understands" that tax revenue growth is slowing
down and a recession is likely in the next few years, Kurt
Wise, senior policy analyst at the Massachusetts Budget and
Policy Center, told lawmakers and staff at a "teach-in" on
state budget and revenue issues.
Republican Gov. Charlie Baker's budget
features $800 million in new revenues, Wise said, including
$550 million in recurring revenues derived from new
measures, such as new taxes on opioids, real estate
transfers, vaping and e-cigarettes. However, Wise said that
$490 million in revenue is set to come off the books soon
due to a scheduled income tax rate cut, the phaseout of a
business health care assessment, and an increase in the
earned income tax credit.
"The governor's opened the conversation
around revenue," Wise said.
Phineas Baxendall, senior policy analyst at
MassBudget, said the organization has fielded "a lot" of
information requests from lawmakers who hope to move state
tax policy in a more progressive direction....
Organized by Sen. Jo Comerford and Rep. Tami
Gouveia, Tuesday's briefing drew several other lawmakers,
including Reps. Denise Provost and Tricia Farley-Bouvier and
Sens. Jamie Eldridge and Becca Rausch....
"There are lots of conversations we should
be having," Comerford said. "I believe that taxes are an
investment in our Commonwealth. And if we don't allow enough
investment then we're faced with really difficult choices
and more of an austerity framework than I think is
ultimately useful for us."
Now that Baker has made his openness to new
taxes clear, the next round of big tax and spending
decisions rests with Rep. Aaron Michlewitz, the new chair of
the House Ways and Means Committee.
State House News Service
Tuesday, February 26, 2019
Lawmakers schooled at state budget, revenue "teach-in"
As lawmakers and advocates try again to
impose a surtax on incomes over $1 million, they're
confident a new attempt can survive a potential legal
challenge and meet constitutional requirements....
"Regrettably, when we got to the finish
line, we ran into a bump here and there and it was
determined that our previous Fair Share Amendment didn't
meet constitutional muster, but that is not going to happen
this time," Rep. James O'Day said at a State House briefing
Tuesday on a new version of the tax proposal. "We're happy
to have folks with us today that are going to put your mind
at ease on that."
O'Day and Sen. Jason Lewis refiled the
surtax (S 16, HD 3300) -- known as the millionaires tax or
the Fair Share Amendment -- this year as a legislative
amendment instead of the citizen's amendment version that
was scuttled last year.
Unlike citizen's amendments, legislative
amendments are not required to contain only related or
mutually dependent subjects, attorney Patrick Moore said....
Lewis, recently named the Senate chairman of
the Education Committee, said Massachusetts has "tremendous
needs" the surtax could help address.
"We need to adequately fund our public
schools. We need to make more affordable early education
available to families," he said. "We need to make sure that
our students can go to public colleges and universities and
not be burdened with a lifetime of debt, and we need to have
a transportation system, particularly public transportation,
that works for all of our families and our businesses
throughout the state. That is pretty much undeniable. I
think everybody agrees with that. The challenge is how do we
pay for it, and I believe it's not fair to put that burden
on the backs of our middle income families."
Opponents to the surtax have argued that it
could lead to an exodus of wealth from the state, along with
tax revenues associated with higher-income households.
The Massachusetts High Technology Council,
one of the groups that sued over the proposal in 2017, said
the new attempt is "bad public policy" regardless of whether
it is "permissible" constitutionally.
"Any shift in state policy that weakens the
private sector performance, or any weakness in the economy
in general as a result of a national recession, will create
significant state budget challenges in Massachusetts," the
council said in a statement when O'Day and Lewis filed their
legislation last month.
Like the original version, the amendment
proposed by O'Day and Lewis would dedicate money generated
from the tax to education and transportation. It is again
backed by Raise Up Massachusetts, the coalition of more than
100 labor, community and faith-based groups that has
successfully worked to secure minimum wage increases, a new
paid family and medical leave program and guaranteed earned
sick time.
State House News Service
Tuesday, February 26, 2019
Income surtax supporters bullish about new approach
The House Ways and Means Committee is voting
on a substantial budget bill Tuesday night that House
leaders will bring to the floor on Wednesday for the first
major vote in that branch since it passed rules in late
January....
Several freshman members took to Twitter on
Tuesday afternoon indicating that they had been told the
House would take up a version of Gov. Charlie Baker's $165
million supplemental budget, a piece of legislation (H 74)
filed by the governor last month that also includes a slew
of outside policy sections....
Speaker Robert DeLeo's office subsequently
shared with the News Service the scheduling email informing
members to be prepared to consider the governor's
supplemental budget (H 74), and a spokesman for the Ways and
Means Committee said at 4:30 p.m. that members would soon be
polled on the committee's version of the spending bill.
"Luckily I read & synthesize info quickly bc
I have a very full calendar this evening and tomorrow
morning. Budgets are important & deserve enough attention by
all Reps bc they determine how the state will spend
#taxpayer $$. I wish I had more time for thorough review,"
[Rep. Tami] Gouveia (D-Acton) wrote on Twitter....
In his filing letter, Baker, who is
monitoring tax collections that have softened in recent
months, said sufficient revenues are estimated to be
available to cover the additional spending in the bill,
which would cost the state a net of $150.8 million.
State House News Service
Tuesday, February 26, 2019
House plans to roll out spending bill Wednesday
The House of Representatives passed its
first significant bill of the young legislative session
Wednesday, unanimously endorsing a bill that adds $135
million in mid-year spending at a time when tax collections
are trailing behind projections.
The bill (H 3505), intended to funnel money
in the current fiscal year to state accounts that either
have run out of cash or will soon run dry, began with a
proposal Gov. Charlie Baker filed late in January but House
leaders shaved about $30 million from the bill before
bringing it to a vote Wednesday....
Through February, state tax collections were
running $400 million below benchmarks, which House Speaker
Robert DeLeo said Wednesday was a factor in the House's
decision to trim spending from the governor's proposal.
Michlewitz echoed that on the House floor....
