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State Budget Balances Books without New Taxes; Treble Fix Omitted

Posted on July 1, 2011

First the good news: The $30.6 billion budget that lawmakers are expected to send to Governor Deval Patrick today closes a $1.9 billion fiscal gap without raising taxes, gives cities and towns the ability to control soaring health insurance costs and insulates the employer-funded Workforce Training Fund from the uncertainty of annual budgets.

Massachusetts State BudgetNow the disappointing news: The spending blueprint omits both a proposal to narrow the onerous treble damages provision for violations of wage and hour laws and a second initiative to repeal the pharmaceutical gift ban that threatens job growth in one of the economy’s most important sectors.

“The Legislature deserves high marks for balancing the budget without raising taxes and impeding an already shaky economic recovery. Members of the House and Senate clearly share our belief that the only way to solve the commonwealth’s long-term budgetary issues is through economic expansion and job growth,” said John Regan, Executive Vice President of Government Affairs at AIM.

“We look forward to continuing the debate over modifying 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.”

The budget proposal for the fiscal year that begins today emerged from a six-member House and Senate conference committee yesterday morning. The Senate and House of Representatives are expected to vote on the budget today and send it to the governor, who has 10 days to sign it.

Lawmakers passed a $1.25 billion stopgap budget on Monday to keep the commonwealth running for 10 days while the full Fiscal Year 2012 spending plan is finalized.

The municipal health plan provision has drawn strong support from employers 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 compromise contained in the budget would give cities and towns the option to change the design of employee health coverage after an expedited 30-day bargaining window.  Municipal employees would receive 25 percent of any savings generated from changes that could include increases in co-payments and deductibles, or the transfer of employees into the state’s Group Insurance Commission.

“We believe the compromise we have reached will provide for a very fair and balanced approach that will allow for folks to have a voice but will also allow for us to achieve the savings that I think we all want to achieve,” House Ways and Means Chairman Brian Dempsey told State House News Service.

Analysts estimate that cities and towns could save approximately $100 million. Governor Patrick has expressed general support for the concept of plan design.

“The bottom line is that municipalities will save millions of dollars and maintain essential services,” Regan said.

The budget also creates a trust for the Workforce Training Program, the flagship program through which Massachusetts improves the skills of workers. It has provided $193.2 million in grants since its inception to some 2,500 Massachusetts employers to train 277,351 workers.

The trust will remove the program from the ups and downs of annual budget deliberations, which resulted in the program operating with less than full funding in Fiscal Years 2009 and 2010.