February 2, 2023
Business Confidence Slips to Begin 2023
A strong performance by the Massachusetts economy during the fourth quarter of 2022 was not enough to stem…Read More
Posted on May 17, 2022
Trade Groups Back New Bill to Protect Employees in the Workplace
Boston Globe – It’s not every day that the Associated Industries of Massachusetts and the Massachusetts Restaurant Association ask for more regulation in the workplace.
But this time, the two trade groups are backing a bill on Beacon Hill that prohibits employment discrimination against victims of domestic violence, sexual assault, and other abusive behaviors. The bill also requires employers to provide reasonable accommodations ― such as time off to see a therapist ― as well to take safety protections like providing someone with an unlisted work number.
Typically, businesses would oppose new rules that would increase their legal obligations, but support comes amid a tight labor market that makes retaining employees a priority. Women, especially women of color, are the primary victims of violence and stalking, and abusers often show up at their workplace.
There’s also an urgency to help women in the workforce after many dropped out during the pandemic to take on more child care and caregiving responsibilities.
“We can’t say women have left the workforce in large numbers and not say we have an obligation to help,” said Brooke Thomson, executive vice president of government affairs at AIM. “Bringing women back to the workforce and helping them succeed is a major priority for AIM members. This is one step of many that will allow us to do that.”
Most of State Now at High COVID Risk, CDC Says
NBC Boston – All but three of Massachusetts’ 14 counties are now considered high risk for COVID-19, according to the latest data from the Centers for Disease Control and Prevention.
The latest data released Thursday shows that Barnstable, Berkshire, Dukes, Essex, Franklin, Middlesex, Nantucket, Norfolk, Plymouth, Suffolk, and Worcester counties are all listed as high risk. Bristol, Hampden and Hampshire counties are medium risk, with no counties in the low risk category.
Massachusetts’ COVID metrics, tracked on the Department of Public Health’s interactive coronavirus dashboard, have declined since the omicron surge, but case counts and hospitalizations are starting to increase once again.
State health officials reported 5,576 new COVID-19 cases Thursday. The last time there were more than 5,000 new cases reported in a single day was at the end of January. The state’s seven-day average positivity rate increased to 8.24% Thursday, compared to 7.89% on Wednesday. The number of new COVID-19 cases in Massachusetts schools has also shot up significantly, rising 62.6% in the past week.
Reshuffling of Labor Force Boosts Workers; Frustrates Employers
Newburyport News – It’s being called the great resignation – millions of workers quitting their jobs or leaving the workforce entirely amid the tightest labor market in decades.
A record 4.5 million Americans quit or changed jobs in March, according to the latest employment data from the U.S. Bureau of Labor Statistics.
Nationwide, there were at least 11.5 million job openings in March — the highest number ever recorded by the agency. The tightening labor market comes as businesses are struggling to fill open positions, with a record 1.9 jobs open for every unemployed worker.
Business leaders say the reasons behind the worker shortage is complicated but has long-term implications in hard-hit industries like health care and early education.
Many suggest the so-called “great resignation” is more of a churn in the labor force as the pool of available workers look for advancement and higher-paying jobs.
“There’s such a high demand for workers that there are tremendous opportunities out there,” said Chris Geehern, executive vice president of Associated Industries of Massachusetts, a pro-business group. “Companies are realizing that they can’t just put up an ad for a job and get dozens of applications from highly skilled workers.”
Massachusetts Gas Prices Reach Record High for Fifth Straight Day
That’s up two cents from Thursday and 17 cents in the last week. A year ago at this time it was $1.58 lower at $2.89 a gallon.
The national average is now $4.43 a gallon, also a new record AAA said Friday. California has the highest average price at $5.87 a gallon.
Diesel prices have also hit a new high in Massachusetts, now averaging $6.33 as of Friday.
State Work Force Shrinks to 2012 Levels
Commonwealth Magazine – Massachusetts state government lost the equivalent of 1,409 full-time employees in one year during the pandemic, the steepest drop in state government employment since the Baker administration intentionally cut the state workforce in 2016.