The supplemental budget bill came to the
House floor at about 2 p.m. Wednesday and Michlewitz was the
only representative to speak in favor or in opposition on
the floor. Members filed 18 amendments to the bill by the 1
p.m. deadline, but 16 of them were withdrawn before they
could be considered. There was no debate on the two
amendments the House did consider and the bill passed on a
154-0 roll call vote at about 3:40 p.m....
The Senate must now pass its own version of
a fiscal 2019 supplemental budget and reconcile it with the
House's version before the governor can sign it into law.
State House News Service
Wednesday, February 27, 2019
House approves $135 Mil in new spending
From record snowfall and drought to
tornadoes, storm surges and flooding, Massachusetts has seen
an assortment of extreme weather in recent years, giving
Gov. Charlie Baker plenty to talk about as he participated
in a climate resilience discussion this weekend at the
National Governors Association winter meeting....
Speaking at a Greater Boston Chamber of
Commerce breakfast at the Westin Copley Place, Baker said
hearing officials from across the country discuss major
storms they've experienced made lessons about the frequency
and intensity of climate change "pretty clear at this
point."
Baker, who has proposed increasing the real
estate transfer excise tax to help municipalities fund
projects intended to mitigate the effects of climate change,
told the crowd he expected to be "spending a fair amount of
time" on climate issues this legislative session. House
Speaker Robert DeLeo on Friday proposed his own climate
initiative, a ten-year $1 billion grant program that would
be funded by borrowing.
State House News Service
Tuesday, February 26, 2019
Guv finds common interests on trade, climate, opioids
Despite its economic strengths,
Massachusetts ranks near the bottom in a new fiscal
stability index that sizes up the states, its position
pulled down by "heavy" government health care, borrowing and
employee pension costs....
Massachusetts ranked ninth among the states
for its gross state product, but 44th in the fiscal
stability rankings. Wyoming ranked first....
The showing in the fiscal stability index is
offset by No. 1 rankings for Massachusetts in talent and
quality of life, according to the MATTERS index.
Massachusetts ranks No. 33 in the tax index and 47 in cost
of doing business.
State House News Service
Wednesday, February 27, 2019
Massachusetts No. 44 in new fiscal stability index
The MBTA pension fund’s financial outlook
tumbled even further in 2018, when the troubled $1.5 billion
system took in less than half of the $275 million it
ultimately paid out or lost on investments, according to new
data to be released Monday....
Its unfunded liability jumped to nearly $1.4
billion by year’s end — a roughly 12 percent increase from
the year before and a 75 percent hike from a decade ago. And
the T is expecting its rider- and taxpayer-funded share of
costs to account for 24 percent of its payroll next fiscal
year, the fourth increase in as many years, according to the
transit agency....
But the figures are likely to add to the
already intense scrutiny of the MBTA Retirement Fund. The
transit agency and its largest union for months have been
quietly renegotiating the agreement governing what the T
contributes to the system, the Globe has reported.
Those contributions have been a regular
focus in recent months. Over the last decade, the amount the
agency has funneled into the fund has ballooned, from $30
million in fiscal year 2007 to $103 million this year. MBTA
officials warned in November that those costs could grow to
$137 million within three years, depending on how the fund
performs.
The Boston Globe
Monday, February 25, 2019
Struggling MBTA pension fund took $150 million hit in 2018
After the MBTA's pension fund absorbed
losses in 2018, officials warned Monday that the burden of
covering retirement for thousands of T employees remains "a
really crucial issue." ...
"This is a really crucial issue facing the
MBTA," General Manager Steve Poftak said. "As we'll detail
next week when we take a look at the operating budget, the
pension payment out of the operating budget has gone up from
16 percent to 24 percent (since 2015). That is an
unsustainable trajectory." ...
"It eventually deteriorates the amount of
service we can put out to the public, so it has those dire
consequences," said FMCB Chair Joseph Aiello, who urged the
board to "accelerate" its search for a solution. "I wouldn't
want to be halfway into earning a pension when the numbers
look like this....
Not all parties shared those concerns,
though. Jimmy O'Brien, president of the Boston Carmen's
Union Local 589 that represents about 4,100 MBTA employees,
said in a statement that "claims by the MBTA that the fund
is in crisis are simply not true." ...
"The truth is that the MBTA enticed
employees into retirement in order to balance the budget and
claim a public victory, now they act shocked that those same
employees are collecting pensions," O'Brien said.
State House News Service
Monday, February 25, 2019
MBTA pension problems pose risks seen for riders, retirees
Even as MBTA riders face a proposed 6.3
percent fare hike, totalling an estimated $32 million, the
transit system is already committed to sinking $103 million
into the black hole that is the T’s pension system....
The numbers alone are sobering. In 2017 the
fund paid out $209 million in benefits to 6,800 retirees or
their beneficiaries, while only 5,300 current employees paid
into the fund. Over the previous decade, $1.7 billion was
paid out, and $740 million paid into the fund.
In the private sector, that would be
considered a Ponzi scheme....
That leaves riders and taxpayers to cover
the gap. In 2007 the shortfall the T was forced to cover was
$30 million. Today it stands at $103 million, and it could
hit $137 million within three years, T officials warn.
Thus far, attempts at reform have merely
tinkered at the edges. Where once T employees could retire
after 23 years of service — and many still can, having been
grandfathered in — those hired after 2012 can retire at age
55, after 25 years of service. However, other state
employees and teachers aren’t eligible until age 60 (with 25
years on the job). The teachers get less than 40 percent of
their ending salaries; T workers retire at some 60 percent
of their ending salary.
All of that, plus the T’s growing interest
on construction-related debt, makes up what the MBTA calls
its “structural deficit.” But it’s only “structural” because
no one has had the guts to tackle it head on — well, perhaps
until now.
A Boston Globe editorial
Monday, February 25, 2019
MBTA pension system operates like a Ponzi scheme
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Chip Ford's CLT
Commentary
The More Is Never Enough cabal's front
group has just exposed its true intent for the future of
Massachusetts taxation. First they'll come for the
"millionaires" – but indeed
that is just the first step. Doubt not
their ultimate goal: a graduated income tax on all
taxpayers across the state. In their own words,
ultimately "the wealthy would pay more in taxes and
lower-income residents could receive tax relief."
