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Massachusetts Eats its Peas without Washington Budget Acrimony

Posted on July 15, 2011

Boston and Washington provided a study in contrasts this week on the ability of government to manage its expenses during times of fiscal distress.

Patrick.Signs.2012.Budget.SmallAs federal budget negotiations devolved into a desperate game of chicken over raising the nation’s debt ceiling, Governor Deval Patrick quietly signed a Fiscal Year 2012 state budget designed to close a $1.9 billion budget gap without new taxes.

Sure the $30.6 billion Beacon Hill spending blueprint was finalized 12 days late. Yes, the deliberations included plenty of contentious debate over collective bargaining. And the judicial branch ended the week in full revolt over budget reductions by threatening to close 11 courthouses and asking the governor to cease appointing new candidates to the bench.

But the governor and the Legislature ended up achieving remarkable consensus in the fourth consecutive year of fiscal crisis following the recession of 2008. That consensus produced a budget with much to like for employers still struggling to accelerate hiring in an uncertain economic recovery:

  • The decision to avoid tax increases indicates that lawmakers believe that the only way to solve the commonwealth’s long-term budgetary issues is through economic expansion and job growth.
  • The budget gives cities and towns the ability to control soaring health insurance costs by changing the design of employee health coverage after an expedited 30-day bargaining window. The provision matters to employers who have been concerned that spiraling health costs threaten the ability of cities and towns to provide the educational, safety and public works services that businesses need.
  • The employer-funded Massachusetts Workforce Training Program will be placed into a trust that will remove the program from the uncertainties of annual budget deliberations. The flagship program through which Massachusetts improves the skills of workers has provided $193.2 million in grants since its inception to some 2,500 Massachusetts employers to train 277,351 people.
  • The budget includes three tax reforms designed to strengthen the state’s business climate and enhance fairness and predictability for taxpayers: speeding tax audits, establishing equal rules for taxpayers and the Department of Revenue and providing early notification of changes in tax policy.

There were disappointments in the budget process as well:

  • Governor Patrick vetoed two provisions essential to the stability of employer-sponsored health plans: One would have required the Massachusetts Division of Insurance (DOI) to notify health plans 60 days in advance if they plan to reject insurers’ proposed health insurance rates. The other would add additional actuarial criteria the DOI has to take into consideration before rejecting insurers’ premium rates. AIM and other business groups have asked the Legislature to override these vetoes.
  • The final budget omits a proposal originally passed by the House of Representatives to narrow the onerous treble damages provision for violations of wage and hour laws.
  • Also omitted was a House-passed measure to repeal the pharmaceutical gift ban that threatens job growth in one of the economy’s most important sectors.

AIM will continue work with lawmakers outside of the budget process to address the treble damages law and pharmaceutical gift ban, both of which raise red flags for companies evaluating whether or not to do business in Massachusetts.

“On balance, the budget creates fiscal stability and takes a courageous step toward empowering cities and towns to save up to $100 million on health insurance costs,” said John Regan, Executive Vice President of Government Affairs at AIM.

“And all that without people walking out of negotiations, without brinksmanship, without talk of eating our peas and without the level of acrimony that has consumed Washington.”