The drop was felt most heavily in higher education but also extended to executive and judicial branch agencies. State officials say there was not a major concerted effort to reduce the state workforce, but there has been a mix of attrition, a reluctance to hire, and an inability to hire, similar to what is happening in the private sector.
“There were a lot of retirements, just like in many other industries,” said Vincent Pedone, executive director of the State Universities Council of Presidents, which represents public universities other than UMass. “There’s the issue of the difficulty finding folks who are able to fill positions. A lot of positions I know are available and campuses want to fill them, but they are unable to find the talent willing to accept those positions.”
The state comptroller’s fiscal 2021 annual report, released last week, looked at the period between June 30, 2020 and June 30, 2021. During that time, the number of full-time employees working for the state dropped from 86,583 to 85,174, a decline of 1.6 percent. That figure represents the smallest state workforce Massachusetts has had since 2012.
Worcester Issues Indoor Mask Advisory as COVID Cases Surge
MassLive – Worcester officials issued an advisory Friday strongly encouraging residents to wear masks when indoors and around others as COVID-19 cases surge in the state.
The City’s seven-day daily average of new positive COVID-19 cases has risen steadily over the past eight weeks to 128.9 since its low of the year on March 12. Hospitalizations at the city’s hospitals have also increased, with the total number of COVID-positive inpatients currently at 72, with 11 in intensive care. To date, 534 Worcester residents have passed away due to COVID, officials said.
The city is also encouraging all eligible residents to be up to date on vaccines and boosters, avoid crowded spaces when possible and get tested for COVID when experiencing symptoms.
Last week, the Centers for Disease Control and Prevention elevated Worcester County’s community level to “high.”
Additional data related to the city’s case counts, vaccination status, wastewater and hospitalization numbers can be viewed on its new COVID-19 dashboard.
Committee Bulks Up Baker’s Infrastructure Bill
State House News – The $9.75 billion infrastructure bond bill that cleared the Transportation Committee does not include any language creating a new rail authority to oversee a passenger train extension to western Massachusetts, bucking a prediction Congressman Richard Neal made last month when he and state officials announced a historic agreement to advance the project.
Lawmakers on the panel packed $47 million in additional spending on top of the bottom line in the bill Gov. Charlie Baker filed (H 4561), calling for increased investments in regional transit authorities and $25 million in grants aimed at reducing roadway congestion by promoting carpooling and running shuttles.
In April, Neal and Gov. Charlie Baker announced they had agreed on a path forward to extend passenger rail from Worcester — the current western terminus for the MBTA’s commuter rail network — to Springfield and Pittsfield. Neal said the plans hinged on standing up a new rail authority in the pending infrastructure bond bill as well as seeking a dedicated funding stream tied to the federal infrastructure law steering billions to Massachusetts.
Lawmakers could tack on language creating the authority during the bill’s journey through the House and Senate.
The Boston-based MBTA current oversees the core bus and subway systems as well as a commuter rail network that runs north, south and west of the city.
Tara Gregorio: Respect and Protect Nursing Home Caregiver Wages
Berkshire Eagle (Opinion) It’s been two long, arduous and devastating years since Massachusetts, the country and indeed the world, were thrown into a terrifying situation as the COVID-19 pandemic swept through our communities.
For nursing homes, the impact was especially severe as we came to understand that elders with underlying medical conditions, which describes most of our residents, were the most vulnerable population to this insidious disease. And, because of the communal nature of facilities, coupled with the contagiousness of the disease, it moved swiftly throughout our buildings with dire results at the outset.
We now have perspective from the past two years of experience. We know what works to protect our residents and staff, namely strong infection prevention protocols, ample personal protective equipment, timely testing, vaccines and treatments.
Some things we can boast about, such as being a national leader in the vaccination rate of our staff. Some things we can’t — we are currently ranked 30th in the nation for staffing levels for a state that’s considered the vanguard in health care.
Businesses Face Benefits Questions amid Roe Uncertainty
Axios – Corporate America is facing a flurry of questions about how it provides health benefits in the wake of a leaked U.S. Supreme Court draft that indicates the federal right to abortion could be overturned.
Businesses hoping to use reproductive health benefits as part of efforts to recruit and retain employees would have to be careful not to run afoul of laws should states be allowed to ban abortions.
