12/03/2008
Health insurance; paperwork reduction
A report concluded that 440,000 additional Massachusetts residents have obtained health insurance since reform started in 2006, but less than half were enrolled in private plans. Seventy-two percent of employers in the Commonwealth offer health insurance. The increased coverage has resulted in a 38 percent reduction in the cost of caring for the uninsured with a 36 percent reduction in free care claims from hospitals and clinics. The charge to employers who do not offer insurance, which is based on the cost of the uncompensated care pool, will remain at $295 per employee.
Good news: The Patrick administration has apparently agreed to reduce the number of companies required to file fair share reports quarterly by more than 95 percent. Under the new rules almost all employers would, after the Feb. 15 filing, be able to return to annual filings substantially reducing paperwork. Only those companies that fail the current or new fair share test will be required to file quarterly. A notice of the finalized new guidelines will be mailed to employers within three weeks.
Gas taxes and tolls
As the large toll increase proposals for the turnpike, bridges and tunnels to pay bonds associated with the Big Dig were unveiled -- the second toll increase this year -- shocked legislators from the western and northern suburbs and Boston sprung into action. Several bills were filed to increase the gas tax, freeze tolls, increase registry fees, restructure debt, grant the Legislature the power to set tolls, and/or a combination of all of the above. The long promised comprehensive transportation reform proposal to reduce administrative costs was still not forthcoming from the governor. A concrete proposal still seems several weeks away.
Note: A $0.11 increase in the current $0.0235 state gas tax brings in an additional $7 billion annually to the state's coffers.
Unemployment insurance
Two House Committee chairs, Rep. Michael Rodrigues (Westport) and Rep. Daniel Bosley (North Adams) indicated that a legislatively imposed freeze on 2009 unemployment insurance rates similar to the ones voted in recent years is not likely in 2009. With rising unemployment and increasing payments made from the Unemployment Insurance Trust Fund projected well into calendar 2009, business owners should expect unemployment insurance taxes to increase in accordance with the statutory triggers to Schedule E. That would mean the average annual cost per employee would go from $570 to $621 in 2009.
Massachusetts economy and FY 09 state budget
The economic numbers continue to be grim. The state's job numbers are 100,000 below peak after a year of flat growth. Regionally, Boston and the MetroWest area added jobs, as did the professional, scientific and technical services sectors across the state.
The FY 09 $28.2 billion state budget was based on a 3.8 percent increase in revenues, but, through November, revenues have now fallen 1.2 percent below FY 08, despite a large $54 million estate tax payment. While income tax withholding continued to increase, income tax refunds erased the gains in November as the financial industry and others recoup taxes paid earlier in the year. Revenue from the sales tax and from business and corporate taxes fell significantly, with sales tax revenue from automobiles down 23 percent from last November and the business tax revenue crash presaging a capital gains tax revenue shortfall.
In addition, the state pension fund has lost 27 percent ($13 billion) through October.
Despite the legislature having passed several multi-billion dollar capital spending plans last year, the governor has not released his capital spending plans. His plan to expand the annual borrowing cap from $1.5 billion to $2.0 billion may also be under review, necessitating further delay of proposed capital projects. In addition, the administration is waiting to see the "bailout" money, which will likely include funds for transportation infrastructure projects. That will probably determine the necessity for further spending reductions.
Just wondering
How many jobs would the state's more than 100,000 small businesses create with the following tax regimen: a tax credit equal to 50 percent of production costs, which include salaries paid, exemption from the sales tax for materials purchased, a property tax exemption for five years and gradual increases in property taxes for the ensuing 15 years with full taxation in year 20. Those are just some of the state and local tax breaks enjoyed by the proposed new movie studio in Plymouth.
