House Enacts FY ’08 State Budget
On April 27th the Massachusetts House of
Representatives passed its version of the $26.9
billion state operating budget for the next fiscal
year. As budget’s go, this one posed some unique
challenges due to slowing revenue growth accompanied
by the rapidly increasing cost of providing
government services. These factors made our familiar
problem of balancing two conflicting yet equally
important interests—preserving fiscal prudence while
at the same time addressing the fundamental charges
of government such as providing for the public
safety, education and caring for those in need—more
pronounced. Our solution was to target effective
initiatives while rejecting burdensome tax increases
that would hinder business’ growth and ability to
create jobs and raise wages.
Governing is often about prioritizing. This year, as
in years past, the House placed at the top of its
list funding to cities and towns. Roughly one-fifth
of the budget is distributed to local communities.
Approximately $3.7 billion, an increase of $220
million over last year, goes to municipalities in
the form off Chapter 70 school aid distribution.
This amount is $93.4 million above the amount
required under current law to keep each school
district at “foundation” levels and represents an
unmistakable commitment to improving public
education and continuing education reform.
An additional $935 million in unrestricted local aid
is also dispersed by way of Lottery
Distribution payments. This amount, which is an
increase $15 million over last year, is dispersed by
way of Lottery distribution payments to cities and
towns and represents 100 percent of Lottery
revenues. Chapter 70 and Lottery distribution,
combined with $378 million in Additional Assistance
payments to cities and towns, constitute the bulk of
funds directed to municipalities.
The House also voted to provide $25 million to
reduce water and sewer payments for
ratepayers in many communities throughout the state.
A water and sewer bill is the same as a tax bill,
and because of that a concerted effort was made to
help ratepayers by keeping rate increases in check.
In the area of public safety, we provided $21.3
million to continue the successful
community policing program and an additional $13.5
million to fund the anti-crime/anti-gang initiative
known as the Shannon Grants program.
In non-Chapter 70 education related funding, we
continue to move towards making
kindergarten available to all students with a $31
million appropriation for Kindergarten Expansion
grants, and we continue down the path of giving our
students a better chance of achieving academic
excellence by funding $13 million for Extended
Learning Time grants and $2 million for after-School
grants.
With respect to Health and Human Services, our
budget continues to support
Massachusetts’ historic Health Care Reform, the goal
of which is to ensure every child and adult has
quality, affordable health insurance. We also
continue to improve the lives of those most in need
and those who care for them by appropriating $20
million for the Direct Care Service Providers’
Salary Reserve and $7 million for the Child Care
Rate Reserve. These reserves help to bolster the
salaries of those who by-in-large provide excellent
and compassionate care to the sick and frail for
very little compensation.
Finally, continuing the work of our Economic
Stimulus bill and other efforts to promote a swift
economic recovery, we provide $7.9 million for
Workforce Development Grants; $6 million for
One-Stop carrier centers and $4 million for the
Science, Technology, Engineering and Mathematics
(STEM) fund. This fund is used to stimulate learning
and interest in these key sectors. We also funded
numerous programs and projects that affect local
communities. These may not be state-wide
initiatives, but collectively, they enhance the
larger economy and quality of life for all Bay
Staters.
What does this all mean to the working families of
Massachusetts? It means that the
Members of the House have heard loud and clear from
neighbors and constituents that they demand better
service from their government; that they expect not
to be made to sacrifice more of their hard-earned
dollars to the state’s coffers; and that they care
about having safe, clean communities that provide an
excellent education for their children. The House
has heard these calls and our budget is a reflection
of our sincere and proven efforts to answer them.
Quinn Supports Entire Municipal Partnership Act
set forth by Governor Patrick
1. Municipal Partnership Represents Cooperation Between State and Local
Government
· Strengthening the partnership between local governments and state
government will improve the health of each municipality and improve the
Commonwealth as a whole. The Commonwealth is home to 351 cities and towns, each
having individual and specific needs.
· Among the provisions of the legislation are plans to help lower
property taxes, allow cities and towns to participate in the state’s health
insurance program, address underperforming municipal pension funds, and close a
telecommunications tax loophole.
2. Local Meals and Hotel Taxes
· Diversifying a community’s revenue base diminishes its reliance on
the property tax. Nationally, municipal revenue structures are more
diversified. For example, most major American cities have local taxing
authority over restaurant meals and other local activities.
· Homeowners bore the greatest tax increase in the last four years.
Property taxes paid by homeowners increased by $1.4 billion.
· Cities and towns may adopt a hotel tax of up to 5% and a meals tax
of up to 2% of gross receipts.
· If all cities and towns in Massachusetts adopted a 1% meals tax, more
than $120M is estimated to be available to cities and towns in Massachusetts.
· 25% percent of new revenue would be deposited into the Municipal
Property Tax Exemption Reimbursement Fund and reimbursed across cities and towns
for property tax exemptions for qualifying senior citizens.
· The remaining balances will be returned to the originating city or
town.
3. Telecommunications Tax Loophole
· Massachusetts has an outdated telecommunications property tax law
that exempts above ground poles and wires from property taxation. This law,
passed in 1915, was designed to bring the telephone to all areas of
Massachusetts. That goal was achieved. Now, it is time for telecommunications
companies to pay their fair share of the property tax.
· Overall, the telecommunications industry in Massachusetts is avoiding
an estimated $78 million in annual property taxes.
· This $78 million could be used for property tax reduction, education,
road construction and maintenance, or any other municipal expense.
· Electric companies and wireless companies are required to pay
property taxes on their equipment. Currently, if a pole is jointly owned, the
electric company owes property tax on its half, while the telecommunications
company does not.