The balancing act over the next several months could get messy, experts warn.
“It’s a serious issue for employers,” said Candice Sherman, the CEO of the Northeast Business Group on Health. The group represents roughly 80 large companies such as American Express, Colgate, Moderna and Pfizer.
Limits on abortion coverage have the potential to impact the physical and mental health of the workforce and could come as many employers are addressing equity and inclusion for women, people of color and LGBTQ employees, Sherman said.
That is often communicated by companies through benefit design.
Some large companies like Amazon, Apple and Lyft have already announced plans to provide workarounds in those states with abortion restrictions.
But many others are still on the sidelines as they tease out employees’ priorities on abortion-related benefits, as well as the potential costs and legal risks.
Eleven states restrict insurance coverage of abortion in all private insurance plans written in the state, including those offered through Affordable Care Act markets, according to the Guttmacher Institute. Six other states require abortion coverage in private health insurance plans.
Baker Administration Launches Telehealth Program for COVID-19 Treatment
Mass.gov – The Baker Administration, in collaboration with Color Health, today launched a new free telehealth program to help residents access COVID-19 treatment. Through this program, residents 18 years and older who have tested positive for COVID-19 and who are experiencing mild to moderate symptoms are able to undergo a video consultation with a trained health care clinician to determine if they are eligible for Paxlovid, a COVID-19 treatment pill taken orally that can reduce the risk for severe symptoms and hospitalization by nearly 90 percent.
This program can be accessed at www.mass.gov/covidtelehealth and is available in English, Spanish, Haitian Creole and Portuguese.
The COVID-19 telehealth program is a quick, easy and free way for individuals to see if Paxlovid is an appropriate treatment for them. This program is available to all COVID-19 positive individuals 18 years or older who are experiencing COVID-19 symptoms and currently live in Massachusetts. This program is not for medical emergencies.
New Health Equity Compact Examining Comprehensive Change
State House News – A new coalition announced Monday has its eye on reimagining the state’s health care and health policy landscape to better focus on equity, and its members hope to put forward a slate of proposals for moving toward that goal as soon as this fall.
The Health Equity Compact, officially launched with a Monday afternoon event at the Dimock Community Health Center in Roxbury, describes its 40 founders as a group of “Black and Latinx leaders from across Massachusetts,” representing nonprofit, business and health care organizations.
The members say they were motivated to act by the health disparities illuminated during the COVID-19 pandemic and by acts of racial injustice over the past few years, including the 2020 killings of George Floyd, Breonna Taylor and Ahmaud Arbery.
“We know that there are many existing efforts locally and nationally to address health equity, but what we really, really need is comprehensive system reforms to avoid piecemeal approaches, to avoid short-lived approaches, grants that run out,” said Juan Lopera, the chief diversity, equity and inclusion officer at Beth Israel Lahey Health. “We need to codify health equity into law.”
Compact members said their policy priorities will encourage the state’s health care, business and nonprofit sectors to partner up in addressing social determinants of health, like access to food, affordable housing, child care and transportation.
Baker, Polis Urge FDA To Move On Vaccine For Youngest
State House News – Gov. Charlie Baker and Colorado Gov. Jared Polis have teamed up to urge the Biden administration to “expeditiously” review Moderna’s application for emergency use authorization of a COVID-19 vaccine that could be given to children under 5.
In a letter released Friday by the Baker administration, the governors urged the Food and Drug Administration not to wait until June to review the application in tandem with an application expected from Pfizer for a vaccine for the same age group.
“Waiting to combine applications from Moderna and Pfizer in an effort to ‘prevent confusion’ with staggered approvals would be ill advised and ultimately prevent our nation’s progress in fighting this virus,” wrote Baker, a Republican, and Polis, a Democrat.
The governors sent their letter to President Joe Biden last Thursday, lamenting the “grave decisions” some parents are making as government officials and the courts have rolled back most mask mandates, but the youngest children remain unprotected by a vaccine.
“Parents have been told, over and over again, that COVID-19 vaccines are on the horizon for their children. They deserve the peace of mind that comes with being able to choose to protect their children through vaccination,” the governors wrote.
