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Marblehead, Massachusetts 01945
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“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
46 years as “The Voice of Massachusetts Taxpayers”
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their Institutional Memory — |
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CLT UPDATE
Monday, October 5, 2020
"Idle Hands Are The
Devil's Workshop"
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to CLT's Commentary on the News
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Most Relevant News Excerpts
(Full news reports follow
Commentary)
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The coronavirus
pandemic did a number on the state budget as revenues
plummeted but funding for services still had to be
maintained.
Hence, a
flurry of borrowing to keep Massachusetts afloat.
But we’re not
out of the woods. A projection earlier this month for
the State House News Service by the Center for State
Policy Analysis at Tufts University suggests a nearly
$1.6 billion reduction in anticipated fiscal 2021 tax
revenues.
Last week,
Gov. Charlie Baker said the state should be able to
close out fiscal 2020 and manage through fiscal 2021,
but he was concerned about where Massachusetts would be
financially in FY 2022....
According to
the News Service, Massachusetts Budget and Policy
Center, a state finance think tank, says it's time for
lawmakers to consider other ways to fill budget gaps,
other than borrowing money.
They include
tapping into the state’s $3.5 billion reserves and
adopting “new policies to increase revenue.”
Translation:
raising taxes.
MassBudget
makes an excellent point in stating that debt must be
paid back, and one short-term borrowing option — a $7.86
billion credit line through the U.S. Federal Reserve’s
Municipal Liquidity Fund — would have to be paid back by
2023.
The report
from MassBudget didn’t get into specifics, but it’s
previously supported options that include raising the
personal income tax rate, raising the tax rate on
capital gains, imposing a surtax on the sale of
multi-million dollar homes, taxing large private college
and university endowments, and raising various corporate
tax rates....
There are many
balls up in the air — cities and towns may be eyeing
property tax increases to mend their broken budgets as
well.
The state
needs to find sustainable budget solutions, understood,
but many other options should be considered before
turning to beleaguered taxpayers.
A Boston
Herald editorial
Wednesday, September 30, 2020
Tax hikes should be last resort as
state seeks revenue
This November
taxpayers will celebrate the 40th anniversary of
Proposition 2½. Citizens for Limited Taxation’s
(CLT) ballot question was adopted by the voters in 1980
after a furious campaign to defeat it by self-serving
interests vested in ever-increasing property and vehicle
excise taxes.
From its
inception Proposition 2½ was detested by those never
satisfied that they’ve extracted enough from taxpayers.
For decades CLT has managed to fend off numerous attacks
time and again. Those assaults were usually clear,
direct, and obvious.
Not anymore.
Now they are stealthy, typically buried in some obscure
language within an unrelated “must pass” major bill.
A recent example was the “Community Benefit Districts”
in 2018, stashed deep within the massive Economic
Development bill. It would have created a whole
new level of government — neighborhood districts — each
with its own power to tax property above and beyond the
limitations on municipalities imposed by Prop 2½.
CLT managed to kill that sneak attack just moments
before the Economic Development Law was passed.
We weren’t as
successful last year with another end-run, this one
snuck into the $1.5 billion Education Funding Reform Law
to “analyze the impact” and “mitigate the constraints”
of Prop 2½.
This year’s
clandestine attack was secreted in the Senate’s
Transportation Bond Bill, which addresses massive state
borrowing and spending of over a billion dollars for
transportation projects. . . .
t now sits in
the House/Senate Transportation Bond Bill conference
committee comprised of six members. The House’s
bill and the Senate’s have little in common.
Whatever is finally agreed to and reported out cannot be
amended. It will be quickly passed with a
rubber-stamp vote, whisked to the governor for his
signature, and will become law. If it is to be stopped
that must happen now, in the conference committee.
Boston
Broadside
October 2020
40 Years Later Proposition 2½ Is
Under Assault, Again
By Chip Ford
The Senate on
Monday gave life support to a smorgasbord of legislation
before the Judiciary Committee, extending the deadline
for action on some bills that have already been extended
multiple times.
The Judiciary
Committee would have until Nov. 12 to report on a bundle
of bills covering topics like First Amendment rights,
forfeiture reform, face recognition and biometric
surveillance, COVID-19 emergency aid by higher education
institutions, COVID-19 estate recovery, and false
reporting of an emergency.
Some bills
like S 313, relative to preventing the sexual abuse of
children and youth, have already gone past the Feb. 5
Joint Rule 10 deadline, an initial extension to May 12,
and a second extension to July 31.
Legislative
leaders have said they want this fall's formal sessions
to focus on the budget, conference committee reports,
and COVID-19 response, and it remains to be seen what --
if any -- additional priorities get pulled up for
debate.
Before
adjourning until Thursday, senators sent Gov. Baker
bills allowing a new liquor license in Maynard and
authorizing Wellesley to keep a firefighter on their
department until he turns 70.
State House
News Service
Monday, September 28, 2020
Senate Session Summary - Monday, Sept. 28, 2020
State tax
collections in the fiscal year that ended June 30 came
up about $693 million short of expectations, mostly
driven by an evaporation of sales tax revenue, Gov.
Charlie Baker said Wednesday as he filed a bill to close
the books on fiscal year 2020 without borrowing or
tapping the state's reserves.
The $424
million supplemental budget (HD 5307) carries a net
state cost of $197 million, which Baker said is mostly
to cover expenses at MassHealth, the state's Medicaid
program.
The governor
said Massachusetts does not need to dip into its $3.5
billion Stabilization Fund to close the books on FY20 in
part because state spending, which is managed by the
executive branch, was slowed in the spring as the
COVID-19 pandemic upended state programs....
Wednesday's
filing of an FY20 closeout supp kicks off a process that
has turned somewhat ugly in recent years.
Every year,
the state comptroller must finalize the books on the
fiscal year that ends June 30 and file the state's
annual Statutory Basis Financial Report by Oct. 31. The
comptroller cannot prepare the SBFR until the
Legislature passes and the governor signs a closeout
supplemental budget.
In recent
years, lawmakers have waited longer and longer to pass
that bill, taking it up in October or even November,
rather than August or September as they used to do in
the late 1990s and early 2000s. The lateness of the
closeout supp devolved into a staring contest between
former Comptroller Andrew Maylor and the Legislature
last year -- when Baker got the ball rolling on Sept. 6.
The
Legislature took negotiations over last year's closeout
supp later into the year than any time since at least
1995, forfeiting more than $1 million in interest that
the state could have earned had lawmakers completed
their work on time. This year is sure to be more
complicated and the process is starting more than three
weeks later....
Baker's
closeout supplemental budget will likely head first to
the House Ways and Means Committee and it might have
some company as it knocks around the House and Senate
this fall.
State House
News Service
Wednesday, September 30, 2020
Baker: Reserves, Borrowing Not Needed
for Fiscal 2020
Cap Gains, Slowed Spending Help Address Shortfall
Senate
President Karen Spilka told local officials in her
district this week that action on the overdue annual
state budget is unlikely to happen in the Legislature
until after the November election, a softer target than
the more ambitious goal articulated earlier in the week
by the Senate's budget chief of making decisions on how
to spend billions in tax dollars by the end of October.
Spilka also
said that Gov. Charlie Baker may be planning to file an
updated version of the pre-pandemic fiscal 2021 spending
plan he put forward in January, which would become the
jumping off point for the House and Senate to craft
their own budgets for the fiscal year that began on July
1....
The comments
made by the Senate's top Democrat add to the uncertainty
of how Beacon Hill intends to proceed in the development
of an annual state budget as they continue to wait for
any clear signs from Congress about the prospects for
additional federal aid.
On Monday,
Senate Ways and Means Chairman Michael Rodrigues said
his goal was to have a budget passed and on Gov. Baker's
desk by the end of the month when a three-month, $16.5
billion interim budget expires. "Our idea is to get it
done by the end of October. I'm here today. I'm here
every day. We are working," Rodrigues said at the State
House....
A rare
post-election budget debate would mean that scores of
major decisions about spending would be made in part by
a lame-duck Legislature featuring some lawmakers who are
retiring and others who won't be returning in January
because they lost their elections.
Spilka told
Holliston officials another interim budget is "very
possible," and suggested the Legislature was inclined to
wait a little longer to see if Congress will deliver
another stimulus package with aid for states and
municipalities.
State House
News Service
Thursday, October 1, 2020
Spilka: Baker Budget Refile May Spark
Post-Election Debate
Rodrigues Amends Budget Goal to "Soon as Possible"
One of the
lawmakers most responsible for crafting a budget for the
fiscal year that began in July expects the budget
process to get a reboot by the middle of this month when
Gov. Charlie Baker's administration puts forward updated
revenue assumptions.