That is the very definition of a graduated income
tax. As the State House News Service reported:
"The
governor's opened the conversation around
revenue," Wise said.
Phineas
Baxendall, senior policy analyst at MassBudget,
said the organization has fielded "a lot" of
information requests from lawmakers who hope to
move state tax policy in a more progressive
direction....
Ahead of
this spring's state budget debate, a non-profit
research group that views the state tax code as
regressive outlined policy options under which
the wealthy would pay more in taxes and
lower-income residents could receive tax relief.
And note what happens when "the
governor's opened the conversation around revenue."
That reaction was so utterly predictable. We
called it out on January 25: "Baker
opens the tax floodgates."
In the CLT Update of July 1, 2017 ("It's
full circle again") I provided the evolving history
of the Gimme Lobby's lead tax-hike advocacy group.
Over the decades its name morphed to sound more
cerebral, the Massachusetts Budget and Policy Center,
now shortened to MassBudget:
The organization that's pushing for the
graduated income tax is the same cabal of
liberals who have been behind every past attempt
to pick taxpayers' pockets or deprive them of
tax relief. Raise Up Massachusetts evolved from
the dissolution of TEAM, the Tax Equity Alliance
for Massachusetts, or as we long ago more aptly
branded them, "Tax Everything And More."
In a December 1, 2002 article in CommonWealth
Magazine, "TEAM
finds a less taxing name" writer Michael
Jonas noted:
Formed in 1987 as a
liberal counterweight to Citizens for
Limited Taxation, the Tax Equity
Alliance for Massachusetts has made the case
for public spending and progressive taxation
with the same zeal its foes have brought to
their anti-tax crusades. But after 15 years
in the tax-battle mosh pit, TEAM is getting
a makeover. Shedding its name
– and well-known
acronym – for a wonkier moniker, the
organization
– formerly known
as TEAM
– has recast
itself as the Massachusetts Budget and
Policy Center.
Leaders of the group
say the name change simply brings the title
in line with the work. “Over the last
several years we’ve expanded to work on far
more issues than just taxes or just tax
equity,” says executive director James St.
George. The organization’s recent research
reports include an examination of growing
income disparities between the state’s top
and bottom wage earners and an analysis of
state budget growth in the 1990s.
The new Massachusetts Budget and Policy
Center is part of a network of
liberal-leaning groups in 23 states
receiving funding from the Ford Foundation,
the Charles Stewart Mott Foundation, and the
Annie E. Casey Foundation to produce budget
and tax analyses with a particular focus on
low-income and other vulnerable groups.
(TEAM will still exist, on paper at least,
handling more direct political and lobbying
work, but is not expected to consume much of
the four-person staff’s time.)
Citizens for Limited Taxation
executive director Barbara Anderson,
who says the TEAM acronym should have stood
for “tax everything and more,” sees the name
change as an effort to camouflage the
group’s left-wing image. “I think they’re
trying to get away from TEAM because people
aren’t into liberals anymore,” says
Anderson.
Jim St. George was the first executive
director of the Mass. Budget and Policy Center (MBPC),
replaced by Noah Berger in 2003. The Takers
Cabal flowed with the name change, the
same cast of characters and the
same deep pockets. As a tax-exempt 501(c)3
organization, MBPC had to keep up at least a
semblance of being non-political and
non-partisan — its
purpose purely "educational."
A "teach-in" for legislators seemingly
fits that "purely educational" transformation, though
some might consider it to be lobbying in disguise.
"New Ways and Means Chairman Aaron
Michlewitz released his version of Gov. Charlie Baker's
$165 million spending bill early Tuesday evening, giving
members of the committee until 10 a.m. on Wednesday to
vote on the 23-page proposal," the State House News
Service reported on Tuesday evening:
Reps. Lindsay Sabadosa and Tami Gouveia both
Tweeted that they had been notified to be
prepared to consider a report from the House
Ways and Means Committee on the governor's
budget bill on Wednesday when a formal session
has been scheduled.
Speaker Robert DeLeo's office subsequently
shared with the News Service the scheduling
email informing members to be prepared to
consider the governor's supplemental budget (H
74), and a spokesman for the Ways and Means
Committee said at 4:30 p.m. that members would
soon be polled on the committee's version of the
spending bill.
"Luckily I read & synthesize info quickly bc I
have a very full calendar this evening and
tomorrow morning. Budgets are important &
deserve enough attention by all Reps bc they
determine how the state will spend #taxpayer $$.
I wish I had more time for thorough review,"
Gouveia (D-Acton) wrote on Twitter.
Freshman representatives Tami Gouveia
(D-Acton) and Lindsay Sabadosa (D-Northampton) have a
lot to learn, starting with Beacon Hill basics.
Rep. Gouveia doesn't need to waste her time actually
reading bills, especially a 23-page spending bill
– she just needs to vote
the way her leadership tells her to vote. Rep.
Gouveia, for a demonstration of what's expected of you
see here.
The supplemental budget she thought she
had to sit up all night and speed-read through passed
the next day on a vote of 154-0.
If everyone on Beacon Hill gets their
way it looks like the state will have a huge slush fund
at its disposal to "mitigate the effects of climate
change."
On January 19 the State House News
Service
reported: "Gov. Charlie Baker
plans to propose an estimated $137 million annual
increase in the excise tax paid on real estate
transfers, a proposal he said Friday morning will
generate $1 billion over the next decade to protect
properties and help cities and towns cope with climate
change impacts."
Then the News Service reported on
Tuesday: "House Speaker Robert DeLeo on Friday
proposed his own climate initiative, a ten-year $1
billion grant program that would be funded by
borrowing."
So Baker's going to hike the deeds
excise tax and spend a billion dollars over ten years
for his "climate mitigation" plan, and DeLeo's going to
borrow another billion dollars to hand out in grants
over ten years to "mitigate" his way. Will
two billion dollars be enough, do you think?
