State House News Service
Tuesday, April 14, 2020
Institute: Tax Collections to Plummet 20 Percent
BHI: Jobless Rate in Mass Will Approach 15 Percent
By Michael P. Norton
State tax collections in 2020 will plunge 20 percent and
unemployment in Massachusetts will soar to 14.7 percent,
according to one of the experts scheduled to testify Tuesday
before state budget officials about the economic havoc being
caused by the COVID-19 pandemic.
U.S. gross domestic product this year will decline by 7.4
percent, according to the Beacon Hill Institute for Public
Policy Research, which estimates that the state's gross
state product will roughly mirror that fall, with a
projected decline of 7.2 percent.
The institute based its U.S. GDP estimate on the average of
the estimates from Bank of America, Morgan Stanley and
Goldman Sachs.
"Massachusetts state tax revenues are set to face a
significant strain as most revenue streams will fall
significantly," according to the institute, which is led by
its president David Tuerck.
By comparison, tax revenues fell nearly 15 percent in fiscal
2002, the institute said, and nearly 13 percent in fiscal
2009 due to the Great Recession, when U.S. gross domestic
product sunk by 3.9 percent.
Tuerck and other economists and fiscal analysts are set to
testify remotely Tuesday at a virtual hearing called by
state budget officials who are preparing to alter the course
of spending to reflect the many new realities brought on by
the pandemic.
The novel coronavirus has forced an unprecedented shutdown
of economic activity, and while public officials are
beginning to plan for the reopening of parts of the economy,
many parts of the nation remain in the clutches of the virus
and no one can say for sure when the economy will rebound or
how strongly.
In his testimony, Tuerck said the $2 trillion federal
stimulus package is "a step in the right direction in
staving off incoming liquidity issues facing businesses
large and small," but cautioned that the economy "cannot
functionally restart until the COVID-19 virus is properly
contained."
"Elsewhere in the economy, the residential and commercial
real estate market will be burdened moving forward,"
according to the institute's testimony, a copy of which was
obtained by the News Service. "Businesses that have been
forced to close and people who have lost their jobs will be
unable to pay their rent or mortgages, which could in turn
lead to a collapse in the real estate market."
The virus hit Massachusetts about three quarters of the way
through fiscal 2020, a year in which tax collections have
largely been rolling in as expected. A steep falloff in
collections over the final three months of fiscal 2020 will
likely force Gov. Charlie Baker to make budget corrections
or tap into the state's reserves.
Baker in January filed a $44.6 billion fiscal 2021 budget
that called for significant investments in K-12 education
and transportation. His spending plan was based on an
agreement with top lawmakers that fiscal 2021 tax revenues
would grow 2.8 percent to $31.15 billion. That number is now
expected to be marked down.
With schools closed, public transit lines experiencing a 90
percent reduction in ridership and predictions of historic
drops in tax receipts, the path forward is uncharted and the
next moves are up to Ways and Means Chairs Rep. Aaron
Michlewitz of Boston and Sen. Michael Rodrigues of Westport.
Apart from a wrenching series of spending decisions,
legislative leaders also need to come up with a new process
for approving an annual budget since they are currently
unable to gather at the largely closed State House for
traditional deliberations due to social distancing
guidelines.
Beacon Hill officials plan to "huddle" sometime after
Tuesday's hearing to figure out how to craft the state
budget, according to Senate President Karen Spilka. Like her
House counterpart, Speaker Robert DeLeo, Spilka served as
Ways and Means Committee chair earlier in her career.
"I think we'll then huddle -- the House, the Senate and the
administration -- with an eye as to a process and a
procedure that will help us move forward," Spilka told the
News Service Monday afternoon.
Michlewitz previously said last month that regular
conversations were ongoing between the branches and the
administration about options for how to proceed with
budgeting for fiscal 2021.
State House News Service
Tuesday, April 14, 2020
Crisis Puts Pressure on Treasury to Maintain Cash Flow
Lottery's All-Cash Model Exposed by Pandemic
Colin A. Young
Not only will Massachusetts' rainy day fund of roughly $3.5
billion give state budget managers a pool of money to tap
into if needed, but it will also make the state stand out
among its peers in what is expected to be a competitive bond
market, Treasurer Deborah Goldberg said.
State officials made a priority out of growing the fund
during the long economic recovery and after being chided in
2017 by S&P Global Ratings, which lowered the state's bond
rating in part because the state had been drawing from its
reserves, rather than building them up, during the economic
expansion.
"The problem for the majority of the other states is they
are not in as good of a situation as we are, they don't have
the resources that, fortunately, we put away in the last
couple of years and all I can do is say is thank God we
did," Goldberg said Tuesday morning at the roundtable held
by the Joint Ways and Means Committee and Baker
administration officials.
Goldberg was the first person to testify at the hearing
Tuesday, which was intended to give fiscal managers a sense
of how they might need to deal with pandemic impacts in the
current fiscal year and what they might face as they attempt
to craft a budget for fiscal year 2021. She touched upon
big-picture financial conditions and revenue projections for
the agencies she oversees, like the Massachusetts Lottery.
Not only does Massachusetts have its highest stabilization
fund balance since fiscal year 2008 to draw from, the
treasurer said, but the fund's balance will help the state
if it opts to participate in the Municipal Liquidity
Facility announced last week by the Federal Reserve Bank.
