Going Great Guns: Field Notes from the State House

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Remember when our state legislators were talking about the tragedy in Newtown, Connecticut? Back then, in January, House Speaker DeLeo said he was going to convene a task force to look into the relationship between gun violence and mental illness, and 200 legislators and staff members crowded into a meeting organized by Representative David Linsky of Natick, a leading gun control proponent, about reforming the state’s gun laws.

Since then, the action has slowed a bit. Speaker DeLeo did not assemble his task force until mid-March, and he expects that their work will take several months. The Joint Committee on Public Safety and Homeland Security, which has jurisdiction over gun-related legislation, including Representative Linsky’s bill, does not plan to take any action until it has held public hearings across the state, which House Chairman Harold Naughton says will run into September.

The only legislator to invoke Newtown recently has been Representative Marc Lombardo (R-Billerica). Lombardo (who was elected to the House in 2010 with support from Tea Party groups and whose National Rifle Association rating is 92 out of a possible 100) filed legislation in honor of Newtown last month that would station police officers in our public schools to increase security. Any municipal or state police officer (including part time and retired officers) who has a license to carry and is up-to-date with required training could receive a state income tax deduction of up to $8000 annually (the amount to be determined by the hourly paid detail rate in the officer’s city or town) by serving as a security presence at a school.

Many of us may have concerns that Representative Lombardo’s plan might reduce the sense of urgency about putting other, different, gun safety measures in place. But that’s a discussion for another day — now let’s just look at the money.

Supporters of the legislation say that the officers would be “volunteering” their time, and therefore the extra security would come “without a penny being paid by the taxpayers.” Well, since an $8000 state income tax deduction is worth $428, that’s not exactly “volunteering” in the truest sense of the word, even if the award is relatively modest. And how many police officers do we have? Just for starters, there are 2,300 active members of the State Police. Add in the municipal officers and retirees and it’s a pretty big number.

In their belief that any tax deduction is a good thing, tax cut champions often forget that most state taxpayers are also consumers of the state services that taxes pay for. Except, of course, when it’s time to take credit for delivering those services to their constituents. Here’s Representative Lombardo enumerating with considerable pride what he was able to accomplish for the people of Billerica in the annual state budget:

“I’m pleased to support the funding of programs critical to Billerica. Project BEAM, the Boys & Girls Club, and the Council on Aging are such important parts of the Billerica community. I’m happy I was able to secure funding that will enable them to continue serve the residents of Billerica.”

Taxpayers of Billerica: meet the residents of Billerica who benefit from important state services.

SIDEBARS: Want to see how the National Rifle Association has rated your legislators? The info is here.

Two of the statewide hearings on gun safety legislation are scheduled for noon on June 19 at Cape Cod Community College in West Barnstable and on June 26 at Assumption College in Worcester.

Making One Half of the Working Class Kill the Other Half

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The 19th century railroad tycoon and robber baron Jay Gould is said to have bragged that he was so powerful he could make one half of the working class kill the other half.  Gould was likely referring to the Great Southwest Railroad Strike of 1886, which he was able to break by hiring replacements for the 200,000 striking workers.

The aim of those who are sounding the most extreme alarms about “welfare fraud” these days would appear to be, like Gould’s, to make one half of the working class kill the other half. But not by hiring strikebreakers. Instead, by stoking the resentment and fear of those who may not be too far away from poverty themselves against those who are so poor (income of less than $13,000 per year for a family of three) that they qualify for welfare ($618 per month). About 51,000 families receive welfare in Massachusetts today, although many more than that number are living in extreme poverty (and although you wouldn’t know it from the rhetoric, our welfare program has a work requirement).  

So, how to set the working class against itself in our time? Widespread economic insecurity — there are many more job seekers than jobs — makes for a good start. Add to that an obsessive focus on the mere possibility of abuse (in order to dispose of the inconvenient facts that public benefits programs are largely well run and what is needed to improve them further is better technology and more staff). To wit: Representative Shaunna O’Connell offers stories of  EBT cards with balances of $7,000 on them.  Representative Dan Winslow suggests that applicants for housing assistance are likely to have secret real estate holdings, stock and bond portfolios, recreational vehicles and watercraft (what is it with this guy and boats, anyway)?  And Representative Brad Jones claims that hard working citizens are seeing their money go to welfare cheats at the same time that they are being asked to pay “billions” more in taxes. Which of course is not true — there’s no current proposal to increase taxes by that amount, in part because of the unanimous objections by the minority party to the idea that those who can afford to pay more ought to do so for the benefit of all of us in the Commonwealth.

