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Senate Bill Would Expand R&D Credit; Restrict Non-Compete Agreements

Posted by Christopher Geehern on Jul 2, 2014 2:56:00 PM

The Massachusetts Senate approved an economic development bill yesterday that would restrict the use of non-compete agreements and broaden existing tax incentives for companies to conduct research and development.

IntellectualProspertyA legislative conference committee will now hammer out differences between the Senate bill and a similar measure passed several weeks ago by the House of Representatives. The House bill includes neither the non-compete nor the R&D tax provisions.

AIM supports the updated R&D tax credit. The association continues to study the Senate non-compete measure with an eye toward maintaining adequate protections for the intellectual property of employers.

The non-compete compromise would prohibit employers from using the agreements with hourly employees and limit the length of those agreements to six months.

Non-competes would have to be presented at least five business days before the employee starts work, or when any formal offer of employment is first made to the employee. If the agreement is entered into after the person is already employed, but not in connection with separation from employment, it must be supported by fair and reasonable consideration in addition to the continuation of employment, and notice of the agreement must be provided at least 10 business days before the agreement is to be effective.

The Patrick administration and a coalition of venture capitalists have been seeking to ban non-competes altogether, arguing that they inhibit the growth of new companies in the innovation economy. AIM has led the effort to preserve the current law governing the use of non-competes.

Brad MacDougall, Vice President of Government at AIM, says the non-compete issue is really about choice for both individuals and employers, who should be free to negotiate contracts of mutual benefit as long as the employee is a part of the process.

Employees already enjoy legal protection against overly restrictive non-compete agreements, according to MacDougall.  Case law dictates that enforcement of agreements occurs only when they:

  • are narrowly tailored to protect legitimate business interests;
  • are limited in time, geography, and scope;
  • are consonant with public policy; and
  • the harm to the employer from non-enforcement outweighs the harm to the employee.

The Senate bill seeks to reassure employers about protection of intellectual property by adopting a version of the federal Uniform Trade Secrets Act. But the Massachusetts version contains a major problem – it forbids court injunctions with respect to trade secrets “unless the trade secret is specified with sufficient particularity so as to reasonably enable the respondent to prepare a reasonable defense under the circumstances.” 

So an employer would have to specify with “particularity” the trade secrets at issue before obtaining an injunction.  It would be nearly impossible for a company to secure an injunction before a competitor or former employee carries away vital company information.

Massachusetts Secretary and Housing and Economic Development Gregory Bialecki signaled yesterday that the administration is open to compromise on non-competes.

Sen. Michael Rodrigues, a Westport Democrat, disagreed with the provision preventing hourly workers from being subjected to non-compete agreements. Rodrigues argued that in the building trades employers often pay for training and licensing for their workers, and need protection that non-compete agreements offer.

All four Republicans – Sens. Bruce Tarr, Robert Hedlund, Richard Ross, and Donald Humason - and Sens. Rodrigues, Harriette Chandler and Karen Spilka voted against the amendment. 

The R&D tax credit amendment filed by Rodrigues, Tarr and Senator Barry Feingold, would allow employers the option to claim a credit equal to 10 of any research expenses that exceed a base amount calculated over a period of three years. Current law allows credits only for incremental R&D spending over a set base period in the 1980s.

AIM believes the changes are necessary to reverse a troubling 19.3 percent decline in R&D spending among Massachusetts employers between 2007 and 2011. The vast majority of research and development in Massachusetts takes place not in urban innovation districts, but in advanced manufacturing, defense and biopharma companies salted throughout the commonwealth

“And we know that R&D credits work. Massachusetts enacted a set of research and development tax incentives in 1991 that were among the most advantageous in the nation. Over the next five years, R&D spending in the commonwealth increased by more than 50 percent,” said John Regan, Executive Vice President of Government Affairs for AIM.

A recent report from The Pioneer Institute found that overall R&D spending in Massachusetts fell 10.3 percent in the four years ending in 2011. Massachusetts fell further behind chief R&D rival California, which significantly increased its R&D market share on the strength of one of the strongest R&D credits in the nation – 15 percent.

