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Budget Plan Includes T Reforms, Troubling Tax Reversal

Posted by Brad MacDougall on Jul 8, 2015 11:17:00 AM

A proposed $38.1 billion state budget to be debated today on Beacon Hill contains no broad-based tax increases and makes substantive public-transportation reforms sought by the business community.

State_House_and_One_BeaconEmployers are disappointed, however, that the spending blueprint reverses an agreement reached between business and the Legislature as part of the 2008 “combined reporting" tax policy change. Repeal of the so-called FAS 109 deduction, which had been postponed as the state revenues declined during the recession, could harm capital-intensive national and global companies.

“AIM continues to review the final budget for Fiscal Year 2016, but the budget conference committee has generally maintained the kind of spending discipline that employers support,” said John Regan, Executive Vice President of Government Affairs.

“The proposal lays the groundwork for real changes at the MBTA, changes intended to prevent the widespread service breakdowns we saw this past winter.”

The committee budget increases spending by 3.5 percent, less than the predicted 4.8 percent consensus on revenue growth. Unrestricted local aid would rise by $34 million and local education aid by $111.2 million.

The MBTA reforms provide Governor Charlie Baker with many of the tools he is seeking to overhaul the transit agency. The budget would suspend for three years the onerous privatization vetting of the Pacheco Law, give the secretary of transportation the authority to hire an MBTA general manager, increase the size of the state Transportation Board and create a temporary fiscal and management control board for the T.

The budget contains other good news for employers as well:

  • Requires state executive offices and agencies to develop measurable, outcome-based performance goals and metrics.
  • Forms a special commission to improve state agency information-sharing capabilities to facilitate new business registration.
  • Authorizes the commissioner or revenue to offer an amnesty program for tax penalties in 2016.
  • Provides $2 million to the Workforce Competitiveness Trust Fund, which will train new workers in manufacturing, hospitality and other high-need industries.

Beacon Hill observers say the FAS 109 deduction is being repealed to pay for an increase in the earned income tax credit for low-income workers. The reversal sends a troubling signal to employers that previous agreements on major tax policy may be changed on a whim.

“It certainly does not help the commonwealth’s reputation for consistency on tax matters,” Regan said.

AIM and other business groups will recommend today that the governor veto the FAS 109 repeal.

The 2008 Combined Reporting tax law brought income from companies' operations in other states into a unitary or "combined" Massachusetts return. The FAS 109 deduction was adopted to avoid penalizing companies after the fact for making capital investments. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences.

Fiscal Year 2016 began on July 1. If the Legislature approves the blueprint today, it goes to Governor Baker for his review. The Governor has 10 days to review the budget and take action - approve or veto the entire budget, veto or reduce specific line items, veto outside sections or submit changes as an amendment to the budget for further consideration by the Legislature.

The Legislature can override the governor’s vetoes with a two-thirds vote in each branch. The House must vote first to override any vetoes before they may be considered by the Senate.  

 

Topics: Massachusetts state budget, Budget, Taxes, Transportation

Midwest Pension Upheaval May Reverberate in Massachusetts

Posted by Christopher Geehern on Dec 5, 2013 2:15:00 PM

Two seismic developments from the nation’s heartland this week may expand the ability of Massachusetts and its cities and towns to address a looming crisis totaling $83 billion in unfunded pension and retiree health-care obligations.

DetroitFederal Judge Steven Rhodes ruled Tuesday that public employee pensions will not be protected as the financially struggling City of Detroit initiates a Chapter 9 bankruptcy. The ruling raised the prospect that emergency City Manager Kevyn Orr (right) may seek to reduce the pensions of 23,000 retirees in an effort to address an unfunded pension liability of $3.5 billion.

Several hours later, Illinois lawmakers approved an historic overhaul of the state's government-worker pension system that would raise the retirement age for many state workers and scale back the size of - and even skip - some annual cost-of-living increases. In return, the state would put a few hundred dollars into most workers' pockets by slightly reducing the amount of money they have to chip in from their paychecks.

Unions representing public employees plan to challenge both developments in court.

