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Volume 26, Week 34 - MTF Calls for Health Care, Pension Reforms to Help Cities and Towns

One of the state’s leading taxpayer advocacy groups is warning that local government finances are “under siege” due to a volatile mix of rising costs and local aid reductions, and is calling on lawmakers to make municipal relief a top priority in 2011.

In an “open letter” to legislators and candidates released on August 18, the Massachusetts Taxpayers Foundation (MTF) indicated reforms are needed in two key areas – health care and pensions – but notes that Beacon Hill failed to deliver those reforms during the 2009-2010 legislative session.

“It is imperative that the Legislature act in 2011 to help municipalities address the unsustainable increases in the costs of health care and pensions that are leading directly to layoffs of teachers, police, fire and other local employees,” MTF President Michael J. Widmer wrote.  “The recently passed ‘municipal relief’ legislation fails to address either of these issues in a meaningful way.”

MTF is pushing for these cost-saving reforms because it anticipates cities and towns are “virtually certain” to see additional local aid cuts next year, as the flow of federal stimulus dollars ends.  This is on top of the $700 million reduction in local aid municipalities have already experienced since Fiscal Year 2009.

Rising health care costs are a significant concern.  According to MTF, these costs accounted for 6 percent of annual municipal spending 10 years ago, but now consume 14 percent of local budgets and will rise to 20 percent by 2020.

MTF has proposed two changes to slow the rate of health care cost increases.  Together, these changes would save cities and towns $175 million in the first year alone, with additional savings moving forward.

The first reform is one I have long championed, which is to give communities more flexibility to design their own health care plans for employees and retirees.  By allowing cities and towns to make modifications without going through the collective bargaining process, MTF estimates a first-year savings of $100 million and $2 billion in annual savings by 2020.

The second major health care reform MTF is advocating would require all eligible municipal retirees to enroll in Medicare for their primary coverage.  Approximately 15,000 Medicare-eligible retirees are still using their municipal health insurance as their primary coverage, and MTF is warning another 15,000 retirees under the age of 65 could do the same once they turn 65.

Requiring Medicare-eligible retirees to enroll in Medicare would save communities $75 million initially, with further savings down the road, according to MTF.  MTF estimates this change would also lower overall health care costs by 5 percent because the pool of employees and retirees remaining in municipal plans would tend to be younger and healthier.

In addition to health care costs, one of the biggest challenges facing communities is their unfunded pension liability.  The Legislature recently agreed to extend the amount of time communities have to fully fund their local pension systems by 10 years, from 2030 to 2040.  While this will give communities some short-term financial flexibility, in the long run it will require increased annual contributions and could lead to lowered bond ratings that would make it more costly to borrow money in the future.

Although the Legislature extended the pension funding scheduled, it “failed to include any meaningful reforms that would reduce costs,” MTF notes.  In his open letter, Widmer offers a series of state and municipal pension reforms – including several that I have offered – that he estimates “would generate approximately $2 billion in savings over the next 30 years with nearly $800 million benefiting municipal plans.”

MTF recommends increasing the minimum retirement age to reflect the fact that people are living longer, and therefore collecting pension benefits longer.  MTF supports raising the minimum retirement age for most employees from 55 to 60, and raising the age at which most employees would receive a maximum pension benefit from 65 to 67.

MTF also wants to see a change in the formula used to determine the size of individual pensions.  Currently, pensions for most public employees are calculated based on their three highest consecutive years of earnings.  MTF believes this should be changed to either a five-year average, or to a lifetime salary average, adjusted for inflation.

Further savings can be realized by pro-rating pension benefits for those employees who served in more than one group classification, since pension benefits vary from one group to the next.  MTF also wants to see all public pensions capped at $100,000, which is about five times the current state average but a fraction of what some of the highest-paid retirees are earning.

MTF has offered some common-sense reforms to reduce government costs, particularly for cities and towns.  When the Legislature reconvenes in January, it would be wise to heed MTF’s recommendations and implement these reforms without delay.

Volume 26, Week 33 - Lawrence Bailout Needs More State Oversight

Earlier this year, when the Legislature approved a $35 million bailout plan for the City of Lawrence, there was a provision tucked into the bill that authorized the creation of a finance control board to help the community find a way out of its fiscal mess.

But this provision came with a catch that seriously weakened what should have been a strong protection for Massachusetts’ taxpayers: the finance control board could not be put into place until 2011, or after city officials had first been given a chance to try to work out the city’s fiscal problems on their own.

I was one of several legislators who argued that a finance control board should have been implemented from the outset to take the tough but necessary steps to address Lawrence’s long-standing budget problems and ensure that the city will not default on its loan repayments.  Recent events have convinced me that the state was wrong not to insist on this additional layer of oversight right from the start.

The taxpayers of the Commonwealth have a strong stake in Lawrence’s future and its efforts to pull itself back from the brink of bankruptcy.  The city received $154 million in local aid from the state during the fiscal year that ended on June 30, and its schools are now almost fully funded by the state’s taxpayers.

When Lawrence issued bonds to raise the $35 million authorized by the Legislature, those loans were backed by the city’s future local aid payments.  If Lawrence fails to attain fiscal solvency and defaults on its loan repayments, it will be the state’s taxpayers who are left holding the bag.

As of last month, Lawrence had already borrowed $24 million, or more than two-thirds of the total loan amount authorized by the Legislature.  The city is planning to borrow another $3.3 million to balance the new $224 million municipal budget that went into effect on July 1, leaving just a little more than $8 million available to deal with any future budget shortfalls that might arise.

To balance this year’s budget, Lawrence has already laid off 84 municipal workers, including 23 firefighters.  It‘s also reportedly planning to raise additional revenues by aggressively pursuing those individuals who owe unpaid property taxes to the city.

Despite these actions, it’s concerning that so much of the city’s loan authorization has already been expended in such a short period of time.  If a finance control board had been in place, the city might have been more careful in allocating these resources.  My fear is that, given the uncertain economy, the city may be back before the Legislature seeking additional authorization to borrow before the current fiscal year ends.