Topics: Massachusetts senate, Non-Compete Agreements, Taxes

State Extends Unemployment Tax Deadline

Posted by Christopher Geehern on Mar 24, 2014 6:21:00 AM

Unemployment InsuranceMassachusetts has extended by one month the deadline for employers to pay first-quarter Unemployment Insurance bills as lawmakers remain deadlocked over the best way to freeze UI rates and head off a $500 million tax increase that took effect January 1.

Both the state Senate and House of Representatives support a rate freeze for 2014, but disagree about how to wrap that freeze into a broader set of reforms to the state’s costly Unemployment Insurance system. House leaders were unable to vote last week on Speaker Robert DeLeo’s UI reform and minimum wage proposal because of a procedural maneuver by the Senate not to extend the time for reporting the bill from committee.

The vote Thursday by the Massachusetts Department of Unemployment Assistance Advisory Committee to postpone first-quarter UI payments until May 30 will give lawmakers additional time to avert a 33 percent rate increase before employers have to pay it.

AIM Executive Vice President of Government Affairs John Regan, who represents employers on the DUA Advisory Committee, said the delay is the only way to prevent hundreds of millions of dollars from being unnecessarily drawn out of the productive economy. The Unemployment Insurance Trust Fund used to pay jobless benefits in Massachusetts currently enjoys a healthy balance of approximately $800 million.

“AIM supports the delay but is disappointed that it is necessary at all.  The UI rate freeze is an agreed upon policy choice that should have been done days, if not weeks ago.  We are still hopeful that a freeze will be taken up sooner rather than later,” Regan said.

“The change in the regulations ensures that employers’ bills are processed in a timely manner and not at the last minute.”

Multiple media outlets reported last week that the House bill would raise the minimum wage to from $8 per hour to $10.50 per hour, freeze unemployment insurance rates for the next four years, and reward businesses with a record of low employee turnover.

The proposal, initially outlined two weeks ago by DeLeo, would:

  • Raise the per-employee taxable wage base from $14,000 to $16,000. A separate UI reform bill passed by in February by the Senate raised the taxable wage base to $21,000.
  • Introduce a new rate table with levels added at each end of the spectrum to decrease the financial burden on high-rated employers with low workforce turnover while penalizing negatively rated employers.
  • Create a new employment fund to be capitalized by an increase in a per-employee tax on businesses and dedicated through grants to community-based job training organizations. The fees would be adjusted to generate $80 million for the fund, up from the existing $18 million cost to business.

Neither the House bill, nor the Senate UI reform passed on February 6, include provisions supported by AIM to reduce the maximum duration of benefit weeks from 30 to 26 or increase the time people must work before collecting benefits.

Regan urged lawmakers to prioritize the 2014 rate freeze and then hammer out their differences over long-term reform.

“Uncertainty is the enemy of economic growth and the impending UI rate increase represents a huge dose of uncertainty for Massachusetts employers,” he said.

AIM has opposed increasing the minimum wage at the state level. The House proposes to increase in the minimum wage to $10.50 by July 2016, and expand the earned income tax credit in Massachusetts from 15 percent of the federal credit to 20 percent, saving taxpayers an estimated $41.2 million to $45.5 million, according to documents prepared by the committee.

Topics: Massachusetts senate, Unemployment insurance, Massachusetts House of Representatives

Senate Seeks Rate Stability with Unemployment Insurance Bill

Posted by John Regan on Feb 6, 2014 5:09:00 PM

The Massachusetts Senate passed an Unemployment Insurance reform bill today designed to stabilize UI tax rates for most employers and make those rates more dependent on the hiring and firing record of individual companies. 

The measure includes an immediate freeze of UI rates for 2014, averting an automatic 33 percent, $500 million tax increase that took effect on January 1.