All this matters to Massachusetts because Bay State taxpayers are currently saddled with $37 billion in unfunded pension liabilities and $46 billion in unfunded health-care benefits. A report issued in October by the Massachusetts Taxpayers Foundation concludes that Massachusetts and its cities and towns have set aside just 43 percent of the money they need to pay benefits already promised to current employees and retirees.

“The troubling reality is that unfunded pension liabilities have grown over the past decade despite the  enormous sums that state and municipal governments have contributed to their pension funds,” the report states.

Employers concerned about the financial stability of the communities in which they operate have become increasingly alarmed at the largely hidden problem building underneath public retirement systems. The fear is that escalating pension funding requirements will eventually impede the ability of cities and towns to provide the key services – education, public safety, roads and bridges – needed to maintain economic growth.

Analysts believe the Detroit decision and Illinois vote are unlikely to touch off a rush of bankruptcy filings by municipalities, but will undoubtedly give cities and states newfound leverage in negotiating pension benefits outside of court proceedings. At the very least, it’s a rare opportunity to address an issue that few people want to talk about in a commonwealth where nearly one-third of all state, municipal and other retirement boards are less than 60 percent funded.

City Manager Orr in Detroit provides a sobering warning about the alternative: “There’s not enough money to address the situation no matter what we do.”

Topics: Massachusetts state budget, Municipal Reform

AIM: Move Ahead with Plan to Eliminate Fair Share Assessment

Posted by Kristen Lepore on Jul 3, 2013 12:52:00 PM

Associated Industries of Massachusetts today urged Governor Deval Patrick to approve a carefully crafted health insurance compromise contained in the proposed state budget, even though the Obama administration yesterday postponed a key element of federal health care reform.

Health Care ReformIncluded in the budget for Fiscal Year 2014 now on the governor’s desk is a provision eliminating the $295 per employee Fair Share assessment that Massachusetts employers have been paying under state health reform since 2006. The budget would also drop the requirement that employers collect and retain the Health Insurance Responsibility Disclosure (HIRD) form, and replace the current $67.20 per employee contribution to the Medical Security Trust Fund with a $50 per employee contribution to fund subsidized health care.

The measures, intended to make way for the federal Affordable Care Act and reduce the administrative burden on employers who provide health insurance, are a product of extensive negotiations among AIM, state lawmakers and groups representing the health care industry and consumers.

The proposed changes became more complicated yesterday when the U.S. Department of the Treasury announced that it will postpone until 2015 the federal health reform mandate that larger employers provide health insurance for their workers or face penalties. Those penalties - $2,000 per each full-time employee after the first 30 for companies that do not provide insurance or $3,000 per full-time employee for employers who offer health insurance that is either not affordable or of minimum value– were expected to replace the Fair Share assessment.

The postponement raised the possibility that Massachusetts employers who do not provide affordable health insurance for their workers may face no financial penalty for the next 18 months.

John Regan, Executive Vice President of Government Affairs at AIM, said the new implementation date for federal penalties does not diminish the value to employers and consumers of eliminating Fair Share and the Medical Security Trust Fund.

“The temporary presence or absence of health reform penalties does not drive benefit decisions for the vast majority of Massachusetts employers,” Regan said.

“Those employers offer health insurance to ensure they attract and retain key talent in a competitive market.”

Regan stressed that the requirement under the federal Affordable Care Act that individuals purchase health insurance by January 1, 2014, remains in effect.

Mark J. Mazur, Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, said in a blog post that the administration decided to postpone imposition of employer penalties after hearing concerns from business about the complexity of the requirements and the need for more time to implement them effectively.

“First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law.  Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees,” Mazur wrote. 

The administration says it will provide formal guidance within a week.

AIM believes the action by the Treasury Department confirms that the administration has the authority to grant a request to be made by Governor Patrick for a waiver from certain elements of the ACA that could drive up premiums for an estimated 60 percent of employers.

Elimination of the Fair Share assessment has been a priority for the AIM Health Policy Committee and was proposed by Governor Patrick in January.

 

Topics: Massachusetts state budget, Health Care Reform, Health Care Costs, Issues

Legislature, Governor Lurch Toward Budget, Tax Resolution

Posted by John Regan on Jul 3, 2013 8:19:00 AM

The Massachusetts Legislature and Governor Deval Patrick lurched toward final approval yesterday of a $34 billion state budget for the fiscal year that began Monday and a $500 tax package required to fund that budget.

