January 4, 2017

Top of the Hill: 7 of the biggest issues on tap for State House lawmakers

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Massachusetts State House

From State House News Service

The 2017-2018 Massachusetts legislative session, which gets underway Wednesday on Beacon Hill, is an important one for the commonwealth, replete with a number of pivotal and ongoing issues that promise to have long-ranging financial, and in many cases social, impacts on residents.

With a little help from our friends at State House News Service, have a quick-hit look at synopses of our top 7 stories to watch or scroll down for more in-depth background and analysis on each subject.

  1. HEALTH CARE: Total healthcare expenditures have outpaced the state’s economic growth rate for two straight years, a significant portion of the state’s population remains uninsured despite a mandatory health insurance law, and rising premiums and access to care, including oral care, are issues for many patients.
  2. ENERGY: Diversification, costs and reliability remain the legs of the state’s three-legged energy policy stool. Heading into 2017, Gov. Charlie Baker and his administration are implementing a major renewable energy law to procure large-scale hydropower and develop offshore wind farms that will eventually help power homes and businesses around the state.
  3. INCOME INEQUALITY: Many pundits are tying President-elect Donald Trump’s win this year to the frustration of the American worker, both with the availability of good jobs and with the widening gap in between those who make the least and the super wealthy.
  4. POT POLITICS: Sooner or later, Massachusetts lawmakers were going to get around to debating marijuana legalization. 2017 qualifies as later, much later.
  5. TAXES: A riddle that has perplexed lawmakers all year — anemic tax revenue growth amid surging job growth — could receive an answer from the Democrat-led Legislature in the form of new taxes next session. Short-term room rentals, marijuana sales and seven-figure incomes have all emerged as likely candidates for new or increased taxes.
  6. EDUCATION FUNDING/REFORM: Lawmakers have identified education funding reform as a priority for the upcoming session, but a combination of overspending (versus budget) and slow revenue growth leaves the question hanging of where any new funding would come from.
  7. ONLINE GAMING, LOTTERY WOES: It’s been five years since lawmakers came around to embrace the idea of casino gambling as a panacea for its transportation, local aid and economic development spending desires. But apart from the trickle of slot revenues from Plainridge, that dream is still just that.

Health care

Massachusetts is on the verge of having a staggering 2 million of its residents enrolled in Medicaid, the taxpayer-funded health insurance program for those who are income eligible and individuals with disabilities. Amid the rollout of healthcare access and cost control laws, the market itself has undergone dramatic consolidation in recent years and there’s continuing concern over the financial health of community hospitals.

Medicaid is now experimenting with an accountable care payment model, with results due in 2017 that will determine how those pilot programs perform on cost and patient care measures. At the same time, there’s talk in the Trump administration about converting Medicaid to a block grant program in an attempt to limit the flow of federal funds to the state. And a special commission looking at variations in prices charged by hospitals is closing in on possible recommendations. If it sounds like a lot, it is. Per usual, the health care policy arena in Massachusetts is active, with plenty of uncertainty.

Energy

A big hitch in the governor’s hydropower/wind farm plans is the fruits of that labor are several years from ripening. In the meantime, expect battles to be fought along familiar lines. As the administration works to finalize a new tariff-based solar renewable energy credit program, solar advocates are pressing the Department of Energy Resources to come up with a plan to bridge the gap between January and the summer, when the new program takes effect, to keep the subsidies flowing to the industry. Caps on solar net metering are also being bumped up against in most utility territories, meaning that debate will perk up for another round early in the year.

And while hydropower might eventually address some of the demand and reliability concerns in the grid, a Federal Energy Regulatory Commission investigation of the ongoing maintenance issues at the Pilgrim Nuclear Power Station will continue to fire up Pilgrim opponents who are pressing Baker to demand the plant’s shutdown before a scheduled refueling in 2017 designed to keep the plant running until 2019. Any adjustments to the state’s energy mix, including new gas pipeline capacity, must all be balanced against greenhouse gas emission reduction requirements and targets.

Lawmakers like Rep. Jay Kaufman and Sen. Michael Barrett will undoubtedly continue to make the case for a carbon tax, but more likely is a more aggressive effort by the Baker administration to promote the purchase of electric vehicles. A boost in zero-emission vehicle sales would dovetail nicely with the aims of the new court-ordered emission regulations from the Department of Environmental Protection that are up for hearings in February. The Supreme Judicial Court ordered the state to spread its emission reduction efforts across all sectors, including transportation, but some critics would like to see stricter caps on power plants.

Income inequality

Backed by a powerful coalition of interest groups, low-income workers in recent years have racked up big wins in Massachusetts with a ballot law broadening access to earned sick time and a law increasing the minimum wage from $8 to $11 an hour, effective Jan. 1, 2017. Now workers are threatening to place on the 2018 ballot a proposal to boost the wage floor to $15 an hour, which could be coupled with a constitutional amendment adding nearly $2 billion in higher taxes on households with incomes above $1 million.