I bet Jay Gould would smile.

A Flood of Special Elections?

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Hey you – especially those of you who are trying to maintain a perfect attendance record at the ballot box. Does it seem like there are way too many special elections to try to keep up with?

Me, too, so I compiled this list to check my sense of these things. The list includes only state elections and not the special elections to succeed U.S. Senators Kennedy and Kerry.

I have listed only the final result, but many of these special elections included both a primary and a general, adding to the total number.  Here they are, starting in 2009:

2009

  • Special election to replace Representative (and Speaker) Sal DiMasi of Boston, who resigned, was won by Aaron Michlewicz

2010 

  • Special election to replace Senator Scott Brown, who was elected to the U.S. Senate, was won by Representative Richard Ross.
  • Special election to replace Representative William Lantigua of Lawrence, who resigned under political pressure to vacate one of his elective offices (he was also Mayor of Lawrence), was won by Marcos Devers.

2011

  • Special election to replace Representative Stephen Canessa of Lakeville, who resigned to take a job in the health care industry, was won by  Keiko Orrall.
  • Special election to replace Representative Christopher Speranzao of Pittsfield, who was named Clerk Magistrate of the Pittsfield District Court, was won by Tricia Farley-Bouvier.
  • Special election between Geraldo Alicea of Southbridge and Peter Durant of Spencer, whose 2010 contest resulted in a tie, was won by Peter Durant.
  • Special election to replace Representative Peter Koutoujian of Newton, who was named Middlesex County Sheriff, was won by John Lawn.

2012

  • Special election to replace Senator Steven Tolman of Watertown, who resigned to become President of the Massachusetts AFL-CIO, was won by William Brownsberger.

2013

  • Special election to replace Representative Joyce Spiliotis of Peabody, who died, was won by Leah Cole.
  • Special election to replace Representative Stephen Smith of Everett, who resigned as part of a plea bargain in an election fraud case, was won by Wayne Matewsky.
  • Special election to replace Senator John Hart, who resigned to join the law firm Nelson Mullins, was won by Representative Linda Dorcena Forry.

Still to come in 2013

  • Special election to replace Representative Marty Walz of Boston, who resigned to become the President of Planned Parenthood Massachusetts, will be held on June 25.  Democrat Jay Livingstone may face a write-in challenger.
  • Special election to replace Representative David Sullivan of Fall River, who resigned to become the Director of the Fall River Housing Authority, will be held on September 10.
  • Special election to replace Representative John Fresolo of Worcester, who resigned amid ethics charges brought against him in the House of Representatives, will be held on September 10.

And after that will likely come some jockeying for all the newly-vacated positions resulting from the Markey-Gomez Senate race.    So stay tuned for updates.

Field Notes from the State House: Senate Budget Debate

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This week at the State House, the Senate will debate the budget proposal that its Committee on Ways and Means released last Wednesday. The 39 Senate members (there’s currently one vacancy) have filed 725 amendments to the Committee’s budget. After a couple days of internal discussions on Monday and Tuesday, the debate will likely begin on Wednesday. Not all the amendments will receive formal consideration — at some point, probably on Thursday, the amendments that have not yet been considered will be sorted by the Committee into two “bundles,” as they’re called: a thumbs-up bundle, and another — larger — thumbs-down bundle. The Committee’s bundling decisions are generally accepted, but any Senator can contest a call.

Not surprisingly, the members of the minority party often file amendments in excess of their numbers, and this year that is particularly true. In fact, one Senator, Minority Leader Bruce Tarr from Gloucester, is the author of 14 percent of the amendments — 103 of the 725.

Let’s see what vision of state government the GOP amendments offer.

Certainly the Norquistian “drown it in a bathtub” approach is prominent. There are amendments to lower both the sales and income taxes to five percent, which would reduce available revenues by billions of dollars. Also, there’s one that might bring some unwanted attention to a U.S. Senate candidate — proposing that the state ought to be giving away lots more money in historic preservation tax credits (now come out from behind that facade, Mr. Gomez).

But is the GOP entirely committed to small government? Apparently not. For one thing, there’s no end to the money that they feel the state should spend in order to ensure that not one single person who is not eligible for public benefits receives them. And a true libertarian would dismiss the amendment to prohibit young people from receiving drivers’ licenses until they have pledged to abide by the laws as a misguided effort to involve the government in meaningless gestures.