Massahcusetts State BudgetThe Fiscal Year 2014 spending blueprint includes several measures affecting the cost of health insurance – it eliminates the Fair-Share Assessment created under the 2006 state health reform, drops the requirement that employers collect and retain the Health Insurance Responsibility Disclosure (HIRD) form, and replaces the current $67.20 per employee contribution to the Medical Security Trust Fund with a $50 per employee contribution to fund subsidized health care.

The measure also appropriates $2 million for the Massachusetts Manufacturing Extension Partnership.

Governor Deval Patrick has 10 days to consider the budget, which passed Monday after largely party-line votes in the House of Representatives and Senate.

The governor yesterday rejected and sent back to the Legislature the $500 million transportation finance bill because he believes it does not include enough revenue to fix the commonwealth’s roads, bridges and public transit systems. The governor proposed that the finance package, which increases the state gasoline and cigarette taxes and imposes a levy on software services, also boost the gas tax at least three additional cents beginning in 2017 when the tolls on the western portion of the Massachusetts Turnpike are set to come down.

House Speaker Robert DeLeo and Senate President Therese Murray immediately declared the governor’s proposal dead on arrival. The Legislature is expected to vote on the bill with the changes proposed by Patrick after the July 4 holiday.

Associated Industries of Massachusetts has maintained throughout the debate that lawmakers should fund transportation improvements with transportation-specific sources of revenue rather than business taxes such as the one on computer software. The association nevertheless believes that the legislation passed by the House and Senate takes positive steps toward fixing the transportation system without crippling increases to the income tax or other broad-based levies.

“Last week, the Legislature passed a carefully calibrated revenue proposal that solves long-standing financial problems within the transportation system," Murray and DeLeo said in a statement.

"The administration’s proposal tying the question of tolls in Western Massachusetts - a plan not even mentioned in its original bill - to a 4 cents gas tax increase places too high a burden on the taxpayers of our state. This threatens working families and businesses still fighting to overcome the financial downturn. Therefore, we will ask our respective chambers to reject the administration’s proposal.”

Elimination of the Fair Share Assessment and the HIRD form were priorities of the AIM Health Policy Committee.

“We’re delighted that the Legislature included these items that will have an immediate benefit for employers struggling with the high cost of providing good health insurance coverage to their employees,” said William Grant, Chair of the Health Policy Committee and Chief Financial Officer at Cummings Properties in Woburn,

House Ways and Means Committee Chairman Rep. Brian Dempsey said lawmakers have been prudent about rebuilding the state’s reserves after the recession.

Dempsey said the spending plan would leave Massachusetts with more than $1.5 billion in its stabilization account at the end of fiscal 2013, making it one of just four states with more than $1 billion in its rainy day fund. He said the Legislature also approved the first increase in unrestricted local aid for cities and towns in five years, and made investments in early education and elder care to reduce waiting lists for pre-school and home care services.


Topics: Massachusetts state budget, Issues, Taxes, Transportation

Senate Budget Omits Dangerous Contingent Contract Provision

Posted by Brad MacDougall on May 24, 2013 4:23:00 PM

Sometimes a budget is significant more for what it omits than what it includes.

Senate budgetThat’s the case with the $34 billion spending blueprint approved Thursday by the Massachusetts Senate, which wisely chose to pass its budget without a proposal to allow the Department of Revenue to hire outside tax auditors and pay them a portion of what they recover.

The budget proposal also replaces two existing health care assessments with a new Employer Responsibility levy and does way with the Health Insurance Responsibility Disclosure (HIRD) form as Massachusetts prepares to replace its 2006 health care reform with the federal Affordable Care Act.

A conference committee will now hammer out differences between Senate and House versions of the budget for the Fiscal Year that begins July 1.

Senators adopted an amendment from Senator Michael Rodrigues, D-Westport, that struck the so-called “contingent contracts” provision that had been added to the budget in an outside section. Rodrigues noted on the Senate floor that the National Conference of State Legislators, the Securities and Exchange Commission and and the American Institute of Certified Public Accountants all reject the use of contingent contracts.  