Baker started
the annual budget process in January when he filed a
$44.6 billion proposal, but the COVID-19 pandemic
brought work on the budget to a screeching halt and
Massachusetts has been operating on a series of
temporary budgets -- which are due to expire in about a
month -- since July 1.
House Ways and
Means Committee Chairman Rep. Aaron Michlewitz told the
News Service he expects the budget process to get back
into gear starting next week when he and other state
budget managers will hear updated economic assessments
from a variety of experts....
As far as when
the long overdue fiscal year 2021 budget gets done,
Michlewitz falls somewhere between Senate Ways and Means
Chairman Sen. Michael Rodrigues, who has said he wants a
budget done by the end of October, and Senate President
Karen Spilka, who told local officials this week that
budget action on Beacon Hill will likely come after the
Nov. 3 presidential election....
By not passing
a state budget so deep into the fiscal year, the
Legislature has ceded authority over spending decisions
to Baker for the first third of the budget year. Without
including myriad spending directives as they usually do
in a state budget, lawmakers passed a $5.5 billion
budget to cover expenses in July and then approved a
three-month $16.5 billion budget.
Two months
into the fiscal year, state tax collections are running
$124 million or more than 3 percent ahead of their pace
one year ago, the Department of Revenue reported early
in September, a promising sign given predictions of a
revenue collapse this fiscal year....
As if crafting
a spending plan for the rest of fiscal 2021 was not
enough, the Legislature and governor still must close
the books on fiscal year 2020, which ended June 30.
The $424
million supplemental budget (HD 5307) Baker filed
Wednesday to put fiscal 2020 to bed was sent to
Michlewitz's committee Thursday. The chairman said his
staff was still vetting the bill, but he said the
governor's proposal to plug the fiscal 2020 gap without
touching the state's $3.5 billion rainy day fund is the
right way to go at it.
"That was
something that we felt was the necessary approach
because of just the dramatic impact that we are going to
see in FY 21, potentially in FY 22, and even beyond,"
Michlewitz said. "Touching the rainy day fund is
something that we want to be very clear is one of the
last resorts that we want to do. And so if we can get
through FY 20 without touching it -- and I think the
governor has accomplished that with what he's filing
here -- I think that that's what the direction we'll
want to take as well."
State House
News Service
Thursday, October 1, 2020
Michlewitz Flags Budget “Starting
Points”
HW&M Chair Won't Commit to Budget Timetable
The House and
Senate may be getting ready in unprecedented economic
times to attempt to do in three weeks what would
ordinarily take three months, according to the Senate's
top budget writer. That would be to draft and put an
annual state budget on Gov. Charlie Baker's desk.
But exactly
how the Legislature would accomplish this feat remains
to be explained.
The House and
Senate Ways and Means committees, along with
Administration and Finance Secretary Michael Heffernan,
plan to welcome back a slate of economic experts and
fiscal prognosticators next week for the second time
during the pandemic to help them forecast tax revenues
for the last nine months of the fiscal year.
After that
hearing, the leadership on Beacon Hill will need to
agree to a revised tax estimate for fiscal 2021 and
build spending plans around that anticipated revenue.
The assumption is that forecasts will have improved
since April when experts were predicting as much as $6
billion in lost tax revenue.
But in a
typical year, the act of formulating a revenue estimate
usually takes a month, following by the governor filing
a budget in January. The House in April then releases
and debates its version of the governor's budget,
followed by the Senate in May. Each of those debates
usually takes about three or four days apiece. That
leaves about a month - and sometimes longer - for a
conference committee of negotiators from both branches
to iron out many budget differences and send the
governor a consensus budget for his review.
Senate Ways
and Means Chairman Michael Rodrigues confirmed to the
News Service Monday that it's his intention that all of
those steps will be finished by Oct. 31, when a more
than $16 billion interim budget authorization
expires....
With the
revenue roundtable planned for next Wednesday, the
Legislature would have a little more than three full
weeks after hearing from economists to finish its
budget. It's a stretch that coincides with the buildup
to the November election when legislators would
otherwise be focused on their own reelections, or
campaigning for colleagues and other candidates for
state and federal office....
The
Legislature punted on trying to devise a full-year
spending plan while in the throes of the COVID-19
pandemic this spring, and extended its session
indefinitely past July 31 knowing that the budget would
have to be dealt with before the end of the year.
Senate
leadership also told members that they may be called
back to vote on emergency COVID-19 legislation or one of
the five conference committee reports -- police reform,
economic development, health care, transportation
borrowing and climate change - if and when deals are
reached.
"None of those
are on the horizon as we speak, the budget being
probably the closest," said Rodrigues, whose committee
processes most bills -- with the exception of conference
committee reports -- before they land on the Senate
floor for consideration.
State House
News Service
Monday, September 28, 2020
Rodrigues Still Planning for
October Budget
Timeframe Would Require Extensive House-Senate
Collaboration
Despite a week
of elevated case counts and a positive test rate that by
some measures is approaching 3 percent, Baker on Tuesday
greenlighted the reopening of a host of new businesses,
from roller rinks and trampoline parks to indoor concert
and performance venues, with half-capacity, or 250
people, limits.
"If people are
going to go inside, which they probably will, I would
much rather have them go inside in organized and
supervised ways with rules than in unorganized,
unsupervised ways with no rules," the governor said.
The only catch
is that those businesses must be located within a
community that's been gray, green or yellow for the past
three weeks, meaning less than eight cases of COVID-19
for every 100,000 people per day.
And that does
not include the city of Boston....
Even after
talks were resuscitated between Speaker Nancy Pelosi and
Treasury Secretary Steve Mnuchin, there was no deal to
be had. The House wound up pushing forward with a
largely symbolic vote on a slimmed down $2.2 trillion
version of the Heroes Act that had zero chances of
advancing in the Senate, basically leaving Congress
where it started the week -- nowhere. The new relief
bill passed 214-207, with 18 Democrats, but none from
Massachusetts, voting no.
Without
federal aid, Spilka said the Senate was "guestimating" a
$5 billion revenue shortfall in fiscal 2021, and some
liberal think tanks and legislators said borrowing
should not be part of the long-term solution.
"We need to
raise significant amounts of progressive revenue to
invest in the programs that will allow people to stay
safe," said Rep. Mike Connolly, a Cambridge Democrat.
Spilka wasn't
ready to start talking taxes just yet, however, telling
local officials in Holliston during a visit with the
Board of Selectmen that the Legislature will give
Congress a little more time before trying to pass a
fiscal 2021 state budget, now not likely until after the
election.
In saying
that, she basically threw cold water on the suggestion
earlier in the week by Senate Ways and Means Chairman
Michael Rodrigues that completion of the budget before
the end of October was not only a possibility, but his
goal.
Rodrigues is
now saying he hopes to get a budget done "as soon as
possible," and his counterpart in the House, Rep. Aaron
Michlewitz, is expecting the Baker administration to
update revenue projections for the rest of the fiscal
year by Oct. 15, after officials hear next week from
economists.
That revenue
update, according to Spilka and other officials, could
include the filing of a completely revised budget from
the governor, which would jumpstart a process that has
been stalled since March.
One positive
sign for the state's ability to get through the next
couple of years is that Baker was able to file a budget
bill to close-out fiscal 2020 this week that did not
borrow or draw down on the state's $3.5 billion "rainy
day" fund, despite tax collections ending the year $693
million below expectations.
Instead, Baker
is relying on unspecified slowdowns in spending during
the pandemic and a proposal to cancel a planned deposit
of some capital gains tax revenue into reserves.
The pandemic
pain inflicted on the budget last year was not as bad as
had been feared, Baker said, and officials are hoping
the same will be said of fiscal 2021.
State House
News Service
Friday, October 2, 2020
Weekly Roundup - Debatable Strategies
On Beacon
Hill, the drawn-out stimulus talks in Washington seem to
have immobilized state budget writers. Massachusetts is
now into its fourth month running on interim budgets and
the Legislature and Gov. Charlie Baker have not even
proposed a fiscal 2021 budget, which will actually only
cover spending for, at most, the last eight months of
the fiscal year.
Legislators
and the Baker administration reconvene economic experts
to hear updates on the uncertain outlook, which has
improved since their last gathering in April, and there
are signs that the Baker administration will soon get
the budget ball rolling with a refiled fiscal 2021
budget based on revenue assumptions that will be revised
by an Oct. 15 state finance milestone marker.