Most significantly, many of the GOP amendments propose additional spending, notwithstanding the drop in revenues that would result from their proposed tax cuts. Our police training facilities are inadequate. Our seawalls are falling apart. More people need help paying for health insurance. Dams are in urgent need of repair. Contaminants in our aquifers may be migrating into the water supply and causing cancer in children. All these problems sound like they might be legitimate concerns of government, but the GOP’s overriding priority of tax cuts undermines a serious discussion about them.

Oh, and one more spending item. Apparently our sewer costs are just too much to impose on individual property owners and the government must step in to shoulder more of the burden.

The vision of the GOP budget? Government has an obligation to drain all bathtubs, even those intended for drownings.

Dear IRS: Let’s Change the Subject (Slightly)

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(Catching up on my correspondence.)

Dear Folks at the IRS:

I bet you would love to talk about something — anything — besides the extra scrutiny you have apparently been giving to Tea Party groups applying for tax-exempt status. So here’s a different topic.

Let’s revisit 2005, when U.S. Senate candidate Gabriel Gomez took a federal tax deduction of $281,500 for agreeing not to make any changes to the facade of his historic Cohasset house. By an interesting coincidence, that very same year you were warning taxpayers that such deductions might not be legal. Your “Dirty Dozen” tax scams list for that year (the historic facade scam was number 9) urged people not to be “fooled by false promises peddled by scam artists. They’ll take your money and leave you with a hefty tax bill.” Before reading your list, it had not occurred to me that Mr. Gomez might have been the victim of the false promise of a scam artist, but now I can picture it: the scam artist mounting the steps of the historic Cohasset house carrying a cheap suitcase. He looks like Steve Buscemi.

I so admire your willingness to give Mr. Gomez the benefit of the doubt in this case, and would encourage you to apply it more widely. For example, also in 2005 your “Questionable Refund Program, which uses “data mining” computer techniques, surmised that hundreds of thousands of refund claims appeared that they might be fraudulent. You put a freeze on those claims and did not even notify the taxpayers that their returns were being held. Some 28,000 of the people whose refunds were frozen asked the Taxpayer Advocate Service for help, and in 4 out of 5 cases, they ended up receiving their full or a partial refund. The average income of these taxpayers was $13,300, and more than eight months passed before those who pursued the matter received their refunds. Here’s how bad it was – even Chuck Grassley wrote you a protest letter.

Based on this experience, the Taxpayer Advocate concluded that the filters on your data mining programs might be in need of some adjustment. This seems especially true if, as appears to be the case, the tax return Mr. Gomez filed was not one of ones that was frozen.

So, going forward (and sincerest apologies for getting back to the issue of the tax exempt status of 501(c)(4) social welfare groups), you might want to double check that your data mining filters are programmed to let you investigate whether a group like Karl Rove’s Crossroads GPS, which spent $70 million during the last election, does in fact qualify for tax exempt status under your guidelines. As you say,

the promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office . . . a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity

If your filters don’t tell you that the primary activity of Crossroads GPS is political, it’s definitely time for another adjustment.

With all good wishes,

H.P.

Let’s Occupy the Film Tax Credit

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Old joke – a merchant tells a customer that the goods he’s selling actually cost him more than he’s charging the customer for them. When he’s asked how he can afford to sell them at such a low price, he answers: the profit comes from selling a large quantity. Sadly, something akin to that joke is serving as the premise for our state’s film tax credit program: all our tax break giveaways are — somehow — going to boost our bottom line.

This is the eighth year Massachusetts has offered a film tax credit. For the first six of those years (2006-2011, the years for which data is available), the state gave away $327 million in credits. These tax credits attracted $186 million in new spending, which yielded $44 million in new revenue. That is to say, for every dollar we spent on film tax credits, we got back 13 cents and lost 87.

Given its abysmal record so far, why is it (to borrow a line from a movie that was not filmed in Massachusetts) that we just can’t quit the film tax credit? Let’s review.

In 2005, Massachusetts enacted a relatively modest film tax credit, which was signed by Governor Mitt Romney. Also in 2005, director Martin Scorsese filmed a movie about Boston, The Departed. Most of the filming for that movie, however, took place not in Boston but in New York. And especially after that movie won four Oscars in 2006, people got to talking about how other states were poaching on what should be our movies and how we needed to do something about it.

