May 21, 2017

On Beacon Hill: Burning down the house

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Sam Doran / State House News Service

Sen. Karen Spilka said last week there is "a recognition by all that we don't have the revenue that we need to meet our obligations."

Recap and analysis of the week in state, and federal, government
from State House News Service

BOSTON — Whether it was being blurted out loud or held on the tip of the tongue, the “i” word floated through Beacon Hill this week like a poorly kept secret.

No, not impeachment or investigation, although those words got a fair share of airing last week, as well. But more topical here at home, the operative word was “imbalanced.” As in, how is the state going to pay for the spending that the Senate will debate this week?

As the unemployment rate ticked up again to 3.9 percent and with state revenues being watched more closely than the State House’s resident red-tailed hawk eyes the rabbits that hop blithely across the capitol grounds, Senate leadership released its budget plan for fiscal 2018.

The roughly $40.3 billion budget bill is widely understood to be a document written in erasable ink. Barring a dramatic turnaround in May and June, budget writers are preparing for the likelihood that revenues will have to be adjusted during negotiations between the branches, which will in turn require spending to be lowered to fit the new frame.

“We recognize that we may need to adjust,” Senate Ways and Means Chair Karen Spilka, D-Ashland, said early last week, as she detailed the ways in which she and her committee had invested in local aid, housing, education and economic development.

As put by another senior Senate official: “This budget has a lot of vision, and maybe a few sugarplum fairies.”

But even if the numbers won’t exactly add up by the end of this week, there’s plenty of meaningful pieces in the budget that will shape the debate moving forward.

For instance, the Senate chose to include a hotel room tax on short-term rentals, such as those offered through sites like Airbnb, that would generate an estimated $18 million next year.

The Joint Committee on Financial Services is already planning a three-stop tour around the state to get input on the idea of short-term rental taxes and regulations, and the House is waiting for that process to play out. But Spilka’s budget put a marker down on the Senate side that’s vastly different from what Gov. Charlie Baker included in his own budget.

The Ways and Means budget proposes taxing short-term rentals on day one, while Baker sought to target those unit owners renting their homes like a business for more than 150 days a year.

Antonio Caban / State House News Service

Gov. Charlie Baker

The Senate budget would give Baker the go-ahead to pursue an employer assessment to cover MassHealth, or Medicaid expenses, though senators would apply the assessment on certain companies with 25 or more employees, instead of 10 or more, as Baker recommended. Unlike the House, the Senate also gave Baker the choice of a second option — to raise the existing Employer Medical Assistance Contribution employer fee — which is favored by some small-business groups.

Even though the Democrat-controlled House and Senate are both now on record essentially putting their full faith and trust in the Republican governor to resolve the controversial issue of how much to tax businesses to pay for MassHealth, Democrat Jay Gonzalez credited the Legislature with “reining in” Baker by recommending adjustments to the governor’s employer assessment proposal and lowering the revenue target by about half.

That was not all Gonzalez — a former secretary of Administration and Finances for the state who has announced a run for governor — had to say this week, either. As the temperatures heated up, so did the gubernatorial race. [More on that below.]

— Matt Murphy

ALSO ON THE AGENDA

  • Baker warns D.C. leaders of looming healthcare boondoggle
  • Gonzalez ratchets up governor bid
  • McGovern on Rosenstein, Warren on Wall Street, Polito at WPI
  • All about the amendments during initial Senate budget debate
  • Video: Spilka, Senate leaders talk fiscal 2018 spending plan
  • Sudders sees pot industry as work in progress


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