House Ways and
Means Chairman Aaron Michlewitz told the News Service
this week that a similar hearing held in April was
helpful, but that he expects the economists and others
to have a clearer sense of what's in store now that
they've observed almost six months of pandemic era data.
State House
News Service
Friday, October 2, 2020
Advances - Week of Oct. 5, 2020 |
Chip Ford's CLT
Commentary
A Boston Herald editorial
on September 30 ("Tax hikes should be last resort as
state seeks revenue") noted:
According to the News Service,
Massachusetts Budget and Policy Center, a state
finance think tank, says it's time for lawmakers to
consider other ways to fill budget gaps, other than
borrowing money.
They include tapping into the
state’s $3.5 billion reserves and adopting “new
policies to increase revenue.”
Translation: raising taxes.
MassBudget makes an excellent
point in stating that debt must be paid back, and
one short-term borrowing option — a $7.86 billion
credit line through the U.S. Federal Reserve’s
Municipal Liquidity Fund — would have to be paid
back by 2023.
The report from MassBudget
didn’t get into specifics, but it’s previously
supported options that include raising the personal
income tax rate, raising the tax rate on capital
gains, imposing a surtax on the sale of
multi-million dollar homes, taxing large private
college and university endowments, and raising
various corporate tax rates....
There are many balls up in the
air — cities and towns may be eyeing property tax
increases to mend their broken budgets as well.
The state needs to find
sustainable budget solutions, understood, but many
other options should be considered before turning to
beleaguered taxpayers.
As we have
reminded many time before,
Massachusetts Budget and Policy Center is the evolution
of CLT's old nemesis, Tax Equity Alliance for
Massachusetts (TEAM, or more affectionately known in
these parts as Tax Everything And More).
TEAM was created in the late-80s primarily if not
exclusively to counter Citizens for Limited Taxation and
its advocacy of tax limitation and fiscal
responsibility. TEAM was and MBPC is comprised of
the usual coalition of The Takers, so it's
expected they would, will, and are calling for ever
higher taxes on economic producers and productive
taxpayers.
As the notorious depression-era bank
robber Willy Sutton reportedly responded when asked why he robbed
banks, "Because that's where the money is."
I was invited to write a column for
Boston
Broadside alerting its readership to the latest threat to CLT's
and the taxpayers' and voters' Proposition 2½. It appears in
this month's (October) issue, ("40 Years Later Proposition 2½ Is
Under Assault, Again"). In my column I noted:
This November taxpayers will
celebrate the 40th anniversary of Proposition 2½.
Citizens for Limited Taxation’s (CLT) ballot question
was adopted by the voters in 1980 after a furious
campaign to defeat it by self-serving interests vested
in ever-increasing property and vehicle excise taxes.
From its inception Proposition 2½
was detested by those never satisfied that they’ve
extracted enough from taxpayers. For decades CLT
has managed to fend off numerous attacks time and again.
Those assaults were usually clear, direct, and obvious.
Not anymore. Now they are stealthy,
typically buried in some obscure language within an
unrelated “must pass” major bill. A recent example
was the “Community Benefit Districts” in 2018, stashed
deep within the massive Economic Development bill.
It would have created a whole new level of government —
neighborhood districts — each with its own power to tax
property above and beyond the limitations on
municipalities imposed by Prop 2½. CLT managed to
kill that sneak attack just moments before the Economic
Development Law was passed.
We weren’t as successful last year
with another end-run, this one snuck into the $1.5
billion Education Funding Reform Law to “analyze the
impact” and “mitigate the constraints” of Prop 2½.
This year’s clandestine attack was
secreted in the Senate’s Transportation Bond Bill, which
addresses massive state borrowing and spending of over a
billion dollars for transportation projects. . . .
In my
CLT
Commentary of August 16 regarding the Legislature's
abrupt decision to stay in session through the year, I
wrote:
There's nothing
like a deadline to focus attention, and there's nothing like
extending a deadline to feed procrastination. Remember a month
ago when everything on Beacon Hill was about getting so much
accomplished before the July 31 recess deadline? Now that
they've agreed to ignore their own rule and remain in session
interminably the pressure is off the pols; it's back to
business-as-usual. Nothing has come out of any of the numerous
conference committees, and nothing likely will until the next
deadline, after they are safely re-elected.
As we predicted, there is
and has been little going on among the Legislature
during its extended session (but campaigning for
reelection and/or for others while on the taxpayers'
dime). One example was reported by the State House
News Service on Monday for the Senate Session:
The Senate on Monday gave life
support to a smorgasbord of legislation before the
Judiciary Committee, extending the deadline for
action on some bills that have already been extended
multiple times.
The Judiciary Committee would
have until Nov. 12 to report on a bundle of bills
covering topics like First Amendment rights,
forfeiture reform, face recognition and biometric
surveillance, COVID-19 emergency aid by higher
education institutions, COVID-19 estate recovery,
and false reporting of an emergency.
Some bills like S 313, relative
to preventing the sexual abuse of children and
youth, have already gone past the Feb. 5 Joint Rule
10 deadline, an initial extension to May 12, and a
second extension to July 31.
Legislative leaders have said
they want this fall's formal sessions to focus on
the budget, conference committee reports, and
COVID-19 response, and it remains to be seen what --
if any -- additional priorities get pulled up for
debate.
Before adjourning until
Thursday, senators sent Gov. Baker bills allowing a
new liquor license in Maynard and authorizing
Wellesley to keep a firefighter on their department
until he turns 70.
On September
28 the State House News Service reported ("Rodrigues
Still Planning for October Budget
— Timeframe Would Require Extensive House-Senate
Collaboration"):
The House and Senate may be
getting ready in unprecedented economic times to
attempt to do in three weeks what would ordinarily
take three months, according to the Senate's top
budget writer. That would be to draft and put an
annual state budget on Gov. Charlie Baker's desk.
But exactly how the Legislature
would accomplish this feat remains to be explained.
The House and Senate Ways and
Means committees, along with Administration and
Finance Secretary Michael Heffernan, plan to welcome
back a slate of economic experts and fiscal
prognosticators next week for the second time during
the pandemic to help them forecast tax revenues for
the last nine months of the fiscal year.
After that hearing, the
leadership on Beacon Hill will need to agree to a
revised tax estimate for fiscal 2021 and build
spending plans around that anticipated revenue. The
assumption is that forecasts will have improved
since April when experts were predicting as much as
$6 billion in lost tax revenue.
But in a typical year, the act
of formulating a revenue estimate usually takes a
month, following by the governor filing a budget in
January. The House in April then releases and
debates its version of the governor's budget,
followed by the Senate in May. Each of those debates
usually takes about three or four days apiece. That
leaves about a month - and sometimes longer - for a
conference committee of negotiators from both
branches to iron out many budget differences and
send the governor a consensus budget for his review.
Senate Ways and Means Chairman
Michael Rodrigues confirmed to the News Service
Monday that it's his intention that all of those
steps will be finished by Oct. 31, when a more than
$16 billion interim budget authorization expires....
With the revenue roundtable
planned for next Wednesday, the Legislature would
have a little more than three full weeks after
hearing from economists to finish its budget. It's a
stretch that coincides with the buildup to the
November election when legislators would otherwise
be focused on their own reelections, or campaigning
for colleagues and other candidates for state and
federal office....
The Legislature punted on
trying to devise a full-year spending plan while in
the throes of the COVID-19 pandemic this spring, and
extended its session indefinitely past July 31
knowing that the budget would have to be dealt with
before the end of the year.
Senate leadership also told
members that they may be called back to vote on
emergency COVID-19 legislation or one of the five
conference committee reports -- police reform,
economic development, health care, transportation
borrowing and climate change - if and when deals are
reached.
"None of those are on the
horizon as we speak, the budget being probably the
closest," said Rodrigues, whose committee processes
most bills -- with the exception of conference
committee reports -- before they land on the Senate
floor for consideration.
The State House News
Service further reported on Thursday ("'Michlewitz Flags
Budget 'Starting Points' —
HW&M Chair Won't Commit to Budget Timetable"):
One of the lawmakers most
responsible for crafting a budget for the fiscal
year that began in July expects the budget process
to get a reboot by the middle of this month when
Gov. Charlie Baker's administration puts forward
updated revenue assumptions.
Baker started the annual budget
process in January when he filed a $44.6 billion
proposal, but the COVID-19 pandemic brought work on
the budget to a screeching halt and Massachusetts
has been operating on a series of temporary budgets
-- which are due to expire in about a month -- since
July 1.
House Ways and Means Committee
Chairman Rep. Aaron Michlewitz told the News Service
he expects the budget process to get back into gear
starting next week when he and other state budget
managers will hear updated economic assessments from
a variety of experts....