So in 2007 (possibly influenced by one film director who said that film executives “would shoot a movie on Mars if they could get a 25 percent tax break”), Massachusetts opened the spigot wide, where it remains today. Now we reimburse film companies for 25 percent of their production and payroll costs, and we also throw in an exemption from the sales tax. Most significantly, the film tax credit is now refundable. This means that after the film company has paid the state taxes it owes, it can sell the remainder (usually at a slight discount) to a company or individual who owes state taxes and who can therefore capture the full value of the credit. As soon as he signed the legislation, Governor Deval Patrick (apparently unconcerned about criticism that the point of the the film tax credit was to let politicians hobnob with Hollywood celebrities) hurried off in order to hang with Denzel, who was in town filming The Great Debaters. And probably at exactly the same time, markets sprang up for the buying and selling of film tax credits.

Who’s buying them? Primarily insurance companies, financial institutions and other corporations that owe state taxes. Of the $327 million in film tax credits that have been generated since 2006, these organizations have purchased $280 million, or 86 percent. They have paid an average of 89 cents for a dollar’s worth of tax credit and thereby reduced the state taxes they would otherwise have had to pay by $30 million.

In the difficult budget years after he signed the film tax credit into law, Governor Patrick has lost some of his original enthusiasm. He now believes that the credit should be capped at $40 million per year. There’s no cap under current law. This is an entitlement program — filmmakers are free to come to Massachusetts and we are obliged to pay them 25 percent of their production costs, whatever those costs are. And if past experience is a guide, 87 cents of every credit dollar we give will simply disappear. The Department of Revenue estimates that the projects claiming the film tax credit in 2012 will cost the state more than $78 million. Representative Angelo Scaccia of Boston filed an amendment to the House budget last month to cap the film tax credit at $40 million, but it was rejected; the prospects for closing the spigot are not good.

So what to do? How about — if you can’t beat ‘em, join ‘em? The market for buying film tax credits is open to everyone. Maybe some civic-minded individuals or companies or individuals who owe state taxes could purchase tax credits at the going rate of 89 cents on the dollar and then, instead of keeping the 11 percent savings, donate it to a worthy cause. Or we can organize ourselves into (gasp!) collectives and then share the proceeds among us. As the insurance companies and financial institutions have demonstrated, there’s lots of money to be had. If they can make millions from this policy debacle, why can’t we?

So what do you say? It’s showtime!

House Budget Debate: A Guide for Progressives

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It’s budget week for our House of Representatives. The House Ways and Means Committee released its budget recommendation for the upcoming fiscal year on April 10, and since then Committee staffers have been busy analyzing the 888 amendments that House members filed and sorting them into subject matter groups. Here’s what we can expect.

In keeping with the practice in place for a decade or so, much of the budget debate will happen outside of public view, in a room next to the House chamber. Announcements will be made that the amendments on a particular subject are to be considered. Representatives interested in those amendments will then go to the side room to argue their case to House leadership. There will be some winners and some losers, but the end result, known as a “consolidated amendment,” is always agreed to, often unanimously.

This process may strike you as shockingly devoid of transparency. Its defenders point out that all members are free to decline the consolidated amendment process and to debate their amendments on the House floor instead. Some members regularly accept that challenge — the members of the minority party, along with a conservative Democrat or two. We can expect that they will again demand debate on at least two issues, closely related to each other politically.

The subject of the first debate will be cutting taxes. Minority Leader Brad Jones, for example, has filed an amendment to cut both the sales and income taxes to five percent over five years. (If you’re wondering, House Democrats have not filed any budget amendments proposing large-scale tax increases.) The GOP’s tax cut amendments stand no real chance of being passed — their purpose is to try to force the Democrats to vote against a tax cut, a record that could then be used against them in the next election. The Democrats may counter that amendment with a further amendment in order to render the issue politically innocuous: to wit, last year, when the GOP proposed a sales tax cut, the Democrats changed the amendment to provide that the sales tax would be cut when legislation was passed to cut it — and voila, who could be against that?

