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The Constitutional Amendment Tax Trap - Myths and Facts, Part 1

Posted by John Regan on Jun 8, 2017 1:26:49 PM

Editor's note - Beacon HIll lawmakers will vote on Wednesday whether to place on the 2018 statewide ballot a proposed constitutional amendement that would impose a four percentage-point surtax (an 80 percent increase) on incomes of more than $1 million. AIM opposes the Constitutional Amendment Tax Trap and will look at the myths and facts surrounding the issue each day through next Wednesday.

Myth: Massachusetts has a revenue crisis and cannot support the cost of essential state government services without new taxes.

Fact: Massachusetts is one of the highest spending states in the nation on a per capita basis. Revenue collection and state spending in the commonwealth have increased significantly during the past 15 years. In that time period the state budget has doubled to more than $40 billion dollars, a growth rate that far outpaces inflation.

State Budget by Year 2017.jpg

Massachusetts has a spending problem, not a revenue crisis. Fiscal Year 2016 state revenues were $4.7 billion more than they were just five years earlier. In just the past five years, Massachusetts has increased the sales tax rate by 25 percent, raised the gas tax by 14 percent and adopted major policy changes, including casino gaming, designed to raise billions of dollars in new revenue each year. 

Revenue Trends-1.jpg

Myth: Massachusetts under-invests in its K-12 public educational system.

Fact: Massachusetts taxpayers support the seventh highest level of per-pupil spending in the country with an average expenditure of $15,000 per student each year. Massachusetts students perform better than their peers across the country, evidenced by the National Assessment of Education Progress (NAEP) eighth-grade student performance in Science (1st), Reading (tie 1st) and Math (tie 4th). (Source: MATTERS.mhtc.org; NCES)

Myth: Massachusetts under-invests in its transportation infrastructure.

Fact: Year after year, Massachusetts spends significantly more per mile on highways than nearly every other state in the country. Currently, Massachusetts spends more annually to build and maintain each mile of highway than 47 other states and four times the national average. Yet the condition of our roads and bridges is among the worst in the country.

The state Department of Transportation and MBTA acknowledge they are unable to effectively spend the capital funds already available to them.

According to Transportation Secretary Stephanie Pollack “for years the T [has been] leaving hundreds of millions on the table, failing to spend it on desperately needed maintenance and repair projects. The T is like a bathtub full of holes. Turning the spigot to let more water in is not going to fill up the bathtub. We need to fix the holes.”

Before any additional funds are expended, the state transportation system needs to adopt significant additional structural and management reforms and improvements.

State Highway Spending.jpg

(Sources: MATTERS.mhtc.org; the Reason Foundation; Boston Globe, 9.2.15)  

 

Topics: Taxes, Income Surtax

Employer Confidence Rebounds in May

Posted by Christopher Geehern on Jun 6, 2017 8:29:22 AM

Massachusetts employer confidence resumed its upward trajectory during May as companies expressed renewed optimism about their own business prospects and hiring plans.

BCI.May.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) edged up 0.6 points to 60.8 last month after retreating from a 13-year high in April. The Index has increased in eight of the past nine months and now stands 3.1 points higher than in May 2016.

The May advance was led by strengthening employer confidence in their companies, rather than their overall views of the state and national economies. Manufacturers were particularly bullish, ending May a full 7 points higher than a year earlier.

“We were not surprised to see confidence readings correct slightly in April, and the May results suggest that employers still feel positive about the future,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“In fact, employers seem to have more confidence in their own economic prospects than in the broader economies in which they operate.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The index has remained above 50 since October 2013.

The constituent indicators that make up the overall Business Confidence Index were mixed during May.

The Massachusetts Index, assessing business conditions within the commonwealth, lost 1.2 points to 62.1, leaving it a slim 1.8 points higher than in May 2016.

The U.S. Index of national business conditions shed 2.3 points to 57.2, its second consecutive decline. May marked the 86th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, rose 0.5 points to 60.4 while the Future Index, measuring expectations for six months out, increased 0.8 points to 61.3. The Future Index was 3.2 points higher than a year ago.