Massachusetts Competing To Host Federal Biomed Agency HQ
State House News – A bid led by top government, business, higher education and life sciences officials to bring a federal biomedical research agency to Massachusetts is launching Monday with a meeting at the UMass Club in Boston.
Gov. Charlie Baker, Congressman Richard Neal, University of Massachusetts President Marty Meehan and Massachusetts Biotechnology Council CEO Joe Boncore are leading the effort to bring the new Advanced Research Projects Agency, created by the Biden administration and funded with $1 billion in March legislation, to Massachusetts.
The agency is modeled after the Defense Advanced Research Projects Agency, or DARPA, and does not have a headquarters though several states are expected to vie for the opportunity to host it.
Boncore, a former state senator from Winthrop, said Massachusetts has “the highest density of biopharma research and development in the country, supported by world-class talent, universities, hospitals, and other research institutions” and that locating the agency here would let the federal government tap into that ecosystem.
“When it comes to health care, higher education, and innovation, we are at the forefront of global leadership,” Neal said in a statement. “Massachusetts is an international hub for medical research and development, which is why our state is the best location for ARPA-H. I am eager to make this a reality.”
Others joining Baker, Neal, Meehan and Boncore at the meeting include Sen. Ed Markey, Congressman Jake Auchincloss, House Speaker Ron Mariano, Housing and Economic Development Secretary Mike Kennealy, Jay Ash of the Massachusetts Competitive Partnership, John Fish of Suffolk Construction, Greater Boston Chamber of Commerce CEO Jim Rooney, and officials from Harvard, Boston University, MIT, UMass Lowell, UMass Boston, the city of Boston, Sen. Elizabeth Warren’s office, Wellesley College, Boston College, Northeastern University, Tufts University, the Massachusetts Health and Hospital Association and Mass. Life Sciences Center.
Sustainability, Climate and Energy
America Leans on Aging Power Plants to Keep the Lights On
Wall Street Journal – As parts of the U.S. face potential electricity shortages this year, power grid operators around the country are moving to keep old coal- and gas-fired power plants running longer and harder.
The extra mileage being put on these power-plant versions of old clunkers, some of which were set for retirement, has raised concerns that some could break down when needed most. It has also led to complaints from power plant owners that they should be paid more to ensure that the aging facilities are properly staffed and maintained if they are pressed into service for longer than anticipated.
Grid operators across the country have lately warned that demand for power may soon exceed supply, in part because traditional power plants are retiring more quickly than they can be replaced by renewable energy. Many fossil-fuel plants are being phased out in states that have adopted aggressive targets to reduce emissions to combat climate change, while others are voluntarily being shut down by their owners because they have increasingly struggled to compete against newer facilities, and may only be able to sell their output part of the time.
The shortfalls in power generation could lead to rolling blackouts during peak periods such as heat waves, the grid officials say. The threat has led the grid operators to push to keep certain plants online as last-resort measures meant to ensure there are adequate electricity supplies.
The California grid operator last year moved to extend the lives of several gas-fired power plants amid concerns that the state could see an electricity supply shortage as soon as this summer. Photo: Bing Guan/Bloomberg News
Texas grid officials warned on Friday that a tight supply situation was getting tighter going into the weekend, after six power generating facilities totaling 2,900 megawatts of capacity “tripped offline” amid high temperatures. They asked Texans to turn
The prospect of supply shortages comes as the U.S. power grid transitions from conventional power plants fueled by coal and natural gas to wind and solar farms, which are among the cleanest and cheapest forms of generation. Replacing conventional plants, which can produce power on demand, presents challenges in part because wind and solar farms generally need large batteries to store their output for use when their production declines.
The difficulty of managing the transition has lately been compounded by supply-chain snarls, inflation and a federal probe into whether Chinese solar-panel manufacturers are circumventing trade tariffs. Together, those factors have threatened to slow the build-out of renewables and battery storage, with many projects already facing delays.
The risk of rolling blackouts is particularly acute in California, which is racing to procure an unprecedented amount of renewable energy and batteries to offset the impending closure of several large gas-fired power plants, as well as a nuclear plant known as Diablo Canyon that supplies nearly 10% of the electricity produced in the state.