Dan.WolfAssociated Industries of Massachusetts believes the Senate UI bill represents a constructive first step toward reforming the commonwealth’s burdensome system for paying benefits to jobless people. The association had hoped that the Senate would also reduce the maximum duration of benefit weeks from 30 to 26 and increase the time people must work before collecting benefits, but AIM expects to place those issues front and center when the reform moves to the House of Representatives.

“Senate President Therese Murray and Labor and Workforce Development Committee Chair Dan Wolf (right) deserve credit for taking a thoughtful and creative approach to a seemingly intractable problem. We don’t agree with everything in the bill, but it provides a basis for continuing debate,” said Richard C. Lord, President and Chief Executive Officer of AIM.

Under the Senate bill:

  • The wage base upon which UI payments are calculated would rise from the current $14,000 per year to $21,000 per year in 2015, a change that by itself would escalate costs for employers.
  • An expanded rate table would take effect in 2015, and rates would be set at a new Schedule C for 2015, Schedule A for 2016 and back to Schedule C for 2017. The expanded rate table should offset the effects of the increased wage base for companies with stable employment histories while raising rates for some companies that add and terminate workers frequently. Under the new rates, the most stable employers would pay $153 per employee per year, while the worst-rated companies would pay $2,337 per employee annually.
  • Company UI taxes rates will be based upon the average of three years payroll instead of one, minimizing rate shock for expanding companies or those that encounter cyclical economic problems and find themselves having to lay people off.
  • The definition of seasonal employment is expanded to 20 weeks of work, closing a loophole under which lawmakers say some people work seasonally and then collect Massachusetts unemployment benefits while living out of state during the winter.

“In effect, it’s revenue neutral in that we’ll collect the same amount in aggregate,” said Wolf, a Cape Cod Democrat.

Murray said in a statement: “The current system serves as a considerable burden to our businesses and it is time for change. This bill will alleviate costs for employers, provide predictability to their budgets and foster an environment where jobs can grow and be created.”

House Speaker Robert DeLeo has indicated that his chamber will consider Unemployment Insurance reform in tandem with an increase to the $8-per-hour state minimum wage. The Senate has already passed legislation increasing the minimum wage to $11 per hour over three years and indexing it to inflation thereafter.

The Unemployment Insurance Trust Fund used to pay jobless benefits in Massachusetts currently enjoys a healthy balance of approximately $800 million.

Massachusetts UI costs, driven by high wages, lenient qualification requirements and an overly generous benefit structure, are among the highest in the country. AIM has long supported reducing the maximum duration of benefit weeks from 30 to 26 when the state's economy is performing well and increasing the work requirement for eligibility to collect UI benefits from 30 times the weekly benefit amount to 40.

Topics: Minimum Wage, Massachusetts senate, Unemployment insurance

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

Senate Passes Transportation Bill; Tax Debate Nears Resolution

Posted by Christopher Geehern on Apr 15, 2013 8:20:00 AM

The Massachusetts Senate approved a transportation funding bill Saturday that would dedicate approximately $800 million per year in new taxes and other revenue to roads, bridges and public transit by 2018.

TaxesThe Senate measure is larger than the $500 million package approved on April 8 by the House of Representatives, but still well below Governor Deval Patrick’s original proposal to raise $1.9 billion annually for transportation and education by raising the income tax and corporate taxes.  The governor praised the Senate bill on Saturday as a significant step toward a “safe, functional, modern transportation system to keep pace with a growing economy.”

Senators voted 30 to 5 to approve the same basic group of tax changes passed by the House - $110 million from increasing the gasoline tax 3 cents per gallon and then indexing the levy to inflation; $161 million from a tax on computer services; $110 million from tobacco taxes; and $83 million from changes to utility classification and sales sourcing.

The Senate bill adds revenue from several sources, including $40 million by requiring utility companies to pay for light poles and other structures on public rights of way, and $80 million by redirecting 2.5 cents per gallon from the gasoline tax currently earmarked for cleanup of underground storage tanks.