The subject of the second debate will be the fraudulent receipt of public benefits by the recipients of those benefits. Promoting the notion that this is the single most pressing issue facing the state is a joint profile-raising venture among the Republican Party and conservative media, and it has been used — with a fair amount of success — in each of the past three budget debates and well before that. The particulars of this second debate have varied over recent years. Sometimes the villains are immigrants, as in this Herald cover from House budget debate week in 2010:

HeraldWelfareCover

Last year the focus was on EBT cards. This year again, the public benefits fraud alarm has been sounded, in eighteen separate amendments* calling for more restrictions and more punishments, the tacit message of which reinforces the first subject the GOP is eager to debate — if it weren’t for these moochers robbing us, we’d have our money back in the form of tax cuts.

Mark Twain once said that a lie can travel halfway around the world while the truth is still putting its shoes on. And so it is here, with the claim that public benefits fraud by recipients is the biggest problem we face. State Senator Dan Wolf and some others have helpfully begun to expose this notion as a myth. Here are some reasons why they’re right.

For starters, the idea of investigating potential fraud by recipients of public benefits programs is hardly a new one — it’s nearly as old as the programs themselves. Today, it is the mission of the Bureau of Special Investigations, which was established in the early days of Weld administration. The Office of the State Auditor, where the Bureau is located, reports that in a recent fiscal year, the Bureau received more than 2000 complaints of suspected fraud and identified $4.1 million in fraudulent claims.

Second, the premise that welfare fraud is becoming more rampant because so many more people are receiving welfare is just wrong. Let’s look at the caseload numbers. Shortly before the Great Recession began, the welfare caseload stood at 45,900. The unemployment rate at the time was 4.1 percent . Three years later, in December 2010, when the employment rate had nearly doubled to 8 percent, and one might have expected the welfare caseload to have done the same, it stood at 52,463, an increase of only 14 percent. The truth is that today, fewer than half the families living in poverty in Massachusetts receive any form of cash assistance; fifteen years ago, nearly all of them did. We readily suspect that poor people are up to no good, but we’re oblivious to their poverty.

Finally, the argument that eliminating welfare fraud would significantly affect the state’s bottom line collapses when you consider that the program for cash assistance to families living in poverty — the primary target of the anti-fraud movement — accounts for less than one percent of the entire state budget.

Now, let’s consider — and embrace — the argument that public benefits fraud should be eliminated wherever it occurs. In that case, the state’s biggest welfare cheat is a pharmaceutical company named GlaxoSmithKline, which paid $35 million to the state’s Medicaid program to settle charges of illegally marketing and pricing drugs that it manufactures. That’s almost nine times the amount of money that the Bureau of Special Investigations identifies annually in recipient fraud (and the $35 million is only what GlaxoSmithKline admitted to). Did outraged legislators demand investigations of other drug companies and call for Glaxo to be excluded from state Medicaid contracts as punishment? Not exactly — in fact, quite the opposite: the House responded by loosening restrictions that had been imposed to control Big Pharma’s aggressive marketing of drugs. Or to take another example, remember when one guy stole $4 million from the film tax credit program and there was a swift and stern response from legislators calling for the Department of Revenue to exercise much stricter oversight? Of course you don’t, because, although the theft occurred, the swift and stern response did not.

But we progressives need to get ready for another battle in the welfare fraud wars. The Boston Herald is already crowing that it has brought House Speaker Robert DeLeo to heel again this year. DeLeo is demanding photo ID’s on electronic benefits cards, a very expensive venture of dubious value in fraud prevention, and he wants another layer of bureaucracy on fraud patrol. If he thinks that those moves will end the debate, he doesn’t know the minority party very well. Leader Brad Jones has predictably responded to DeLeo’s initiatives by saying, “it’s a great first step, but it’s not addressing all that needs to be addressed.”

So it looks like we’re getting set up for another House budget debate where the only thing that’s debated in public is the deliciously tormenting idea that poor people are getting away with something at the expense of the rest of us.

What can we progressives do? We can support the good budget amendments that will fight poverty instead of fighting the poor. We can provide more child care for working families. We can restore dental benefits to adults who receive subsidized health care; we can provide jobs for unemployed kids; we can help to bring vacant public housing units back online to ease the problem of homelessness, and we can provide shelter for homeless children without first requiring that they sleep in unsafe places.

And the biggest thing we can do is to make sure our Representatives know that we’re rejecting the austerity war against the poor. We’re rejecting tax cuts and we’re rejecting the lie that punishing the poor for their poverty will solve our problems. This year, maybe, the truth has its running shoes on.

* The amendments, by number: 96, 322, 385, 387, 683, 686, 697, 753, 790, 814, 820, 828, 838, 840, 848, 871, 878, 880.