The Beacon Hill Report – June 5, 2014

Date: June 04, 2014

After two days of debate, the Senate adopted its version of the FY15 state budget. The House and Senate versions will be reconciled with the House proposal and sent to the Governor for his signature. The fiscal year begins on July 1.

The bottom lines for the original budget from the Governor and the two legislative proposals are within $200,000. Spending is increased by about $1.7 billion from the current fiscal year. The House and Senate did not include new taxes and fees as proposed by Governor Patrick in their budgets.

The budget is an important policy document because it lays out the spending priorities and because it contains some statutory changes. NFIB works for changes to strengthen small business and enhance the opportunity to grow your business, such as removing barriers to new small businesses (minimum corporate tax) and to affordable health insurance (restoring rules and regulations of Massachusetts’ health insurance program). The Senate agreed to consider the effect on the Massachusetts economy of the federal tax on medical devices and to force the Governor to request again that the old health insurance rating factors be restored in Massachusetts. 

The conference committee to work out differences between the House and Senate versions of legislation to increase the minimum wage and make changes in the unemployment insurance has begun its work. The UI rate “freeze” for 2014 was enacted earlier this year – all employers should have their new unemployment insurance rates and paid their first quarter UI taxes by May 30.

Again there are three versions of the minimum wage bills: the versions that passed the House and the Senate and the version that is slated for the ballot in November. Major differences among the bills are the size of the tipped wage for restaurant workers (between 35% and 50% of the full minimum wage), the final minimum wage after the phased in increase is completed ($10.50 and $11.00 per hour) and whether the minimum wage will be indexed, i.e. tied to inflation annually, going forward.

We have expressed our displeasure with the extent of true reforms in the unemployment insurance bills in both chambers. The savings to employers are essentially attributable to arbitrary rate freezes over the next few years as opposed to fundamental changes that would lower rates for the long term. But we hope the smaller increase in the wage base (the House increased the base to $15,000; the Senate to $21,000) and the three-year averaging of income (the Senate) will be adopted.

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