A conference committee will now hammer out differences between the two versions, but analysts expect the final measure to be closer to the Senate’s $800 million number. Governor Patrick had threatened to veto the House blueprint, but has not said directly whether he would sign a final bill with the Senate numbers.

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.

AIM also remains encouraged that both the House and Senate bills would require the MBTA and Department of Transportation to accelerate reasonable benchmarks for revenues, savings, and reforms. A menu of reforms approved in 2009 was supposed to generate $6.5 billion in savings over 20 years, but has so far reduced costs by just $500 million.

“Employers understand the need for Massachusetts to maintain a transportation infrastructure that supports economic growth. The Senate and House measures solve the immediate and long-term structural deficit of the state transportation system,” said John Regan, Executive Vice President of Government Affairs at AIM.

The increase in the gasoline tax would cause an average driver to pay an additional $12 to $30 per year to fill the tank. The Legislature said it did not want to rely solely on increasing the gas tax because gas consumption has declined in recent years and is expected to continue to fall.

The plan would provide “forward funding” for regional transit authorities in 2014 and allow the Department of Transportation to move all employees onto the operating budget by 2016, ending the current practice of  paying for personnel with borrowed funds.

Information provided by the Legislature indicates that their proposal to apply the sales tax to software modifications and systems design does not impose taxes on cloud-based services such as remote data storage. Downloads of computer games, music and books would also remain outside the new sales tax.

Other elements of the Senate bill include:

  • A provision directing the Department of Transportation (DOT) to move towards open road tolling on major routes other than the Turnpike.
  • A commitment to transfer up to approximately $160 million per year from the general fund to the transportation fund in years beyond Fiscal 2018. 
  • A directive to the MBTA to pursue naming rights sales on its stations and other assets.

PriceWaterhouse Coopers Analysis of Business Taxes in Murray/DeLeo Plan

Ernst & Young Analysis of Tax on Computer Services

 

Topics: Massachusetts senate, Issues, Taxes, Transportation

Senate Advances Health Cost Bill; House Urged to Set Ambitious Goal

Posted by Kristen Lepore on May 18, 2012 7:38:00 AM

Two days after Governor Deval Patrick suggested that the health-care industry could slow the growth of medical spending below overall economic growth, the Massachusetts Senate approved a bill that sets a less ambitious objective of keeping health spending changes equal to economic output beginning in 2016.

Health Care CostsThe Senate voted 35 to 2 last night for a bill that leaders say will save $150 billion over 15 years by limiting health spending growth to 0.5 percentage points above gross state product from 2012-2015 and equal to GSP thereafter. The measure would create a quasi-public Health Care Quality and Finance Authority to monitor compliance with health cost objectives.

It would also require insurance companies and doctors to tell patients what the fee and final payment will be for a particular medical procedure. Massachusetts would raise more than $200 million over five years in assessments on insurance companies to fund wellness programs and electronic medical records.

The Senate cost-control bill now moves to the House of Representatives, which wants to slow health cost growth to half a percentage point below gross state product after three years.

AIM has set a far more aggressive cost-control target, calling upon the health care industry to reduce the growth of medical spending to two percentage points below overall state economic growth. The aggressive target is attainable for an industry where experts believe that $1 in every $3 is wasted because of care delivered in the wrong setting; marked by a lack of coordination; provided with an inadequate emphasis on prevention; harmed by medical errors; burdened with rules and fraud; or just plain excessive. 

Soaring health insurance premiums impede the ability of Massachusetts employers to grow and create economic opportunity for the citizens of the commonwealth.The average cost paid by employers and workers to insure a single Massachusetts family though a health maintenance organization now stands at $15,864, according to the 2012 AIM Benefits Survey. The cost to insure an individual is $6,000.

Patrick said earlier this week that “I think the industry can do better than GSP.” AIM agrees.  This is a once in a generation opportunity to pass a bill that will solve the state’s health care cost crisis.