Goldberg said the Fed's program will try to help state and
local governments better manage cash flow pressures during
the pandemic by purchasing up to $500 billion of short-term
notes directly from states.
"The stability of a state will make their issuance of bonds
all the more attractive when both the Fed and others are
looking at whether or not they will purchase the bonds or
backstop the bonds, and so our rainy day fund is one of the
reasons that we will look attractive in a very competitive
market," Goldberg said.
The treasurer said her office is watching for further
guidance on the facility and is "about to create an ad hoc
committee in order to work with the feds."
Goldberg also gave an update Tuesday on the state's $70-plus
billion pension fund, which is of great importance to
retired or active state employees and municipal teachers.
"I want to assure stakeholders that PRIM is fully
operational and well-positioned to navigate these volatile
markets. I also want to make clear that the fund is not
facing any liquidity stress as a result of the recent market
volatility," she said. "The PRIM investment portfolio is a
carefully constructed, broadly diversified one that we have
designed to perform well over the long-term. The current
asset allocation reflects an investment philosophy that has
consistently performed strongly in both up and down
markets."
Goldberg said PRIM "systematically de-risked" its portfolio
over the last decade to prepare for a downturn. She said the
fund reduced its global equity allocation from a midpoint of
50 percent to 39 percent over the last five years and has
put risk mitigation strategies in place.
"We are much better prepared in 2020 to withstand this
market than during the last market crisis in 2008-2009,"
Goldberg said.
At the Lottery, which is a major source of the local aid
funding that lawmakers and municipal leaders rely on, the
pandemic has meant that more than 1,800 of its 7,500
retailers are closed and some that remain open have stopped
conducting Lottery sales because they are short staffed.
"Sales of all Lottery products are down significantly across
the board. Total sales last week were down almost 33 percent
from sales for the same week last year. So far in the month
of April, sales of Keno, one of our best performing
products, have dropped by over 53 percent when compared to
April of last year. Similarly, instant ticket sales for the
month of April are down by almost 29 percent compared to
this time in April last year," she said.
Those declines have "dramatically exposed the limitations
and vulnerabilities of the Lottery's all-cash, in-person
business model," Goldberg said.
In New Hampshire, the number of first-time online lottery
players increased by 38 percent from February to March while
online lottery revenue rose by 10 percent. First-time
players in Michigan were up 123 percent and online lottery
revenue was up 21 percent, she said. Pennsylvania saw its
online lottery sales go up by almost 20 percent over the
previous five-week average and the number of first-time
players climbed by almost 167 percent over the previous
five-week average, Goldberg said.
"The ability to process cashless payments and to sell our
products online would have undoubtedly helped to mitigate
our losses," the treasurer said, echoing a call she has
repeated to the Legislature for years. She added, "As both
state and lottery revenues trend downward across the
country, we expect the number of lotteries with online
offerings to increase ... I would encourage the Legislature
to carefully consider statutory changes that will allow the
Lottery to modernize so it is better positioned to weather
future crises, as they will inevitably occur."
Another revenue-generating Treasury agency, the Alcoholic
Beverages Control Commission, has been dealing with
something "like nothing ever seen before" since the
governor's essential work order shut down all restaurants
and bars for on-premises consumption of food and alcohol.
While the ABCC is still on track to generate its expected
$5.15 million in revenue for fiscal 2020, Goldberg said the
picture for fiscal 2021 is not nearly as pretty.
"While too early to predict accurately, local industry
experts estimate that we may see upwards of 20 to 25 percent
of retail licensees and 10 to 15 percent of state licensees
not renew. Such a precipitous drop would result in a
reduction of revenue of 10 to 20 percent for fiscal year
2021," she said.
She said the ABCC took immediate administrative action after
the governor's order took effect to extend the usual 60-day
period in which bars and restaurants have to pay their
invoices to creditors by an extra 30 days and was quick to
issue guidance when the Legislature passed a law allowing
bars and restaurants to sell beer and wine with delivery or
take-out orders.
"We stand ready to work with you to find innovative ways to
revive these local and statewide economic engines," she told
state lawmakers Tuesday.
Goldberg said her office's Cash Management Department has
been "working around the clock, literally" to make sure the
state can pay for its needs, especially when it comes to
purchases of the critical personal protective gear that
states have been scrambling to buy.
"Payments that would normally take days are happening in a
matter of hours. You have all heard about the demand of
N95s, medical gowns and equipment. The suppliers want their
money quickly or they will move on to someone else. Working
with the Operational Services Division and state
comptroller's office along with our bank, Peoples United,
cash management has been able to directly wire transfer the
money into accounts after confirming banking information.
Over the last three weeks, that has resulted in over $190
million of transfers."
State House News Service
Tuesday, April 14, 2020
Virus Leaves Economists Uncertain About Its Final Toll
Recession Certain, Recovery Timing Seen as Critical
By Colin A. Young, Chris Lisinski and Katie Lannan
As Massachusetts budget managers gathered Tuesday morning to
begin to figure out how the coronavirus pandemic will affect
the state budget picture, the International Monetary Fund
published a report that made clear that the virus has
created a global financial crisis that is expected to do
more harm than the 2008 recession.
