House Speaker Thomas M. Finneran's leadership lieutenants
treat themselves to a multi-million-dollar pork bonanza in a new environmental bond bill slated for debate today.
The $424 million borrowing bill is riddled with earmarks for
parks, rail-trails, pond-dredging projects, ice-skating rink renovations and swamp clean-ups.
The bond offering - which is the equivalent of flashing the
state's credit card - comes as Beacon Hill leaders are scrambling to fill a $2.5 billion cash budget deficit that
yawns wider every month.
Lawmakers always clamor for environmental earmarks, which
are highly popular with their constituents, especially in election years.
But while House leaders said "no" to most rank-and-file
members' requests, they managed to squeeze in many of their own priorities.
Of the two dozen or so members who secured earmarks, most
went to districts represented by Finneran's chairmen or favored lawmakers.
"We couldn't accommodate every request, nor should we," said
House Ways and Means Chairman John H. Rogers (D-Norwood).
The bill is expected to fly through the House today, before
lawmakers dive into a potentially heated fray over proposed reforms to bilingual education.
Rogers - Finneran's right-hand man and the author of the
bond bill - was the hands-down winner in the earmarking spree.
The House budget chief set aside five separate piles of
money, totaling just shy of $3 million, for his hometown of Norwood and neighboring Walpole, which he also represents.
Rogers claimed he refused one lawmaker's request to
reimburse a town for buying open space, arguing it was "poor public policy."
But he set aside $375,000 to buy 6.5 acres of land in
Norwood, and found another $3 million to buy open space in Education Committee Chairman Rep. Peter J. Larkin's Pittsfield
district.
Rogers also scared up $2.2 million for "restoration of
fields" in Norwood; $200,000 to dredge a Walpole pond; and $50,000 for a nature trail in Walpole.
However, the state's staggering debt load - $13 billion and
counting - makes Wall Street credit agencies jittery when state leaders come begging for an interest-lowering bond
upgrade. Massachusetts has long had one of the highest debt loads in the
nation - and Moody's Investors Service recently awarded the state the top per-capita slot.
"We're keenly aware that we have to tone that down," Rogers
said.
But House leaders could face a struggle as they try to
contain pent-up appetites among rank-and-file lawmakers who have already gone along with nearly $1 billion in program cuts,
and are facing the prospect of slashing $500 million more.
Last month, state senators loaded up a parallel environmental bond bill with dozens of
pet-project amendments, driving the bottom line past $900 million.
The Senate's five-year offering is widely regarded as more
generous than the House's two-year plan.
Parsimonious though it may be, House leaders made sure to
drop a handful of goodies into the lap of Rep. Maryanne Lewis (D-Dedham), a Finneran floor division leader who's facing a
tough re-election fight from mostly anti-Finneran forces.
In addition to announcing the bond bill at a feel-good press
conference in Lewis' district, the bill contains the following Dedham-specific earmarks: $250,000 for a "passive recreation
trail;" $550,000 for a rail-trail; and $200,000 for park and playground improvements.
And House leaders rewarded Taxation Committee Chairman Paul
C. Casey (D-Winchester), who shepherded a $1 billion tax-hike through the House. Casey scored a
$3.5 million earmark in the bond bill to study and repair several dams in his Winchester
hometown, and $500,000 to clean up the Aberjona River and Horn Pond in Winchester.
And one-time anti-Finneran insurgent Rep. Daniel E. Bosley
landed a $2 million kitty for improvements to the Vietnam Veterans Skating Rink in his North Adams hometown.
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The Boston Globe
Wednesday, June 19, 2002
Capital gains tax hike would be retroactive
By Rick Klein
Globe Staff
It is a little-noted provision of the $1.2 billion tax
package just approved by the House and Senate: The capital gains tax increase would be retroactive to Jan. 1.
It was an attractive move to Beacon Hill lawmakers who are
seeking to close a budget gap that figures to top $2 billion next year. By making the tax hike effective Jan. 1, instead of
July 1 when the new fiscal year begins, the state would generate an estimated $100 million to
$200 million more.
But after receiving initial approval from both branches of
the Legislature with little debate, the measure has created a swirl of anger as citizens realize the impact. It's startling
to taxpayers like Arthur Johanningsmeier, who made financial decisions earlier this year expecting to be
taxed under the current capital gains schedule, which favors long-term
investors with lower rates. Instead, many will get hit hard.
Johanningsmeier owned a home that he had rented out in
Mission Hill since 1979. When he sold it in March, he was looking forward to the tax benefit offered to those who have
held onto an asset for more than six years: no state capital gains tax.
But under the new Legislature-backed system, instead of
capital gains being taxed on a sliding scale of between 12 percent and zero based on how long the asset was held, all
capital gains on assets held for more than a year would be taxed like regular income: 5.3
percent. The difference for Johanningsmeier, 71, is $20,000.
"It's totally unfair to change things in the middle like
that, and make me pay for it," said Johanningsmeier, a retired ecologist and biochemist who lives in Ashburnham. "I'm retired.
I need that money. I shouldn't have to live with something that they've passed after the fact."