Topics: Massachusetts senate, Health Care Costs, Issues

Senate: Be Bold and Solve the Health Cost Crisis

Posted by Rick Lord on May 14, 2012 2:39:00 PM

The Massachusetts Senate faces a once-in-a-generation opportunity tomorrow to solve a health care cost crisis that is bleeding the life out of the Bay State economy for both employers and workers.

Health Care CostsOur message to the Senate – Be bold. Don’t miss the opportunity. Don’t be afraid to make health spending fall significantly below the rate of overall economic growth.

Outside the confines of Beacon Hill, a consensus is emerging among the employers and citizens who actually pay the medical bills that total health spending must fall as much as two percentage points below economic growth if the Massachusetts economy is to survive.

The consensus among groups as diverse as AIM, the largest employer association in Massachusetts; the Greater Boston Interfaith Organization (GBIO), a community-based health care consumer group, and several  respected academics is that a chronically inefficient health care industry is diverting resources from the 87 percent of the economy unconnected to health care.

Dr. Donald Berwick, the former president of the Institute for Healthcare Improvement and the former administrator of the federal Centers for Medicare and Medicaid Services, maintained in an article published today that one-third of all health-care spending is wasted.  The waste includes “overtreatment that helps no patient at all (like treating viral infections with antibiotics), errors and injuries from unsafe care, failures in coordination (such as sending people home from hospitals without supports), needless administrative complexity, failures of price competition, and fraud.

“Alarms are sounding. Massachusetts hospitals and other providers are warning that too stringent a target will harm care — and harm the state’s economy when unemployment is already high,” Dr. Berwick writes in an Op-Ed in The Boston Globe.

“Undoubtedly, this transition will be wrenching. But no healthy industry can maintain jobs that depend on continuing services that add no value. Health care costs are hurting the economy now, because they keep employers and consumers from spending on other priorities.”

Dr. Berwick notes that the ambitious health cost control proposals from AIM, GBIO and the House of Representatives “are on the right track.”

“Health care can and should begin to return money to other uses, starting now,” he said.

The Senate will debate a health cost bill that would establish less ambitious objectives, setting set a limit of 0.5 percent above economic growth until 2016, and then equal to it thereafter. House leaders have proposed limiting the growth of health care costs to the growth rate of the economy starting now, and then to 0.5 percentage points lower than the overall economic growth rate starting in 2016.

Dr. Berwick’s public comments come three days after Attorney General Martha Coakley, told the AIM Annual Meeting that her office remains committed to addressing a health care market rife with price disparities that have little to do with medical outcomes.

“And while I know there is a lot of discussion about payment and delivery system reform - at the same time, I believe that we must also address the market dysfunction that my office has highlighted in our reports,” Coakley said Friday.

MIT economist Jonathan Gruber found in a study released on April 26 that lowering the annual growth of health insurance premiums to 2 percent in Massachusetts would increase the take-home pay of every Bay State worker by $9,200 over the next eight years. Gruber said it is far from certain that slowing the growth of health care costs will produce widespread layoffs in the health care system.

Kristen Lepore, Vice President of Government Affairs at AIM, agrees with Berwick that soaring health care premiums are burdening the rest of the Massachusetts economy. Far from causing catastrophic layoffs, Lepore said, limiting the growth of health spending will create a system that delivers health care efficiently and returns money that can be used for business expansion, education, roads, bridges and putting more money into the pockets of consumers.

“We have every confidence that Massachusetts can maintain a world-class health care system that people can actually afford,” Lepore said.

AIM hopes the growing consensus around meaningful cost control will resemble the broad coalition that assembled when the commonwealth passed what remains the only state-level health care reform law in 2006 in an effort to expand access to medical care and bring everyone into the health insurance system. The 2006 reform gained support from business groups, including AIM, as well as hospitals, doctors, unions and consumer groups.

Topics: Massachusetts senate, Health Care Costs, Issues

Senate Moves to Boost Efficiency of Massachusetts State Government

Posted by Christopher Geehern on Jun 10, 2011 1:48:00 PM

The Massachusetts Senate took an important step to improve the efficiency of state government Thursday by approving a bill that would overhaul the commonwealth’s finance laws and establish a performance-management system for state agencies.