The Company Index, reflecting overall business conditions, gained 2.2 points for the month and 3.2 points for the 12-month period to 60.2. The Employment Index rose 2.3 points to 58.5, and the Sales Index was up 1.5 points to 62.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months are more optimistic – 38 percent hiring and only 10 percent downsizing.

Sara L. Johnson, Senior Research Director, Global Economics, IHS Markit, and a BEA member, said it is encouraging that employers are looking at their own balance sheets and feeling confident enough to anticipate stepped-up hiring.

“The overall AIM Index continues to move in a range that suggests solid optimism among employers, both in the current time frame and six months into the future. As optimism turns to hiring, the tight labor market is likely to put upward pressure on wages,” Johnson said.

The changing dynamics of the labor market were underscored last week when the government issued a jobs report that reflected a decline in the share of working-age adults who have a job or are in the market for one. Overall participation in the labor force has hovered below 63 percent during the recovery, compared with more than 66 percent before the recession.

For the second time in three months, Western Massachusetts companies were more confident in May than those in the eastern portion of the commonwealth. Western Massachusetts employers posted a 61.2 confidence reading in May versus 60.9 for employers in the western part of the state.

AIM President and CEO Richard C. Lord, also a BEA member, said employers appear to be drawing encouragement from within rather than looking for clues amid the chaotic and often contradictory signals of the overall economy and political debate.

“Employers, like everyone else, are still trying to digest the economic implications of the United States pulling out of the climate-change accord. They are also trying to balance the promise of meaningful federal tax reform with concern about renegotiated trade agreements and Medicaid changes that could blow a $2 billion hole in the state budget,” Lord aid.

“Amid all those factors, the potential acceleration of hiring speaks to the resiliency of Massachusetts employers and the global pre-eminence of their products and services.”

Topics: AIM Business Confidence Index, Massachusetts economy, Jobs

Senate Creates Roadmap for Debate on Employer Assessment

Posted by Katie Holahan on May 16, 2017 3:36:24 PM

The Massachusetts Senate today sought to define the process through which the Baker Administration might require employers pay for a shortfall in the MassHealth program.

statehousedome.jpgThe proposed Fiscal Year 2018 budget released by the Senate Ways & Means Committee gives the administration a choice of increasing the Employer Medical Assistance Contribution (EMAC) or creating a stand-alone quarterly assessment on employers.

The Senate envisions raising $180 million from such assessments versus the $300 million contained in the governor’s budget. Senators would also limit the life of those assessments to two years.

The approach of creating a roadmap for the administration is similar to the one adopted earlier by the House of Representatives, through the specifics of each proposal differ.

“The Senate Ways & Means Committee took a step in the right direction today by outlining a thoughtful and transparent approach to closing the Medicaid budget deficit. Employers are particularly encouraged that the committee’s budget proposal would raise $180 million from employers instead of $300 million; would provide the Baker Administration with the flexibility to find a solution; and would sunset any employer assessments,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

“The Senate plan again reminds us that the only long-term solution to the Medicaid funding issue is to redouble efforts to control the cost of providing health insurance to our low-income neighbors. Without such an effort, the Medicaid budget gap will continue to grow and divert precious resources from other priorities such as education and infrastructure.”

Lord also urged the Senate to add a provision that would require the Baker Administration to seek a federal waiver allowing Massachusetts to prevent people who receive an offer of health insurance from their employers from purchasing insurance through MassHealth.

The Senate proposal would require Secretary of Administration and Finance Kristen Lepore to file a letter with the Legislature by August 1 indicating whether she will choose the EMAC or assessment option. Regulations must be published by November 1 and take effect January 1 of next year.

Secretary Lepore could either increase the employer assessment for EMAC, an obscure program originally meant to provide health insurance to unemployed people, from .34 percent to .75 percent, or establish a separate employer assessment based upon whether or not an employer offers qualified health insurance and has a minimum uptake rate for that insurance.