As far as when the long overdue
fiscal year 2021 budget gets done, Michlewitz falls
somewhere between Senate Ways and Means Chairman
Sen. Michael Rodrigues, who has said he wants a
budget done by the end of October, and Senate
President Karen Spilka, who told local officials
this week that budget action on Beacon Hill will
likely come after the Nov. 3 presidential
election....
By not passing a state budget
so deep into the fiscal year, the Legislature has
ceded authority over spending decisions to Baker for
the first third of the budget year. Without
including myriad spending directives as they usually
do in a state budget, lawmakers passed a $5.5
billion budget to cover expenses in July and then
approved a three-month $16.5 billion budget.
Two months into the fiscal
year, state tax collections are running $124 million
or more than 3 percent ahead of their pace one year
ago, the Department of Revenue reported early in
September, a promising sign given predictions of a
revenue collapse this fiscal year.
On October 1 the News
Service added ("Spilka: Baker Budget Refile May Spark
Post-Election Debate"):
Senate President Karen Spilka
told local officials in her district this week that
action on the overdue annual state budget is
unlikely to happen in the Legislature until after
the November election, a softer target than the more
ambitious goal articulated earlier in the week by
the Senate's budget chief of making decisions on how
to spend billions in tax dollars by the end of
October. . . .
A rare post-election budget
debate would mean that scores of major decisions
about spending would be made in part by a lame-duck
Legislature featuring some lawmakers who are
retiring and others who won't be returning in
January because they lost their elections.
Spilka told Holliston officials
another interim budget is "very possible," and
suggested the Legislature was inclined to wait a
little longer to see if Congress will deliver
another stimulus package with aid for states and
municipalities.
Remember, the Legislature
— under its own
longstanding rule — was
supposed to recess for the remainder of the year
back on July 31. It instead upturned that rule and
voted to remain in session until the next Legislature is
sworn in in January. It asserted that legislators
needed more time to get things like the budget
— due by the end of last June —
done. That was more than three months ago
and what has been accomplished?
It reminds me of
the Biblical proverb; "Idle hands are the devil's workshop."
There's nothing like a deadline to focus attention,
and there's nothing like extending a deadline to
feed procrastination. Remember a month ago when
everything on Beacon Hill was about getting so much
accomplished before the July 31 recess deadline?
Now that they've agreed to ignore their own rule and
remain in session interminably the pressure is off
the pols; it's back to business-as-usual. Nothing
has come out of any of the numerous conference
committees, and nothing likely will until the next
deadline, after they are safely re-elected.
On September
30 the News Service reported ("Baker: Reserves,
Borrowing Not Needed for Fiscal 2020"):
State tax collections in the
fiscal year that ended June 30 came up about $693
million short of expectations, mostly driven by an
evaporation of sales tax revenue, Gov. Charlie Baker
said Wednesday as he filed a bill to close the books
on fiscal year 2020 without borrowing or tapping the
state's reserves.
The $424 million supplemental
budget (HD 5307) carries a net state cost of $197
million, which Baker said is mostly to cover
expenses at MassHealth, the state's Medicaid
program.
The governor said Massachusetts
does not need to dip into its $3.5 billion
Stabilization Fund to close the books on FY20 in
part because state spending, which is managed by the
executive branch, was slowed in the spring as the
COVID-19 pandemic upended state programs.
On October 30 State House
News Service noted ("Spilka: Baker Budget Refile May
Spark Post-Election Debate"):
Tax collections
over the first two months of fiscal 2021 are actually on the
rise compared to last year, with a report due next week on
collections for September, which is typically a major month for
tax receipts.
On September 4 the News
Service reported on the last Department of Revenue
monthly report ("State
Tax Collections Continue to Rebound
— Running Ahead of FY 2020
After Steep Decline in Spring"):
Having taken in $1.992 billion in tax revenue in
August, state tax collections are running $124
million or more than 3 percent ahead of their pace
one year ago, the Department of Revenue reported
Friday, a potentially promising sign given
predictions that receipts could collapse this fiscal
year.
Of
the $1.992 billion collected last month, all but $13
million will go towards fiscal year 2021. Counting
the $1.979 billion that will be recorded in FY 2021,
August collections were $7 million less than the
August 2019 collections, DOR said. But through two
months of FY 2021, DOR said it has collected roughly
$4.135 billion, which is $124 million or 3.1 percent
more than it had collected during the same period of
fiscal 2020.
This is the old
"expectations" vs. reality game. Revenue collected
in this fiscal year exceeds that of last fiscal year,
pre-Chinese Coronavirus pandemic —
but failed to meet "expectations" conjured up by
"economic experts" such as those who will again divine
their revised tea leaves on Wednesday.
Meanwhile the volume of the tax hike
conversation is ratcheting up. In its Weekly Roundup on Friday
the State House News Service noted:
Without federal aid, Spilka said the Senate was "guestimating"
a $5 billion revenue shortfall in fiscal 2021, and
some liberal think tanks and legislators said
borrowing should not be part of the long-term
solution.
"We need to raise significant amounts of progressive
revenue to invest in the programs that will allow
people to stay safe," said Rep. Mike Connolly, a
Cambridge Democrat.
Spilka wasn't ready to start talking taxes just yet,
however, telling local officials in Holliston during
a visit with the Board of Selectmen that the
Legislature will give Congress a little more time
before trying to pass a fiscal 2021 state budget,
now not likely until after the election.
Stay tuned and keep your
eyes and ears open . . .
|
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|
Chip Ford
Executive Director |
|
|
|
Full News Reports Follow
(excerpted above) |
|
The Boston
Herald
Wednesday, September 30, 2020
A Boston Herald editorial
Tax hikes should be last resort as state seeks revenue
The coronavirus pandemic did a number on the state budget as
revenues plummeted but funding for services still had to be
maintained.
Hence, a flurry of borrowing to keep Massachusetts afloat.
But we’re not out of the woods. A projection earlier this
month for the State House News Service by the Center for
State Policy Analysis at Tufts University suggests a nearly
$1.6 billion reduction in anticipated fiscal 2021 tax
revenues.
Last week, Gov. Charlie Baker said the state should be able
to close out fiscal 2020 and manage through fiscal 2021, but
he was concerned about where Massachusetts would be
financially in FY 2022.
“Long story short, the FY20 budget is going to be fine,
alright,” Baker said. “Generally speaking, we think (fiscal
2021) we can work our way through. But (fiscal 2022) we
believe it’s going to be important for the feds to support
states and municipalities.”
According to the News Service, Massachusetts Budget and
Policy Center, a state finance think tank, says it's time
for lawmakers to consider other ways to fill budget gaps,
other than borrowing money.
They include tapping into the state’s $3.5 billion reserves
and adopting “new policies to increase revenue.”
Translation: raising taxes.
MassBudget makes an excellent point in stating that debt
must be paid back, and one short-term borrowing option — a
$7.86 billion credit line through the U.S. Federal Reserve’s
Municipal Liquidity Fund — would have to be paid back by
2023.
The report from MassBudget didn’t get into specifics, but
it’s previously supported options that include raising the
personal income tax rate, raising the tax rate on capital
gains, imposing a surtax on the sale of multi-million dollar
homes, taxing large private college and university
endowments, and raising various corporate tax rates.
There are difficult financial decisions ahead, but as
lawmakers weigh options such as budget cuts and tax
increases against borrowing even more, we think ample
consideration should be given to the state of Massachusetts
residents’ own finances as we head into the next few years.
Even after rent and utility moratoriums are lifted, tenants
will have to repay past rent and bills. That’s a hefty
financial burden, assuming they are able to secure
employment. Those fortunate enough not to have missed rent
or utility payments, and who remain employed, may have a
partner in the household without a job, or are working
through pay cuts and furloughs.
There are very few who are coming through this pandemic
financially unscathed.
The surtax on the sale of multi-million dollar homes could
be an extra whammy for property owners in Boston, where a
proposed luxury real estate tax, introduced by Boston City
Councilors Kim Janey and Lydia Edwards, would levy a 2% real
estate transfer tax on residential and commercial properties
assessed over $2 million. The tax would raise an estimated
$169 million a year for affordable housing.
Taxing large private college and university endowments,
however, is a stellar idea.
There are many balls up in the air — cities and towns may be
eyeing property tax increases to mend their broken budgets
as well.
The state needs to find sustainable budget solutions,
understood, but many other options should be considered
before turning to beleaguered taxpayers.