I’m also concerned about what’s been happening with the Lawrence Fire Department.  Half of the city’s fire stations have been closed since July 1, and the department is now operating with 13 to 15 firefighters per shift, which is less than half the number that was available per shift just last year.

Acting Fire Chief Brian Murphy has warned that the station closings and personnel cutbacks have compromised public safety by hampering his department’s ability to protect citizens and their homes in the event of a fire.  Since July 1, the average response time has doubled, and the city has come to rely increasingly on mutual aid from other communities to make up the difference.

City officials have offered to rehire some of the laid-off firefighters, but only if the department agrees to a series of concessions, including a 10 percent pay cut and an end to bonus pay.  The union has countered by offering to give up a 3.5 percent pay raise that went into effect on January 1, but so far neither side has been able to come to an agreement.

If a finance control board had been in place, the city and its fire department would not be at an impasse for one simple reason: a finance control board would have the power to unilaterally declare all contracts null and void, and force all parties to work together to reach an agreement.  The final compromise might not have been a popular one, but it would have been financially viable and something the city could afford.

A finance control board is exactly what the City of Lawrence needs right now to address its chronic budget problems.  This board will have the power to steer the city towards the fiscal solvency it has been lacking for many years.

The Legislature made a mistake by not insisting that Lawrence be placed under a finance control board months ago.  It’s time to rectify that mistake to get Lawrence back on the right track.

Volume 26, Week 32 - Electing President by National Popular Vote a Bad Idea

Election Night 2012.  President Barack Obama has easily won the backing of Massachusetts’ voters for a second term in office, but Republican Sarah Palin, riding a national wave of anti-incumbent sentiment, captures a narrow lead in the popular vote.  As a result, Massachusetts’ 12 electoral votes go to … Sarah Palin.

Sound impossible?  Not under a National Popular Vote system, which Massachusetts is one step closer to implementing now that Governor Patrick has signed legislation authorizing the Commonwealth to join a multi-state compact to change the way we elect the President.

The National Popular Vote movement, which is being spearheaded in Massachusetts by Common Cause, would scrap our current system by awarding the state’s 12 Electoral College votes to the candidate who captures the most votes nationwide.  That means a candidate who fails to top the ticket in Massachusetts could still end up with all of our state’s electoral votes.

Why would Common Cause -- and the Massachusetts Legislature -- be pushing for such a radical change in the way we elect a President?  The answer lies in the 2000 Presidential Election.

Ten years ago, Democrat Al Gore received over half a million votes more than Republican George W. Bush nationwide.  But following the Florida recount, Bush emerged with enough electoral votes to become our 43^rd President, despite losing the popular vote.

The 2000 election marked only the fourth time in our nation’s history where the winner of the popular vote did not become President (the same outcome occurred in 1824, 1876 and 1888).  Considering it’s happened only four times in 56 election cycles tells me the Electoral College system works well and doesn’t need to be changed.

Our nation’s Founding Fathers did a good job when they crafted their “Grand Compromise” over 200 years ago, providing each state with a number of seats in the U.S. House of Representatives proportional to their population while giving every state – large and small – two seats each in the U.S. Senate.  The number of Electoral College votes each state has is equal to the number of U.S. Senators and Representatives from that state.

Proponents of the National Popular Vote don’t like the Electoral College system, and are trying to circumvent the Constitution to change the way Americans elect their President.

Article V of the U.S. Constitution provides a process by which the Constitution can be amended.  A two-thirds vote is required in both branches of Congress, followed by ratification by three-fourths of the states’ legislatures, before an amendment can take effect.

Supporters of the National Popular Vote are trying to bypass this process entirely by passing legislation on a state-by-state basis.  The goal is to get enough states to join the compact to produce the 270 electoral votes needed to elect a President.

Five other states have already signed on, including Hawaii, Illinois, Maryland, New Jersey and Washington.  These five states represent 61 electoral votes, and Massachusetts brings that number up to 73.

Supporters of the National Popular Vote initiative should be careful what they wish for, given the unintended consequences that could result.  After all, the system they’re advocating would force some states to cast their electoral votes for a candidate who did not receive the support of a majority of the state’s voters.  There’s also a possibility that in some states, the electoral votes could go to a candidate who doesn’t even qualify for the ballot.

Consider what happened in the 2004 Presidential election.  Although John Kerry captured more than 60 percent of the vote in Massachusetts that year, Bush received the most votes nationwide.  If the National Popular Vote had been in place six years ago, all of Massachusetts’ 12 electoral votes would have gone to Bush, even though less than 40 percent of the state’s residents who went to the polls that year cast a ballot for him.

The current electoral system works because it ensures every state and every region has a say in the process.  As Tara Ross, author of Enlightened Democracy: The Case for the Electoral College, notes: “Presidential candidates must build national coalitions of voters” to get elected.

“Historically speaking, the candidate who builds the broadest coalition will win,” Ross writes.  “Thus, presidents are good representatives for all Americans; they do not merely represent one region, state or special interest group.”

As the Newburyport News noted in a July 22 editorial, “The election of the president is, by the design of the fathers, a contest to win states, not merely to win votes.  That legislators in this state, one of the original adopters of the Constitution, would subvert that design in the name of a fashionable populism is horrifying.”

I couldn’t agree more.  The National Popular Vote is bad public policy, not only for Massachusetts, but also for our country.

Volume 26, Week 31 - Legislative Session Comes up Short on Reforms

In the waning days of the 2009-2010 legislative session, no single issue dominated the news as much as the debate over casino gambling.

By the time the clock struck midnight on July 31, the House and Senate had finalized a proposal to license up to three resort-style casinos and two slot machine parlors, with each license subject to a competitive bidding process.  But the long-term viability of the proposal remains in doubt, as Governor Deval Patrick appears poised to veto the bill and many legislators have already dismissed a suggestion that they return for a special session later this year to override the anticipated veto from the Corner Office.

Despite all the hoopla over casinos, dozens of other policy initiatives made it through both branches with little fanfare and are now sitting on the governor’s desk awaiting his signature or veto pen.  These proposals represent a mixed bag and demonstrate that while the Legislature delivered some positive changes, it also failed to take advantage of many opportunities to substantially reform the way state government operates.