The AIM Taxation Committee had urged the Senate to reject the provision.  

“The proposal was bad public policy,” said John Regan, Executive Vice President of Government Affairs at AIM.

“An auditor should have no financial stake in the outcome of an audit. The conflict of interest is readily apparent and should trouble policy makers concerned about tax fairness and Massachusetts reputation for its tax climate.”

The Senate budget represents a 4.2 percent spending increase over the current fiscal year. The document anticipates using between $500 million and $800 million in new taxes for transportation currently pending before a separate Beacon Hill conference Committee.

AIM has maintained throughout the debate that lawmakers should fund transportation improvements with transportation-specific sources of revenue rather than business taxes such as those proposed for computer software. The association nevertheless believes that the legislation passed by the House and Senate takes positive steps toward fixing the transportation system without crippling increases to the income tax or other broad-based levies.

The Senate budget includes a $50 per employee medical assistance assessment on employers that was filed by Governor Patrick and included in the House budget.  The new fee replaces the $67.20 Medical Security Trust Fund assessment.  The Senate did not support an AIM amendment to require legislative approval for any increases to the assessment and gives the authority to increase the fee up to 5 percent per year to a rate review board.

As part of the package for this new assessment, the Senate budget eliminates the fair-share contribution and the requirement that employee Health Insurance Responsibility Disclosure forms be collected and retained by employers. 

Senators followed suit with the House in voting to postpone implementation of the so-called FAS 109 deduction instead of eliminating it as the administration proposed. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences. The deduction was adopted as part of the 2008 debate over adoption of combined tax reporting in Massachusetts.

Topics: Massachusetts state budget, Budget, Massachusetts senate, Issues, Taxes

What is in the Governor's Tax Plan?

Posted by John Regan on Feb 11, 2013 7:56:00 AM

Governor Deval Patrick last month proposed historic changes to the Massachusetts tax system in an effort to raise some $1.9 billion per year for transportation and education.

Massachusetts State BudgetThe complex proposal would redefine the tax landscape for everyone from parents with children in day care, to workers accustomed to a deduction for health savings accounts, to employers who purchase computer software. The plan also calls for automatic increases in the gasoline tax, highway tolls and MBTA fares.

Here is a summary of the administration tax plan. Most of the summary was prepared by the Massachusetts Taxpayers Foundation, with additions from the AIM Government Affairs team.

What is your opinion of the proposal and how might it affect your business? The AIM Board of Directors is currently developing a position on the plan and would like to hear from as many employers as possible.

Please leave your opinions in the comments section below, or email Brad MacDougall, Vice President of Government Affairs, bmacdougall@aimnet.org.

  Annualized Revenue Gain/Loss (Millions) % of Proposed New Revenues

Changes in Tax Rates

 

 

Raise the personal income tax rate from 5.25% to

6.25% and double the personal exemption

 $1,480

 

Reduce the sales tax rate from 6.25% to 4.5%

 ($1,370)

 

Total Tax Rate Changes

 $110

 6%

     
Expanded Individual Taxes    
Eliminate 44 personal income tax exemptions and deductions (estimate based on 6.25% rate)  $1,080  
Expand sales tax to cover candy and soda
(estimate based on 4.5% rate)
 $53  
 Increase cigarette/smokeless tobacco taxes  $166  
 Total Individual Taxes  $1,299  68%
     
Additional Corporate Taxes    
Apply the sales tax to customized computer software and computer and data processing services.  $265  
Reclassify security and utility corporations as corporations or financial institutions  $35  
Eliminate the FAS 109 deduction   $76  
Change sourcing rule for services in calculating
sales factor in apportionment formula
 $35  
Limit film tax credits to $40 million per year  $40  
Total, Corporate Taxes  $499   26%
     
Total New Revenues  $1,908  100%

 

Here are some of the 44 personal exemptions and deductions the plan would eliminate:

  Value at 6.25% Rate (millions) Filers Affected
Deduction for Employee Contributions to Social Security and Public Pension Plans  $357 3.585m
Exemption of Capital Gains on Home Sale  $285 55,000
Deductions for Dependent(s) under 12  $162 510,000
Deduction for Business-Related Child Care Expenses  $18 54,000
Exemption of Dependent Care Expenses  $11 NA
Exemption of Certain Foster Care Payments  $4 NA
Deductions for Adoption Fees and Employer-Provided Adoption Assistance  $0.6 1,000+
Tuition Tax Deduction  $43 65,000
Exemption of Scholarships and Fellowships  $23 255,000
Personal Exemption for Students Aged 19 or Over  $10 NA 
Employer-Provided Education Assistance  $10 NA
Exclusion from Gross Income of Parking, T-Pass and Vanpool Fringe Benefits  $46 NA
Commuter Deduction  $8 225,000
Exemption for Premiums on Accident and Accidental Death Insurance  $28 1.97m
Deduction for Health Savings Accounts  $15 10,000
Septic System Repair Credit  $15 11,000
Exemption of Premiums on Group-Term Life Insurance  $14 NA 
Exemption of Workers' Compensation Benefits  $10 NA
Exemption of Meals and Lodging Provided at Work  $9 NA
Exemption of Interest on Savings in Massachusetts Banks  $6 505,000 
Credit for Removal of Lead Paint $3  1,850
Renewable Energy Source Credit $1.5  2,000 

 

Here are proposed increases in taxes and user fees pertaining to transportation:

Index the Gasoline Tax $13 million in FY 14. Increases gas tax revenue $118 million by FY 21.
MBTA Fares 5% biennial fare increase beginning in FY 15. Increases fare revenue 27 percent by FY 23.
Registry of Motor Vehicles Fees 10% fee increase every five years beginning in FY 16. Increases fee revenue 20 percent by FY 23.
Tolls 5% biennial increase beginning in FY 15. Increases toll revenue 27 percent by FY 23.

 

Topics: Massachusetts state budget, Issues, Taxes

Supplemental Budget Will Free Money to Train Workers

Posted by John Regan on Oct 5, 2011 5:59:00 PM

The Massachusetts House of Representatives approved a supplemental budget today that will free up millions of dollars in desperately needed workforce training funds currently tangled in an accounting transition.

Massachusetts state budgetThe $460 million budget measure will allow state officials to move money earmarked earlier this year for the Workforce Training Fund Program (WTFP) into a new trust fund created when Governor Deval Patrick signed the Fiscal Year 2012 budget in July. Officials cannot currently apply money that was in the fund prior to the creation of the trust, meaning that companies awarded grants in July have been waiting to receive their money.

“AIM strongly supports moving the Workforce Training Fund Program to a trust as a means of insulating the program from the uncertainties of the annual budget process. Moving money from the former structure to the new trust is really just an accounting issue,” said Richard C. Lord, President of AIM and Chair of the Workforce Training Fund Advisory Committee.

The measure also contains a provision requiring the commonwealth to post regulatory cost-benefit studies online, a move that AIM believes will foster  meaningful debate about the costs and potential consequences of rules that may harm the Massachusetts economy.

The Legislature passed a cost-benefit study requirement in 2010, but the current law provides that only a summary of the analysis be posted online.  The full text is available at the Secretary of the Commonwealth’s office.

The cost-benefit reviews must include the following information about any new rule:

  • an estimate of the number of small businesses subject to the proposed regulation;
  • projected reporting, recordkeeping and other administrative costs required for compliance with the proposed regulation;
  • the appropriateness of performance standards versus design standards;
  • an identification of regulations of the promulgating agency, or of another agency or department of the commonwealth, which may duplicate or conflict with the proposed regulation; and
  • an analysis of whether the proposed regulation is likely to deter or encourage the formation of new businesses in the commonwealth.

The supplemental budget proposes to spend $154 million and deposit $350 million into the state's rainy day fund. The bill addresses recent budget cut by investing in clothing allowances for children in need, nursing home residents, developmentally disabled individuals, adult education, the trial courts, an expansion of a housing tax credit, and disaster assistance.

 

Topics: Massachusetts state budget, Massachusetts Legislature, Massachusetts Workforce Training Fund

Supplemental Budget Addresses Regulation, Workforce Training

Posted by John Regan on Aug 31, 2011 4:03:00 PM

The Patrick administration filed a supplemental budget this week that contains two key provisions for employers – one that will require regulatory cost-benefit studies to be placed online and a second that will free up millions of dollars in workforce training funds current caught in an accounting transition.

