Hey Look: State Senate Takes a Step for Revenues and Tax Progressivity

The State Senate began debate on the annual budget today, and lo — it came to pass that the Senators voted (29-11) to adopt an amendment that will raise additional revenues and will do so in a progressive way!

The amendment freezes the state income tax rate at the current 5.15 percent, repealing a formula enacted in 2002 that automatically reduces the income tax rate when certain fiscal benchmarks are met. This formula has reduced the income tax from 5.3 percent to 5.15 percent since 2002. (Our friends at MassBudget have prepared this excellent analysis of the reasons that this formula compounds the problems of recent declines in state revenue.)

The amendment allocates some of the revenue resulting from the income tax freeze to increasing the state’s Earned Income Tax Credit program, which helps low-income individuals and families meet the high cost of living in Massachusetts. The amendment also increases the personal income tax exemption, which benefits all taxpayers. Pending some more number crunching, I’ll speculate that for most taxpayers, the increase in the exemption will offset the freeze in the tax rate. The taxpayers for whom the increase in the exemption is least likely to offset the freeze in the tax rate are those at the upper part of the income spectrum.

So, good on the Senate. Will the House go along when the Senate and House meet to reconcile their respective budgets? As of now, the signs are not so good. Speaker DeLeo is vexed at the Senate for even debating tax policy when, in his view, the House did not relinquish its sole power to originate what our State Constitution calls “money bills.” He’s even threatening to go to court over the whole thing. Details here.

In any event, it’s a sure thing that the Speaker won’t go along unless his members convince him to do so.

What’s a “Money Bill?” (More Annals of Senate-House Discord)

Update: May 19: Speaker DeLeo continues to be peeved that the Senate regards the budget proposal that the House passed last month as a money bill, and is now threatening to take the entire matter to court, which could delay the completion of the budget past the end of the fiscal year on June 30.

Let’s review. The House budget includes a provision expanding the amount of money available for a tax credit program, thus reducing general state tax revenue. The House and Senate have agreed (in a document on the Legislature’s website) that a money bill “may either reduce general state tax revenue or increase state tax revenue.” Q.E.D.

Hmmm. Is litigation over the meaning of a money bill the sort of “progress and cooperation” that we were promised?

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Original post: May 7

The annual state budget process, now underway, has opened a new battlefront in the ongoing power struggle between the Senate and the House: what’s a “money bill?”

Our State Constitution (in Part II, chapter 1, section 3, article 7 for you wonks out there) says that “all money bills shall originate in the house of representatives; but the senate may propose or concur with amendments, as on other bills.”

We know from a very old decision by the Supreme Judicial Court (126 Mass. 557 for you wonks out there) what a money bill is not — it is not simply a bill that appropriates money for government spending. Money bills, the court said in that decision, are those that “transfer money or property from the people to the State.”

The Constitutional provision giving the Senate the power to “propose or concur with amendments” to money bills muddies the waters of that court decision a little. Are money bills only those that raise taxes? If the House were to propose a new tax, the Senate’s power to propose amendments would seem to allow that body latitude to increase or to lower that tax, or other taxes, or to change tax deductions or tax credits, or to otherwise amend state tax policy.

So in recent memory the House and Senate have defined a money bill as any bill that alters tax policy. In 1997, for example, the House budget proposal included a tax credit for homeowners who had to upgrade their septic systems and a one-year extension of an investment tax credit. The Senate, with the understanding that the House budget was a money bill, proposed additional tax credits and deductions, including the establishment of a state counterpart to the federal earned income tax credit for low-income families.

In the interest of preserving its sole power to originate money bills, and therefore to control when taxes are even considered, the House has been very careful about when it proposes any changes in tax policy. And the Senate has kept its side of the bargain, deferring to the House — to the frustration of many of that body’s members who would like an opportunity to debate tax policy, including its GOP members, who are eager for a debate on tax cuts.