Here’s just a small sampling of some of the major bills passed by the Legislature before the midnight deadline last Saturday:

IRAN DIVESTMENT – The Legislature has approved the divestment of state pension funds from companies that do business with Iran, which is on the U.S. State Department’s list of terrorist-sponsoring nations.  This policy change will ensure the money invested on behalf of the state’s employees and retirees will not be used to support companies that profit from their connections to countries that engage in or condone acts of terrorism.

The Legislature approved a similar divestment plan in 2008, when the pension fund withdrew its assets from companies connected to Sudan.  I believe this represents a great opportunity for the state to support homegrown businesses by investing in companies based right here in Massachusetts.

HEALTH CARE COST CONTAINMENT – The Senate had ambitious plans to pass comprehensive health care cost containment measures this session, but by the time the House acted on the bill, many of the Senate proposals were stripped out, which means these changes will have to wait until next year.  Given the pressing need to contain health care costs, it’s disappointing to know many long-term reforms have been put on hold.

The Legislature instead passed a scaled-down bill aimed at reducing the health care burden on small businesses.  The final bill allows small businesses to join together to secure health care coverage for their employees at a reduced cost, and also requires insurance carriers in the small group market to offer at least one reduced network plan with premiums that are 12 percent lower than  a full network plan.

To minimize the impact of rising rates, insurers will now be required to file premium rate increases with the Division of Insurance (DOI) 90 days before they take effect, and those rates can be rejected if they are deemed excessive.  Insurers will also have to change the way they calculate premium costs based on the age of the employee group covered to avoid the 30-40 percent cost spikes many small businesses experience as their workforce ages.

CORI AND SENTENCING REFORM – The House and Senate agreed to a series of reforms dealing with Criminal Offender Record Information (CORI) reports.  The final bill grants wider access to these reports, but also reduces the amount of time this information will be made available.

Information on felonies, for example, will now be available for only 10 years, rather than 15, and on misdemeanor convictions for 5 years instead of 10.  The bill provides liability protection to employers who utilize the CORI system, but also prohibits employers from asking potential employees about their prior criminal record on their initial job application.  Having accurate and timely access to this information is important for employers considering prospective job candidates.

I also have serious concerns about the bill’s provisions that weaken the state’s mandatory minimum sentencing laws.  In some cases, criminals could be released from prison, without having adequate post-release supervision in place, after serving only one-half or two-thirds of their sentence.  This goes against the entire concept of minimum mandatory sentencing, and sets a dangerous precedent that undermines public safety.

ECONOMIC DEVELOPMENT – This bill includes the first sales tax holiday for consumers since 2008, which is scheduled to take place on the weekend of August 14-15.  Most items costing $2,500 or less can be purchased on those two days without being subject to the 6.25 percent state sales tax.

The bill also seeks to encourage investments in Massachusetts-based start-up companies by creating a 3 percent tax rate on capital gains earned from investments in those companies.  It also seeks to alleviate some of the financial burdens imposed on employers by requiring an economic impact statement on any proposed state regulations that might entail new costs for small businesses, as well as an ongoing review of existing regulations to identify and modify those that are too costly.

Despite some positive initiatives, the 2009-2010 legislative session will likely be remembered more for its missed opportunities.  In the end, Beacon Hill fell short on delivering the reforms needed to lower our record unemployment rate, make Massachusetts more affordable and address our multi-billion dollar budget deficit.

Volume 26, Week 30 - Common Core Doesn't Stack up to MCAS Standards

Two years ago, as the Senate was debating Governor Patrick’s education reorganization proposal, I warned my colleagues it would be a mistake to strip away the Board of Education’s independence and predicted we would soon see the systematic dismantling of many of the gains the state has made since the passage of the 1993 Education Reform Act.

My worst fears were realized on July 16, when Elementary and Secondary Education Commissioner Mitchell Chester submitted a memo to the board recommending the adoption of the national Common Core education standards.  The board’s unanimous vote in favor of moving to the national standards five days later was a mere formality.

Although the Patrick-Murray Administration denies it, last week’s vote appears to be the precursor to the end of the Massachusetts Comprehensive Assessment System (MCAS) test.  The state’s application for the second round of federal Race to the Top funding all but confirms this by stating that “in four years we will be prepared to administer [the new national assessment] in place of our current state assessments” in math and English.

Like any test, the MCAS is not so sacrosanct that it shouldn’t be subject to periodic review.  Taking steps to improve the MCAS is one thing, but abandoning the MCAS-based curriculum and replacing it with unproven national standards would be a huge mistake.

Just consider how much student academic achievement has been elevated in Massachusetts’ schools over the last two decades.  Prior to education reform, our state’s SAT scores typically fell below the national average.  But in 2005, Massachusetts accomplished what no other state has done before or since: our students placed first in all four academic categories that make up the National Assessment of Educational Progress (NAEP) test, which is often referred to as “The Nation’s Report Card.”

The NAEP test results were not a fluke; in fact, Massachusetts’ students repeated their first-place finish in all four categories in 2007 and again in 2009.  That was due in large part to the MCAS and the state academic standards on which it’s based, which are widely considered to be the national “gold standard” for academic testing and standards.

So why is the state moving full speed ahead to adopt the proposed national standards, which even our top education officials concede match our current standards only about 90 percent of the time?  Unfortunately, money appears to be the primary factor driving this discussion.

Under the federal Race to the Top program, $3.4 billion in one-time education grant funding is being made available to states that adopt the new national standards, but not every state is guaranteed to receive funding.  With last week’s vote, Massachusetts hopes to position itself to qualify for up to $250 million.

Our schools could certainly use this additional funding, but is it really worth sacrificing all of the gains we have made over the last 17 years of education reform?  By adopting the Common Core standards, we are essentially acknowledging that Massachusetts no longer wants to retain its status as a leader in education, and is now content to be just one of the pack.  We are also giving up our autonomy as a state to decide what is best for our children, and leaving those decisions up to a national consortium of states that may not share our view of what constitutes academic excellence.