Boston
Broadside
October 2020
40 Years Later Proposition 2½ Is Under Assault, Again
By Chip Ford
This November taxpayers will celebrate the 40th anniversary
of Proposition 2½. Citizens for Limited Taxation’s
(CLT) ballot question was adopted by the voters in 1980
after a furious campaign to defeat it by self-serving
interests vested in ever-increasing property and vehicle
excise taxes.
From its inception Proposition 2½ was detested by those
never satisfied that they’ve extracted enough from
taxpayers. For decades CLT has managed to fend off
numerous attacks time and again. Those assaults were
usually clear, direct, and obvious.
Not anymore. Now
they are stealthy, typically buried in some obscure language
within an unrelated “must pass” major bill. A recent
example was the “Community Benefit Districts” in 2018, stashed
deep within the massive Economic Development bill. It
would have created a whole new level of government —
neighborhood districts — each with its own power to tax property
above and beyond the limitations on municipalities imposed by
Prop 2½. CLT managed to kill that sneak attack just
moments before the Economic Development Law was passed.
We weren’t as successful last year with another end-run, this
one snuck into the $1.5 billion Education Funding Reform Law to
“analyze the impact” and “mitigate the constraints” of Prop 2½.
This year’s clandestine attack was secreted in the Senate’s
Transportation Bond Bill, which addresses massive state
borrowing and spending of over a billion dollars for
transportation projects.
Section 5 of S-2813 is titled "Local and Regional Transportation
Initiatives." Its twelve pages of the 61-page bond bill
creates a new scheme for circumventing Prop 2½ by providing
cities and towns another means of funding municipal
transportation costs for a “qualifying transportation project”
outside and beyond the restrictions of Proposition 2½.
A qualifying transportation project is defined as "a project or
program for the planning, design or construction of public or
mass transportation transit systems, transit-oriented
development, roads, bridges, bikeways, pedestrian pathways or
other transportation-related projects."
Those are costs historically borne by municipalities funded
within their budgets by overall municipal revenue, assisted by
Chapter 90 funds rightly provided by the state.
If more revenue is thought necessary for any municipal need,
Proposition 2½ provides a mechanism: Operational overrides and
debt exclusions. This has worked well for four decades,
with debt exclusions proposed and adopted for a multitude of
unbudgeted projects such as sewer systems; new schools and
municipal buildings; purchase of fire trucks and police
equipment; snow plows and other municipal equipment, etc.
If this becomes law it will create a slippery slope precedent
that can only expand: Municipal government responsibilities
funded à la carte.
Consider a future city or town ballot menu: Police protection,
vote yes to raise your taxes; continuing a fire department, vote
yes to raise your taxes; public works, vote yes to raise your
taxes; schools and education, vote yes to raise your taxes.
It now sits in the House/Senate Transportation Bond Bill
conference committee comprised of six members. The House’s
bill and the Senate’s have little in common. Whatever is
finally agreed to and reported out cannot be amended. It
will be quickly passed with a rubber-stamp vote, whisked to the
governor for his signature, and will become law. If it is
to be stopped that must happen now, in the conference committee.
For more information or to make a contribution to keep CLT
fighting for you visit our website at
http://cltg.org.
— Chip Ford is executive
director of Citizens for Limited Taxation: “46 years as ‘The
Voice of Massachusetts Taxpayers.’”)
State House
News Service
Wednesday, September 30, 2020
Baker: Reserves, Borrowing Not Needed for Fiscal 2020
Cap Gains, Slowed Spending Help Address Shortfall
By Colin A. Young
State tax collections in the fiscal year that ended June 30
came up about $693 million short of expectations, mostly
driven by an evaporation of sales tax revenue, Gov. Charlie
Baker said Wednesday as he filed a bill to close the books
on fiscal year 2020 without borrowing or tapping the state's
reserves.
The $424 million supplemental budget (HD 5307) carries a net
state cost of $197 million, which Baker said is mostly to
cover expenses at MassHealth, the state's Medicaid program.
The governor said Massachusetts does not need to dip into
its $3.5 billion Stabilization Fund to close the books on
FY20 in part because state spending, which is managed by the
executive branch, was slowed in the spring as the COVID-19
pandemic upended state programs.
Baker said the FY20 budget shortfall "was less severe than
some had feared" in part because businesses and employees
generally adapted well to remote working and others were
kept afloat with unemployment insurance, which contributed
to income tax withholding revenues meeting expectations set
before the pandemic hit.
"Outside of taxes, the budget picture was a complicated mix
of puts and takes," Baker wrote to lawmakers in his filing
letter. "Certain non-tax revenue, such as gaming revenue,
fell short of budgeted forecasts. Spending in many areas of
the budget slowed down, as COVID-19 prevented budgeted
activity. Spending directly related to the COVID-19 response
spiked in the spring, generally supported by federal aid.
... A temporary higher federal reimbursement rate for
MassHealth also helped mitigate the budget impacts of a
difficult spring."
The governor's closeout supp proposes keeping certain FY20
capital gains taxes in the state's General Fund to help plug
the FY20 gap rather than seeing them transferred to the
Stabilization Fund. Baker said his proposed change "will
allow us to close FY20 more cleanly while also reducing the
impact of FY21 tax shortfalls."
The Executive Office of Administration and Finance told the
News Service that approximately $390 million in capital
gains taxes is expected to remain in the General Fund if the
proposal is adopted, though the final amount would have to
be certified by the Department of Revenue.
Baker also proposes carrying over $108 million in FY20
appropriations into FY21, a result of spending slowdowns.
"Over half of this amount, $63 million at the Group
Insurance Commission, would use an FY20 surplus to cover the
future costs of public employee and retiree health care
deferred due to COVID-19," the governor wrote.
The bill proposes several non-budget policy changes,
including a clarification to the Paid Family and Medical
Leave Act dealing with personal care attendants, allowing
extended emergency civil service appointments if medical
exams or physical tests cannot be held, granting the
University of Massachusetts access to a short-term line of
credit to help with operating costs, and letting the
Department of Environmental Protection issue electronic
notices of non-compliance.
The governor also included re-filed sections of old bills,
including an allowance for the MBTA to use some capital
funds to pay employees, and restricting transportation
network companies like Lyft and Uber from implementing surge
pricing during a state of emergency unless the Department of
Public Utilities approves it.
Wednesday's filing of an FY20 closeout supp kicks off a
process that has turned somewhat ugly in recent years.
Every year, the state comptroller must finalize the books on
the fiscal year that ends June 30 and file the state's
annual Statutory Basis Financial Report by Oct. 31. The
comptroller cannot prepare the SBFR until the Legislature
passes and the governor signs a closeout supplemental
budget.
In recent years, lawmakers have waited longer and longer to
pass that bill, taking it up in October or even November,
rather than August or September as they used to do in the
late 1990s and early 2000s. The lateness of the closeout
supp devolved into a staring contest between former
Comptroller Andrew Maylor and the Legislature last year --
when Baker got the ball rolling on Sept. 6.
The Legislature took negotiations over last year's closeout
supp later into the year than any time since at least 1995,
forfeiting more than $1 million in interest that the state
could have earned had lawmakers completed their work on
time. This year is sure to be more complicated and the
process is starting more than three weeks later.
"As we roll out into September, we're aware of the dates but
with the delay in a number of tax types from April, this has
become an incredibly complex close," Michael Heffernan, the
Baker administration's secretary for administration and
finance, said earlier this month.
Massachusetts moved the deadlines for personal income tax
returns and payments from April 15 to July 15 and deferred
some sales, meals and room occupancy tax payments to
September as a result of the COVID-19 pandemic, and the
Department of Revenue was still collecting millions of
dollars of revenue for fiscal 2020 into August.
Baker's closeout supplemental budget will likely head first
to the House Ways and Means Committee and it might have some
company as it knocks around the House and Senate this fall.
In addition to dotting their Is and cross their Ts on the
FY20 budget, lawmakers also have to craft an annual budget
for the fiscal year that began July 1.
A $16.53 billion interim budget will keep state government
operating through at least the end of October, but no
revised fiscal 2021 budget has emerged as state government
heads deeper into the fall.
State House
News Service
Thursday, October 1, 2020
Spilka: Baker Budget Refile May Spark Post-Election Debate
Rodrigues Amends Budget Goal to "Soon as Possible"
By Matt Murphy
Senate President Karen Spilka told local officials in her
district this week that action on the overdue annual state
budget is unlikely to happen in the Legislature until after
the November election, a softer target than the more
ambitious goal articulated earlier in the week by the
Senate's budget chief of making decisions on how to spend
billions in tax dollars by the end of October.
Spilka also said that Gov. Charlie Baker may be planning to
file an updated version of the pre-pandemic fiscal 2021
spending plan he put forward in January, which would become
the jumping off point for the House and Senate to craft
their own budgets for the fiscal year that began on July 1.