"It is very likely that this year the global economy will
experience its worst recession since the Great Depression,
surpassing that seen during the global financial crisis a
decade ago. The Great Lockdown, as one might call it, is
projected to shrink global growth dramatically," the IMF
wrote in its latest world economic outlook. "A partial
recovery is projected for 2021, with above trend growth
rates, but the level of GDP will remain below the pre-virus
trend, with considerable uncertainty about the strength of
the rebound. Much worse growth outcomes are possible and
maybe even likely."
The IMF projects that the global economy will "contract
sharply" by -3 percent in 2020, which the organization said
would be "much worse than during the 2008–09 financial
crisis." For the United States' economy specifically, the
IMF's outlook projects a contraction of -5.9 percent in
2020.
But the IMF report also looks ahead to 2021 and projects
global economic growth of 5.8 percent and U.S. economic
growth of 4.7 percent, assuming that the pandemic fades in
the second half of 2020 and social distancing measures that
have kept businesses closed and hampered consumer spending
can be gradually eased.
A panel of economic and fiscal experts briefed lawmakers and
Baker administration officials Tuesday on the likely
ramifications of widespread business shutdowns and deep job
losses in the Bay State. There was some overlap in
projections, but the forecasts differed in key ways for a
reason each presenter acknowledged: this is an unprecedented
situation and the virus doesn't play by typical economic
rules.
Mass. Taxpayers Foundation
Tax collections that lawmakers had hoped would propel big
investments in education and transportation this year are
now projected to fall by $4.4 billion, or 14.1 percent below
the benchmark that top budget officials agreed to back in
January, according to an analysis released Tuesday by the
Massachusetts Taxpayers Foundation.
According to MTF, sudden and massive layoffs are pushing the
unemployment rate up to nearly 18 percent in the current
quarter, with 570,000 jobs expected to be lost in just three
months, including many in the leisure and hospitality
sectors. The total number of people unemployed in
Massachusetts is poised to peak at roughly 677,000 by the
end of this quarter.
MTF President Eileen McAnneny said it is projected that
Massachusetts will recover 410,000 of those jobs during
fiscal year 2021, which begins July 1, and that the
unemployment rate will drop back down to 7 percent one year
from now and further decline to 3.9 percent by the end of
calendar year 2021.
The suddenness and speed of the economic decline is
unprecedented, McAnneny said.
"The economic and fiscal fall-out from the pandemic puts an
unprecedented strain on the state's budget and resources,
surpassing previous fiscal crises because of its sudden and
steep onslaught," she said. "Although alarming, MTF's
projected shortfall does not represent a worst case
scenario. In fact, we project a recovery beginning in July.
Should the size, scope, or duration of this public health
crisis grow, the numbers would have to be revised to reflect
the deteriorating economic outlook."
What shape that recovery will take was a key theme to
Tuesday's hearing. Several analysts used the shape of
letters to outline possible economic recovery trajectories.
The letters are V, U, L and W.
If new cases of COVID-19 peak in April or early May and
subside during June, McAnneny said, "a recovery could start
in early July with a V-shaped growth spurt in quarter one of
FY2021 due largely to pent up demand."
But if the re-opening of the economy is delayed because new
virus cases don't peak until summer and don't recede until
fall, or if a second wave of the virus forces another round
of shutdowns, the recovery will follow something more like a
U shape, MTF said.
"One of our biggest challenges is not just how we're going
to build out of this, but the timing mechanisms of when we
will know the economy is heading in a different direction
and obviously that V-shape versus the U-shape is a big
determining factor," House Ways and Means Chairman Rep.
Aaron Michlewitz said.
MTF Vice President for Policy and Research Andy Bagley said
the virus will ultimately determine the timeline but that
the trajectory of the recovery could "become more knowable
in about a month."
"We need to follow the course of the pandemic to see if we
do in fact begin seeing new cases peak in April or very
early May," he said. "More important, though, is when they
abate and when will people feel any confidence about
re-engaging in the economy."
MTF summed it up in its analysis: "Either way, a return to
pre-pandemic employment levels of Q1 2020 will take several
years to achieve."
Beacon Hill Institute
Beacon Hill Institute experts warned that already-dramatic
job losses both nationwide and in Massachusetts could become
"a lot worse" in the coming months as more businesses feel
the strain of forced closures and plummeting revenues.
In calendar year 2020 — the timeline on which the
organization's economists based their calculations, rather
than the fiscal year that ends June 30 — BHI forecast that
the unemployment rate in Massachusetts will rise to 14.7
percent, state GDP will decline 7.2 percent, and tax
revenues will drop 20 percent.
Analytics suggest Massachusetts has been losing about 30
percent of its daily GDP at the current rate, BHI Director
of Research William Burke said.
Burke and BHI President David Tuerck noted, as did several
other speakers, that projecting full impacts is difficult
because of uncertainty about how long the pandemic will
last. The damage will become more intense the longer the
public health crisis continues, Burke said.
"At this point, we believe that the global and U.S. economy
will face a deep recession," Burke said. "If the pandemic
sustains for a deeper period of time, through the calendar
year, there is a chance the global and U.S. economy could
see depression-level job losses."
Unemployment claims both nationwide and in Massachusetts
have surged to record levels in recent weeks. Burke said the
roughly 469,000 initial claims in Massachusetts over the
past three weeks represents more than 12 percent of the
state's labor force.
BHI based its national estimates on an average of forecasts
from Goldman Sachs, Bank of America and Morgan Stanley, then
adjusted based on 20 years of historical trends to get
state-level figures.