State regulators last week warned of a potential shortfall in electricity supplies this summer that could be made worse by extreme heat, wildfires or delays in bringing new power sources online.
The California Independent System Operator, which operates the state’s power grid, last year moved to keep several gas-fired power plants from retiring with contracts mandating their availability during times of need. Historically, the grid operator occasionally used such contracts to address local supply needs, but some of the latest ones were meant to help the entire system.
CAISO Chief Operating Officer Mark Rothleder said the grid operator faces challenges in deciding whether to keep relying on older plants, some of which have become less reliable because of their age.
“Some of those resources are frankly just near the end of life,” Mr. Rothleder said. “They should be replaced with clean, flexible capacity that you can rely upon, but until then, there is the need to maintain them a bit longer.”
Starwood Energy Group, a private-equity firm that funds and develops energy projects, had requested to retire a gas-fired power plant north of Sacramento by the end 2019, but CAISO instead required the company to keep it online. The plant is currently operating under a one-year contract set to expire at the end of the year, unless the grid operator moves to extend it.
Himanshu Saxena, the company’s chief executive, said it is challenging to plan and fund maintenance work necessary to keep older plants operating, especially when it is unclear how long the plant will be needed. He said multiyear contracts would help the company better decide how and when to do the work.
“These are large assets, and they have to be maintained in a certain way,” he said. “That means longer-term planning is necessary.”
The Midcontinent Independent System Operator, which operates a large regional grid spanning much of the Midwest, is studying whether to permit the closure of a coal plant owned by Ameren Corp. MISO, which last month warned of the risk of rolling blackouts this summer, determined that the plant’s closure could affect the reliability of the system.
In Texas, the grid operator, known as the Electric Reliability Council of Texas, has lately been calling on some of the state’s oldest and priciest power plants to run more often than usual for fear of having short supplies. ERCOT took such measures far less frequently before a freak winter storm last year that caused power plants of all kinds to fail and resulted in dayslong blackouts.
The grid operator’s new approach to managing supplies has raised concerns among some power generators that it may affect the operational health of the plants. Texas regulators are debating whether generators should be paid well ahead of time for resources that might be needed, instead of just compensating them for actual power sold.
“Running a bunch of stuff when they are typically in reserve could have the unintended consequences of them being less reliable when you actually need them,” said Chris Moser, head of competitive markets and policy for NRG Energy Inc., which operates a number of power plants in Texas.
Pummeled at the Pump: Towns See Huge Increases in Fuel Budgets amid Record Prices
The average price of gas in early May 2021 was $2.85 a gallon, AAA reported. Now it’s at a record high of $4.39, an increase of 54%.
The cost of diesel fuel, which powers the heavy machinery and equipment used by road crews and public works departments, has more than doubled from an average of $3.03 last May to an average now of $6.27.
Norwell Town Administrator Peter Morin said his town is supplementing the fuel budget with other money to cover this year’s costs. While slight fuel budget increases are normal – the budgets are set a year in advance and costs change regularly – the rapid increase in the price of gas since Russia’s invasion of Ukraine has meant a lot more money is needed for fuel.
Wu Rolls out $2 Billion Green New Deal for Boston Schools
The latest attempt to fix the many longstanding woes of the city’s beleaguered school system is a $2 billion “Green New Deal” from Mayor Michelle Wu, who said she wants to see every school building redone in the next decade.
“This plan will bring major new construction and renovation plans to our facilities,” Wu said at a press conference Thursday morning. “These improvements are long overdue.”
Wu’s administration rolled out the $2 billion announcement with a quick outline of some immediate priorities and a new online dashboard detailing the various physical needs of 132 school buildings.
The cash, which periodically would have to be approved by the City Council, would be spent over the course of years, though Wu wouldn’t specify a timeframe when asked. Wu said $605 million of it is included in her proposed rolling capital budget this year.
Massachusetts Reports Uptick in School COVID Cases
Boston Globe – For the eighth consecutive reporting week, Massachusetts public schools have seen an uptick in COVID-19 cases among students and staff.