Workforce TrainingThe $460 million spending bill, funded by surplus funds from the fiscal year that ended June 30, would send $300 million to the state’s rainy day fund, bringing that account’s balance to more than $1 billion for the first time since the recession. The remaining $160 million would be distributed among social safety net programs, workforce development programs and communities impacted by a December 2008 ice storm and June 2011 tornadoes

The measure would allow the commonwealth to move money earmarked earlier this year for the Workforce Training Fund Program (WTFP) into a new trust fund created when Governor Deval Patrick signed the Fiscal Year 2012 budget in August. Officials cannot currently apply money that was in the fund prior to the creation of the trust, meaning that companies receiving grants in July to train employees must wait to receive their money.

The Massachusetts Executive Office of Labor and Workforce Development says there is enough money in the trust to fund the backlog of applications to the WTFP Express program, which provides small grants.

“AIM strongly supports moving the Workforce Training Fund Program to a trust as a means of insulating the program from the uncertainties of the annual budget process. Moving money from the former structure to the new trust is really just an accounting issue,” said Richard C. Lord, President of AIM and Chair of the Workforce Training Fund Advisory Committee.

Lord said employers should know that applications for the WTFP will soon be accepted and approved on a monthly, rather than quarterly, basis.  State officials also say that a new WTFP application will be available Friday on the Labor and Workforce Development Web site.

The proposal to require state regulators to post the full text of cost-benefit studies of proposed new rules comes as welcome news to AIM. The association believes that online disclosure will lead to meaningful debates about the costs and potential consequences of regulations that may harm the Massachusetts economy.

The Massachusetts Legislature passed the cost-benefit study requirement in 2010, but the current law provides that only a summary of the analysis be posted online.  The full text is available at the Secretary of the Commonwealth’s office.

The cost-benefit reviews must include the following information about any new rule:

  • an estimate of the number of small businesses subject to the proposed regulation;
  • projected reporting, recordkeeping and other administrative costs required for compliance with the proposed regulation;
  • the appropriateness of performance standards versus design standards;
  • an identification of regulations of the promulgating agency, or of another agency or department of the commonwealth, which may duplicate or conflict with the proposed regulation; and
  • an analysis of whether the proposed regulation is likely to deter or encourage the formation of new businesses in the commonwealth.

"Employers appreciate the support of the Patrick Administration on these two important issues and look forward to working with the Legislature to ensure that both are addressed expeditiously," Lord said.

 

 

 

Topics: Regulation, Massachusetts state budget, Associated Industries of Massachusetts

Massachusetts Eats its Peas without Washington Budget Acrimony

Posted by Eileen McAnneny on Jul 15, 2011 10:37:00 AM

Boston and Washington provided a study in contrasts this week on the ability of government to manage its expenses during times of fiscal distress.

Patrick.Signs.2012.Budget.SmallAs federal budget negotiations devolved into a desperate game of chicken over raising the nation’s debt ceiling, Governor Deval Patrick quietly signed a Fiscal Year 2012 state budget designed to close a $1.9 billion budget gap without new taxes.

Sure the $30.6 billion Beacon Hill spending blueprint was finalized 12 days late. Yes, the deliberations included plenty of contentious debate over collective bargaining. And the judicial branch ended the week in full revolt over budget reductions by threatening to close 11 courthouses and asking the governor to cease appointing new candidates to the bench.

But the governor and the Legislature ended up achieving remarkable consensus in the fourth consecutive year of fiscal crisis following the recession of 2008. That consensus produced a budget with much to like for employers still struggling to accelerate hiring in an uncertain economic recovery:

  • The decision to avoid tax increases indicates that lawmakers believe that the only way to solve the commonwealth’s long-term budgetary issues is through economic expansion and job growth.
  • The budget gives cities and towns the ability to control soaring health insurance costs by changing the design of employee health coverage after an expedited 30-day bargaining window. The provision matters to employers who have been concerned that spiraling health costs threaten the ability of cities and towns to provide the educational, safety and public works services that businesses need.
  • The employer-funded Massachusetts Workforce Training Program will be placed into a trust that will remove the program from the uncertainties of annual budget deliberations. The flagship program through which Massachusetts improves the skills of workers has provided $193.2 million in grants since its inception to some 2,500 Massachusetts employers to train 277,351 people.
  • The budget includes three tax reforms designed to strengthen the state’s business climate and enhance fairness and predictability for taxpayers: speeding tax audits, establishing equal rules for taxpayers and the Department of Revenue and providing early notification of changes in tax policy.