The secretary would have  to consider the following in developing any assessment:

  1. how much the employer pays toward the employee’s insurance;
  2. how many employees they have;
  3. whether or not their employees are Massachusetts residents;
  4. how many employees are part-time
  5. whether or not their employees have access to health insurance through different private sources, like parental, spousal, veteran’s, or Medicare, for example.

Governor Baker originally proposed a $2,000-per-employee assessment upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, and that do not make a minimum contribution of $4,950 annual contribution for each full-time worker. If 70 percent of a company’s employees accept company health insurance, the company would be assessed $2,000 per employee for the number of employees represented by the 10 percent difference.

AIM has opposed the employer assessment because the growing shortfall at MassHealth, which provides health insurance to 1.9 million low-income Massachusetts residents, is attributable largely to problems arising from the federal health care reform. Federal reform made access to health insurance an entitlement based on expanded income eligibility and significantly expanded the roles of people on Medicaid.

The full Senate will vote on the Medicaid assessment proposal and the rest of its Fiscal Year 2018 budget blueprint later this week. House and Senate will then meet to work out differences.

 

Topics: Massachusetts senate, Health Care Costs, Employer Health Assessment

Governor Baker Addresses AIM Annual Meeting

Posted by Christopher Geehern on May 12, 2017 12:19:02 PM

Governor Charlie Baker delivered the keynote address at the 2017 AIM Annual Meeting last week in Boston. The governor reviewed the accomplishments of his administration and ended with a passionate plea for bipartisanship.

Here is his full speech...

Topics: AIM Annual Meeting, Massachusetts economy, Charlie Baker

Tech Foundry Addresses Burgeoning Need for IT Workers

Posted by Christopher Geehern on May 11, 2017 3:31:56 PM

Associated Industries of Massachusetts last week presented the John Gould Education and Workforce Development Award to Tech Foundry of Springfield.

Founded in 2013, Tech Foundry has trained more than 100 people ranging from high school students to older workers – many from underserved and at-risk populations – to meet the accelerating demand for qualified IT workers in western Massachusetts.

Here is their story...

 

Topics: AIM Annual Meeting, Education, Gould Education and Workforce Training

AIM Vision Awards | WHOI Makes Massachusetts Global Center of Ocean Science

Posted by Christopher Geehern on May 10, 2017 10:45:10 AM

Associated Industries of Massachusetts last week presented the second annual Vision Awards, which honor the accomplishments of companies and individuals who have made unique contributions to the economy and citizens of Massachusetts.

One of three 2017 Vision Awards went to Woods Hole Oceanographic Institution (WHOI) and its Director and President, Mark Abbott.

WHOI is the world’s largest, private non-profit oceanographic research institution and a global leader in the study and exploration of the ocean. An unmatched reputation for intellectual discovery under the water has allowed the organization to contribute to its economic surroundings out of the water as well.

Here is their story...

Topics: AIM Annual Meeting, Massachusetts employers, AIM Vision Award

AIM Vision Awards | Bright Horizons Helps Employers, Employees Balance Complex Work/Life Issues

Posted by Christopher Geehern on May 9, 2017 1:43:52 PM

Associated Industries of Massachusetts last week presented the second annual Vision Awards, which honor the accomplishments of companies and individuals who have made unique contributions to the economy and citizens of Massachusetts.

One of three 2017 Vision Awards went to Bright Horizons Family Solutions of Watertown and its co-founder, Linda Mason. Bright Horizons has forged a trusted global presence as an indispensable resource for employers and their workers seeking to address an increasingly complex array of work-life issues.

Here is their story...

 

Topics: AIM Annual Meeting, Massachusetts employers, AIM Vision Award

AIM Vision Award | Financial Services Pioneer Fidelity Continues to Innovate

Posted by Christopher Geehern on May 8, 2017 11:00:00 AM

Associated Industries of Massachusetts last week presented the second annual Vision Awards, which honor the accomplishments of companies and individuals who have made unique contributions to the economy and citizens of Massachusetts.