What about those deficient highways,
roads and bridges
that need $8.4 billion for maintenance? Have
they forgotten the "desperately needed major investments
in our public schools and colleges" that will be funded
with a "millionaires tax"?
"A billion here, a billion there, pretty
soon you're talking real money."
And then there are all the multiples of
billions for those pesky state and MBTA pension
liabilities. Guess who will be on the hook to keep
that promise, taxpayer. Funny how those
promises work, isn't it: heads they win, tails you
lose.
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Chip Ford
Executive Director |
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State House News
Service
Tuesday, February 26, 2019
Lawmakers schooled at state budget, revenue
"teach-in"
By Michael P. Norton
Ahead of this spring's state budget debate, a
non-profit research group that views the state
tax code as regressive outlined policy options
under which the wealthy would pay more in taxes
and lower-income residents could receive tax
relief.
Lawmakers this year are trying to find consensus
for major, multi-year increases in education
spending, an attempt to face up to the
realization that funding has fallen more than $2
billion short of actual increases in costs,
especially in areas like special education and
health insurance.
The work is occurring when "pretty much everyone
understands" that tax revenue growth is slowing
down and a recession is likely in the next few
years, Kurt Wise, senior policy analyst at the
Massachusetts Budget and Policy Center, told
lawmakers and staff at a "teach-in" on state
budget and revenue issues.
Republican Gov. Charlie Baker's budget features
$800 million in new revenues, Wise said,
including $550 million in recurring revenues
derived from new measures, such as new taxes on
opioids, real estate transfers, vaping and
e-cigarettes. However, Wise said that $490
million in revenue is set to come off the books
soon due to a scheduled income tax rate cut, the
phaseout of a business health care assessment,
and an increase in the earned income tax credit.
"The governor's opened the conversation around
revenue," Wise said.
Phineas Baxendall, senior policy analyst at
MassBudget, said the organization has fielded "a
lot" of information requests from lawmakers who
hope to move state tax policy in a more
progressive direction. The top 1 percent of
income earners in Massachusetts pay 6.8 percent
of their income in state and local taxes,
Baxendall said, while the bottom 20 percent of
earners pay 10 percent of their income in state
and local taxes.
Baxendall said lawmakers could consider
progressive-minded changes in tax exemptions and
deductions, increasing taxes on dividends,
interest and capital gains, changes in the laws
that govern taxes on inherited assets, a surtax
on sales of the most expensive homes, altering
business tax rates, and revisiting about $1
billion in business tax breaks - for
manufucturing, the film industry or the mutual
fund industry, for instance - that may not be
leading to desired job production.
Another idea that Baxendall mentioned was a
surtax on excess CEO pay. It's a measure that he
said is being implemented this year in Portland,
Oregon.
Organized by Sen. Jo Comerford and Rep. Tami
Gouveia, Tuesday's briefing drew several other
lawmakers, including Reps. Denise Provost and
Tricia Farley-Bouvier and Sens. Jamie Eldridge
and Becca Rausch.
Colin Jones, a senior policy analyst at
MassBudget, broke down the way K-12 public
education is funded in Massachusetts, pointing
out that the ability of cities and towns to make
local contributions to their schools varies
widely from community to community, with
supplemental state aid playing a major role.
The state this fiscal year increased Chapter 70
state education aid by $161 million, and the
increase in fiscal 2020 could range from $185
million, as Gov. Baker has proposed, to as much
as $317 million under a MassBudget model, Jones
said.
"Clearly it depends on how the Legislature puts
it together," Jones said.
Comerford said she and Gouveia share a
background in data analysis, and they want
Beacon Hill to be mindful of the data available
at MassBudget. "We wanted to make sure the
offices in the building saw the rich opportunity
in their numbers and analysis," Comerford said.
Comerford and Rep. Liz Malia are sponsoring a
bill calling for a "luxury real estate transfer
tax," and the senator said she supports a surtax
on incomes above $1 million, as is proposed in a
constitutional amendment sponsored by Sen. Jason
Lewis.
"There are lots of conversations we should be
having," Comerford said. "I believe that taxes
are an investment in our Commonwealth. And if we
don't allow enough investment then we're faced
with really difficult choices and more of an
austerity framework than I think is ultimately
useful for us."
Now that Baker has made his openness to new
taxes clear, the next round of big tax and
spending decisions rests with Rep. Aaron
Michlewitz, the new chair of the House Ways and
Means Committee.
That panel, with its Senate counterparts, plans
to kick off fiscal 2020 budget hearings on
Monday, March 4.
Like Sen. Michael Rodrigues, who was appointed
chair of the Senate Ways and Means Committee,
Michlewitz did not say when he was appointed
earlier this month whether he supported or
opposed new taxes to create further revenues.
"We're going to have to take a look at
everything and that's going to come with time,"
Michlewitz said. "We have the next ten weeks
here to go through the budget process and I
think we're going to make sure we're taking a
look at all options on the table."
State House News
Service
Tuesday, February 26, 2019
Income surtax supporters bullish about new
approach
By Katie Lannan
As lawmakers and advocates try again to impose a
surtax on incomes over $1 million, they're
confident a new attempt can survive a potential
legal challenge and meet constitutional
requirements.
The Supreme Judicial Court in June 2018 derailed
a proposal to amend the state Constitution to
assess a higher tax rate on people with the
largest annual incomes, erasing what had been
eyed by Democrats on Beacon Hill as a new
revenue stream to fund education and
transportation projects.
The high court ruled that the ballot question,
which had been on track to go before voters in
November, unconstitutionally mixed the two
different spending priorities and a major change
in tax policy.
"Regrettably, when we got to the finish line, we
ran into a bump here and there and it was
determined that our previous Fair Share
Amendment didn't meet constitutional muster, but
that is not going to happen this time," Rep.
James O'Day said at a State House briefing
Tuesday on a new version of the tax proposal.
"We're happy to have folks with us today that
are going to put your mind at ease on that."