But this year there are complications. During its budget debate last month the House adopted an amendment expanding the cap on a land conversation tax credit from $2 million to $5 million (a proposal, if you’re wondering, that has not been through the Speaker’s vaunted “committee process”). The inclusion of that provision led Senate President Rosenberg to pronounce the House budget a money bill and to add that the Senate would be taking up taxation issues in its budget debate.

It’s not clear whether House Speaker DeLeo was aware of the money bill implications of the tax credit amendment when he agreed to it. He has said that he disagrees with the Senate position (but note that he avoids using the language — “money bill” — that would clarify his view): “I don’t think it’s a revenue bill…I think a revenue bill involves that where, very simply, you’re talking about the increasing of revenue and I don’t think the budget that we did did that at all. So I feel clear that it’s not a revenue bill.”

It would seem that the Speaker now has a couple of choices: to concede that the tax policy provision in the House budget makes that bill a money bill, or to adopt a new policy that restricts the definition of a money bill to one that increases revenue rather than one that alters tax policy. The second choice might help save face this year, but it would mean a significant weakening of the power of the House to control tax policy debate in the future.

In the meantime, the Senate will have a rare opportunity for far-ranging tax policy discussions in its budget debate next week.

To sum up this latest skirmish: unforced error by House Speaker DeLeo, advantage Senate President Rosenberg.

Dear Shirley: On the Subject of Media Coverage of Boston 2024

[An open letter to Globe columnist Shirley Leung, in the spirit of her recent open letter to Red Sox Executive Larry Lucchino.]

Dear Shirley:

Just read your open letter to Larry Lucchino, in which you implore him to save the city’s Olympic bid.

It’s clear you think pretty highly of the guy — his “storied career,” his “outsized role” in the Sox turnaround, his “discerning eyes,” etc. Heck, in your view of things, Larry Lucchino can build stadiums that “transform entire sections of cities and make people realize we can be better than we are.”

As you argue, Larry accomplished this very thing in San Diego, getting voters to approve a referendum to build a stadium for the Padres. The stadium, in turn, was to be the cornerstone of a bigger redevelopment project.

But here’s some more about that stadium and that redevelopment project that your open letter didn’t include. Back in 1998, at the urging of San Diego’s mayor and the redevelopment team (of which Lucchino was a part), the voters of San Diego voted to contribute $275 million to the project in the form of bonds. The beauty part for the San Diego electorate was that the bonds would be paid off by the property taxes that the project would create. A free lunch, as it were.

Sadly, but not surprisingly, something happened to that free lunch along the way. A California-wide budget crisis in 2011 led to a new state law that intercepted the property taxes that the city was counting on to pay off the bonds. When the city asked to be exempted from the new law, the state said “no.” Now the whole thing is in litigation and the city may well be on the hook for the money it ponied up in reliance on what may have turned out to have been a broken promise. You can read more about it here and here.

So, here’s to recognizing what, as you said, Larry Lucchino knows: God is in the details. All of them.

Hey, Look: Scott Walker’s Coming to Town Tomorrow

It’s going to be a busy Monday for our friends at the Massachusetts Fiscal Alliance. Scott Walker, the Republican governor of Wisconsin and 2016 GOP Presidential candidate will be in town for a fundraiser.

The Mass Fiscal folks may have some of last year’s campaign debt still to retire. In 2014, they and an Independent Expenditure PAC called Jobs First spent quite a lot of money in direct mail efforts targeting 20 incumbent Democratic legislators for defeat. They sent out flyers charging that these lawmakers had taken many scandalously unpopular positions, such as favoring “illegal immigrants over military veterans.”

That this accusation was a distortion in the extreme did not go unnoticed in the press or, apparently, among voters, and 18 of the 20 legislators overcame whatever threat Mass. Fiscal’s “voter education” efforts may have posed, and they prevailed in their races. Nevertheless, the Democrats are feeling pretty sore about it all and will be holding an event to “expose the truth” about both Mass. Fiscal and Scott Walker at the State House at 1:00.