"Currently the state budget has been delayed, as you know,"
Spilka said, appearing before the Holliston Board of
Selectmen and the town finance committee on Tuesday night.
"We are waiting on certain factors."
"We will also know more after the election. If the feds have
not done anything with a stimulus package, a second one,
before that, we'll have a better idea as to how to interpret
that with the election," Spilka said, according to a
recording of the meeting reviewed by the News Service.
The comments made by the Senate's top Democrat add to the
uncertainty of how Beacon Hill intends to proceed in the
development of an annual state budget as they continue to
wait for any clear signs from Congress about the prospects
for additional federal aid.
On Monday, Senate Ways and Means Chairman Michael Rodrigues
said his goal was to have a budget passed and on Gov.
Baker's desk by the end of the month when a three-month,
$16.5 billion interim budget expires. "Our idea is to get it
done by the end of October. I'm here today. I'm here every
day. We are working," Rodrigues said at the State House.
Rodrigues told the News Service on Thursday that he didn't
mean to imply it had to happen by the end of the month, and
that his goal is to finish the fiscal 2021 budget and turn
his attention to the fiscal 2022 budget "as soon as
possible." He acknowledged that was different from what he
said three days earlier, and said he could have been more
careful in choosing his words.
After learning of the News Service's reporting, Spilka
reached out to say she felt her comments were not
incompatible with what Rodrigues has been saying, and that
everything from the timeline for budget to the amount of
money lawmakers will have to spend remains uncertain.
"We would all love to get the budget done and focus on FY22.
But our need is to do it right. We need more clarity ... ,"
she said, pointing to renewed talks in Washington over
relief spending. "This week alone it's changed at least
three time what they're doing or not doing."
A rare post-election budget debate would mean that scores of
major decisions about spending would be made in part by a
lame-duck Legislature featuring some lawmakers who are
retiring and others who won't be returning in January
because they lost their elections.
Spilka told Holliston officials another interim budget is
"very possible," and suggested the Legislature was inclined
to wait a little longer to see if Congress will deliver
another stimulus package with aid for states and
municipalities.
"There are people saying we can hold out for months. I'm not
so certain. Eventually, we are going to need to do a
full-year budget," Spilka said, later specifying, "We need
to have a balanced budget and we need to get it done, I
would say hopefully before this year is out, this calendar
year."
Spilka went before the board with Rep. Carolyn Dykema, of
Holliston, to update the town on status of the state budget
as local officials try to plan their own finances for the
year.
She noted that Rodrigues and House Ways and Means Chairman
Aaron Michlewitz, whose committee has custody of the
governor's fiscal 2021 budget bill, meet every Monday
morning to discuss budget planning, but said the uncertainty
in Washington has made moving forward difficult.
"We have no idea at this point what the federal government
is doing. We need relief. It really is dependent a lot upon
what the feds do in terms of us putting together a budget,
but we will have a full year budget," Spilka said.
Next Wednesday, the Ways and Means committees have invited
economists and other fiscal experts to offer updated
projections for tax revenues for the remainder of the fiscal
year. The hearing falls about a week before the annual Oct.
15 deadline for the administration to make adjustments to
annual revenue projections that were agreed to by the
administration and the Legislature in January.
"The administration is required to certify revenues by Oct.
15 and they may be filing another budget, a revised budget
from what they did last January. We're not certain," Spilka
said.
A spokesman for Administration and Finance Secretary Michael
Heffernan would not say whether Baker intended to file
another budget, only that the administration was working
with legislative leaders. But officials in both the House,
Senate and administration told the News Service that a new
budget from Baker is on the table as an option, and that
votes in the Legislature were unlikely until after Nov. 3.
Holliston officials were particularly concerned that Beacon
Hill's promise to level fund unrestricted local aid and
Chapter 70 school aid, with a $107 million boost for
inflation, might get broken if Congress doesn't come through
with additional relief.
Spilka assured them that would not happen.
"We have given our commitment. The Senate, the House and the
governor. You don't get much better than that in this
business," Spilka said.
The Ashland Democrat, however, did say that support from
Washington would go a long way toward alleviating financial
pain in states like Massachusetts, where Gov. Baker
confirmed Wednesday that the COVID-19 pandemic took a $693
million bite out of expected revenues in fiscal 2020 and
Spilka said the Senate was "guestimating" that revenues
could drop up by up to $5 billion in fiscal 2021.
Tax collections over the first two months of fiscal 2021 are
actually on the rise compared to last year, with a report
due next week on collections for September, which is
typically a major month for tax receipts.
House Speaker Nancy Pelosi and Treasury Secretary Steve
Mnuchin revived stalled talks Wednesday over a stimulus
package, but were unable to reach a deal as negotiations
spilled over into Thursday.
Spilka said the $3.4 trillion Heroes Act passed by the House
would mean $10 billion for Massachusetts, but the latest
talks have revolved around a significantly smaller package
of aid.
Pelosi on Thursday said she's optimistic that Republicans
and Democrats can reach a deal on the next round of
coronavirus stimulus funding and that she hopes to bring a
bill to the floor for a vote later in the day.
Asked about taxes if the federal government doesn't come
through, Spilka said there are "other ways and other ideas."
"We have options, but we don't want to start going down the
path of one option if we're going to end up getting a decent
amount in the federal stimulus," she said.
In addition to the $3.5 billion "rainy day" fund, Spilka
said legislators could employ an accelerated sales tax
collection schedule that has been discussed for years, and
would offer a one-time shift of hundreds of millions in
sales taxes from one fiscal year to another.
The Baker administration filed a spending bill Wednesday to
close out fiscal 2020 without resorting to state reserves or
borrowing to address the revenue shortfall, instead
proposing to avoid a large capital gains tax deposit in the
rainy day fund to help close last year's deficit. While
Baker did not make formal spending cuts in response to last
fiscal year's revenue downturn, the administration says
spending slowed down.
State House
News Service
Thursday, October 1, 2020
Michlewitz Flags Budget “Starting Points”
HW&M Chair Won't Commit to Budget Timetable
By Colin A. Young
One of the lawmakers most responsible for crafting a budget
for the fiscal year that began in July expects the budget
process to get a reboot by the middle of this month when
Gov. Charlie Baker's administration puts forward updated
revenue assumptions.
Baker started the annual budget process in January when he
filed a $44.6 billion proposal, but the COVID-19 pandemic
brought work on the budget to a screeching halt and
Massachusetts has been operating on a series of temporary
budgets -- which are due to expire in about a month -- since
July 1.
House Ways and Means Committee Chairman Rep. Aaron
Michlewitz told the News Service he expects the budget
process to get back into gear starting next week when he and
other state budget managers will hear updated economic
assessments from a variety of experts.
"I'm hopeful that October 7 will provide us a little more
substantial depiction or forecast in terms of where we're
going to go. And at that point in time then the governor
has, by statute, he has to reassess the revenue number by
October 15," Michlewitz said in an interview that will be
featured on an episode of the "State House Takeout" podcast
to be released Friday. "And so I think that'll be a good
framework of really kickstarting the budget process and
getting it moving."
As far as when the long overdue fiscal year 2021 budget gets
done, Michlewitz falls somewhere between Senate Ways and
Means Chairman Sen. Michael Rodrigues, who has said he wants
a budget done by the end of October, and Senate President
Karen Spilka, who told local officials this week that budget
action on Beacon Hill will likely come after the Nov. 3
presidential election.
"We have two pieces there -- October 7, the roundtable and
then October 15, the reconfiguration of the revenue numbers
-- two starting points. And we're working hard to try to get
it done as quickly as we possibly can, but I don't want to
place arbitrary timetables on it because I think for us
these are going to be difficult decisions and I want to make
sure we get them right, or as right as possible," he said.
"And if that means we get it done by October 31, then that's
great. But if we don't, then I think we'll have to consider
other options."
The House and Senate usually process their annual state
budgets in April and May with the goal of having a plan in
place for the July 1 start of the fiscal year. The pandemic
canceled that schedule and the House agreed to a rule change
calling for a budget plan by July 1, but has still not
released a spending plan.
By not passing a state budget so deep into the fiscal year,
the Legislature has ceded authority over spending decisions
to Baker for the first third of the budget year. Without
including myriad spending directives as they usually do in a
state budget, lawmakers passed a $5.5 billion budget to
cover expenses in July and then approved a three-month $16.5
billion budget.
Two months into the fiscal year, state tax collections are
running $124 million or more than 3 percent ahead of their
pace one year ago, the Department of Revenue reported early
in September, a promising sign given predictions of a
revenue collapse this fiscal year.