One of three 2017 Vision Awards went to financial services pioneer Fidelity Investments and its Chairman and Chief Executive Officer, Abby Johnson.

Fidelity has used innovation and an unrelenting focus on customer service to mold itself into a diversified financial services firm that is a leader in personal investing, workplace investing, and tools and services for financial intermediaries.

Here is their story:

Topics: AIM Annual Meeting, Massachusetts employers, AIM Vision Award

Governor Makes Case for Bipartisanship

Posted by Christopher Geehern on May 8, 2017 10:11:59 AM

Governor Charlie Baker, speaking one day after a health-care bill once again passed the US House of Representatives without a single vote from the minority party, made a passionate case for bipartisanship in a speech to the AIM Annual Meeting Friday.

Baker.2017.jpg“In the end, you’re not measured by how many things you opposed but how many things you get done,” the governor told more than 850 business leaders gathered at the Westin Boston Waterfront hotel.

“I take tremendous satisfaction from the fact that we get along with people on both sides of the aisle.”

Governor Baker has worked closely throughout his first two years in office with the two top Democrats in the Massachusetts Legislature – House Speaker Robert DeLeo and Senate President Stan Rosenberg – on complex issues ranging from the MBTA and energy policy to the opiate crisis. The bipartisan approach has made the governor the most popular chief executive in the nation, according to polls.

“I’ve learned a lot from people I don’t agree with,” said Governor Baker, who said his entire staff prides itself on listening to ideas from throughout the ideological spectrum.

The governor’s speech highlighted an Annual Meeting celebration that featured presentation of 2017 AIM Vision Awards to Fidelity Investments, Bright Horizons Family Solutions and Woods Hole Oceanographic Institution. AIM also presented the John Gould Education and Workforce Development Award to Tech Foundry of Springfield.

Governor Baker highlighted several bipartisan initiatives he said have been cornerstones of his administration:

  • Strengthening communities, including a $300 million funding increase for k-12 education, development of a second-generation MCAS test, $800 million for local roads and bridges and an initiative under which cities and towns can share best governing and management practices.
  • Economic growth, including a broad regulatory review, a multi-million-dollar investment in vocational/technical schools, streamlining of mass transit systems and an energy bill that maintains costs while reducing the commonwealth’s carbon footprint.
  • Improved efficiency, including reduced wait times at the Registry of Motor Vehicles and an overhaul of the Health Insurance Connector Authority, which broke down several years ago as residents were attempting to buy insurance.

Bipartisan cooperation, the governor said, was one of the primary reasons that General Electric Company chose to locate its corporate headquarters in Boston. The company has often cited the collaboration between the Republican Baker and Boston Mayor Marty Walsh, a Democrat, as a factor in its decision to move from Connecticut.

Governor Baker praised the work done by AIM to represent the interests of employers in public-policy debates.

He praised the association for its willingness to “speak candidly and straight about issues it cares about.”

Topics: AIM Annual Meeting, Massachusetts, Charlie Baker

Woods Hole Oceanographic President Discusses AIM Vision Award

Posted by Christopher Geehern on May 2, 2017 3:01:03 PM

Woods Hole Oceanographic Institution (WHOI) - the world’s largest, private non-profit oceanographic research institution and a lynchpin of the Massachusetts economy – will be one of three organizations honored with AIM Vision Awards on Friday.

Mark Abbott, the President and Executive Director of WHOI, spoke to Public Radio’s Living Lab Radio yesterday about receiving the Vision Award and about the organization’s long-term strategy for maintaining its status as a pre-eminent scientific center.

We invite you to listen to his comments. Please go to 6:07 on the audio download from WCAI in Falmouth.

Listen to the Interview

Other 2017 Vision Award winners are Fidelity Investments and Bright Horizons Family Solutions.

Topics: AIM Vision Award

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