Weekly round-up: Suspend! Repeal! Retreat?
Recap and analysis of the week in state government
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The obscure tax deduction for multinational corporations was offed in closed door budget negotiations between the House and Senate. Both branches had voted to delay the deduction's implementation. But that didn't stop a six-member conference committee from slipping repeal language into the $38.1 billion spending bill, and negotiators found their colleagues had no problem with their maneuver.
Such is life at 24 Beacon.
There was far greater upheaval, at least among membership of the Legislature, about the three-year suspension of the 22-year-old Pacheco law at the MBTA. Championed by labor and scorned by private sector devotees, the 1993 law establishes a vetting system whereby the state auditor can nix any privatization of state government services.
Senate President Pro Tempore Marc Pacheco himself took to the floor for a 43-minute stemwinder arguing that the law protects taxpayers from potential cronyism and protects public workers from having private companies turn their jobs into profits.
Thanking members of the Republican caucus for containing their glee, the Taunton Democrat said scant few T workers live in his district and he had in May extracted commitments from 32 senators to stand with him if the matter came before the Senate.
Taking aim at Gov. Charlie Baker, who asked lawmakers to completely exempt the T from the Pacheco law in a separate bill, the senator noted Baker's earlier position within the Weld administration and recounted, "He did everything he could to stop that law from coming on the books."
The 40-seat Senate also lost a colleague recently when Sen. Thomas Patrick Kennedy of Brockton died in late June, and Pacheco was displeased that the Pioneer Institute chose the day of Kennedy's funeral to release a report claiming the Pacheco law had cost the T hundreds of millions of dollars.
"That really ticked me off that they would pick that day to release their report," Pacheco said on the Senate floor in a speech that also noted Baker's long-ago role at the think tank.
The Baker administration has said freedom from the Pacheco law will allow more work to be done on the T's infrastructure, less costly late-night service and better fare collection on the commuter rail.
The conference committee report, which was also issued Tuesday, was accepted by the Senate on a 31-5 vote less than 24 hours later. A few senators who supported the negotiated budget indicated they were not happy campers, but a little over a week into the fiscal year, the Legislature agreed it was beyond time to send a fiscal 2016 budget to the governor's desk.
Outside the chamber, Senate President Stanley Rosenberg and Senate Ways and Means Chairwoman Karen Spilka, who was the Senate's lead negotiator, took turns telling reporters what "disappointed" them about the budget, though overall they both said it was a success and a victory for citizens of the Commonwealth.
Rosenberg shared his opposition to the Pacheco law suspension and Spilka said she was disappointed that the House didn't agree to relief for middle class taxpayers. Along with a freeze of the income tax, the Senate had passed a provision that would have upped the income tax exemption for all filers.
Contrast that with the commentary by Speaker Robert DeLeo, standing alongside the House's chief negotiator Ways and Means Chairman Brian Dempsey, after a House caucus and before the vote. The Winthrop Democrat was in his element, praising Dempsey relative to his deep-sixing the Senate's tax proposals and the "innovative way" lawmakers found money to pay for the earned income tax credit expansion, which benefits low-income workers.
The Senate's bid to freeze the income tax at 5.15 percent to pay for the earned income tax credit would have stopped the slide toward 5 percent that voters endorsed in 2000. The final budget instead uses the money that will continue to roll in following the repeal of FAS 109 to pay for the credit.
"I really have to congratulate the chair on this. Because it was in conference, we couldn't, I really couldn't talk a whole lot about it," DeLeo said. "But I knew we didn't want to change in terms of what we had stated relative to the taxpayers, what commitment we made to the taxpayers, and we didn't do that."
For his part, Dempsey congratulated Spilka on the House floor, while noting, "A first conference is always a challenging one."
Hitching the earned income tax credit to the repeal of FAS 109 also allows the film tax credit to keep on trucking without a major threat. The credit aimed at luring the movie business is favored by House leaders and was marked for elimination by the governor as a means of funding his own earned income tax credit expansion proposal. The Supreme Judicial Court also went on-record this year saying House budgets that suspended FAS 109 gave the Senate free reign to take up its own tax-altering proposals. If repeal prevails, there's no chance the perennial suspension of FAS 109 will be included in next year's budget.
Given that FAS 109 has been suspended since its inception and the dollars that corporations would have saved through its implementation have been rolling into state coffers, lawmakers may need to find additional savings or revenue in future years, but the benefit for low-income workers will really be felt in the spring of 2017 when they file their taxes for 2016.
