The Beacon Hill Report - June 19, 2014 Edition

Date: June 18, 2014

Legislative Pace Quickens

The legislature picked up the pace as the July 31 adjournment date for 2015 formal sessions approaches. The conference committee charged with bridging differences between the House and Senate version of the minimum wage-unemployment insurance bill issued their report. The UI reform did stabilize the UI tax rates until 2017 at Schedule C, but failed to make several of the underlying reforms that would result in lowering MA ‘highest rates in the nation’ in the out years. The wage base was increased marginally from $14,000 to $15,000. A company’s payroll to determine experience rating is averaged over three years, the definition of a seasonal employee is increased from 16 to 20 weeks, and self-employed persons may not lay themselves off on a seasonal basis. But provisions to reduce the maximum duration of benefits from ‘MA only’ 30 weeks to 26 weeks and to increase the time for qualification for benefits were rejected. 

The report also recommended increasing the minimum wage from $8 to $11 per hour in three steps by 2017. The final bill set January 1, 2015 as the effective date for the first step, eliminated indexing the minimum wage to inflation, and set the tipped wage for restaurant workers at $ 3.75 per hour. Proponents of a ballot question to increase the minimum wage to $10.50 per hour tied to inflation with a $6.30 tipped wage are faced with a decision whether to go forward with the campaign.

AIM calculated that the minimum wage will cost MA employers $1.5 billion when including raises for minimum wage workers and workers currently earning near minimum wage (491,000 workers), as well as union workers whose contracts are adjusted with the minimum wage (327,000 workers).  

Christmas may come early in MA after all. Lawmakers are looking at a spike in revenues to permit additional spending before the November election. State tax collections in May surged upwards by $109 million or 7.2 percent above collections in May 2013, and are now running nearly $600 million above original state budget benchmarks.  The Department of Revenue reported Wednesday that collections totaled $1.624 billion last month. Over the first 11 months of fiscal 2014, tax collections of $20.84 billion are running $1.18 billion, or 6 percent above the comparable period in fiscal 2013. The Patrick administration in January revised its expectation of tax revenues upwards by $403 million and receipts are running $183 million above that revised figure. 

Reducing taxes or replenishing the ‘rainy day’ fund would be nice.

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