"It's certainly good news, in particular because we've had
such bad news over the previous couple months. So any
glimmer of hope, I think we are running with and being
hopeful with. But I think it's still early to be definitive
in saying that this is a trend of positive things to come,"
he said. "There's still a little bit more time that needs to
be played out. And like I said, September will be another
stepping stone towards understanding where we are and in a
more accurate way."
By the time Michlewitz, Rodrigues and Administration and
Finance Secretary Michael Heffernan hear from economists and
other experts Wednesday morning, DOR is expected to have
announced September's tax collections and lawmakers will
have a better picture of where things stand at the quarter
pole of the fiscal year.
As if crafting a spending plan for the rest of fiscal 2021
was not enough, the Legislature and governor still must
close the books on fiscal year 2020, which ended June 30.
The $424 million supplemental budget (HD 5307) Baker filed
Wednesday to put fiscal 2020 to bed was sent to Michlewitz's
committee Thursday. The chairman said his staff was still
vetting the bill, but he said the governor's proposal to
plug the fiscal 2020 gap without touching the state's $3.5
billion rainy day fund is the right way to go at it.
"That was something that we felt was the necessary approach
because of just the dramatic impact that we are going to see
in FY 21, potentially in FY 22, and even beyond," Michlewitz
said. "Touching the rainy day fund is something that we want
to be very clear is one of the last resorts that we want to
do. And so if we can get through FY 20 without touching it
-- and I think the governor has accomplished that with what
he's filing here -- I think that that's what the direction
we'll want to take as well."
State House
News Service
Monday, September 28, 2020
Rodrigues Still Planning for October Budget
Timeframe Would Require Extensive House-Senate Collaboration
By Matt Murphy
The House and Senate may be getting ready in unprecedented
economic times to attempt to do in three weeks what would
ordinarily take three months, according to the Senate's top
budget writer. That would be to draft and put an annual
state budget on Gov. Charlie Baker's desk.
But exactly how the Legislature would accomplish this feat
remains to be explained.
The House and Senate Ways and Means committees, along with
Administration and Finance Secretary Michael Heffernan, plan
to welcome back a slate of economic experts and fiscal
prognosticators next week for the second time during the
pandemic to help them forecast tax revenues for the last
nine months of the fiscal year.
After that hearing, the leadership on Beacon Hill will need
to agree to a revised tax estimate for fiscal 2021 and build
spending plans around that anticipated revenue. The
assumption is that forecasts will have improved since April
when experts were predicting as much as $6 billion in lost
tax revenue.
But in a typical year, the act of formulating a revenue
estimate usually takes a month, following by the governor
filing a budget in January. The House in April then releases
and debates its version of the governor's budget, followed
by the Senate in May. Each of those debates usually takes
about three or four days apiece. That leaves about a month -
and sometimes longer - for a conference committee of
negotiators from both branches to iron out many budget
differences and send the governor a consensus budget for his
review.
Senate Ways and Means Chairman Michael Rodrigues confirmed
to the News Service Monday that it's his intention that all
of those steps will be finished by Oct. 31, when a more than
$16 billion interim budget authorization expires.
"Our idea is to get it done by the end of October. I'm here
today. I'm here every day. We are working," Rodrigues said
as he exited the Senate chamber, wearing a Westport Wildcats
cloth face mask.
Rodrigues said no decision has been made on whether House
and Senate leadership will try to pre-negotiate a budget
before presenting it to their full membership for
amendments, but the Westport Democrat said leaders are
hoping to avoid having to pass another interim budget.
Senate Democrats plan a caucus on Thursday, and no one
outside of Rodrigues, including no one from the House, has
outlined any sort of time frame for consideration of a
budget.
With the revenue roundtable planned for next Wednesday, the
Legislature would have a little more than three full weeks
after hearing from economists to finish its budget. It's a
stretch that coincides with the buildup to the November
election when legislators would otherwise be focused on
their own reelections, or campaigning for colleagues and
other candidates for state and federal office.
Passing something as large and complex as a state budget in
such a tight timeframe would also require a level of
cooperation between the leadership of the two
Democrat-controlled chambers unseen during this first
session of Speaker Robert DeLeo and Senate President Karen
Spilka working together.
Gov. Baker last week said his administration has been
working closely with legislative leaders, and expressed
confidence in being able to "work our way through" the
current fiscal year. But Baker's comments came during the
same press conference that he ripped into Congress for
failing to compromise on a new round of coronavirus stimulus
spending that would send aid back to states.
Rodrigues, who has suggested the state will need to draw
heavily from its $3.5 billion cash reserve, said state
lawmakers can't wait on Congress for much longer.
"It's getting less certain that we're going to have any sort
of help from the feds at all. And that's critical. That's
something we were hoping, back in July, for certainty from
the the feds. Unfortunately down in D.C., they're not
working, so we will work up here," Rodrigues said.
The Legislature punted on trying to devise a full-year
spending plan while in the throes of the COVID-19 pandemic
this spring, and extended its session indefinitely past July
31 knowing that the budget would have to be dealt with
before the end of the year.
Senate leadership also told members that they may be called
back to vote on emergency COVID-19 legislation or one of the
five conference committee reports -- police reform, economic
development, health care, transportation borrowing and
climate change - if and when deals are reached.
"None of those are on the horizon as we speak, the budget
being probably the closest," said Rodrigues, whose committee
processes most bills -- with the exception of conference
committee reports -- before they land on the Senate floor
for consideration.
So how does the Ways and Means chairman expect to finalize a
budget in just three weeks?
"We'll see. Good question. I'll have to make sure I eat my
Wheaties," Rodrigues said.
State House
News Service
Friday, October 2, 2020
Weekly Roundup - Debatable Strategies
Recap and analysis of the week in state government
By Matt Murphy
Strap on your roller skates. Grab your laser tag gun. And,
for goodness sake, wear a mask.
The season everyone feared - fall - is here, and COVID-19
cases are, in fact, on the rise in Massachusetts. While no
one is yet saying the second surge has arrived, some
epidemiologists and medical professionals, like
Massachusetts Medical Society President Dr. David Rosman,
are warning policy leaders to proceed with caution.
That didn't stop Gov. Charlie Baker from moving ahead with
economic reopening plans, fueled by the belief that social
and business activities can resume safely in communities
that look to have the virus under control.
And that, of course, means distancing and wearing masks.
Despite a week of elevated case counts and a positive test
rate that by some measures is approaching 3 percent, Baker
on Tuesday greenlighted the reopening of a host of new
businesses, from roller rinks and trampoline parks to indoor
concert and performance venues, with half-capacity, or 250
people, limits.
"If people are going to go inside, which they probably will,
I would much rather have them go inside in organized and
supervised ways with rules than in unorganized, unsupervised
ways with no rules," the governor said.
The only catch is that those businesses must be located
within a community that's been gray, green or yellow for the
past three weeks, meaning less than eight cases of COVID-19
for every 100,000 people per day.
And that does not include the city of Boston.
Mayor Marty Walsh said his city would not be reopening
concert halls and theaters after the capital tipped into the
red category with a daily incidence rate of 8.5 new COVID-19
cases for every 100,000 people.
Walsh sounded a lot of the same notes that Baker does when
talking about spikes in cases, blaming irresponsible
individuals, including college students, for pockets of
infection rather than a more systemic problem.
"I do get frustrated because here we are today laying down
millions of dollars to open school, we have businesses on
the verge of bankruptcy, we have restaurants that need to
open up, we have arts venues that need to open up, we have
people that have to come back to work and we're in the
process of [being] concerned about do we have to shut
everything down again because 25 here, 25 there, 25 people
over here decided to get together and have a party and raise
the number in Boston to get us to the red point," Walsh
said.
In other words, if everyone just wore their masks and kept
their distance...
Because not even the president of the United States can be
properly insulated from the virus
After a debate on Tuesday night with Joe Biden that became
memorable for all the wrong reasons, Trump revealed early
Friday morning that he and First Lady Melanie Trump - along
with senior advisor Hope Hicks - had contracted COVID-19,
upending the election in ways a belligerent debate
performance never could.
Suddenly, Biden calling Trump a "clown," and telling him,
"Will you shut up, man," no longer had pundits breathlessly
parsing those words.
Even before Trump's diagnosis attracted the eyes of the
nation to the capital, Beacon Hill was watching Washington
closely. Everyone from Gov. Baker to Senate President Karen
Spilka has been waiting on Congress to deliver another round
of coronavirus relief. Let's hope they're not holding their
breath.
