The governor went along with most of the Legislature’s spending plans and policy proposals when he signed the fiscal year 2022 budget late last week, vetoing just $7.9 million in spending and sending back a relatively small number of sections with amendments.
Gov. Charlie Baker’s disagreement with the Legislature’s proposal to use $600 million in higher-than-previously-anticipated revenues over the next 11 months for pension obligations and an education funding reserve account got some attention Friday, as did his recommendation that a charitable donation tax deduction be allowed to take effect.
But several other sticking points between Baker and lawmakers were revealed.
Here are five things that stood out among the 25 policy sections that Baker returned to lawmakers with proposed amendments:
Regional Transit Authority Funding
The Legislature increased Baker’s recommendation of $90.5 million for regional transit authorities to $94 million, and added another $3.5 million that would be distributed by a new funding formula. The governor is now proposing that RTAs be funded at his $90.5 million level and that another $3.5 million be distributed as performance grants with a nod to “the continuing need to incentivize improved RTA performance.”
Baker pointed out how RTAs have recently received “approximately $214 million as part of the CARES Act, $39 million from CRRSA, and more than $165 million from ARPA.”
“This is in addition to the $90.5 million in State Contract Assistance that the RTAs received in FY21, as well as the $72 million in existing Federal Fiscal Year 2021 federal distributions,” he said.
Rep. Natalie Blais, who represents a clutch of rural Franklin County towns north of Northampton, said the governor’s amendment is “[i]nsulting to areas of the state like the #1stFranklin that STILL lack public transportation on evenings & wknds.”
Responding to Blais’ tweet about the governor’s action on RTA funding, former Rep. Tom Sannicandro responded, “Well, we know the legislature will override that!”
Tax Credits
After a state Tax Expenditure Review Commission determined that three tax breaks — two credits for harbor maintenance and medical device companies’ user fees and a tax exemption for certain patent-related income — no longer serve their intended purposes, the fiscal 2022 budget incorporated a Senate amendment to eliminate them.
While Baker agrees with lawmakers on scrapping the energy patent deduction, he said he disagrees with scrapping the other two, which he said “encourage innovation and economic activity in the Commonwealth and should be maintained.”
The medical device user fee credit — which reimburses companies for certain fees paid to the U.S. Food and Drug Administration for devices developed in Massachusetts — was established in 2006 and annually distributes between $400 million and $600 million to a half-dozen companies, Baker said.
“I see no reason to repeal this tax expenditure, as it is claimed annually by its intended beneficiaries and supports medical device companies operating in the Commonwealth,” he wrote.
When it comes to the harbor maintenance credit, it appears that the governor and Legislature have looked at the same information and arrived at different conclusions.
The Legislature’s commission said Massachusetts is the only state to provide “a dollar-for-dollar offset of the federal harbor maintenance excise tax,” and that the credit is claimed by a “small number” of filers — 79 to 88 claims annually during the 2015 to 2018 tax years.
“We conclude that while this credit does provide an incentive to use Massachusetts ports, we find it does not have a measurable benefit, and does not have any relevance today,” the report said.
The governor said that more than 80 taxpayers claim the credit each year for a total of $1.5 million is proof that it is working.
“Quite simply, I do not support the repeal of a tax credit that is serving as a benefit to shippers, importers, and exporters who generate critical economic activity in and around Massachusetts ports,” Baker wrote.
Sexual Assault Evidence Kits
In the fiscal 2022 budget, the Legislature put up funding for the state crime laboratory to test about 6,000 previously untested sexual assault evidence kits and gave a 180-day window for all testing to be conducted.
Baker pointed out a few process issues with what the Legislature approved and said the budget language would require the state crime lab “to test kits regardless of whether or not testing would destroy the sample, without the guidance of prosecuting agencies or, where appropriate, observation by a representative of the accused.”
“Not only do these sections fail to account for the complexities inherent in these different categories of previously untested evidence kits, they impose a legislative deadline that is impossible to meet given the time, technology, and expertise needed to properly test an individual kit,” Baker wrote.
He then added, “Accordingly, the most appropriate approach to testing previously untested evidence kits is one that accounts for kits associated with previously adjudicated cases and kits where the evidentiary sample is so small that nothing will remain after testing is completed, and that provides sufficient time for the state crime laboratory to ensure that these kits can be tested with appropriate scientific rigor.”
Baker did not alter the Legislature’s proposed funding level, but sent back an amendment that would narrow the scope of the test kits that would need to be tested and would give officials at the crime lab until June 30, 2022 to conduct the testing.
Pensioner Work Hours
Under the budget as initially enacted by the Legislature, a retiree collecting a pension from the state or a municipality would be allowed to work for a government entity for as many as 1,200 hours a year, up from the current limit of 960 hours in a calendar year.
“I support providing municipalities and state agencies with increased flexibility to make appropriate staffing decisions. However, an increase of 240 more hours per year is a significant policy change and moves the Commonwealth and its municipalities closer to a place where employees continue to work near full-time while collecting a pension, without any corresponding changes to improve the current practice,” Baker wrote.
Instead, the governor proposes increasing the hours cap from 960 hours a year to 975 hours a year, “which more accurately reflects half-time,” and waiving the hours cap for personnel in positions that have “a critical shortage,” similar to a waiver in place for retired educators in Massachusetts.
Future Budget Bill
The fiscal 2022 budget called for a special commission to investigate poverty in Massachusetts and recommend methods for reducing it over the next decade. Baker said he strongly supports the aim of the commission and recommended removing some executive branch representation from the panel “to streamline” its work and “permit meaningful participation” of all members.
In recognition of budgeting as a year-round activity, Baker also hinted at a proposal to come in the next budget bill he will file.
“To ensure that sufficient resources are available to accomplish these important directives, in the coming weeks I will propose $300,000 in funding to support the work of the commission, in the next appropriations bill that I file,” the governor wrote.
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