Mass. Budget and Policy Center
The state will need to tap into its rainy day fund and
should also reconsider some tax breaks and work to ensure it
receives as much federal relief money as possible,
Massachusetts Budget and Policy Center President
Marie-Frances Rivera said.
The economic ramifications of the pandemic have left many
people out of work and struggling to afford housing and
other basic needs, Rivera said. She said the state must make
sure it continues to fund key services and that systems
people rely on -- like transit, education and unemployment
insurance -- remain operational.
"Now is not the time to switch into austerity mode, so we
have to utilize all the tools that we have in our toolbox,"
Rivera said.
If patterns from past recessions hold, Rivera said, fiscal
2020 tax collections would fall somewhere between $4.2
billion and $4.9 billion below fiscal 2019 collections, and,
with limited growth, collections in fiscal 2021 could land
between $5 billion and $5.7 billion shy of the estimates
budget writers agreed to in January.
Rivera said state officials should identify ways to limit
near-term tax losses "so we can invest in people now and
into the future." MassBudget's written testimony said the
"best, first option" for doing so would be "to delay,
down-size or eliminate several of the largest and most
wasteful tax breaks and tax loopholes in our state tax
code."
Specific tax policies Rivera flagged for reconsideration
included the film tax credit, the "single sales factor tax
break," and a not-yet-implemented new state charitable
deduction.
She thanked budget writers for building up the state's rainy
day fund in recent years. "Our recommendation would be --
it's pouring," Rivera said. "We need to use it to make sure
we have vital services covered. These dollars must be
accessed."
Michael Goodman
Michael Goodman, co-editor of MassBenchmarks and executive
director of the Public Policy Center at UMass Dartmouth,
flagged for the budget managers a key vulnerability he sees
as he thinks about the Massachusetts economy and how it
might fare through a global pandemic.
Massachusetts has come to lean on a couple of large sectors
of its economy for reliable growth and stable jobs -- "the
eds and meds," he said, referring to higher education and
the health care sector.
"If you look at the tale of tape for Massachusetts over the
last couple of decades, you can see that even through some
of the worst economic experiences that we've had, our health
care institutions have grown and added job. Similarly,
higher ed has had its challenges during downturns, but both
have been stalwart counter-cyclical employment stabilizers,"
he said.
But that might change during this pandemic since elective
procedures and other health care procedures have been called
off, threatening "to blow a very large hole in the fiscal
model, the financial and budget model, for our larger and
not-so-large health care systems throughout the state," he
said.
"I have grave concerns about health care without additional
public support," Goodman said.
With students sent home from college campuses this spring,
universities have shifted to remote learning and it's
unclear when it will be safe for students, and the higher
education institutions they attend, to return to the old way
of doing things.
Alan Clayton-Matthews
Alan Clayton-Matthews, a Northeastern University economics
professor and senior editor at MassBenchmarks, presented a
forecast that estimated state tax revenues for the current
year to come in at about $29.7 billion -- which would be
virtually no change over last fiscal year -- and that state
revenues in fiscal year 2021 will come in around $26.1
billion, down 12 percent over his projection for fiscal
2020.
Without the COVID-19 pandemic, Clayton-Matthews said his
modeling projected FY20 state tax revenues at $30.6 billion
and FY21 tax revenues at $32.1 billion. He also added that
he thinks his model might be "over-predicting the revenue
fall by about $1 billion" in FY21.
His forecast assumes that 20 percent of the state's
workforce will be unemployed, furloughed, on leave or will
have dropped out of workforce by June. Another 45 percent of
the workforce by June will be working from their office or
worksite, and 35 percent will be working from home,
according to his assumptions. He projected the number of
unemployed Bay Staters will peak at 875,000 in July.
Massachusetts taxpayers stand to benefit to the tune of $5.5
billion from the federal stimulus checks that should soon
start hitting bank accounts, Clayton-Matthews said, but that
will not translate into a direct benefit for state coffers.
"People will have more money to spend and that could affect
taxes that depend on spending, like sales taxes and excise
taxes," he said. But the stimulus checks are not taxable
under Massachusetts law, "so revenues won't be positively
affected by these stimulus checks directly."
Clayton-Matthews said the economy will come back to about
where it was pre-virus by end of calendar year 2021,
depending on the success of mitigation strategies, the
development of a vaccine and more.
"This bounceback is not quite V-shaped but its close to
V-shaped in this assumption and it's a fairly optimistic
assumption," he said.
Tufts University Center for State Policy Analysis
One of the newest figures in the economic expert circuit,
Tufts University Center for State Policy Analysis Executive
Director Evan Horowitz, said he is "more optimistic" about
outcomes than some of the others who testified Tuesday even
as he projected a revenue shortfall over the next 15 months
at least $2.5 billion below state benchmarks.
While the figures are dramatic, Horowitz said the scale of
governmental response "is much closer to economic need this
time than it was in 2008," specifically noting congressional
action on relief packages, expanded unemployment benefits,
and several measures by the Federal Reserve.
"The fact is the recessionary cycle should be blunted,"
Horowitz told state officials. "It's not that this will
prevent a recession, but it brightens hope for a medium-term
recovery and should factor into any estimate."
Should federal support prove inadequate, he said, any
withdrawal from the Massachusetts rainy day fund will need
to be carefully calibrated to keep reserves at a sufficient
level to weather a lengthier economic downturn.