The Pioneer Institute recently released an analysis of the proposed Common Core standards and how they compare to Massachusetts’ existing curriculum.  On a four-point scale, Pioneer rated Massachusetts as a 3.9 but gave the national standards a rating of just 2.7.

Over two dozen states have already adopted the Common Core standards, and that number could rise to more than 40 before the August 2 deadline.  For those states whose schools have been languishing near the bottom nationally, the choice was an obvious one.  But how can Massachusetts justify embracing inferior standards?

The Worcester Telegram & Gazette, in a May 24 editorial, noted that “education is overwhelmingly a state and local function,” but warned that adopting national standards “will inevitably entangle Massachusetts in a thicket of additional bureaucracy and regulations that will erode local control, decision-making and accountability.”

Last week, the Boston Herald came out strongly against the board’s vote.  In an editorial, the Herald agreed with the Patrick-Murray Administration’s assertion that we should not be complacent when it comes to improving education, but also noted that “change for change’s sake is the enemy of true academic leadership.”

The debate over national education standards should not be driven by money.  Instead, Massachusetts should focus on the only thing that truly matters: acting in the best interests of our students.

Volume 26, Week 29 - Beacon Hill Not Offering Much Relief to Cities and Towns

The Legislature passed a long-awaited “municipal relief bill” last week, but the proposal that is heading to Governor Patrick’s desk falls far short of its original stated goal.

After three straight years of local aid cuts, cities and towns have been looking for a comprehensive package of cost-saving reforms to help offset state aid reductions and preserve essential municipal services.  Instead, what they’ve been given is a bill that settles on a band-aid approach and offers mostly minor fixes that won’t amount to much actual “relief,” particularly in the short term.

I voted against the bill, in part because it does not include the one major cost-saving reform that cities and towns have been clamoring for: health care plan design.  Giving communities more flexibility to design their own health care plans for municipal workers could save $100 million a year, but this provision is nowhere to be found in the bill.

Ironically, on July 15 – the very same day the Senate voted on the municipal relief bill – the Boston Globe ran a scathing editorial calling on the Senate to “scrap the bill” because “proposals that might have helped cities and towns cut costs [have] been weakened almost to the point of irrelevance.”

“The most important thing the Legislature can do to help cities and towns is to give them more control over the design of employee health plans,” the Globe noted.  “But efforts to do so went nowhere in the face of stiff union opposition.”

There are some positive reforms in the municipal relief bill, but none that would produce the immediate and long-term cost savings associated with municipal health care reform.  For example, the bill establishes a statewide mutual aid agreement to make it easier for cities and towns to share resources during a public safety or public works-related incident, along with other regionalization options to encourage the sharing of resources among multiple communities.

The bill also contains provisions for a temporary tax amnesty program at the local level, which is modeled after a similar Republican-sponsored program that has been successfully implemented at the state level through the Department of Revenue.  The measure allows for communities to waive portions of the penalties and interest due on unpaid local taxes as long as the principal tax amount is paid within a specified time period.

One of the provisions being touted by supporters of the bill is language authorizing communities to offer an optional early retirement program for employees with at least 20 years of service.  But a number of communities have already offered similar incentives in recent years, and for many the savings generated by a new early retirement option would be negligible.  Also, it’s questionable how many eligible employees would even participate, given that they must agree to relinquish all of their accrued vacation and sick time without any additional compensation.

Supporters also point to a provision in the bill allowing cities and towns to extend the date by which they must cover their unfunded pension liability by another 10 years.  Currently, municipalities are required to have enough money in their pension funds to cover all employee retirement benefits by 2030.  The municipal relief bill would extend that deadline out to 2040.

Giving communities additional time to meet their unfunded pension liabilities will offer them more financial flexibility in the short term, but all it really does is put things off for another day without implementing the real reforms needed to address the underlying problem.  The Boston Globe agrees, noting the “dangerous combination” of denying communities “the tools to reap meaningful savings today, while giving them the option to push off their costs deep into the future.”

The biggest flaw of the so-called municipal relief bill is its failure to deliver health care cost savings to cities and towns.

Over the last 10 years, municipal health care costs have jumped by 150 percent, while spending on other municipal services has increased by just 30 percent.  Communities across Massachusetts spend $2 billion a year on health care costs, which now accounts for an average of 15 percent of total municipal spending each year.

It’s unthinkable that the Legislature would try to pass something off as a municipal “relief” package without addressing the one crucial area where reform is most needed, and without providing the one tool that would allow cities and towns to realize real savings year after year.

The Beacon Hill Institute estimates the statewide savings associated with plan design could spare the equivalent of between 1,070 and 1,630 teachers, firefighters and police officers.  That’s the kind of relief cities and towns are looking for, not the minor tweaks the bill offers.

Volume 26, Week 28 - Consumers and Businesses Deserve a Sales Tax Break

Massachusetts residents and business owners are still reeling from last year’s 25 percent increase in the state sales tax, but could soon get a temporary reprieve.

Last week, the House of Representatives voted to authorize a two-day sales tax holiday to take place on August 14 and 15.  The proposal faces a major hurdle because it still needs to pass the Senate and be signed by Governor Patrick, who has been less than supportive of tax cuts.

I say it’s about time the state’s taxpayers get a break, even if it’s only a temporary one.

As in previous years, most items costing less than $2,500 would be exempt from the sales tax when purchased during the tax-free weekend, including many home appliances, computers and other big ticket items.  Certain purchases would still be taxed, including meals, tobacco products, motorboats and automobiles.

There are many reasons why a sales tax holiday makes sense, despite the temporary loss of tax revenues for the state.

For consumers, the tax-free weekend provides an opportunity to save money.  On higher-priced items – such as flat-screen TVs or refrigerators – the savings could be as much as $156 on each purchase, based on the current tax rate of 6.25 percent.

The sales tax holiday also generates increased foot traffic for local businesses, which have been struggling to overcome the competitive disadvantage the sales tax increase has created.  A tax break will help keep their customers from being lured away by businesses in neighboring states, including tax-free New Hampshire.