Massachusetts state budgetPassage of the AIM-supported measure was unanimous.  The legislation would require Massachusetts governors to file a “zero-based budget” at the start of their administrations and force the state to publish online the full text of business-impact statements for new regulations.

“The legislation requires the commonwealth to use the same management tools that private employers have used for decades to improve efficiency. Senate President Therese Murray and the members of the Senate deserve tremendous credit for seeking to make Massachusetts work efficiently for all of its citizens,” said John Regan, Executive Vice President of Government Affairs at AIM.

The bill’s provisions include:

  • Sunset Review Commission - Charged with reviewing the operations of all state agencies and authorities, considering the need for each agency and, if necessary, recommending a sunset date. 
  • Performance Management - Requires executive offices and the State Lottery Commission to implement performance-management strategies to facilitate evaluation and enable better programmatic decision-making.
  • Cash Flow Reports - Improves the commonwealth’s cash-flow reporting. Quarterly cash flow reports would have to compare actual spending and revenue with estimates previously made for that period, and analyze possible reasons for variances.
  • Local Aid - Distributes unrestricted local aid (general government aid, chapter 70 aid and payments in lieu of taxes) monthly rather than quarterly, starting in Fiscal Year 2013.
  • Program versus Maintenance budget - Eliminates statutory requirements that a “maintenance budget” be developed.  Many The starting point for any state budget is to preserve existing programs and agencies.  That starting point is at odds with a more modern notion of budgeting that the commonwealth should continuously evaluate agencies and programs for performance, and invest in the higher-performing programs.”
  • Full impact statements posted to the web –Requires the Secretary of the Commonwealth to post the full text of a business impact statement already produced by an agency rather than simply an overview.

The bill now goes to the House of Representatives.

Topics: Associated Industries of Massachusetts, Massachusetts senate, Senate President Therese Murray

Massachusetts Senate Approves Budget with No Tax Increases

Posted by Brad MacDougall on May 27, 2011 1:40:00 PM

The Massachusetts Senate yesterday finalized a Fiscal Year 2012 budget that includes no tax increases and provides cities and towns the authority to manage their health insurance costs.  The Senate and House of Representatives will now negotiate the final budget proposal through a conference committee.

AIM commends Senate President Therese Murray and Steven Brewer, Senate Chair of the Ways and Means Committee, for taking steps to encourage job creation by passing a fiscally responsible budget.  Brewer indicated that lawmakers faced significant challenges as the economy continues its sluggish recovery.

“The absence of $1.5 billion in federal stimulus funds and growth in non-discretionary costs leave us with a budget gap of $1.9 billion. Once again, we will utilize a balanced approach to address this shortfall, but deep cuts to services and programs cannot be avoided. We must continue to do more with less,” Brewer said.”

Broad budget agreement between the Senate and House virtually assures that the commonwealth will navigate its fourth year of fiscal crisis without a tax increase. The two chambers also agree on creating a trust for the state’s flagship worker training program, a signal that lawmakers agree with AIM and employers that the program should be removed from the uncertainty of annual budget deliberations.

“Placing the Workforce Training Fund into a trust will create the kind of predictability that employers need to improve the skills of Massachusetts workers. We are gratified that the Senate included this provision in its budget proposal,””said Richard C. Lord, President of AIM and chair of the WTF Advisory Board. 

Other key employer issues for the conference committee include:

  • Municipal plan design: Both House and Senate versions would leave cities and towns to continue negotiating with unions over the percentage of premiums paid by employees. Ultimately, the lawmakers estimate that both reform plans would save approximately $100 million per year.

  • The Senate budget does not include a provision of the House plan that would limit the onerous 2008 treble damages law to willful violations of the state wage and hour statute. AIM looks forward to continued discussions with the Legislature on modifying treble damages.