The CSPA estimates total state tax revenues in fiscal year
2020 will wind up $500 million to $700 million below the
most recent benchmark, a figure that does not account for
hundreds of millions of dollars that will be deferred
because leaders postponed the tax filing deadline from April
15 to July 15.
In fiscal year 2021, he said, Massachusetts could fall
roughly $2 billion below consensus revenue estimates, but
that estimate is less clear because of uncertainty about how
the nationwide recovery process will look.
State tax revenues correlate almost one-to-one with national
GDP growth, Horowitz said. The 25 to 35 percent economic
contraction some experts expect in the next three months
will likely accompany an "equally sudden and severe" drop in
revenues.
Horowitz also urged lawmakers to prepare for a significant
shift in spending priorities as the pandemic unfolds. The
rest of FY20 will likely feature urgent spending on health
care, he said, but issues that today may seem distant — such
as a "wholesale rethinking of how we vote in Massachusetts,"
colleges at risk of collapsing without tuition, and K-12
educational inequities — could require attention in FY21.
Standard & Poor's
Total job losses in March marked the largest one-month total
since the Great Recession, but they are "nothing compared to
what we expect to see in April," Standard & Poor's Chief
U.S. Economist Beth Ann Bovino said at Tuesday's hearing.
Bovino said the 701,000 positions cut last month will be
dwarfed by what she believes to be around 24 million job
losses in April once the Bureau of Labor Statistics
tabulates and reports this month's figures.
"It's astonishing to say that number," she said.
The unemployment rate could rise as high as 18 percent,
according to Bovino, with much of the impact tied to
social-distancing measures. Education, food service, retail
and hospitality fields saw significant job losses, with
hotel bookings down to about a third of what they were last
year.
Even if political leaders take steps to reopen the economy
in the next few months — a process that Bovino said is not
as easy as flipping a switch — she warned that it remains
unclear how ready businesses will be to hire workers or how
willing consumers will be to spend.
Like Horowitz, she praised the federal government for action
it took to "provide a cushion," noting that Congress moved
past the impeachment proceedings against President Donald
Trump that were underway just a few months ago.
"(The Federal Reserve) learned from their mistakes in 2008,"
she said. "They didn't even blink in bringing interest rates
down to near zero."
Moody's Analytics
Dan White, the director of government consulting and public
sector research at Moody's Analytics, said that
Massachusetts fares slightly better than other states in
Moody's projections, which suggest an average hit to state
GDP of 17 percent under its baseline scenario in which
restrictions are eased by June and 23 percent under its more
severe situation.
"Massachusetts makes out a little better than most," he
said, pegging the state's anticipated decline at 14 to 16
percent.
"Massachusetts doesn't have as volatile of a tax structure
as some of the other states around you," White said. "You
have a very strong economic base in health care and
education which is much more consistent and solid when we go
into downturns like this, especially since this is a
pandemic and not an overall demand shock."
He acknowledged the same issue that Goodman raised about the
long-term health of the health care sector and said it might
not be "as rosy" in the long-term.
White also predicted a different letter-shaped recovery than
others.
"It's not like we ran out of gas, it's really like somebody
unplugged the economy," he said. "When we re-plug the
economy back in, things should come back quickly but not
everything is going to come back and not everything is going
to come back over a very long period. So what we end up with
is instead of a V-shaped recession like a lot of folks are
talking about, what we probably end up with is something
that looks a bit more like a W."
— Michael P. Norton
contributed to this report.
State House News Service
Wednesday, April 15, 2020
Pandemic Leaves New Normal on Beacon Hill
By Michael P. Norton
Legislative activity during the COVID-19 pandemic has
shifted almost entirely to the back-channels - texts, phone
calls, emails - with bills moving forward or being held up
based entirely on private talks among lawmakers, who are
mostly staying away from Beacon Hill and have put formal
sessions on hold during the crisis.
The House plans an 11 a.m. session Wednesday. The Senate is
not scheduled to meet next until Thursday at 11 a.m. but the
34 Senate Democrats will meet by phone Wednesday morning in
what Senate President Karen Spilka's office calls a "tele-caucus."
Gov. Charlie Baker's daily coronavirus update is scheduled
for 11 a.m. at the State House. Mayor Walsh has one at noon.
In the pre-pandemic order of things, Massachusetts residents
would be scrambling to file their annual tax returns by
today, and the House Ways and Means Committee would be
unveiling its fiscal 2021 budget proposal, while public
schools would be gearing up for April vacation and some
families would be preparing to travel out of state.
Instead, the tax-filing deadline has been pushed forward to
July 15, House leaders have not disclosed any plan to
release or take up an annual budget bill, schools remain
closed due to the pandemic, and state guidance limits travel
to essential trips with most people who are not essential
workers staying home to help limit the spread of COVID-19.
Lawmakers have struggled to find agreement on a pair of
major issues - relaxed signature collection requirements for
2020 candidates and an eviction and foreclosure moratorium
to protect people affected by the COVID-19 state of
emergency. The News Service is following both issues, and
many others, and will have coverage later today of
Wednesday's House session and the governor's press
conference.
A six-member conference committee formed nearly a week ago
to come up with a consensus housing security bill had not
filed its report with the House clerk's office as of
Wednesday morning.