A typical weekend in August generates about $150 million in sales for Massachusetts retailers.  With a sales tax holiday, that figure jumps to almost $500 million, according to the Retailers Association of Massachusetts (RAM), giving retailers a welcome boost during what is traditionally a slow sales period.

Massachusetts offered its first sales tax holiday in 2004, but at the time it was only a one-day event.  Still, it proved to be a huge success, with businesses ringing up $400 million in sales and customers saving $10.1 million on their purchases.

When the sales tax holiday expanded to a full weekend in 2005, businesses registered $500 million in sales and consumers were able to save $15.4 million that would have otherwise gone to the state.  Due to the event’s popularity, a sales tax holiday was offered every year between 2004 and 2008.

Unfortunately, the Legislature often waits until the last minute to decide if and when a tax holiday will take place.  This has left some business owners scrambling to make sure they have the proper staff coverage on hand to accommodate the extra customers visiting their stores.

To avoid this problem, and ensure that consumers receive a regular tax break, I believe the sales tax holiday should be made a permanent, annual event.  For the last several years, I have filed legislation and offered multiple amendments to require the Revenue Commissioner to designate a tax-free weekend in August every year by July 15.

Last year, due to the state’s worsening fiscal problems, the Legislature decided to forego the holiday.  Instead of a tax-free weekend, consumers and retailers were hit with an $875 million tax increase as the state sought to generate additional revenues to balance the budget.

If Massachusetts reinstates the sales tax holiday this year, it would be in good company.  At least 18 other states have either held or scheduled a sales tax holiday in 2010, including Alabama, Connecticut, Florida, Illinois, Iowa, Louisiana, Maryland, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Vermont, Virginia and West Virginia.

Many states are holding two- or three-day tax holidays this year, but some are providing expanded savings for consumers.  Connecticut, for example, is planning a week-long tax holiday from August 15-21, while Illinois has a 10-day event scheduled to run from August 6-15.  West Virginia is offering the most generous sales tax holiday by far, waiving taxes for three months on all non-business purchases of qualified Energy Star Products costing $5,000 or less between September 1 and November 30.

Some critics have labeled the sales tax holiday a “gimmick,” but I disagree.  The benefits to consumers and retailers far outweigh any loss of tax revenue by the state.

I still believe last year’s sales tax increase was a huge mistake, and should be repealed if we want to make the state more competitive and affordable.  Until that happens, the least the Legislature can do is provide a temporary break to the state’s taxpayers via the sales tax holiday.

Volume 26, Week 27 - State Takes a Gamble on Casinos

The state moved one step closer to allowing expanded gaming last week, as the Senate approved a proposal to license up to three destination resort-style casinos in Massachusetts.

The bill passed the Senate on July 1 by a vote of 25-15, following a week of often contentious debate spread over eight legislative days.  The final vote reflects the conflicting opinions that surround the introduction of casino gambling to Massachusetts.

Supporters argue the state should pursue additional revenue sources and recapture some of the money Massachusetts residents now spend at Mohegan Sun and Foxwoods in neighboring Connecticut.  Opponents maintain the increased crime and addictions that often accompany casinos are too much of a gamble and not worth the risk.

The Senate vote comes just weeks after the House passed its own casino bill.  The differences are now being worked out in conference committee, with the rather ambitious goal of getting a compromise bill to Governor Patrick’s desk before formal sessions end July 31.

The House bill authorizes two casinos and up to 750 slot machines at each of the state’s four racetracks, but the Senate bill contains no provisions for slot machines at the racetracks.  Although both bills call for a competitive bidding process for awarding casino licenses, the Senate bill requires the licenses to be distributed over three distinct geographic regions, including eastern, southeastern and western Massachusetts.

Throughout the casino debate, one of my biggest concerns was where the money generated by expanded gaming will go.  With an up-front licensing fee of $75 million per casino, the Senate bill could provide $225 million in one-time revenues for the state.  A new 25 percent tax on gross gaming revenues is expected to produce an additional $350 million annually once the casinos are up and running.

I believe these gaming revenues should be dedicated to providing statewide property tax relief, preserving local aid, and replenishing the state’s Rainy Day Fund.  My fear is that this money might otherwise disappear into the General Fund, never to be seen again.

I also offered a series of targeted tax relief amendments, including proposals to eliminate the alcohol sales tax, repeal last year’s 25 percent sales tax increase, and roll back the income tax rate to 5 percent.  Although I have offered similar amendments before, most recently during the state budget process, they had always been ruled out of order.

Despite a vigorous debate on these proposals, it was frustrating to see the income tax amendment rejected outright, while the alcohol and sales tax proposals were watered down with further amendments calling for studies of their fiscal impact.  The time for studying these harmful tax increases was last year, before they were implemented.

Of all the amendments I filed, my top priority was a plan to assist the state’s property owners.  In 2006, Governor Patrick campaigned on a promise of tax relief for homeowners, but between 2007 and 2009, property tax collections increased by over $1 billion statewide, or 9.2 percent.  With recent cuts in local aid, cities and towns are even more dependent on property taxes to support municipal services.

I proposed depositing all gaming revenues in a new Property Taxpayers Relief Fund.  Under my plan, the state would issue a check directly to all property owners in the Commonwealth every April 15 – tax day, appropriately enough – to offset their property taxes.

Unfortunately, my amendment was never put to a vote because it was superseded by a further amendment, offered by another Senator, to limit the property tax relief to senior citizens, using only 1 percent of the total gaming revenues to do so, or about $3-$4 million annually.  While I certainly support property tax relief for seniors living on fixed incomes, I believe the Senate should have gone further and provided a more comprehensive tax relief package for all property owners across the state.

Because most communities also rely heavily on local aid to help pay for their schools, public safety and other essential municipal services, I offered a similar amendment to distribute the new gaming revenues to cities and towns using the existing Lottery formula.

The state has cut local aid in each of the last three years.  Although Chapter 70 aid was boosted by 6.1 percent last year, that increase was offset by a 9.7 percent reduction in non-education aid to cities and towns.

According to the Massachusetts Taxpayers Foundation, local aid in 2009 was 6 percent lower than it would have been had it kept pace with inflation since 2001.  The Fiscal Year 2011 state budget cuts local aid an additional 3.1 percent, placing cities and towns in an even more precarious financial situation.