O'Day and Sen. Jason Lewis refiled the surtax (S
16, HD 3300) -- known as the millionaires tax or
the Fair Share Amendment -- this year as a
legislative amendment instead of the citizen's
amendment version that was scuttled last year.
Unlike citizen's amendments, legislative
amendments are not required to contain only
related or mutually dependent subjects, attorney
Patrick Moore said.
Moore, a partner at the Boston firm Hemenway &
Barnes who formerly served as deputy counsel to
Gov. Deval Patrick and clerked for Supreme
Judicial Court Justice Robert Cordy, said the
Legislature's authority to amend the
Constitution is "incredibly broad." A
legislative amendment is still required to align
with provisions the U.S. Constitution, which he
said would be an "easy question" when it comes
to the surtax.
"In this circumstance, the answer is yes," Moore
said. "That's not to say there will not be a
legal challenge. A lot of people will have a lot
at stake here, but the legal challenge will be a
lot different in nature, will have no precedent
on its side and is overwhelmingly likely to
fail."
Either pathway to amending the constitution
takes years, but the process is slightly
different.
A citizen's amendment starts with petitions
signed by thousands of Massachusetts voters and
then must receive the support of 25 percent of
the Legislature in two consecutive sessions
before it can appear on the ballot, where voters
can approve or reject it.
Amendments introduced by lawmakers need "a
majority of all the members elected" - 101 votes
in the 200-seat Legislature - in two consecutive
sessions, before advancing to the ballot.
In 2016 the surtax ballot proposal, in the form
of a citizen's petition, cleared the Legislature
on a 135-57 vote, and the next year it passed
134-55. Lewis noted both of those votes
represented nearly 70 percent support, and said
there "really is no difference" in the substance
of this year's proposal.
Lewis, recently named the Senate chairman of the
Education Committee, said Massachusetts has
"tremendous needs" the surtax could help
address.
"We need to adequately fund our public schools.
We need to make more affordable early education
available to families," he said. "We need to
make sure that our students can go to public
colleges and universities and not be burdened
with a lifetime of debt, and we need to have a
transportation system, particularly public
transportation, that works for all of our
families and our businesses throughout the
state. That is pretty much undeniable. I think
everybody agrees with that. The challenge is how
do we pay for it, and I believe it's not fair to
put that burden on the backs of our middle
income families."
Opponents to the surtax have argued that it
could lead to an exodus of wealth from the
state, along with tax revenues associated with
higher-income households.
The Massachusetts High Technology Council, one
of the groups that sued over the proposal in
2017, said the new attempt is "bad public
policy" regardless of whether it is
"permissible" constitutionally.
"Any shift in state policy that weakens the
private sector performance, or any weakness in
the economy in general as a result of a national
recession, will create significant state budget
challenges in Massachusetts," the council said
in a statement when O'Day and Lewis filed their
legislation last month.
Like the original version, the amendment
proposed by O'Day and Lewis would dedicate money
generated from the tax to education and
transportation. It is again backed by Raise Up
Massachusetts, the coalition of more than 100
labor, community and faith-based groups that has
successfully worked to secure minimum wage
increases, a new paid family and medical leave
program and guaranteed earned sick time.
Massachusetts Voter Table director Beth Huang,
who is on the Raise Up steering committee, said
the coalition "resoundingly selected the Fair
Share Amendment as our priority for the next
four years."
State House News
Service
Tuesday, February 26, 2019
House plans to roll out spending bill Wednesday
By Matt Murphy
The House Ways and Means Committee is voting on
a substantial budget bill Tuesday night that
House leaders will bring to the floor on
Wednesday for the first major vote in that
branch since it passed rules in late January.
New Ways and Means Chairman Aaron Michlewitz
released his version of Gov. Charlie Baker's
$165 million spending bill early Tuesday
evening, giving members of the committee until
10 a.m. on Wednesday to vote on the 23-page
proposal. The House plans to come into session
at 11 a.m. on Wednesday, but roll calls are not
planned until after 1 p.m.
While the bottom line on spending in the House
Ways and Means version of the bill was not
immediately available, Michlewitz did propose
$30 million to offset federal reductions in
low-income home heating assistance, up from the
$11 million requested by Baker.
The Ways and Means bill also includes $8 million
for the collection and testing of sexual assault
evidence kits, which is less than half of what
Baker sought, and a variety of outside policy
sections.
Several freshman members took to Twitter on
Tuesday afternoon indicating that they had been
told the House would take up a version of Gov.
Charlie Baker's $165 million supplemental
budget, a piece of legislation (H 74) filed by
the governor last month that also includes a
slew of outside policy sections.
Reps. Lindsay Sabadosa and Tami Gouveia both
Tweeted that they had been notified to be
prepared to consider a report from the House
Ways and Means Committee on the governor's
budget bill on Wednesday when a formal session
has been scheduled.
Speaker Robert DeLeo's office subsequently
shared with the News Service the scheduling
email informing members to be prepared to
consider the governor's supplemental budget (H
74), and a spokesman for the Ways and Means
Committee said at 4:30 p.m. that members would
soon be polled on the committee's version of the
spending bill.
"Luckily I read & synthesize info quickly bc I
have a very full calendar this evening and
tomorrow morning. Budgets are important &
deserve enough attention by all Reps bc they
determine how the state will spend #taxpayer $$.
I wish I had more time for thorough review,"
Gouveia (D-Acton) wrote on Twitter.
While it's unclear how different a House bill
would look from what Baker filed, the governor
requested $54 million for collective bargaining
costs, $32.9 million to help cover
"unanticipated" medical costs at the Department
of Correction and $11 million to offset federal
reductions in low-income home heating
assistance.
The bill also includes $16.5 million for past
costs associated with the development of the
health insurance exchange website, $16 million
for the collection and testing of sexual assault
evidence kits and $10 million for emergency
family shelters.
In his filing letter, Baker, who is monitoring
tax collections that have softened in recent
months, said sufficient revenues are estimated
to be available to cover the additional spending
in the bill, which would cost the state a net of
$150.8 million.