State House News Service
Wednesday, April 15, 2020
Sales Tax Hit Could Affect School Construction
Projects Delayed, MSBA Sizing Up Fiscal Impacts
By Chris Lisinski
Several public school projects around Massachusetts have
delayed construction amid the coronavirus pandemic, and the
emergency's full financial impact on the state agency that
helps funds most of the work remains unclear.
Massachusetts School Building Authority officials said
Wednesday that the organization will face some budget strain
because of the widespread economic downturn, but MSBA Chief
Financial Officer Laura Guadagno believes the agency is
well-poised to weather the storm.
"For fiscal year 2020, there should not be too big of an
impact because we have a pretty strong cash position. I
think that will carry us through fiscal year 2021," she said
during a meeting conducted via videoconference. "We're in a
pretty strong cash position to at least maintain operations
at current level for the near future."
The MSBA, a quasi-public organization that helps fund local
and regional school capital projects, has a dedicated
funding stream from one penny of the state's 6.25 percent
sales tax. Through March of fiscal year 2020, Guadagno said,
the MSBA had received about $703 million in that funding,
the highest amount over the same span in recent years.
However, March tax revenue figures - which statewide were
about $83 million above benchmarks - do not reflect the real
impact of non-essential business closures and stay-at-home
advisories. April revenues are tumbling, and they will
likely remain low in the ensuing months as long as, or
potentially even after, the crisis continues.
Economic experts predicted dire financial outcomes during a
Tuesday hearing, forecasting tax revenues will plunge by
billions of dollars as unemployment soars.
The Massachusetts Taxpayers Foundation estimated sales tax
revenues will drop $1.5 billion due to closures in public
life and loss of personal income as a result of widespread
layoffs and furloughs.
Some MSBA Board members raised concerns Wednesday about the
impact that cratering revenues will have on their ability to
fund school projects.
"We could be in quite a pinch along with a lot of other
agencies," said member Greg Sullivan
"It is obviously very concerning," Guadagno replied.
The MSBA's operating budget is relatively small at $10
million, Guadagno said, compared to more than $600 million
on its capital grants side.
Jim MacDonald, the organization's CEO, said the MSBA sent
models to the Baker administration reflecting how the
authority could be affected by sales tax declines. Federal
stimulus money going to municipalities and states as part of
the so-called CARES Act could help reimburse already-made
expenditures, he said.
However, he said projections will not fully take shape until
revenue outlooks are more certain.
"Just looking out for the next three months, four months and
beyond, a lot of variables are going to come into play," he
said. "When the economy slowly starts to get going, what
will it look like? Nobody knows the answer to that
question."
MSBA Executive Director Jack McCarthy said the organization
will continue to hold board and subcommittee meetings
remotely as often as possible so the process can move
forward during the pandemic, but he noted that districts
will need to cope with any increased project costs on their
own.
"When we set a grant and our reimbursement rate at the time
of project approval, we cannot later increase that amount,"
he said. "So as of right this second, the overages that may
result from actions that districts take are going to fall on
the districts."
More than two dozen MSBA-backed projects in varying stages
of the process have paused active work because of the
pandemic, MSBA Capital Planning Director Mary Pichetti said.
Some responded to local orders to halt construction because
of the highly infectious virus, while others still underway
have adjusted their plans because certain workers were
ordered by their unions not to report until it is safe to do
so.
Gov. Charlie Baker has not issued a statewide ban on
construction projects. The city of Boston and other
municipalities have issued such bans.
State House News Service
Thursday, April 16, 2020
State Spending Shift Financing COVID-19 Care Investments
Sudders: Nearly $1 Bil Not Spent on Elective Procedures
By Michael P. Norton
The coronavirus state of emergency is 37 days old and the
Baker administration and Legislature have so far not
withdrawn funds from the state's $3.5 billion stabilization
fund to finance an array of needs. For now at least, a big
reallocation within the mammoth MassHealth budget is
helping.
On Wednesday, Gov. Charlie Baker and Health and Human
Services Secretary Marylou Sudders highlighted plans to
invest $130 million in facilities like nursing homes and
assisted living centers where workers and residents are
fighting the virus, which has killed 1,108 state residents
in less than a month.
Baker said state officials are "intensely focused" on
detecting, mitigating and managing the spread of COVID-19 in
long-term care facilities, with 38,000 people living in
nursing homes, 16,500 in assisted living facilities and
3,000 in rest homes.
At a State House briefing, Sudders told reporters there is
about $982 million in the fiscal 2020 MassHealth budget that
has not been used for elective surgeries and procedures
because of state orders during the crisis aimed at ensuring
hospital beds are available for COVID-19 surge response.
"It's really taking funds that we already had received in
the budget and reallocating it to sort of stabilize health
care, nursing homes, PCAs, home health agencies and the
like, through primarily rate increases," Sudders said,
explaining the source of funding for the nursing home
supports.
The MassHealth program is by far the largest in the state's
roughly $44 billion budget and its growth over the years has
consumed funds that could be directed into other state
services, including local aid. The program's spending
trajectory, and federal funding supports, will be closely
watched during and after the pandemic, especially since
economists say state tax revenues next fiscal year could
fall by an unprecedented $4 billion to $6 billion.