Even after talks were resuscitated between Speaker Nancy
Pelosi and Treasury Secretary Steve Mnuchin, there was no
deal to be had. The House wound up pushing forward with a
largely symbolic vote on a slimmed down $2.2 trillion
version of the Heroes Act that had zero chances of advancing
in the Senate, basically leaving Congress where it started
the week -- nowhere. The new relief bill passed 214-207,
with 18 Democrats, but none from Massachusetts, voting no.
Without federal aid, Spilka said the Senate was "guestimating"
a $5 billion revenue shortfall in fiscal 2021, and some
liberal think tanks and legislators said borrowing should
not be part of the long-term solution.
"We need to raise significant amounts of progressive revenue
to invest in the programs that will allow people to stay
safe," said Rep. Mike Connolly, a Cambridge Democrat.
Spilka wasn't ready to start talking taxes just yet,
however, telling local officials in Holliston during a visit
with the Board of Selectmen that the Legislature will give
Congress a little more time before trying to pass a fiscal
2021 state budget, now not likely until after the election.
In saying that, she basically threw cold water on the
suggestion earlier in the week by Senate Ways and Means
Chairman Michael Rodrigues that completion of the budget
before the end of October was not only a possibility, but
his goal.
Rodrigues is now saying he hopes to get a budget done "as
soon as possible," and his counterpart in the House, Rep.
Aaron Michlewitz, is expecting the Baker administration to
update revenue projections for the rest of the fiscal year
by Oct. 15, after officials hear next week from economists.
That revenue update, according to Spilka and other
officials, could include the filing of a completely revised
budget from the governor, which would jumpstart a process
that has been stalled since March.
One positive sign for the state's ability to get through the
next couple of years is that Baker was able to file a budget
bill to close-out fiscal 2020 this week that did not borrow
or draw down on the state's $3.5 billion "rainy day" fund,
despite tax collections ending the year $693 million below
expectations.
Instead, Baker is relying on unspecified slowdowns in
spending during the pandemic and a proposal to cancel a
planned deposit of some capital gains tax revenue into
reserves.
The pandemic pain inflicted on the budget last year was not
as bad as had been feared, Baker said, and officials are
hoping the same will be said of fiscal 2021.
The economic pain, however, has not been fully relieved, and
housing advocates are warning that if the state's eviction
moratorium is allowed by Gov. Baker to expire on Oct. 17
between 20,000 and 80,000 people could lose their homes.
Both the governor and Rep. Kevin Honan, the House chair of
the House Committee, said they are talking with the courts
about possible courses of action.
In the meantime Honan's committee advanced his own bill (H
4878) that would freeze evictions and rent increases for a
year beyond the end of the COVID-19 emergency, and extend
financial protections to small landlords as well.
Need more to worry about? Well, if you live near the
Weymouth compressor station you were given reason to be
concerned.
Because after the second forced shutdown of the brand new
natural gas plant this week, Enbridge said it would be
pausing operations and the feds ordered it shut down until
the company can properly investigate the cause for the
latest shutdown and put together a response plan.
Opponents of the controversial compressor station have long
said it should never have been permitted.
But in another industry this week, gaming regulators were
feeling good enough about their decision to license the
five-year-old slots parlor in Plainville that they handed
Plainridge Park Casino another five years to operate.
STORY OF THE WEEK: A resurgent virus doesn't stop targeted
economic reopening plan
State House
News Service
Friday, October 2, 2020
Advances - Week of Oct. 5, 2020
With COVID-19 cases on the rise, the state's four largest
cities and many other large communities won't be able to
move ahead with the type of economic reopening measures that
Gov. Charlie Baker has permitted, beginning on Monday. Baker
has given the go-ahead to a range of new activities, saying
he's convinced it's safe to do so in lower risk communities,
but the governor is facing calls for a less aggressive
reopening posture since so many heavily populated
communities are coded red, marking the highest risk of virus
transmission under his administration's system. The newest
reopening stage, combined with the recent rise in cases and
the resumption of in-person schooling, are creating some
extra unease during these early days of October.
The news of President Trump's positive COVID-19 test on
Friday sent another shockwave rippling through 2020, and
kept the U.S. focused on Washington where the Senate is
about to vet his nominee to the U.S. Supreme Court, Amy
Coney Barrett, and talks about a COVID relief bill won't
die, in part due to the desire across sectors of the economy
for relief measures and initiatives that provide economic
fuel.
House Democrats have come down to $2.2 trillion from their
$3.4 trillion plan in May and Republicans have come up from
their initial proposal, with White House economic advisor
Larry Kudlow saying Friday that Treasury Secretary Steven
Mnuchin told him a $1.5 trillion deal was something viewed
as possible by the White House. It seems there's a targeted
deal to be had in there somewhere, but the sides aren't yet
willing to say yes to a compromise.
"The bid and the offer has narrowed but it's still pretty
far apart," Kudlow told Bloomberg TV. Kudlow said Trump is
willing to support more spending than Senate Republicans and
that he doesn't have a deadline in mind for talks since
there's "way too much hardship" out there in the U.S.
On Beacon Hill, the drawn-out stimulus talks in Washington
seem to have immobilized state budget writers. Massachusetts
is now into its fourth month running on interim budgets and
the Legislature and Gov. Charlie Baker have not even
proposed a fiscal 2021 budget, which will actually only
cover spending for, at most, the last eight months of the
fiscal year.
Legislators and the Baker administration reconvene economic
experts to hear updates on the uncertain outlook, which has
improved since their last gathering in April, and there are
signs that the Baker administration will soon get the budget
ball rolling with a refiled fiscal 2021 budget based on
revenue assumptions that will be revised by an Oct. 15 state
finance milestone marker.
House Ways and Means Chairman Aaron Michlewitz told the News
Service this week that a similar hearing held in April was
helpful, but that he expects the economists and others to
have a clearer sense of what's in store now that they've
observed almost six months of pandemic era data.
"I don't want to downplay anything that they told us in
April, but I think a lot of us were relatively not sure
about -- even though we were saying things I'm not
necessarily sure we were being completely 100 percent
certain in our accuracy because of just the inexperience we
had with dealing with a global pandemic and the economic
fallout of that," he said. "I'm hopeful that October 7 will
provide us a little more substantial depiction or forecast
in terms of where we're going to go." The chairman said he
expects the Wednesday hearing, followed by updated revenue
assumptions due from Gov. Baker by Oct. 15, will reboot the
budget process.
.... The week ahead is also scheduled to bring the lone
debate between Sen. Edward Markey and Republican Kevin
O'Connor (Monday) and the only debate between Vice President
Mike Pence and Democrat Kamala Harris (Wednesday) ... The
Supreme Judicial Court gavels in Monday at 9 a.m. for the
first time since Chief Justice Ralph Gants died ... Mail-in
and early voting are the topics Secretary Galvin wants to
talk about at a Monday morning press conference ... The MBTA
Board delves more deeply into the unpopular options on the
table in the face of plummeting ridership numbers ... And
lawmakers convene a hearing on Tuesday to explore the
pandemic's impacts on higher education ...
Wednesday
FISCAL OUTLOOK HEARING: More than three months into fiscal
2021, state officials still in search of a budget proposal
plan to call economic experts back to Beacon Hill to learn
their latest views of the economic and fiscal impacts of the
COVID-19 pandemic on Massachusetts. Secretary of
Administration and Finance Michael Heffernan, Senate Ways
and Means Chair Michael Rodrigues and House Ways and Means
Chair Aaron Michlewitz are hosting the virtual roundtable.
Gov. Charlie Baker has not made any announcements about how
he'll balance the fiscal 2020 budget nor has he offered a
redrafted fiscal 2021 budget. Baker in January filed a
billion fiscal 2021 budget but that bill is widely viewed as
irrelevant now since it was crafted before the pandemic
threw state spending and revenue patterns out of whack.
The House usually proposes its annual budget in April but
this year agreed to extend that deadline to July 1. But no
budget emerged by that date and legislators and Gov. Baker
have used boilerplate interim budgets to keep government
open over the first three months of the fiscal year, with
enough money set aside to also keep services operating and
people employed through October.
"The economic roundtable that was held in April helped us
get a better grasp on the current and future fiscal health
of the Commonwealth. Now, as we make our way through the
remainder of fiscal year 2021 and look towards fiscal year
2022, it is crucial that we have as clear of a picture as
possible before we make any significant budgetary
decisions," Michlewitz said.
The State House remains closed to the public and the hearing
will also be closed to the public, with participants in the
hearing room practicing social distancing. The roundtable
will be broadcast on the Legislature's website. (Wednesday,
10 a.m., Room A-2, State House)
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