Lord said AIM will continue to review the House and Senate budget proposals and begin work with the members of the conference committee and leadership of both branches regarding the issue that impact employers.

 

Topics: Municipal Reform, Budget, Massachusetts senate

Senate Budget Includes Municipal Health Reform, No Tax Increases

Posted by John Regan on May 18, 2011 1:51:00 PM

The Massachusetts Senate unveiled a proposed Fiscal Year 2012 state budget this morning that includes no tax increases; moves the Workforce Training Fund into a trust; and makes modest changes to a House of Representatives plan to give cities and towns the authority to manage their health insurance costs.

Senate budgetThe $30.3 billion spending blueprint seeks to close an estimated $1.9 billion budget deficit through $1.5 billion in spending reductions - including a $65 million reduction in aid to cities and towns – coupled with $440 million in one-time revenues. The document eliminates 277 budget items and level-funds 221 others.

Amendments to the budget were due on Friday and AIM continues to review them. The association will communicate with members this week about any major issues contained in the amendments.

“As difficult as the recent budgets have been, the fiscal year 2012 budget presents a new set of challenges,” said Senator Steven M. Brewer, Chair of the Senate Ways and Means Committee.

“The absence of $1.5 billion in federal stimulus funds and growth in non-discretionary costs leave us with a budget gap of $1.9 billion. Once again, we will utilize a balanced approach to address this shortfall, but deep cuts to services and programs cannot be avoided. We must continue to do more with less.”

Broad agreement between the Senate budget proposal and the House blueprint approved two weeks ago virtually assures that the commonwealth will navigate its fourth year of fiscal crisis without a tax increase. The agreement on creating a trust for the state’s flagship worker training program also signals that lawmakers agree with AIM and employers that the program should be removed from the uncertainty of annual budget deliberations.

“Placing the Workforce Training Fund into a trust will create the kind of predictability that employers need to improve the skills of Massachusetts workers. We are gratified that the Senate included this provision in its budget proposal,” said Richard C. Lord, President of AIM and chair of the WTF Advisory Board.

The Senate plan for municipal health reform differs from the House version, which would allow municipal officials to set health-insurance co-pays and deductibles unilaterally after a 30-day negotiating period. The Senate proposes that if managers and employees cannot negotiate an agreement during that window, the health plan changes would be handed over to a three-person review panel made up of one labor representative, one management representative and a third mutually selected person from a list provided by the Secretary of Administration and Finance of professionals with expertise in dispute resolution, municipal finance, or municipal health insurance.

The review board would be required to approve any health insurance plan changes proposed by management that do not exceed the benefits received by state employees.

The Senate plan would also require more of any premium savings generated by health plan changes to go to municipal workers – one-third of savings in the first year versus 20 percent under unilaterally imposed changes in the House bill.

Both versions would leave cities and towns to continue negotiating with unions over the percentage of premiums paid by employees. They would also force all eligible retirees to enroll in Medicare.

Lawmakers estimate that both reform plans would save approximately $100 million per year.

AIM and Massachusetts employers generally support municipal health reform because the spiraling cost of health insurance is eroding the ability of city and town governments to deliver educational, public safety and other services upon which the economy depends. A recent report by the Massachusetts Business Alliance for Education found that virtually all of the increased state funding for schools during the past decade has been diverted from classrooms to pay for soaring health benefits.

Massachusetts’ 351 cities and towns spent $3.297 billion more on health insurance from 2001 to 2010 than they would have spent had they purchased coverage through the Group Insurance Commission, which buys insurance for state employees. The Commission limited annual premium increases to a modest 6.4 percent during that time because it is able to make plan design changes outside of collective bargaining.

The Senate budget does not include a provision of the House plan that would limit the onerous 2008 treble damages law to willful violations of the state wage and hour statute. AIM looks forward to continued discussions with the Legislature on modifying treble damages.

Topics: Associated Industries of Massachusetts, Municipal Reform, Budget, Massachusetts senate, Massachusetts Workforce Training Fund

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