The final Senate bill calls for just $85 million of the casino licensing fees and 30 percent of the annual gaming tax revenues to go to local aid.  It also earmarks $105 million in one-time licensing fees to the Rainy Day Fund.

It remains to be seen whether a casino bill can be finalized before July 31, and what form that bill will take.  But when allocating the new gaming revenues, the state should focus on maximizing assistance for taxpayers and cities and towns.

Volume 26, Week 26 - Legislature Passes Safe Driving Bill

Massachusetts will soon ban texting for drivers of all ages, and prohibit junior operators and public transportation employees from using cell phones while operating a vehicle, under a new Safe Driving Bill enacted by the Legislature last week.

The new restrictions are part of a statewide crackdown on risky driving behaviors that have contributed to a significant number of accidents on Massachusetts’ roadways.  The bill is now on Governor Patrick’s desk and could be signed as early as this week.

The bill provides for a range of financial penalties for anyone cited for texting while driving.  A first-time offense would carry a fine of $100, but a second offense would cost $250, with the fine increasing to $500 for all subsequent violations.

If a driver is found to have caused an accident while texting and driving, the penalties could also include jail time.  In these instances, the driver would face a fine of up to $200 or two years in jail, and in some cases both a fine and imprisonment.

Although texting violations would not be subject to an insurance surcharge, they would be treated as a primary offense, which means a police officer can immediately pull the vehicle over and cite the driver for texting while driving, even if the driver has committed no other infraction.

Current state law allows drivers to use a cell phone while operating a motor vehicle, as long as one hand remains on the steering wheel at all times.  The Safe Driving Bill contains additional restrictions that would put Massachusetts’ laws in line with the District of Columbia and 28 other states by banning junior operators under the age of 18 from using cell phones while behind the wheel.

Although the fines mirror the new texting penalties, junior operators caught driving while using a cell phone would face the added penalty of having their driving privileges taken away.  The new bill requires the automatic suspension of a license or permit for 60 days for a first-time offense, with a second violation carrying a 180-day suspension, and any subsequent offenses mandating a 1-year suspension.

In addition to targeting junior operators, the new cell phone ban also extends to the operators of public transportation vehicles, including school buses and all MBTA trains and buses.  This provision was added in response to recent incidents where the use of a cell phone by a train’s operator was found to have contributed to an accident.

The bill allows for cell phones to be used by the operators of public transportation vehicles only in emergency situations.  A $500 fine would be imposed on any driver who violates this provision.

One of the more controversial aspects of earlier versions of the Safe Driving Bill was a requirement that elderly drivers be subject to a road test to renew their license once they reach a certain age.  Current state law requires most drivers to pass a road test only once, at the time they obtain their initial license.

The American Association of Retired Persons (AARP) and other senior advocacy groups called the re-testing provisions discriminatory because they singled out one particular age group.  Instead, they argued that the state should focus on an individual’s driving abilities, not their age, and that all drivers should be re-tested periodically to gauge their ability to safely operate a motor vehicle.

The bill that is on Governor Patrick’s desk addresses many of these concerns.  The two new requirements for drivers who are 75 and older is that they must now renew their licenses in-person and pass a vision test every five years, but the main reforms target impaired drivers of all ages.

For example, the bill authorizes health care providers and law enforcement officials to notify the Registry of Motor Vehicles (RMV) if they believe a driver may not be able to safely operator a motor vehicle, and protects them from civil liability if they do so.  It also directs the RMV to develop regulations that can be used to help identify any cognitive or functional impairments that might impact someone’s ability to safely operate a motor vehicle, regardless of the age of the driver.

The new bill also cracks down on individuals with poor driving records.  Under current law, any driver who has had five surchargeable incidents in three years must successfully complete a driver education program to retain their license.  Now, drivers who commit three surchargeable incidents in two years will be required to take a driver re-training course or have their license suspended indefinitely.

The Safe Driving Bill may not go as far as some would have hoped.  However, it represents a positive step forward in making our roads safer for all.

Volume 26, Week 25 - Unemployment in Massachusetts Remains a Cause for Concern

The Executive Office of Labor and Workforce Development recently announced that Massachusetts added 15,800 jobs in May, marking the fourth consecutive month of positive job growth in the Commonwealth.  But those numbers are misleading, and fail to give a complete picture of how Massachusetts is faring in its attempts to emerge from the global recession.

Most of the 15,800 jobs added last month reflect the hiring of temporary government workers by the U.S. Census Bureau, not the permanent private sector jobs needed to spur the state’s economic growth.  In fact, only 7,000 of the new jobs created last month were in the private sector, a figure that represents less than half the number of private sector jobs created in April.

Meanwhile, 320,400 Massachusetts residents are still looking for a job, and for the second consecutive month, the statewide unemployment rate remains unchanged at 9.2 percent.  Nationally, the unemployment rate is now 9.7 percent, down from 9.9 percent in April, but the number of unemployed residents in Massachusetts has expanded by 34,300 over the past 12 months.

While Massachusetts’ unemployment rate may be lower than the national average, it remains far too high to be a cause for celebration.  Even during the last major recession in the 1990s, the state’s unemployment rate never exceeded 9.1 percent.

A closer look at the state’s unemployment figures for last month shows that not all areas of the workforce are experiencing gains.  In fact, many are still losing ground compared to where they were just one year ago.

Of the 7,000 new private sector jobs created last month, most occurred in leisure and hospitality, education, health services and the construction trades.  Hotels, restaurants and other employers in the leisure and hospitality category added 4,700 jobs in May, representing a 1.6 percent increase.  But since May of 2009, the number of leisure and hospitality jobs is actually down 5,200, or 1.7 percent.

Construction jobs in Massachusetts are showing a similar trend.  Although 1,400 construction jobs were added in May – representing a 1.3 percent increase – the industry has lost 5,500 jobs since May of 2009, which factors out to a net loss of 4.9 percent in just one year.