The Department of Elementary and Secondary Education on Thursday reported total cases among students and staff climbed nearly 63 percent more than those reported last week, to 13,380 new cases among students and 4,043 among staff for the week that ended Wednesday.
COVID-19 related hospitalizations also increased this week among those under age 20, the highest number of hospitalizations among children in the 11 and under age group.
The rise in school cases since mid-March has prompted some districts to reassess their mask policies. Earlier this week, Northampton Public Schools announced it is reinstating its mask mandate through May 20 due to cases increasing in the district.
School leaders in Arlington, Belmont, and Cambridge didn’t reinstate a mask mandate, but urged students to wear masks indoors after the CDC classified Middlesex County as having a high level of COVID-19 transmission.
Employment Law and Workforce Development
Time to Revisit the State Wage Act
Massachusetts Lawyers Weekly – A recent decision from the Supreme Judicial Court suggests it’s time for the Legislature to make some changes to the state Wage Act.
The case before the court involved a city of Methuen employee who was fired in 2013 after she was accused of stealing from her union’s bank account and convicted of larceny.
At the time she was fired, she had accrued $8,952 in unused vacation time. The city failed to pay her for the accrued time at the time it terminated her but sent four checks for the full amount three weeks later.
The plaintiff sent a demand letter to the city for $23,872, which represented a trebling of the unpaid vacation pay (which is considered wages).
The Wage Act, L.L.C. 149, §150, provides that employees be paid for wages owed to them, including accrued vacation, at the conclusion of their employment. While employees who leave voluntarily don’t need to be paid until the next regular payday, employees who are terminated by the employer must be “paid in full on the day of discharge.”
Based on a long-applied Superior Court decision authored by the late SJC Chief Justice Ralph D. Gants, the city argued that the proper measure of damages was lost interest on the unpaid wages from the time the plaintiff was terminated until payment of wages was made. Previously, lower courts had taken the position that as long as an employer paid what was owed before the employee filed a complaint in court, it would not be hit with treble damages on the unpaid wages.
But now the SJC has made clear that is no longer the case.
In writing for the court, Justice Scott L. Kalker noted that the remedy for late payments under the Wage Act was explicit: treble damages “for any lost wages and other benefits.”
His decision also noted the harm many workers face if they are not timely paid all wages due at the time they have lost their jobs: “[P]rompt payment of all wages owed is necessary for employees who often live paycheck to paycheck and who may not be able to pay rent or other necessities.”
While that’s certainly true, sometimes employers make mistakes or, in good faith, need a short time to properly calculate all amounts due and to process final paychecks. With this decision, however, such employers are now penalized to the same extent as scofflaw employers that willfully do not pay.
The decision also removes much of the business incentive for resolving any dispute before a complaint is filed. While previously, employers that failed to pay but made good before being sued were liable only for attorneys’ fees and interest at 12 percent on the unpaid wages, now they are faced with trebled damages on the full amount of the unpaid wages.
In its opinion, the SJC suggests that employers can avoid the harsh effects of the law by suspending an employee, with pay, while calculating the proper payment amount.
While that solution may work in many contexts, it creates a cost to employers and will not work in all situations. There are times when payroll records are simply wrong or when employees and employers reasonably differ on the calculation of amounts due. And it does not help hourly workers — some of the very people who are living paycheck to paycheck — since a suspended hourly worker will not receive any pay while the employer withholds final payment of wages pending actual termination.
All this suggests it’s time for the Legislature to revisit the Wage Act and devise a way to handle good-faith errors in the calculation of paychecks.
While the mandatory treble damages provision of the act has been a powerful tool in ensuring that workers get paid in full and on time, employers that quickly remedy mistakes and can show that their mistake was made in good faith should be able to protect themselves against treble damages.
A wholesale revision isn’t required. For example, the statute could require that employees make a demand, as consumers do for Chapter 93A claims, and employers that pay in full with interest and attorneys’ fees within a certain period could be exempted from treble damages.
Alternatively, employers could still be held strictly liable for treble damages for unpaid wages but given some type of safe harbor for mistaken or slightly late payments of unpaid vacation time.