Certain corporate taxpayers, who have been paying all along with the hopes that the deduction would eventually take effect and likely reflecting that on their financial statements, did not hide their displeasure at the surprise repeal plan.
"Had the full elimination - rather than another postponement - been included in either version, our groups would have immediately voiced concern," some of the most influential business lobbies wrote in a letter to Baker.
FAS 109 was born within a larger corporate-tax raising reform in 2008, and the lean budget years that followed meant lawmakers never let the deduction bear fruit.
Pacheco must wonder whether the suspension of his signature law within the MBTA could calcify into its full elimination down the road. Riders got a taste of a very different form of transit privatization than the type the Bake administration hopes to implement last winter when Dattco, Bloom's Bus Lines, Yankee Lines and M&L Transit Systems stepped in to provide shuttle service when regular service faltered. The Boston Carmen's Union has noted that it acceded to that emergency privatization in attempting to present the union as a partner in efforts to reform the T.
The fiscal 2016 conference report was not the only secret document revealed this week. Sleuthing by Commonwealth Magazine turned up the identity of the whistleblower who launched an ethics investigation into Gaming Commission Chairman Stephen Crosby, who was later cleared.
Meet Charles Baker III, not to be confused with his excellency the governor. Baker III is now the chief administrative officer for Hillary Clinton's presidential campaign but at the time he penned his accusation last fall he was a lawyer for the East Boston-Revere racetrack, which saw its casino dreams dashed by the commission's decision to award a license to Wynn Resorts in Everett.
The war of words between Wynn and Boston Mayor Marty Walsh's administration continued this
week, as did Walsh's lawsuit seeking to grab a greater say in the Everett development.
The biggest open secret in the State House is that at some point decision-makers will rally around a sales tax holiday this year. Lawmakers usually say they are trying to catch consumers unawares to limit their ability to delay major purchases. The Retailers Association of Massachusetts weighed in on Tuesday, suggesting the weekend of Aug. 15-16.
Acknowledged calendar items for potential future consideration are the governor's new hydroelectric procurement legislation, his forthcoming legislation to battle opioid abuse and the MBTA reform bill, which packs less of a punch than the items in the budget but could be a vehicle for further reforms as it sits in House Ways and Means.
Solar advocates have spent much of the year warning that the burgeoning photovoltaic industry and the goal of a greener future will face setbacks without an increase in the cap on commercial and public-entity's ability to sell solar electricity back to the grid at retail prices. The hydroelectric procurement bill could be seen as a vehicle to lift the net-metering caps.
In keeping with the theme of confusion around the specifics of likely future ballot questions on the Olympics and legalized marijuana, a group opposed to the Common Core educational standards is mobilizing for a ballot question to remove the state from the national standard. Unlike the other groups the anti-Common Core activists are not competing against other like-minded referendum groups, but if they are successful that could threaten to pull the rug out from under the Board of Elementary and Secondary Education, which is set this fall to vote on whether to switch standardized testing to PARCC, a multistate system based on Common Core.
Some comings and goings to report this week, as State Police Superintendent Col. Tim Alben announced his retirement and Richard McKeon, the deputy division commander of the Division of Investigative Services, was named as his replacement.
House Chairman of the Committee on Public Safety and Homeland Security Hank Naughton will go by "Major" instead of "Mr. Chairman" for about the next five months. That is Naughton's rank in the U.S. Army Reserve, and the Clinton Democrat has been called up to deploy for duty as legal advisor to the Task Force within the U.S. Central Command and on an operational security unit with missions "throughout the operational areas of Operations Inherent Resolve and Operation Enduring Freedom," according to his office.
Enduring Freedom was the name of the long-running war against the Taliban and nation-building effort in Afghanistan, and Operation Inherent Resolve is the name for the U.S. airstrike campaign against the Islamic State in Iraq and Syria.
STORY OF THE WEEK: Corporations take a tax hit in private budget negotiations that also open up the MBTA to easier privatization of transit service.
BOX SCORE: A Tuesday evening softball game between the governor's office and the office of the state auditor was unfortunately cut short after a collision by two members of the governor's squad. The game ended in the top of the fourth inning with the auditor's team leading 4-2. Gov. Baker said the collision was a "real damper to the whole thing," and both sides wished the player a speedy recovery.
QUOTE OF THE WEEK: "By the way, Conference Committee is a Black Hole. Matter goes in, then disappears with no scientific explanation." - Al Norman, of Mass Home Care in an email about a budget provision adopted unanimously by the Senate in its budget and then "never was seen or heard from again." The provision would have used $6.25 million in federal funds to increase the income eligibility for home care from $27,000 to $35,000.
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