As it happens, Scott Walker’s views on immigration issues have been much in the news in the last week. Just as it was being reported that he had won the heart and mind of the Koch Brothers, which would pretty much guarantee him the Republican nomination, he began to talk about immigrants taking American jobs — a topic that worries his would-be patrons. The Koch Brothers prefer their candidates to adopt a relatively low profile on immigration policy, the better to emphasize the issues that are more important to their big business agenda, like crushing unions and denying climate change. (Speaking of denying climate change, a Wisconsin state agency voted earlier this month to prevent its staff from even discussing the topic.) Walker’s recent comments to the effect that our immigration policy ought to protect American workers and American wages is contrary to his past statements and to Koch Brothers “right-to-work” orthodoxy. It might also mean that Walker sees a need to pander to the nativist wing of his party.

So it would be interesting to see whether Scott Walker steers clear of this controversial subject altogether when he meets with the Mass. Fiscal faithful. I say “would be interesting” because of course the event is closed to those of us who do not pony up $500 to hear him. (Monday, 4/27 at 1:30 at the Union Club, 8 Park Street.)

Boston 2024: If You Like the Marathon, Ipso Facto You Want the Olympics

Update, April 29: Representative William Straus, who sponsored the budget amendment referred to in this post (the amendment would have required the IOC to pay market rates for any outdoor advertising space it commandeered for the Olympics — more info in this Herald article) withdrew the amendment today, so it will not be part of the House budget recommendation for the coming fiscal year.

At the time he filed the amendment, Representative Straus, the House chairman of the Joint Committee on Transportation, said this:

“I am concerned that this could result in the effective diversion of millions of dollars in regular advertising receipts for the commonwealth now realized through Massport, the MBTA and MassDOT,” the Mattapoisett Democrat wrote. “Those revenues currently support and help defray the costs of these transportation agencies.”

I do not believe that the Representative has issued any comment on his reason for withdrawing the amendment.

Earlier this week, the House rejected an amendment to prohibit public money from being used for the Olympics — the same proposal that the United Independent Party is seeking to put on the 2016 statewide ballot.

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Looks like the Boston 2024 folks are going to be swarming the Boston Marathon on Monday. They’ll be trying to create the impression that any fan of the Marathon also supports Boston 2024’s bid to host the Olympics nine years hence.

And as today’s Globe reports, Boston 2024 has some Marathon-related news that it’s hoping will jump-start their flagging campaign: the winner of last year’s men’s race thinks that it would be a swell idea for Boston to host the Olympics. Boston 2024 COO Erin Murphy gushes at the endorsement:

Meb is universally loved and respected for his achievements and we are so honored to have him be part of this,” Murphy said. The Eritrea-born runner who became a US citizen is so well known, Murphy said, “he’s like Madonna and Cher — he doesn’t even need a last name.”

For those of you who don’t want to be seen as so out of touch that you don’t know Meb’s last name, it’s Keflezighi, and here are his comments in support of Boston 2024:

You need unity of the community, unity of the city, in order to make it happen,” he said. “Somebody will be happy, somebody will be upset, and obviously it cannot satisfy everybody but hopefully we can meet halfway, with commitment and sacrifice in a common goal to make it a reality. Not just for Boston, for America.”

Meb’s hometown is San Diego, so maybe what he means by “meeting halfway” is that the 2024 Olympics will be held in Topeka.

*****

In other Olympics news, the state House of Representatives will soon be debating the budget for the coming fiscal year. In light of the IOC’s practice of requiring that all city transport, airport and billboard advertising be under their control for the duration of the games, some Representatives are concerned that this demand might harm ad revenues that go to the MBTA, Massport and other state agencies with outdoor advertising space. So they have filed an amendment to the budget requiring that Boston 2024 pay market rates for any advertising space it commandeers.

Here is more information on the amendment. There’s still time before the budget debate begins on April 27 for you to ask your State Representative to sign on as a co-sponsor.

Everyone seems to be in agreement that the Olympics will be paid for by private money, so maybe the Boston 2024 folks will also be chatting up this budget amendment when they descend on the Marathon on Monday.

“A State Government That Gets Out Of The Way”

In his campaign for Governor last year, Charlie Baker promised us “a state government that gets out of the way.” And it seems that’s what we are getting.