The issues are forcing lawmakers and voters to take sides: with workers and tax raisers or with businesses and other opponents of new taxes. The minimum wage and income surtax loom as potentially huge policy matters on Beacon Hill and political issues in November 2018.

Marijuana legislation

The Legislature’s new Committee on Marijuana will jump into the debate after not one, not two, but three marijuana-related laws were placed on the books while legislators stayed on the sidelines, unwilling to intervene on an issue with far-reaching societal impacts. Now that adult use of marijuana is legal, lawmakers say they want to make changes to the 2016 voter law. On Dec. 28 the Legislature rushed a bill to Gov. Baker’s desk pushing back retail marijuana implementation dates by six months. Baker signed it.

Other potential areas for meddling include tax rates, startup regulatory costs, edible marijuana products, marketing and advertising tactics. The debate will bring marijuana industry lobbying off the campaign trail and onto Beacon Hill, where some of the people rewriting the voter law opposed the ballot question. Legislative leaders hope to tackle this issue over the first six months of 2017.

Taxes

Gov. Charlie Baker will not be able to wield his veto pen against a proposed constitutional amendment adding a 4 percent surtax to incomes over $1 million. In a 2016 joint session the House and Senate advanced the measure, which would need one more vote by the branches in constitutional convention — scheduled to begin meeting no later than Wednesday, May 10, under the current joint rules — before potentially advancing to the 2018 ballot.

The Democrats who control the flow of business in the House and Senate have raised taxes in 2009 and 2013, and in recent weeks have refused to rule out tax hikes in 2017. Lawmakers are already making time in the first part of the two-year session to grapple with changes to the legalized marijuana sales law passed by voters, with some suggesting the 10 percent combined state sales and excise tax on pot is not high enough. Generally ill-disposed toward tax hikes, Baker initially supported a Senate move last summer to subject vacation rentals to the hotel room tax — a move also backed by Airbnb, the highest-profile online repository of private room rentals. The governor then reversed course arguing the legislation would “impose burdensome taxes and government bureaucracy on folks who utilize short term vacation rentals.” A tax bill, which would need to originate in the House, could open the door to a variety of revenue-raising proposals.

Education funding

School aid formula changes wouldn’t come cheap — a 2015 report found the current system’s starting point underestimates the cost of educating students by at least $1 billion. There’s considerable overlap between backers of a funding formula overhaul and the opposition campaign that shut down a 2016 ballot question that would have allowed the up to 12 new charter schools each year.

Patrick Sargent / For Worcester Sun

Charter school funding will be back on the radar in 2017-18.

While teachers unions, public school parents, local school committees and others who pushed against the ballot question aren’t likely to back down, expansion proponents are rallying supporters for Round 2. “Although we took a punch, we’re back at it,” KIPP Boston parent Dawn Foye wrote in Dec. 21 email from Great Schools Massachusetts campaign, continuing, “We’ll come at it in a different way.” A signature issue of Gov. Charlie Baker’s in 2016, charter expansion was defeated on two fronts with the loss at the ballot coming after the House and Senate failed to agree on an expansion bill. Baker called for a lift of the charter cap in his State of the State address last year and could use that platform in 2017 to lay out a new plan to ensure there are no gaps in education adequacy or to send a message to forces looking for major new investments.

A Senate-backed plan to tie a modest charter cap lift to an big infusion of money across all public schools didn’t pique interest in the House, but the distaste voters showed in November for the broader expansion favored by many representatives could change their minds. Baker has also pledged to boost education aid by the projected growth in state revenues, a promise that will be sized up when he releases his fiscal 2018 budget on Jan. 25.

Online gaming/lottery

MGM Springfield isn’t expected to open until 2018, and Wynn Resorts won’t start dealing cards until a year after that. In the meantime, the Lottery — the state’s main source of profit for local aid to cities and towns — is showing its age, or maturity. Treasurer Deborah Goldberg testified last month that profits next year would likely fall by $3 million to $965 million. Scratch ticket sales through November were down 3 percent and the Keno market is “virtually saturated,” the treasurer said. In other words, Lottery revenues are slipping and casinos haven’t even opened yet.

Though not cataclysmic, Goldberg’s forecast for a period of “stagnation” could be the potion needed to get lawmakers to come around to the idea of moving the Lottery online to reach a different, and younger, audience. A grab for more gaming revenues could prove enticing because it would not require raising taxes and could be a tact legislative leaders can convince the governor to go for. It wouldn’t be easy though. Convenience store owners have never warmed to the idea, and critics will argue safeguards to protect problem gamblers will be difficult to enforce online. Gambling opponents warned casinos would not be the end of expansion and it appears the chase for the eternal gambling dollar is headed into the online world.

— Michael Norton, Katie Lannan, Andy Metzger and Matt Murphy

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