Under the $44.6 billion fiscal 2021 budget that Baker filed
in January, which will be overhauled given the changed
landscape brought about by the pandemic, the MassHealth
program that serves 1.86 million residents would be funded
at $16.772 billion, a 0.6 percent increase over the current
fiscal year. With unemployment soaring, more people are
expected to turn to the benefit program for health coverage.
The nursing home investments followed an April 7
announcement by Baker that his administration was directing
$800 million to the Massachusetts health care industry,
supplementing $840 million in previously announced
assistance as the state worked to bulk up its front line of
defense against the COVID-19 surge.
At that time, Baker said the state could cover the $800
million cost with "offsets, reductions in MassHealth and
enhanced federal revenue," and officials said that the more
than $1.6 billion they had newly directed toward the health
care system since March was critical to help providers
simultaneously meet new needs and weather a period of
declining revenues as elective procedures and in-person
office visits have largely ceased.
The nursing home industry on Monday sent an emergency letter
to state officials appealing for immediate help with
staffing, personal protective equipment and testing. The
letter also highlighted hundreds of deaths and thousands of
COVID-19 cases among home residents as well as modeling that
predicts many more infections and deaths.
Tara Gregorio, president of the Massachusetts Senior Care
Association, said after Wednesday's announcement that the
nursing home industry is grateful for the Baker
administration's continued support, but "we believe the
crisis situation warrants significant additional investments
for our frontline staff."
The state's virus-fighting command center and the industry
are together "making good progress on accessing testing and
vital PPE, but we need to do more to help protect and
support our residents, their families and workforce,
including funding a double-time 'hero' wage," Gregorio said,
estimating 40 percent of staffing positions are currently
vacant due to the COVID-19 crisis.
"We are working diligently to identify pools of workers,
utilize the state's long term care employment portal and we
are offering as robust financial incentives as we can afford
to existing staff, but the stark reality is that we are
unable to reach the most basic staffing levels," she said.
"The only way we believe we can meaningfully begin to
stabilize our staffing is for the state to provide a $130
million dollar monthly investment to fund overtime costs,
hiring of new staff and double time for 'hero's pay' for our
frontline staff, and ensure their safety through the
consistent availability of PPE."
A virtual hearing is planned for Thursday on legislation
that would require assisted living residences, elderly
housing facilities and long-term care facilities to file
daily reports with public health officials on their numbers
of COVID-19 cases and deaths.
Under Rep. Ruth Balser's bill (H 4635), the Department of
Public Health would also be required to report to lawmakers
each week the number of COVID-19 cases and deaths in
assisted living, elderly housing or long-term care
facilities, plus demographic data.
Balser told the News Service that "the situation in elder
facilities is alarming" and said long-term care facilities
are "crying out for more testing, more personal protective
equipment, and for more staff."
State House News Service
Monday, April 13, 2020
Signature Relief Seems Distant Goal on Beacon Hill
Candidates Taking COVID-19 Case to SJC Thursday
By Matt Murphy and Sam Doran
Even before one Republican senator put a hold on legislation
that would slash in half the number of signatures federal
and county candidates need to gather to qualify for the
ballot this year, House officials on Monday were downplaying
the need for the bill, making it increasingly likely that
the Supreme Judicial Court will decide the ballot access and
public health issue.
Candidates running for various offices have raised concerns
in recent weeks about their ability to responsibly gather
the required number of voter signatures to run for office
during the coronavirus crisis.
With social distancing the best tool to fight the COVID-19
pandemic, candidates are reluctant to ask volunteers to
approach strangers for their signatures, or ask potential
supporters to put themselves at risk by interacting with
campaign workers.
Three candidates have filed a lawsuit in the Supreme
Judicial Court seeking relief, and U.S. Sen. Edward Markey,
who needs 10,000 voter signatures to get his name on the
ballot, is among those still reaching for the threshold.
"I think there were perfect conditions to gather all the
signatures early and if you didn't take advantage of the
caucuses or the good weather on Super Tuesday with a high
turnout, what were you waiting for?" said one House
chairman, who spoke only on the condition that they remain
anonymous.
Another House source familiar with the thinking of many
members said a signature reduction bill would almost
certainly not clear the House at this point in time, and
that Speaker Robert DeLeo was reluctant to consider changing
requirements for some candidates, but not others.
The Senate bill would not apply to candidates for state
House and Senate seats, and it's unclear if DeLeo supports
changing the status quo at all. His office declined to
comment on the topic, but one source said the speaker was
caught off guard last week when Gov. Charlie Baker publicly
backed the idea of lowering the requirements for federal and
county offices.
Election Laws Committee Co-Chair Rep. John Lawn did not
return an email seeking comment.
Senate President Karen Spilka and Rules Committee Chairwoman
Joan Lovely released a bill last Friday night to cut in half
the signature requirements for candidates for federal
office, county office and Governor's Council.
Senate Democrats had hoped to pass the bill (S 2632) on
Monday, but Sutton Republican Sen. Ryan Fattman blocked it,
pushing consideration off until at least Thursday, the next
the time the Senate meets.
"There needs to be more communication," said Fattman, one of
four Senate Republicans, who had the power as an individual
lawmaker to block the bill's progress because the Senate
continues to meet without a quorum.
The GOP caucus "didn't have much interaction with this
proposal -- whereas with every other issue we have, which is
great," he said.