Right after taking office, Governor Baker announced that one of the ways that state government would be getting out of the way was by not issuing any new regulations for some time. A “regulatory pause” by Executive branch agencies would “enable the administration to implement new guidance that regulations going forward communicate a clear, desired and effective goal.”

This pause was not a surprise. You might say that the notion that regulations are somehow adverse to good government started with Charlie Baker, the Secretary of Administration and Finance as well as the “heart and soul” of the Weld administration. Governor Weld issued the first executive order requiring agencies to pare down their regulations in 1996 (“WHEREAS, the inefficiencies and intrusions resulting from excessive government regulation constitute an unreasonable financial and personal burden on residents of the Commonwealth”). Since then, it has become fashionable in Massachusetts for our governors to begin their terms in office with a similar reproof of the idea that government ought to be in the business of regulating business, as Mitt Romney did in 2003 and Deval Patrick did in 2007.

The right-wing American Legislative Exchange Council offers model legislation for states to trim their inventory of regulations. And our state Legislature got in on the act in 2010, prohibiting agencies from putting out new regulations until they had thoroughly analyzed the potential effect on small business and requiring all agencies to review the need for all of their regulations every 12 years.

Which brings us to Sunday’s Globe article on Baker’s further pursuit of regulatory cutbacks in a new Executive Order. The moratorium on new regulations he announced in January is to continue until further notice. And there’s lots more. Baker has often likened government regulations to the junk that accumulates in your basement and which, in the interests of good housekeeping, you need to clean out every so often (as the Legislature had already concluded in mandating a top-to-bottom review every twelve years). The Executive branch agencies are going to be very busy making sure that every state regulation passes a lengthy series of tests before it may continue to be in effect. The most controversial of these tests is that no regulation may exceed what the federal government requires:

Baker, in a March 31 directive to all state agencies, is requiring a yearlong review of nearly all state regulations, with a mandate that none should exceed federal requirements, which in many cases are far less stringent than the state’s. He wants only regulations that do not “unduly and adversely affect Massachusetts citizens and customers of the Commonwealth.”

This apparently means that if the federal government is not ready to say that the chemical perchlorate, a persistent, inorganic anion found in industrial pollutants that interferes with thyroid function if ingested in significant quantity, is unsafe, then Massachusetts will stop saying it is unsafe and will rescind the current regulation (in place since the Romney administration) capping the amount of perchlorate that safe drinking water may contain. The people of Massachusetts, especially those living in the towns where perchlorate has been found in the drinking water will be on their own, happily unburdened by excessive regulation.

Government regulations are presumptively the enemy, except of course when something goes badly wrong. Then everybody wants to know why government did not prevent the catastrophe from happening — why was nobody minding the store?

Let’s take the example of the New England Compounding Center, the pharmaceutical operation that sold contaminated steroid drugs causing meningitis which led to the deaths of 64 people across the country, caused 750 others to fall ill, and which resulted in second-degree murder charges against an owner and one of the pharmacists.

The Legislature responded to that disaster by recognizing that oversight of the compounding pharmacy industry was inadequate and by passing a law directing the Board of Pharmacy to regulate these pharmacies more strictly. The Board was told, for example, to determine which drug preparations require special training or equipment to prepare in a safe manner, to report adverse drug events in a database available to the public, and to set new penalties for pharmacies that do not comply with the new law.

The legislation passed unanimously, without discussion of whether it might be excessively burdensome or detrimental to the state’s competitiveness. The House Minority leader told the State House News Service that “everybody recognizes the terrible situation that happened and see this bill as progress on that front. I think the bill is an important step forward to bring some accountability and clarity to compounding pharmacies.” In that conversation he apparently did not mention “An Act Reforming the Regulatory Process to Promote Job Growth,” the bill that he files each session that would allow a legislative committee to bottle up any proposed regulation for up to two years in the interests of making Massachusetts a more competitive place to do business. (You may have been unaware that the Legislature has expertise in such matters as acceptable perchloride concentrations in groundwater and the meningitis-free preparation of steroid drugs.)