One bright spot occurred in the education and health services sector.  Educational services added 3,200 jobs last month, while health services added another 800.  Since last year, education and health services have posted a net gain of 18,300 jobs, a 2.8 percent increase.  In addition, professional, scientific and business services reported a loss of 200 jobs last month, but have added 4,600 jobs over the last year, primarily in administrative, support and waste management services, which also includes temporary help.

Unfortunately, not all private sector employers are seeing job growth.

The financial services industry, for example, added a total of 3,000 jobs in March and April, but lost 1,200 jobs in May.  Other job losses were reported in the area of real estate and rental and leasing, which lost another 900 jobs in May after gaining a combined 2,400 jobs in March and April.  Since May of 2009, financial services jobs are actually down by 7,000, or 3.3 percent.

Also posting losses were companies in the trade, transportation and utilities sector.  Last month, this sector of the workforce lost 1,100 jobs, primarily due to cuts in retail, which shed 900 jobs.  Overall, the year-to-date job losses reported in this sector totaled 6,000, for a net loss of 1.1 percent.

Of course, Massachusetts is not alone in dealing with this problem.  The Associated Press reported last week that the number of new claims for jobless benefits jumped by 12,000 nationally in the second week of June, as 472,000 individuals applied for unemployment for the first time.

According to the Associated Press, the number of individuals claiming unemployment benefits is now 4.57 million.  Another 5.2 million people are receiving extended benefits paid for by the federal government.

While we can’t control the national unemployment rate, we can do something to reduce the number of people who are out of work here in Massachusetts.  For starters, we can ease the tax and regulatory burden on employers so they can grow and expand here.

A temporary freeze on non-emergency government regulations, followed by a top-to-bottom review to determine what works and what doesn’t, should help to ease the regulatory burden employers face.  The state also needs to develop a fair and predictable corporate tax system to make it easier for companies to plan from one year to the next.

Creating a more business-friendly environment is essential to convincing companies to invest in Massachusetts.  Unless we take these steps now, we are not going to see any of the meaningful and sustainable jobs creation we really need to get Massachusetts residents back to work.