The strictness of the Wage Act has benefits. But it also has its costs, which have been increased with this decision. It’s time for the Legislature to take a look at whether changes might be beneficial.
Diversity, Equity and Inclusion
Proposal for New Worcester School Committee Districts Up for Public Input
MassLive – The public will have a chance to comment on proposed school committee districts, meant to ensure the voices of Latino and Black residents are heard, at five upcoming public hearings in the city.
The city of Worcester agreed to change the way it elects members to the school committee after a lawsuit was brought against it for its current practices.
In February 2021, Worcester Interfaith, the Worcester Branch of the NAACP and eight residents of color filed the lawsuit that alleged the city’s current practice of having school committee members elected to at-large positions, allowing them to live in any part of the city, dilutes the vote of Latino and Black residents.
When the suit was filed communities of color made up more than a third of the city’s population, but the school committee was entirely white. After the suit was filed, in November 2021, two people of color, Jermoh Kamara and Jermaine Johnson, were elected to the school committee.
On Monday, the plaintiffs’ lawyers in the lawsuit, Brown Rudnick LLP and Lawyers for Civil Rights, submitted their proposed school committee district map to Stanford Law Professor Nathan Persily.
The $8 Figure that Shamed Boston Gets an Update
Boston Globe – Massachusetts has a major wealth gap problem. And as the Globe’s 2017 Spotlight series demonstrated, the cleave is most pronounced along racial lines: White residents are generally far wealthier than their Black and Latino neighbors.
That’s why it’s welcome news that the Federal Reserve Bank of Boston is partnering with local business groups and nonprofits to conduct a more comprehensive study of the wealth divide in the state. The aim is to get a more complete picture of economic inequality, its extent, its causes — and its possible solutions.
The laudable effort is in its early stages. The project’s funders, including the Boston Foundation, the Greater Boston Chamber of Commerce, Eastern Bank Foundation, and the Barr Foundation are still $250,000 short of their $1.5 million budget goal. A survey firm will be hired within the next year to complete the research, and it will take roughly three years until we get its initial findings.
But for this effort to be truly successful, it is crucial not only that the project take a broad look at all the factors that contribute to economic inequality — including that which forms along racial, ethnic, and geographic lines — but also ensure that the research continues at regular intervals so that the success, or the failure, of efforts to address the wealth gap can be measured over time.
Taxation and Budget
Senate Republicans Renew Push for Tax Cuts in Budget
Newburyport News – Senate Republicans are making a last-ditch effort to include Gov. Charlie Baker’s stalled tax relief package and a gas tax holiday in next year’s state budget.
The Democratic-controlled Senate will take up a $49.7 billion budget that calls for tapping into record surplus revenues to make major investments in childcare, workforce development and housing and boost local aid to cities and towns, but rejects a buffet of tax cuts pitched by the Republican governor.
Undeterred, the Senate’s GOP minority has filed a laundry list of amendments to the budget calling for a temporary suspension of the state’s .24-cent per gallon gas tax, lowering the capital gains business tax to 5%, overhauling the estate or “death” tax, and doubling the circuit breaker tax credit for senior citizens.
The proposals mirror parts of a $700 million tax relief package filed by Baker alongside his preliminary budget plan.
Republicans argue that the state is awash with surplus tax revenue and can afford to provide some relief for consumers who are paying higher prices for everything from gas to food amid record inflation, supply chain issues and the impact of economic sanctions against Russia.
State Supreme Court Strikes Application of Capital Gains Tax
State House News – The Supreme Judicial Court ruled Monday that the Baker administration erred when it taxed the gain that an out-of-state company realized when it sold its interest in a Massachusetts-based company, ruling in a closely-watched case that could have drastically changed how capital gains taxes are applied.
As commissioner of the Department of Revenue in 2016, current Baker administration budget chief Michael Heffernan determined that 100 percent of the $37 million capital gain earned when VAS Holdings & Investments (VASHI) LLC, an Illinois- then Florida-based S corporation, sold its interest in Massachusetts-based Cloud5 LLC was taxable by Massachusetts. The company said Heffernan in 2017 rejected its appeals for an abatement. In 2019, the Appellate Tax Board upheld the assessment on VASHI, which led the company to take the case to the SJC.