The bill also included 65 outside sections,
including changes to the recently signed
short-term rental regulations, the Paid Family
and Medical Leave Act and a law banning the
unlicensed possession of a stun gun.
One proposal was to add New Year's Day, Veterans
Day and Columbus Day to the list of holidays for
which time-and-a-half pay will be phased out as
part of last year's "Grand Bargain" law, which
stakeholders on both sides of the debate said
was intended to be a part of the original
compromise but was somehow left out of the bill.
State House News
Service
Wednesday, February 27, 2019
House approves $135 Mil in new spending
By Colin A. Young
The House of Representatives passed its first
significant bill of the young legislative
session Wednesday, unanimously endorsing a bill
that adds $135 million in mid-year spending at a
time when tax collections are trailing behind
projections.
The bill (H 3505), intended to funnel money in
the current fiscal year to state accounts that
either have run out of cash or will soon run
dry, began with a proposal Gov. Charlie Baker
filed late in January but House leaders shaved
about $30 million from the bill before bringing
it to a vote Wednesday.
"The proposal is fairly limited, reflecting a
total cost of $134.9 million with a net cost of
$124 million to the commonwealth. This is
significantly under the governor's original
proposal that called for $165 million in
spending," House Ways and Means Chairman Aaron
Michlewitz said.
Through February, state tax collections were
running $400 million below benchmarks, which
House Speaker Robert DeLeo said Wednesday was a
factor in the House's decision to trim spending
from the governor's proposal. Michlewitz echoed
that on the House floor.
"The commonwealth's economy remains strong but
we need to keep a vigilant eye on revenues as we
head into the upcoming fiscal year in July," he
said. Michlewitz added that the bill "would
spend significantly less than the governor had
filed earlier ... and we want to be limited in
scope to focus on our immediate needs."
The supplemental budget bill came to the House
floor at about 2 p.m. Wednesday and Michlewitz
was the only representative to speak in favor or
in opposition on the floor. Members filed 18
amendments to the bill by the 1 p.m. deadline,
but 16 of them were withdrawn before they could
be considered. There was no debate on the two
amendments the House did consider and the bill
passed on a 154-0 roll call vote at about 3:40
p.m.
Introducing the bill in the House Chamber on
Wednesday afternoon, Michlewitz told members the
supplemental budget bill would fund "a number of
critical programs that are in need of immediate
additional funding" and said the accounts that
need to be funded are one representatives are
familiar with.
The bill includes $30 million in funding for the
low-income heating energy assistance program,
which Michlewitz called "a critical program that
has seen declining support from the federal
government over the last year due to regulation
changes."
The chairman said the $30 million allocation
represented "full funding" and said it "should
ensure that no families in the commonwealth will
be forced to put off paying their heating
bills."
It also includes about $10 million for emergency
shelter assistance for families and $8 million
for the collection and testing of sexual assault
evidence kits, which is less than half of what
Baker sought for the same purpose. Michlewitz
said the $8 million will allow the state to
"begin to address the backlog of assault kit
tests and continue the progress we made last
session with criminal justice reform."
The House bill did not include $5 million
requested by Baker for a regional fentanyl
interdiction program, meant to address the
synthetic substance that has been a significant
driver in the state's opioid overdose epidemic.
Michlewitz said earlier Wednesday that the
House's exclusion of the regional fentanyl
interdiction funding was "not an indictment of
that program" and said the House had to
prioritize accounts that were in danger of
running out of cash.
"Some programs are running out of money as early
as April," the chairman said after a Democratic
caucus.
The House rejected an amendment proposed by
Minority Leader Brad Jones to put the fentanyl
abuse prevention grants back into the bill. The
Jones amendment was rejected without any
discussion and a Rep. William Galvin amendment
related to legislative caucuses was adopted
without any discussion -- both within about one
minute.
The bill includes almost $1.5 million for "the
costs associated with an independent statewide
examination of the safety of gas distribution
infrastructure" with a caveat that the state
will levy assessments on the gas distribution
companies "at a rate sufficient to produce the
amount expended from this item."
In the wake of the natural gas disaster in the
Merrimack Valley, Baker's administration
contracted with Canadian company Dynamic Risk
Assessment Systems Inc. to examine and make
recommendations about "the physical integrity
and safety of the natural gas distribution
system and the operation and maintenance
policies and practices of all natural gas
distribution companies operating within the
Commonwealth."
When it announced the outside analysis, the
Department of Public Utilities said it would
direct all natural gas distribution companies in
the state to fund the evaluation.
The House bill also contains some, but not all,
of the policy changes sought by the governor,
including "technical changes" to the short-term
rental tax and regulation law to address the
definition of rent and the way properties are
registered in an online database.
The Senate must now pass its own version of a
fiscal 2019 supplemental budget and reconcile it
with the House's version before the governor can
sign it into law.
State House News
Service
Tuesday, February 26, 2019
Guv finds common interests on trade, climate,
opioids
By Katie Lannan
From record snowfall and drought to tornadoes,
storm surges and flooding, Massachusetts has
seen an assortment of extreme weather in recent
years, giving Gov. Charlie Baker plenty to talk
about as he participated in a climate resilience
discussion this weekend at the National
Governors Association winter meeting.
"The governor of Hawaii made it look like we've
been at the beach for the last four years,"
Baker said Tuesday, a day after he returned from
the gathering in Washington, D.C. "And the
governor of Louisiana, same thing."
Speaking at a Greater Boston Chamber of Commerce
breakfast at the Westin Copley Place, Baker said
hearing officials from across the country
discuss major storms they've experienced made
lessons about the frequency and intensity of
climate change "pretty clear at this point."
Baker, who has proposed increasing the real
estate transfer excise tax to help
municipalities fund projects intended to
mitigate the effects of climate change, told the
crowd he expected to be "spending a fair amount
of time" on climate issues this legislative
session. House Speaker Robert DeLeo on Friday
proposed his own climate initiative, a ten-year
$1 billion grant program that would be funded by
borrowing.