There were disappointments in the budget process as well:

  • Governor Patrick vetoed two provisions essential to the stability of employer-sponsored health plans: One would have required the Massachusetts Division of Insurance (DOI) to notify health plans 60 days in advance if they plan to reject insurers’ proposed health insurance rates. The other would add additional actuarial criteria the DOI has to take into consideration before rejecting insurers’ premium rates. AIM and other business groups have asked the Legislature to override these vetoes.
  • The final budget omits a proposal originally passed by the House of Representatives to narrow the onerous treble damages provision for violations of wage and hour laws.
  • Also omitted was a House-passed measure to repeal the pharmaceutical gift ban that threatens job growth in one of the economy’s most important sectors.

AIM will continue work with lawmakers outside of the budget process to address the treble damages law and pharmaceutical gift ban, both of which raise red flags for companies evaluating whether or not to do business in Massachusetts.

“On balance, the budget creates fiscal stability and takes a courageous step toward empowering cities and towns to save up to $100 million on health insurance costs,” said John Regan, Executive Vice President of Government Affairs at AIM.

“And all that without people walking out of negotiations, without brinksmanship, without talk of eating our peas and without the level of acrimony that has consumed Washington.”

Topics: Massachusetts state budget, Massachusetts Legislature, Govenor Patrick

Business Groups: Give Cities, Towns the Tools to Operate Efficiently

Posted by Brian Gilmore on Jun 15, 2010 12:44:00 PM

A coalition of business groups led by Associated Industries of Massachusetts (AIM) and the Massachusetts Taxpayers Foundation (MTF) today urged the Legislature to help local government preserve essential services through efficient design of employee benefits.

The coalition supports granting Massachusetts municipalities the ability to alter health-care plan design without having to bargain each change with municipal unions, and to require by statute that all eligible local retirees enroll in Medicare as their primary source of health care coverage.    

These reforms are urgently required.

Since 2000, municipal health insurance costs have increased at double-digit rates - more than five times the rate of inflation- growing from 6 percent of municipal budgets in 2001, to a projected 20 percent by 2020.

The groups support allowing municipalities to change their health benefit design outside collective bargaining, as is the case at the state level. The change would save cities and towns roughly $100 million in the first year alone and as much as $2 billion annually by 2020. Those saving dwarf the benefit from all other pending municipal relief proposals.

The coalition believes that maintaining the quality of local schools and other services is critical to the economic future of the commonwealth. However, exploding health care and pension costs are forcing cities and towns to curtail services and shed jobs in order to balance budgets. Unless these employee benefit cost issues are addressed, cuts and layoffs will intensify over the next several years

The coalition urged members of the Legislature and Governor Patrick to approve the legislation necessary to give communities the authority to make changes in health care plan design before the legislature adjourns its formal 2009-2010 session on July 31.

The coalition includes Affiliated Chambers of Commerce Greater Springfield, Assabet Valley Chamber of Commerce, Boston Municipal Research Bureau, Cape Ann Chamber of Commerce, Cape Cod Chamber of Commerce, Chicopee Chamber of Commerce, Fall River Area Chamber of Commerce, Massachusetts Business Alliance for Education, Metro South Chamber of Commerce, NAIOP Massachusetts, National Federation of Independent Business-Massachusetts, North Central Massachusetts Chamber of Commerce, North Shore Chamber of Commerce, North Suburban Chamber of Commerce, Plymouth Area Chamber of Commerce, Tri-town Chamber of Commerce.

To join the business coalition or to learn more about the campaign contact Brian Gilmore, Executive Vice President of Public Affairs for AIM, by calling 617-262-1180 or email bgilmore@aimnet.org. Also, join and follow the latest news through Facebook.

Topics: Massachusetts state budget, Associated Industries of Massachusetts, AIM, Municipal Reform

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