Ruling Monday in VAS Holdings & Investments (VASHI) LLC v. Commissioner of Revenue, the SJC determined that the tax that Massachusetts imposed was within the constitutional limitations on the state’s authority to tax a nondomiciliary corporation but also established that the Legislature “has chosen to adhere to the unitary business principle in formulating its taxing policy.”
Under the unitary business principle, Massachusetts can only tax the capital gain if there is “functional integration, centralization of management, and economies of scale between the out-of-State corporation and the in-State entity,” or if the investment in the in-state entity “serves an operational function of the out-of-State corporation,” the court said.
“Thus, although the Constitution does not prevent the taxes asserted by the commissioner … the taxes — a corporate excise tax in the amount of $914,489, and a nonresident composite tax in the amount of $1,717,406 — are invalid because there is no statutory authority for the taxes so asserted,” Justice Dalila Argaez Wendlandt wrote in the high court’s decision.
Rich Jones of Boston-based firm Sullivan & Worcester wrote an amicus brief in the case on behalf of the American College of Tax Counsel (ACTC) and said Monday that was the first time the notion that the state had constitutional, but not statutory, authority was raised.
“Neither party had raised the issue, either at the trial level or before the ATB (in briefs or at oral argument), as to whether Massachusetts lacked statutory authority to impose the tax (even if it were constitutional). The issue was first raised by us in the ACTC’s amicus brief,” Jones said. “We maintained in the amicus brief that regardless of constitutionality, the imposition of the tax was not authorized by Massachusetts statute, because Massachusetts statutes clearly adhere to the unitary business principle. The Supreme Judicial Court agreed and adopted this argument.”
An operator of Canadian call centers for the hospitality industry, VASHI merged in 2011 with Massachusetts-based Thing5 into a combined company called Cloud5 valued at roughly $35 million. VASHI “had no involvement whatsoever in the business operations of Cloud5 after the merger,” an attorney wrote in a court filing, and Thing5 employees in Massachusetts took over the functions of VASHI’s Illinois offices, which closed.
Cloud5 was sold to an independent third party for $85 million in 2013 and VASHI realized a capital gain of $37.28 million on the sale of its 50 percent stake. The state’s argument, as articulated by the Appellate Tax Board, was that the increase in Cloud5’s value and the gain realized from its sale “were inextricably connected to and in large measure derived from property and business activities in Massachusetts” and therefore are subject to the state’s capital gains tax.
Michael Bowen, an attorney representing VASHI, told the SJC during oral arguments in January that a ruling upholding the state’s argument could lead to chaos, even for small individual investors, in a hypothetical situation that Justice Scott Kafker said was “frightening.”
“Under the commissioner’s theory of taxation in this case, you as a Massachusetts resident, on the sale of your stock in Ford Motor Company, theoretically would owe tax in every jurisdiction in which Ford Motor Company does business because every jurisdiction in which Ford Motor Company does business would argue that they’ve somehow contributed to the appreciation of the stock that you just sold,” Bowen said.
Will ARPA Funds Come to the Rescue
Lowell Sun (Opinion) – With municipalities across the state in line to receive a second infusion of American Rescue Plan Act funding, the question still remains whether the city of Lowell can use a substantial portion of that sum to offset the cost spike associated with the Lowell High School construction/rehab project.
After $38.5 million in cost overruns on the Lowell High School construction project came to light in March, the loan for the project had to be amended to account for the additional costs.
The City Council unanimously voted to increase the loan order by an additional $38.5 million, from $343,399,220 to $381,967,231.
At the time, City Manager Eileen Donoghue said there could be way to shield taxpayers from this additional debt burden.
Donoghue said she had discussed the possibility with the State House delegation and U.S. Rep. Lori Trahan of using American Rescue Plan Act funds.
While the city’s external auditor Powers and Sullivan had said only about $2 million of the city’s $76 million ARPA allotment could be used for the project, Trahan sought guidance from federal treasury officials.
According to the special director of federal funds for the Baker administration, most local governments should be on the lookout for information on securing the second half of their ARPA awards.