With many states dealing with similar issues in
areas including climate change, addiction, and
trade, Baker said he encountered an "enormous
commonality" among the governors during his trip
to Washington.
Ratification of a new trade deal with Mexico and
Canada is "incredibly important" to many states
and their businesses, Baker said. He told
attendees they're likely to see governors "spend
a fair amount of time over the course of the
next few months trying to nudge that process
forward."
Baker said it's important to have the agreement
ratified before Canada's election this fall.
Addressing the governors Monday morning in the
State Dining Room, President Donald Trump said
he thinks the deal "probably will be approved,"
according to a White House transcript of his
remarks.
Trump said the trade agreement was "very, very
comprehensive" and would "help our dairy farmers
in Wisconsin; our wine makers in Oregon and
Washington and California; our autoworkers in
Michigan and Ohio and Pennsylvania and all over;
and dozens of other states, and ranchers and
farmers and growers and manufacturers from coast
to coast."
Forty-eight governors and 1,911 attendees
gathered in Washington for the meeting,
including 35 governors' spouses and 174 staff
members, according to the NGA. The governors
spent time with Trump, Vice President Mike
Pence, and officials from Canada, Japan, Mexico,
Vietnam, the United Kingdom, Egypt, and
Australia.
At the White House Monday, Baker attended three
sessions with Trump administration officials,
according to the a White House spokesman. He
joined 35 other governors for a plenary session
on workforce development with National Economic
Council director Larry Kudlow, Council of
Economic Advisers Chairman Kevin Hassett, and
Ivanka Trump, the president's daughter and
advisor, and also participated in breakout
sessions on the opioid crisis and improving
health care and drug pricing.
Baker on Tuesday said fighting the opioid
epidemic remains "top of mind" for all the
governors he talked to during the meeting.
State House News
Service
Wednesday, February 27, 2019
Massachusetts No. 44 in new fiscal stability
index
By Michael P. Norton
Despite its economic strengths, Massachusetts
ranks near the bottom in a new fiscal stability
index that sizes up the states, its position
pulled down by "heavy" government health care,
borrowing and employee pension costs.
The Massachusetts High Technology Council
unveiled its index Tuesday, adding it to its
competitiveness dashboard, known as the
Massachusetts Technology, Talent and Economic
Reporting System (MATTERS).
Massachusetts ranked ninth among the states for
its gross state product, but 44th in the fiscal
stability rankings. Wyoming ranked first.
"There is no better time to focus on long-term
financial goals and strategies than when the
economy is relatively strong," council chairman
Aron Ain said. "Solutions do not lie in broad
taxation schemes, arbitrary cutbacks, or
incremental policy change. But in thoughtful
strategic collaborations that harnesses the
innovative economy."
The showing in the fiscal stability index is
offset by No. 1 rankings for Massachusetts in
talent and quality of life, according to the
MATTERS index. Massachusetts ranks No. 33 in the
tax index and 47 in cost of doing business. An
unrelated reported recently knocked the Boston
area for its traffic congestion.
The negatives cited in the fiscal stability
index are some of the same issues long flagged
by Wall Street credit rating agencies, which
have also regularly cited the strong economic
core in Massachusetts, a traditionally high
income state where borrowing costs are
concentrated in state government rather than
counties.
The Boston Globe
Monday, February 25, 2019
Struggling MBTA pension fund took $150 million
hit in 2018
By Matt Stout
The MBTA pension fund’s financial outlook
tumbled even further in 2018, when the troubled
$1.5 billion system took in less than half of
the $275 million it ultimately paid out or lost
on investments, according to new data to be
released Monday.
Long under pressure to turn over its investments
to the state, the MBTA Retirement Fund lost
$50.1 million in the financial markets last year
— its first negative return in the last eight
years, according to information the privately
run fund provided to the transit agency.
The loss, plus another $224.4 million it paid
out to retirees and beneficiaries, meant that
$151 million flowed out of the fund above what
it actually brought in during 2018. The fund
reported getting $123 million in combined
contributions from employees and the T last
year.
The losses, which T officials are expected to
detail at a Fiscal & Management Control Board
meeting on Monday, add to what officials have
described as a worsening financial picture in
the system.
Its unfunded liability jumped to nearly $1.4
billion by year’s end — a roughly 12 percent
increase from the year before and a 75 percent
hike from a decade ago. And the T is expecting
its rider- and taxpayer-funded share of costs to
account for 24 percent of its payroll next
fiscal year, the fourth increase in as many
years, according to the transit agency.
Fund officials, in previously disclosing a
negative-2.9 percent return on investments, have
said the system, like others, was not immune to
a volatile market. The state’s $69 billion fund
— which includes state employees and teachers
along with local retirement systems — reported a
negative-1.8 gross return in 2018, which
included a $4.5 billion hit in the fourth
quarter alone.
But the figures are likely to add to the already
intense scrutiny of the MBTA Retirement Fund.
The transit agency and its largest union for
months have been quietly renegotiating the
agreement governing what the T contributes to
the system, the Globe has reported.
Those contributions have been a regular focus in
recent months. Over the last decade, the amount
the agency has funneled into the fund has
ballooned, from $30 million in fiscal year 2007
to $103 million this year. MBTA officials warned
in November that those costs could grow to $137
million within three years, depending on how the
fund performs.
In 2017, the Legislature passed a measure pushed
by Governor Charlie Baker that allows — but does
not mandate — the state’s Pension Reserves
Investment Management Board and the state’s $69
billion pension fund to manage investments of
the MBTA Retirement Fund. It was a move intended
to help right a system Baker once criticized as
being in “freefall.”
But there’s been little movement since. A
spokesman for the state fund had said there’s
been no discussions in a year, and the T and the
fund itself disagree over whether other
agreements need to be amended even before any
investments are shifted to the state.
State House News
Service
Monday, February 25, 2019
MBTA pension problems pose risks seen for
riders, retirees
By Chris Lisinski
After the MBTA pension fund posted losses in
2018, officials warned Monday that the burden of
covering retirement for thousands of T employees
remains "a really crucial issue."