· Requiring telecommunication companies to pay their tax obligation
will not translate into higher telephone bills.
· Verizon’s tax bill declined by 53%, or nearly $50 million, from
2003-2005 while the average monthly bill rose 27.4%.
· Of all the states in which Verizon does business, Massachusetts has
the 4th lowest total tax burden while Verizon customers in Massachusetts have
the 5th highest monthly bill. There is absolutely NO correlation between tax
burden and monthly bills.
· The monthly bill in Massachusetts is 23% above the national average,
while Verizon’s Massachusetts state and local tax bill is 60% below the national
average.
4. Group Insurance Commission Participation
· Rapidly escalating health insurance costs have put cities and towns
across the Commonwealth in the untenable position of either cutting municipal
services or increasing already high property taxes.
· The cost of health coverage to municipal employees has skyrocketed by
an average of 63 percent from 2001 through 2005, a growth rate nearly double the
rate of increase for health coverage of state government employees over the same
period.
· Cities and towns may choose to participate in the Group Insurance
Commission. Decisions to participate would be made by agreement between the
municipality and a public employee committee which would include representatives
from each collective bargaining unit.
5. Municipal Pension Funds
· There are currently 106 different public pension systems in
Massachusetts. The State system handles all state employees, while the State
Teachers system handles all state teachers. Those two systems alone have over
$37 billion invested in the state Pension Reserve Investment Trust (PRIT). The
remaining 104 systems total under $20 billion, and are individually invested by
the local pension board.
· The Patrick Administration supports the mandate that individual
pension boards are the best vehicle for administering pension benefits to
retirees. This legislation does not change that authority.
· Pension Boards have been able to invest their assets with PRIT
since 1985. Because of the size of the Trust, PRIT can diversify assets for
maximum possible return. Currently, 28 systems are fully invested with PRIT.
An additional 40 systems are partially invested in the various asset classes
that PRIT offers.
· Over the last 21 years, PRIT has averaged an 11.27% return, making
it one of the best pension systems in the country. By choosing to not invest
with PRIT, local systems have squandered the opportunity to increase their
portfolios by over $2.6 billion in the last eight years alone. This money could
have been used for the myriad of municipal obligations.
· This legislation would force the lowest performing systems to
invest their assets with PRIT. The Administration proposed that those systems
that are under-funded and have had a 5-year return that is a certain percentage
less than the same period for PRIT would invest their assets with PRIT.
 2005-2006
Accomplishments - [PDF File 203kb]
2005 Accomplishments
FY ’06 Budget – On-time, balanced budget
increased funding for local aid, education, human
services and affordable housing.
FY ’06 Capital Supplemental Budget –
Transfers $691 million to Rainy Day Fund, bringing
reserves 50 $1.7 billion; Invests $317 million in
vital, long-delayed infrastructure & capital
projects across the Commonwealth and on public
college campuses.
Economic Investment Plan- House passes $345
million stimulus package designed to make smart,
bold investments in workforce training,
infrastructure, technology and cultural facilities.
• $30 million for Brownfields Redevelopment
Fund
• $50 million for Historical Rehabilitation Tax
Credit
• $13 million for establishment of
first-in-the-nation Cultural Facilities Fund
• $200 million bond program for infrastructure
improvements that encourage economic development
H.E.A.T – In a proactive response to
skyrocketing energy costs and the impact on winter
heating bills, the House’s legislation offers tax
deductions on home heating bills, tax credits to
promote purchase of energy efficient residential
items and $20 million in heating assistance for
low-income individuals and families.
Health Care Reform – The House passed an
historic bill to expand coverage to nearly every
Massachusetts resident within three years through
significant expansion of Medicaid coverage for the
poor, asking and, in some instances, aiding
individuals to purchase affordable insurance.
Tax Relief for Senior Citizens – Eligible
seniors can currently receive an annual state income
tax credit of up to $840 if their house is valued at
$400,000 or less; New law initiated in the House
raises the property value threshold to $600,000,
making tens of thousand of additional seniors across
the Commonwealth eligible for tax relief.
Education Relief for “Smart Growth” Cities and
Towns – Removes barriers and provides incentives
for housing production by reimbursing communities
for costs directly related to educating children
living in “smart growth” developments.
OUI Repeat Offenders (“Melanie’s Law”) –
Toughest drunk driving law in the Commonwealth’s
history and the nation; Stiffens penalties for
repeat offenders and brings state in compliance with
federal drunk driving standards.
Voluntary Firefighter & Public Safety Personnel
Benefits – To protect and provide for call
safety personnel across the Commonwealth, the House
requires cities and towns to provide death benefits
for survivors of public safety personnel killed in
the line of duty.
Welcome Home Bill – Just in time for
Veteran’s Day, the House provides additional
benefits and increased pay for service members,
veterans and their families as well as education &
fee waivers for Massachusetts National Guard
members.
Comprehensive Welfare Reform – House helps
individuals become self-sufficient through the
establishment of separate state program for
recipients ineligible for certain federal benefits,
responsible & flexible work requirements and
childcare guarantees.
Sales Tax Holiday – For the second
consecutive year, the House overwhelmingly passed
legislation to give shoppers a two-day August sales
tax break and provide a shot-in-the-arm to retailers
and the economy.
Film Tax Incentives – In order to further
facilitate job growth and make Massachusetts
competitive with other states and countries in its
ability to attract business, the House initiated and
passed legislation to attract the multi-billion
dollar movie industry to Massachusetts in an effort
to create jobs, increase tourism and generate
revenue for state and local economies. |