THE FOLLOWING ITEMS HAVE BEEN MOVED TO OUR ARCHIVES PAGE

• Volume 26, Week 24 - Massachusetts Should Not Abandon MCAS Standards
• Volume 26, Week 23 - FMAP Funding Shortfall Jeopardizes FY2011 State Budget
• Volume 26, Week 22 - A Missed Opportunity on Senate Budget
• Volume 26, Week 21 - Senate Tackles Health Care Cost Relief for Small Businesses
• Volume 26, Week 20 - Not Much Relief for Municipalities in this Bill
• Volume 26, Week 19 - Senate Has a Full Plate in Session's Closing Months
• Volume 26, Week 18 - Anti-Bullying Bill Signed into Law
• Volume 26, Week 17 - House Attempts an End Run Around Proposition 2 1/2
• Volume 26, Week 16 - Senate Advances Workforce Bills
• Volume 26, Week 15 - State Flood Relief Efforts Moving Forward
• Volume 26, Week 14 - Economic Development Takes Center Stage in Senate
• Volume 26, Week 13 - National Health Care Reform Leaves Many Unanswered Questions
• Volume 26, Week 12 - State Eyeing Federal Flood Relief Assistance
• Volume 26, Week 11 - The Debate Continues on Evacuation Day, Bunker Hill Day Repeal
• Volume 26, Week 10 - It's Time to Restore Customer Service at the RMV
• Volume 26, Week 9 - Legislature Seeks to Crack Down on Bullying in Schools
• Volume 26, Week 8 - Lawrence Bailout Needs Stronger Protections for Taxpayers
• Volume 26, Week 7 - Economic Development Takes Center Stage on Beacon Hill
• Volume 26, Week 6 - Stimulus Funding Falls Short on Jobs Creation
• Volume 26, Week 5 - Governor's Budget Offers More of the Same
• Volume 26, Week 4 - Jobs Creation Requires Action, Not Words
• Volume 26, Week 3 - Closing the Education Achievement Gap
• Volume 26, Week 2 - Politics Taints Charter School Approval Process
• Volume 26, Week 1 - MTF: 'No End in Sight' for State Fiscal Crisis
• Volume 25, Week 52 - Homeless Numbers Continue to Rise
• Volume 25, Week 51 - Revenue Hearing Sheds Light on State's Fiscal Health
• Volume 25, Week 50 - State Commission Eyes Dropout Prevention Measures
• Volume 25, Week 49 - Governor's Vetoes Show Misplaced Priorities
• Volume 25, Week 48 - Website Provides Consumer Guidance on Charitable Giving
• Volume 25, Week 47 - Home Heating Assistance is Now Available
• Volume 25, Week 46 - Local Food Pantries Ready to Help for the Holidays
• Volume 25, Week 45 - Honoring Our Nation's Veterans
• Volume 25, Week 44 - Protecting Local Aid Should Be Top Priority
• Senator Tisei Vows to Protect Local Aid; Won't Vote to Give Governor Expanded Powers
• Volume 25, Week 43 - State Fiscal Crisis Demands Action
• Volume 25, Week 42 - Budget Cuts Forcing Libraries To Do More With Less
• Volume 25, Week 41 - More Budget Cuts Are On The Way
• Volume 25, Week 40 - Anti-Business Policies Are Hurting Massachusetts
• Volume 25, Week 39 - Interim Senate Appointee Must Represent All MA Residents
• Volume 25, Week 38 - Making Our Roads Safer For All
• Volume 25, Week 37 - Legislature Must Do What's Best for Massachusetts
• Volume 25, Week 36 - Making Our Schools Safer and More Affordable
• "Save The Zoo" Forum Scheduled for September 17
• Volume 25, Week 35 - Iran Divestment Proposal Makes Sense
• Senator Tisei Welcomes State Treasurer Tim Cahill to "Legislative Report"
• Volume 25, Week 34 - Support Building for Charter School Expansion
• Volume 25, Week 33 - Is Now the Time to Reform the State's CORI Law?
• Volume 25, Week 32 - Voters Could Face a Variety of Ballot Questions in 2010
• Local Legislators Secure Funding to Keep Stone Zoo Open
• Volume 25, Week 31 - Five Things the State Can Do Now to Save Taxpayers Money
• Senator Tisei Urges MBTA to Avoid Service Cuts to Malden
• Volume 25, Week 30 - Thousands Will Be Harmed by DDS, DMH Funding Cuts
• Volume 25, Week 29 - Budget Cuts Endanger Local Zoos
• Senator Tisei's "Legislative Report" Looks at State Budget Issues, Reform Efforts
• Volume 25, Week 28 - Quinn Bill Cuts Will Hurt Police, Communities
• Volume 25, Week 27 - Governor Signs Fiscal Year 2010 State Budget
• Volume 25, Week 26 - Legislature Enacts Sweeping Ethics Reform Bill
• Volume 25, Week 25 - State Budget Balanced on a Hope and a Prayer
• Volume 25, Week 24 - Legislature Takes Baby Steps on Pension Reform
• Volume 25, Week 23 - It's Time to Repeal Evacuation Day and Bunker Hill Day Holidays
• Volume 25, Week 22 - Senate Misses the Mark on the Budget
• Volume 25, Week 21 - Senate Budget Shortchanges Reforms for Revenues
• Volume 25, Week 20 - Senate Passes Ethics Reform Bill
• Volume 25, Week 19 - State Fiscal Crisis is Far From Over
• Senator Tisei Announces New RMV Initiative for Members of US Military
• Volume 25, Week 18 - State Revenues Continue to Decline as Senate Prepares Budget
• Volume 25, Week 17 - Massachusetts Business Climate Hits a Low Point
• Volume 25, Week 16 - More Accountability Needed at MA Turnpike Authority
• Energy-Saving Programs Available to Malden Residents
• Volume 25, Week 15 - Making the Equal Choice Law Work
• Legislators Announce Relase of Private Home Care Services Directory
• Volume 25, Week 14 - Senate Tackles Pension Reform
• Senator Tisei Announces Chapter 90 Money; Malden to Receive $704,530 for Public Works Projects
• Volume 25, Week 13 - Auto Insurance Reform Showing Signs of Success
• Volume 25, Week 12 - A Behind-The-Scenes Look at the Economic Stimulus Package
• Volume 25, Week 11 - State Must Not Allow Rainy Day Fund to Run Dry
• Volume 25, Week 10 - 'Move Over' Law Goes Into Effect March 22
• Volume 25, Week 9 - State Tax Amnesty Program Has Begun
• Volume 25, Week 8 - Will Federal Stimulus Package Deliver on its Promises?
• Volume 25, Week 7 - The Taxman Comes Knocking
• Volume 25, Week 6 - Deja Vu: Governor's FY2010 Budget Balanced on a House of Cards
• Volume 25, Week 5 - Governor's Long Term Care Plan on Hold
• Local Legislators Reach Out to Congress to Help Malden
• Volume 25, Week 4 - Governor's Local Aid Plan Raises Questions
• Volume 25, Week 3 - Why I Opposed Handing the Governor Expanded 9C Powers
• Volume 25, Week 2 - Not All Bills Made the Headlines in 2008
• Volume 25, Week 1 - Legislature Has a Full Plate for 2009
• Malden Geriatric Authority Saves McFadden Manor
• Volume 24, Week 52 - MA Students Earn High Marks in International Math and Science Testing
• Malden Receives State Fire Prevention Grants
• Volume 24, Week 51 - The 'Consensus' Outlook for the Year Ahead: Grim
• Volume 24, Week 50 - The Fight to Save the Fernald Continues
• Volume 24, Week 49 - What's Next for the MA Turnpike Authority?
• Volume 24, Week 48 - Political Scandals Lead to Renewed Calls for Ethics Reform
• Volume 24, Week 47 - Fuel Assistance is Only a Phone Call Away
• Volume 24, Week 46 - Local Food Pantries Offer Help for the Holidays
• Tisei Welcomes Education Commissioner Mitchell Chester to "Legislative Report"
• Volume 24, Week 45 - Report Ranks Massachusetts 32nd in Business Friendliness
• Volume 24, Week 44 - Honoring America's Soldiers on Veterans Day
• Volume 24, Week 43 - Question 1 Goes Too Far
• Senator Tisei Earns High Marks From Small Business, High Tech Groups
• Volume 24, Week 42 - Governor Patrick Outlines his 9C Cuts
• Malden's Elizabeth Hart Appointed to Dropout Prevention and Recovery Commission
• Volume 24, Week 41 - Homelessness a Growing Problem in Massachusetts
• Volume 24, Week 40 - Budget Crisis was Months in the Making
• "Legislative Report" Looks at Wall Street's Impact on State Budget
• Volume 24, Week 39 - Malden Students Show Progress on MCAS
• Volume 24, Week 38 - Stock Market Turmoil will Impact State Budget
• Volume 24, Week 37 - Bracing for Possible 9C Cuts
• Volume 24, Week 36 - State Budget Woes Continue to Mount
• Volume 24, Week 35 - Budget Cuts and Transparency
• MWRA Advisory Board Lauds Malden Legislators
• Volume 24, Week 34 - Reducing Dropout Rates and Improving School Accountability
• Volume 24, Week 33 - Report Predicts a Rough Winter Ahead for Home Heating Costs
• Local Legislators Secure State Transportation Funding for Malden
• Volume 24, Week 32 - Seeking a Solution to the College Loan Crisis
• Tisei Backs Sales Tax Holiday for Weekend of August 16-17
• Volume 24, Week 31 - Highlighting the Legislative Accomplishments of 2007-2008
• Senate Approves Enhanced 911 Legislation
• Volume 24, Week 30 - Child Protection Act a Good Start, But Massachusetts Can Do Better
• Volume 24, Week 29 - Turnpike Problems Will Cost Taxpayers
• Volume 24, Week 28 - State Must Proceed with Caution on Bonding
• Senate OK's Children's Mental Health Bill
• Tisei: Restoration of MWRA Rate Relief Funds for Malden is 'Top Priority'
• Volume 24, Week 27 -  FY09 Budget Puts State on Unsustainable Spending Path