The fund has been the subject of scrutiny for
years as the MBTA grapples with budget concerns.
New figures, discussed at the authority's board
meeting, did not alleviate the pressure: the
fund paid out $100 million more to retirees last
year than it collected in contributions from
current employees, and it lost $50 million in
the financial markets. After a return of more
than 15 percent in 2017, the fund fell 2.9
percent in 2018.
Pension payouts are contributing to budget
struggles at the MBTA, which after years of
deficits has prioritized keeping expenses
growing in line with revenues.
"This is a really crucial issue facing the MBTA,"
General Manager Steve Poftak said at the
meeting. "As we'll detail next week when we take
a look at the operating budget, the pension
payment out of the operating budget has gone up
from 16 percent to 24 percent (since 2015). That
is an unsustainable trajectory."
The poor performance in 2018 was the first time
since at least 2011 the T's retirement fund had
a negative investment return, though the target
rate of 7.5 percent has only been reached in
three of those eight years.
In the last decade, total liabilities increased
by about a third, and many plans remain
underfunded, according to MBTA CFO Paul Brandley.
The federal Pension Protection Act does not
cover the MBTA, but Brandley said if it did,
trustees would likely be required to enact a
rehabilitation plan to navigate out of "critical
status" within the next 10 years.
Both employees and the MBTA itself are
contributing more to the fund than ever before,
according to the figures discussed at Monday's
Fiscal and Management Control Board meeting.
Employees contributed 4 percent of their salary
in fiscal year 2008, while the agency paid 9
percent of salary. In fiscal year 2019,
employees contributed 8 percent and the MBTA 23
percent.
"This pension contribution is making it
increasingly difficult for us to keep that ratio
of revenue growth to expense growth intact,"
Brandley said.
Frequent retirements create financial
liabilities for the agency. Since 2010, more
former employees have drawn pension funds from
the MBTA than current employees have
contributed. In 2017, an agency report found the
fund would need $3 billion to support all
liabilities through 2035.
Officials warned that if the system is not
stabilized, it could create problems for both
employees and for public transit riders as a
whole.
"It eventually deteriorates the amount of
service we can put out to the public, so it has
those dire consequences," said FMCB Chair Joseph
Aiello, who urged the board to "accelerate" its
search for a solution. "I wouldn't want to be
halfway into earning a pension when the numbers
look like this. We're putting employees who come
in every day, doing what they're supposed to do,
providing results, at risk that their pension
isn't going to be there."
Not all parties shared those concerns, though.
Jimmy O'Brien, president of the Boston Carmen's
Union Local 589 that represents about 4,100 MBTA
employees, said in a statement that "claims by
the MBTA that the fund is in crisis are simply
not true."
O'Brien called the MBTA's concerns "a public
scare tactic" and suggested that under current
models, the fund will be fully supported by
2039.
"The truth is that the MBTA enticed employees
into retirement in order to balance the budget
and claim a public victory, now they act shocked
that those same employees are collecting
pensions," O'Brien said.
The Boston Globe
Monday, February 25, 2019
A Boston Globe editorial
MBTA pension system operates like a Ponzi scheme
Even as MBTA riders face a proposed 6.3 percent
fare hike, totalling an estimated $32 million,
the transit system is already committed to
sinking $103 million into the black hole that is
the T’s pension system. That can’t go on
forever, and on Monday T officials are expected
to once again take a look at the budget
implications of the increasingly problematic
program.
The privately run pension fund — a source of
controversy for years because of its lack of
transparency and its overly generous benefits —
clearly cries out for reform. T officials have
told the Globe that they have been attempting to
renegotiate the pension agreement, beginning
with the T’s largest union, Carmen’s Union Local
589. Surely union bosses are aware by now that
the fund is on an unsustainable path.
The numbers alone are sobering. In 2017 the fund
paid out $209 million in benefits to 6,800
retirees or their beneficiaries, while only
5,300 current employees paid into the fund. Over
the previous decade, $1.7 billion was paid out,
and $740 million paid into the fund.
In the private sector, that would be considered
a Ponzi scheme.
By the end of 2019, the estimated unfunded
liability — the difference between what retirees
are owed and what is actually in the fund — is
expected to reach $1.5 billion. Meanwhile the
fund itself, its investment strategy shrouded in
mystery, has been underperforming that of the
state’s $70 billion Pension Reserves Investment
Management Board, which covers pensions for
nearly all other state workers and public school
teachers.
That leaves riders and taxpayers to cover the
gap. In 2007 the shortfall the T was forced to
cover was $30 million. Today it stands at $103
million, and it could hit $137 million within
three years, T officials warn.
Thus far, attempts at reform have merely
tinkered at the edges. Where once T employees
could retire after 23 years of service — and
many still can, having been grandfathered in —
those hired after 2012 can retire at age 55,
after 25 years of service. However, other state
employees and teachers aren’t eligible until age
60 (with 25 years on the job). The teachers get
less than 40 percent of their ending salaries; T
workers retire at some 60 percent of their
ending salary.
All of that, plus the T’s growing interest on
construction-related debt, makes up what the
MBTA calls its “structural deficit.” But it’s
only “structural” because no one has had the
guts to tackle it head on — well, perhaps until
now.
The Carmen’s Union — whose president sits on the
T pension fund board — has pretty much had
things all its way, even as the pension fund
rests on ever shakier ground and its members and
retirees are put at ever greater risk. But the
taxpayer-funded gravy train can’t roll on
forever. In 2017 the Legislature approved a bill
proposed by Governor Charlie Baker that allowed
— but did not mandate — the merger of the T
pension system into the larger state system ably
managed by the PRIM Board. That hasn’t happened
— and it must.
The T’s Fiscal Management and Control Board is
expecting another update on the ongoing bad
pension news Monday. Saving the T pension
system, saving benefits to future retirees, and
saving hard-pressed riders from fare increases
will depend on T officials and union officials
getting serious about change.
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