While Fattman would not be impacted by the changes in the
bill, his wife Stephanie Fattman is the Worcester County
register of probate who is seeking re-election in 2020 and
would see her requirement, and that for potential
challengers, cut to 500 signatures.
Lovely disputed Fattman's account, telling the News Service
that her office had been talking with Senate Minority Leader
Bruce Tarr's office, and she spoke to Tarr personally Friday
night.
"We've been talking about this for probably three weeks, and
it's been in the newspapers, so it's not a surprise or out
of left field," Lovely said. She also defended the decision
to exclude state legislative candidates from the bill, which
has been criticized by some as a move to shield incumbents
from challengers.
"I think if we lowered the amount it would be an incumbent
protection bill," Lovely said. "Three hundred signatures is
not a lot. I didn't have them two weeks ago. I put out a
quick mailing to 125 people and was able to meet it in a
week. It's not a high bar to meet in my opinion."
The bill is the "result of countless conversations over
several weeks," Spilka said in a statement Monday.
"The bill reflects a general consensus view that offices
that require 1,000 signatures or more should be reduced in
light of the COVID-19 emergency," she said. "It is important
to strike a balance between promoting access to the ballot
and ensuring candidates demonstrate sufficient community
support for their candidacies. I believe this bill strikes
that balance."
Candidates for U.S. Senate must collect 10,000 signatures,
while candidates for the U.S. House need 2,000 and county
offices require 1,000 signatures to qualify for the ballot.
Lovely said Senate leaders were targeting those races with
higher requirements.
However, the Salem Democrat said she didn't know the bill's
future now, with the Supreme Judicial Court expected to hear
oral arguments on Thursday in a lawsuit brought by a
bipartisan group of three candidates seeking relief from the
signature requirements. The plaintiffs include a Republican
candidate for U.S. Senate, a Democrat running for Congress
and a candidate for state representative.
"They may make a decision. It's in their hands now," she
said. Briefs in the case are due to the SJC by Tuesday.
Fattman said he would prefer to see bills fast-tracked on
priorities like unemployment and first responders, while
taking time to reach consensus on "periphery things" like
the elections bill.
"We need to figure out what's most fair, and there's a lot
of opinions on that on both sides of the aisle," the Sutton
Republican said. "And so this is something that's still
alive. It's just we need to get to the bottom. There was
miscommunication even in where they should be procedurally
today. So we're going to clear all that up."
Options still available to candidates needing to collect
more signatures include mailing forms to voters and paying
for return postage, or having them print forms at home and
send them back to the campaign. Some candidates, including
Spilka, have even set up tables at the house with clean pens
for passersby to sign.
Markey's campaign has said it's confident it will qualify
for the ballot with or without legal relief from the
signature requirement. But the House chairman opposed to
lowering the threshold, and who endorsed Markey over U.S.
Rep. Joseph Kennedy III in the primary, said that wasn't a
factor in his thinking.
"If he doesn't that's on him," the Democrat said.
The Boston Globe
Wednesday, April 15, 2020
In a pandemic, electronic signatures are needed to protect
our democracy
By Eric S. Maskin and Lawrence H. Summers
It is imperative that the court and the secretary of state
find a way to maintain the prospect of citizen initiative at
this critical moment in the coronavirus pandemic.
The Supreme Judicial Court of Massachusetts will hear a case
Thursday with implications for the collection of signatures
for placing issues on the election ballot that has profound
importance for the quality of democracy in Massachusetts. It
is imperative that the court and the secretary of state find
a way to maintain the prospect of citizen initiative at this
critical moment in the coronavirus pandemic.
Article 48 of the Massachusetts Constitution gives citizens
the right to petition the state government and make law
through ballot initiatives. That is, we can put potential
laws directly on the ballot in general elections and have
our fellow citizens vote these up or down (recreational
marijuana was legalized in this way in 2016).
To prove that a measure has core support, Massachusetts
requires that a petition to put a proposed law on the ballot
must include two rounds of certified signatures: 80,234 by
December of the year preceding the election, and another
13,374 by the following July.
For the 2020 election, several ballot initiatives easily
passed the first signature hurdle (e.g., the initiative we
personally are working on — ranked-choice voting — attracted
over 111,000). However, these ballot initiative campaigns
now face a daunting challenge with meeting the second
hurdle. Historically, the vast majority of signatures are
collected by volunteers in public places — shopping centers
and the like. But this can’t work during the COVID-19
pandemic, as a person handing another person a pen and a
clipboard for the ballot signature is a public health
threat.
To preserve what is embodied in the Massachusetts
constitution, the people should be allowed — for this
election only — to sign petitions electronically.
There is no reasonable alternative. The traditional open-air
method is dangerous and so not available, and collecting
signatures solely by US mail is formidably cumbersome,
time-consuming, and expensive.
The Supreme Judicial Court will hear the case brought
against Secretary of State William Galvin, asking him to
permit electronic signatures for primary-election
candidates. In his written response to the lawsuit, filed on
Tuesday, Galvin appeared to show some sympathy for this
cause, and even outlined a method of electronic signature
gathering and certification that would meet reasonable
anti-fraud standards.
We urge the court to rule that, in this unprecedented
emergency, electronic signatures are acceptable and for
Galvin to implement the process that he proposed himself.
Eric S. Maskin and Lawrence H. Summers are professors of
economics at Harvard University and are on the advisory
board of Voter Choice Massachusetts. |