And so, speaking of the increased regulation and oversight of the compounding pharmacy industry, what’s up with that?

The Herald reported last week that “the state agency that oversees compounding pharmacies is still in disarray two years after a deadly meningitis outbreak, failing to inspect facilities, allowing dirty labs to stay open and rarely publicizing recalls of possibly tainted meds.” Any disarray may have to do with the fact that Board of Registration in Pharmacy has not yet issued any of the regulations that the Legislature ordered. The minutes of the Board meetings show that the regulations received some discussion last year during Governor Patrick’s administration, but progress was slow, in part because of the Legislature’s requirement that no new regulation can take effect until the agency has prepared a “small business impact statement,” which includes, among other things, an estimate of the number of small businesses subject to 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.

And now with Governor Baker’s new Executive Order in effect, we won’t be seeing those pharmacy regulations anytime soon. We have other, higher priorities, like getting state government out of the way. And that’s going to be keeping our state agencies very busy — cleaning out their basements.

The Ballad of Stacey Monahan

Update: May 21, 2015: Megan Woolhouse at the Globe brings us up to date on the damage resulting from the Patrick administration’s “modernization” of the food stamp delivery system.

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Original Post: April 2, 2015

“Few of us can resist a story of triumph against the odds — this is that kind of story.”

So begins the very flattering account in last month’s issue of Government Technology magazine of how Stacey Monahan, the onetime Commissioner of the Massachusetts Department of Transitional Assistance, triumphantly rebuilt public confidence in that beleaguered agency.

Government Technology magazine specializes in stories “about how a specific agency is using software, hardware, a network or some other information technology to improve response time, provide better service and cut costs.” And true to form, the story of Stacey Monahan’s success revolves around her bold embrace of new technological, data-driven solutions for old problems like limited resources and a demoralized workforce. (Indeed, if this story has room for a co-star, that co-star would be data, the building-block of Monahan’s new culture of efficiency and accountability. As in: “An emphasis on data integrity and investments in rebuilding the data warehouse and creating data dashboards helped staff get a data-driven view of the work they were doing.”)

The article informs us that Monahan’s two biggest triumphs were putting photographs on Electronic Benefits Cards and modernizing the food stamp program by introducing electronic document management and a centralized contact number, which in turn allowed her to redistribute the workload of agency employees.

Thus fortified with these information technology breakthroughs, we learn, Monahan’s pragmatic, hands-on approach succeeded in soliciting feedback, empowering staff, rallying stakeholders, engaging multiple constituencies, demonstrating executive stewardship, creating a wide circle of support and delivering outcomes for working families (all the while leaving no human-resources cliche unspoken).

It’s an inspiring story. And if you’re wondering how its author became motivated to set fingers to keyboard to tell it, you might ask him. His name is Matthew Burnham, and he is a public service strategy executive with Accenture, a management consulting company whose clients include the Commonwealth of Massachusetts. (While you’re at it, you might ask if a $70,000 payment from the Department of Transitional Assistance to Accenture had anything to do with his interest in Monahan’s story.)

But alas. This tale does not have a happy ending. It turned out that the Electronic Benefits Cards with the photographs on them were not exactly delivering the outcomes for working families that they were supposed to deliver, and in December, the U.S. Department of Agriculture intervened and ordered that the widespread problems be fixed. Then last week, the Globe reported that the once-vaunted electronic document management system, instead of making for happier clients, had all the while been cutting off thousands of eligible residents from their benefits, leaving them unable to buy food. In short, the technological successes that this story is based on were in fact technological disasters.

Not surprisingly, incoming Governor Charlie Baker announced before he had even taken office that Monahan would not be part of the new administration. But Monahan believes strongly in moving things forward until she gets them right. And she has this nice puff piece in Government Technology to accompany her resume (for which she is presumably grateful to the taxpayers). Maybe there’s an organization out there looking for somebody who “communicates a vision effectively at all levels.” An organization where maybe she already has an in. I understand that the Boston Olympics folks are hiring. Seems like an ideal match.