Acting Governor Jane Swift and other Republicans are
incensed over the retroactivity, saying it's simply unfair to people who played by the rules to change them after sales are
made. Even House Speaker Thomas M. Finneran, who helped craft the tax package, is having
second thoughts.
Finneran told the Globe this week that he'll talk to Senate
leaders about changing that aspect of the package, perhaps pushing back the effective date to March or April, when
lawmakers first started seriously discussing an overhaul to the state capital gains tax structure. The
budget must be negotiated by a conference committee before lawmakers take a
final vote on it.
"I've been thinking about that since we did it, and it's an
aspect of the tax bill that we did that I'm not particularly comfortable with," Finneran said. "I'd be open to a
revisitation of that."
Senate President Thomas F. Birmingham and Senate Ways and
Means chairman Mark C. Montigny did not return calls for comment yesterday. Last week, a Republican move to strip
the retroactivity portion of the capital gains tax increase failed on a 25-to-12 vote in the
Senate, with Montigny arguing on the Senate floor that the revenue from the move was
necessary to prop up "spending programs that every member cares about."
That argument doesn't fly for many Republicans, who are
accusing Democrats of socking taxpayers without regard to fairness.
"This is one of those real clear situations, where the
Democrats didn't care about any of the arguments," said Senate Republican leader Brian P. Lees of East Longmeadow. "All they
wanted to do was put taxes through, and the logic was just thrown out the window."
If the tax change isn't altered, it would amount to an
unusual penalty to long-term investors who decided to sell off assets early this year, said Stephen Ahern, an accountant and
financial planner with the Sullivan Bille Group in Tewksbury. Many people affected by it may
not even realize it until next spring, when they're preparing their 2002 tax returns.
The change would have minimal impact for most people who
have sold their primary residence this year, since the first $500,000 of a couple's profits from such a sale is exempt
from state taxation. But for people selling second homes or other property, and to
entrepreneurs and even anyone with a mutual fund, the impact can be considerable, Ahern
said.
"I've got a bunch of clients who are in tough situations,"
he said. "The fact that this is retroactive - it's just ridiculous. This tax is only going to be punitive."
Boston tax lawyer Kevin Long said the retroactive tax might
be grounds for a legal challenge, though he said he is aware of no precedent in Massachusetts on the issue and said he is not
actively pursuing a case.
"Most people in business like to have predictable outcomes,"
said Long, who is also a certified public accountant at Long and Vott in downtown Boston. "So to come and change
the tax laws after a transaction has already been completed is very unsettling."
The legislators' action has Matthew Jaro wondering aloud if
Massachusetts is the right place to run a business. When his software company was sold in April, he got cash for the
company stock he had held since 1989. Now, instead of owing no state tax on his profits, he
figures to get hit for $250,000 on his profit of about $5 million.
"For being a good citizen and investing in the economy,
you're penalized," said Jaro, 57, of Lexington. "If they make the tax atmosphere oppressive, you'll make people open in
Nashua or something. It's short-sighted. For a small amount of revenue that you bring in, you scare
away a good amount of business."
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The Lawrence Eagle-Tribune
Monday, June 10, 2002
Editorial
Declare the pennies on your eyes
OUR VIEW
The Massachusetts Senate wants to get a few more tax dollars out of the elderly before they
pass on to their final reward.
Spending one's final days in a nursing home bed is no one's
idea of the "golden years."
Except, that is, for the Massachusetts Senate. For the fat
and happy of Beacon Hill, there's gold in them there beds.
In the Senate's version of the $22.2 billion state budget is
a plan to raise revenues by imposing a $9 a day "bed fee" on nursing home patients who pay for their own care. The fee
amounts to $3,300 a year.
That's right. Grandma and Grandpa aren't going to get
through their final days without the state of Massachusetts squeezing a few more dollars out of them. Perhaps when they
finally have the misfortune to die, the Senate can go through their pockets for loose change.
Among the local supporters of this pickpocketing of the
elderly are state Rep. Brian S. Dempsey, D-Haverhill, and state Sen. Steven A.
Baddour, D-Methuen.
Supporters say it's the only way the state can get an extra
$145 million in matching federal Medicaid dollars to help pay for the nursing home care of those too poor to cover their own
bills.
It's another "tax the rich" scheme. But this time the rich
aren't Bill Gates or Ross Perot. They're the middle-class folks next door who were prudent enough to save for their old age
the people who didn't want to "be a burden" on their children or the state. The truly rich get
personal care in their own homes. Those who pay their own way to nursing homes generally
have little left over after a bill that can run into the thousands per month.
Dempsey and Baddour argue that the nursing homes should
absorb the cost of the bed fees since they will benefit from increased Medicaid reimbursement.
"Our position is that it's really on the backs of the
private pay nursing home people," Dempsey told our reporter. "If they pass the cost on, it's because they don't want to eat
into their own profits." Dempsey supported a similar provision in the House budget.
What Dempsey seemingly does not understand is that a nursing
home is a business. If it does not make a profit, it will close. The nursing homes will have little choice but to pass
the bed fee on to their patients.
The Senate should look elsewhere for money before going
after the little the elderly have left after a lifetime of taxation. Let them spend their final days without worrying
about the tax man.
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The Springfield Union-News
Thursday, June 13, 2002
Editorial
Nursing home tax plan won't fix ailing system
The Legislature is poised to raid the wrong piggy bank with
a proposal to boost Medicaid funding for the state's ailing nursing homes.
Under the plan, nursing homes would be assessed a daily
users' fee of $9.10 for each private-paying resident. The fee, which would exact a heavy toll on facilities with large
private-paying populations, won't generate enough money to fix the system, but it could place
an unnecessary burden on the senior citizens who scraped together enough money to move
into assisted living facilities.
Robert E. Markarian, 89, a former Springfield College
professor, is worried that a users' fee could affect his ability to stay at Reeds Landing, a Springfield facility that
provides retirement living, assisted living and nursing home care. Like Markarian, most Reeds Landing residents
sold their homes in order to buy a unit in the life-care community and
it's a delicate financial balancing act to meet other expenses.
Reeds Landing officials project the users' fee proposal
could wind up costing each resident more than $3,000 annually an amount that is apt to wipe out the piggy banks of most
senior citizens.
As the state works to cope with budget shortfalls, the
proposal is part of a complicated measure that would transfer money from the tobacco fund into the Medicaid budget as a way
to increase federal reimbursements, which are based on state dollars, to nursing homes. The
state would recoup its money by assessing the nursing homes the users' fee.
We agree with experts who say that the Legislature's
quick-fix idea for the beleaguered Medicaid system is a backward idea. Jesse Lee, an administrator at North Hill, a
retirement community in the eastern part of the state, said the proposal will force more people onto the
Medicaid rolls placing an even heavier burden on the system.
There is little argument that the Medicaid system is in
crisis. Inadequate staffing and low Medicaid reimbursements have taken a toll on the quality of care received by nursing
home residents including the 40,000 poor, Medicaid-dependent patients. They certainly deserve
better. But driving even more patients into the arms of Medicaid is a short-sighted solution.
Nursing home costs should be more broadly defrayed so the
burden will not fall entirely on those who have worked hard to maintain their independence and pay their own way for
health care. Perhaps better nursing home management may be part of the
answer.
There is no quick fix for what ails America's elder care
system, but asking some seniors to pay more to make up for its flaws is too bitter a pill to swallow.
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The Springfield Union-News
Saturday, June 15, 2002
Bed tax on nursing homes advances
By Patricia Norris
A contentious proposal designed to increase Medicaid funding
by taxing certain beds in the state's ailing nursing home system passed the Massachusetts Senate late Thursday.
Those who pay for their own nursing home care fear that
under the proposal they will be charged more to subsidize those who receive public Medicaid funds.
The complicated measure transfers money from the tobacco
fund into the Medicaid budget as a way to increase federal reimbursement to nursing homes, which is based on state
dollars. Under the proposal, the state would recoup its money by assessing nursing homes a
daily $9.10 user fee for non-Medicare beds. Federal funds pay for the Medicare beds used
for short-term stays.
Although the fee is directly assessed to a facility, not a
patient, the bill has stirred controversy because private-pay patients in nursing homes and those living in continuing-care
retirement communities fear their institutions will pass the cost onto them.
"I think they (legislators) are desperate. I think this is a
very poorly thought-out bill," said Barbara N. Olmsted, a resident of Reed's Landing in Springfield. "It seems a shame
that we have worked hard and saved our money throughout the years to take care of ourselves and
then to have something like this come up. It is just a shame."
Ernest J. Corrigan, spokesman for the Massachusetts Extended
Care Federation, an organization that represents most state nursing homes, said he was pleased with the Senate's
decision, but said the proposal must go before the Conference Committee
in order to hash out Senate and House differences with the bill. The Senate proposal specifies money must be
used to increase wages and benefits to direct-care workers such as certified nursing
assistants while the House version carves out $20 million to be used for other elderly services
such as home care, said Corrigan.
"What is unclear is how these versions will be merged," he
said. "But we are confident that the plight of nursing homes in Massachusetts has caught the attention of House and Senate
leadership.... The point is that this is not a perfect system, but what we have been living with
is more imperfect, and really, 50,000 people are living in jeopardy."
Some 70 percent of nursing home residents are on Medicaid,
the health insurance for the poor. Nursing homes have struggled for years with inadequate reimbursements from the
government, said Corrigan.
But Matthew J. Leahey, executive director of Reed's Landing,
the retirement community where Olmsted lives, said he believes the measure is shortsighted and fears the fee, if passed
on to residents, would increase the Medicaid rolls.
People who were living independently on a fixed income may
eventually become impoverished with the new charges, he said. Leahey estimates the fee will cost his facility
$3,300 per bed, per year. The proposal hits nursing homes with large private-pay
populations hard because they won't share in the Medicaid reimbursements.
"We are still doing everything we can (to fight this), but
it is a tough uphill battle," Leahey said.
Meanwhile, Reed's Landing resident Douglas O. Parker braces
for the worst.
"I think this is terrible," he said. "I don't know what we
are going to do. I think it will affect us and other people coming in here."
Corrigan said nursing homes and retirement communities have
the option to absorb the cost.
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