February 2022

• • Baker-Polito Administration Files Final Annual Budget Proposal

    As the deadline for filing its fiscal year 2023 budget approached, the Baker-Polito Administration filed its final annual budget proposal in late January. According to a press release from the Governor’s Office, the $48.5 billion fiscal year 2023 (FY23) budget proposal supports economic growth across Massachusetts and sustains efforts to address the COVID-19 pandemic, while fully funding the Student Opportunity Act, and making key investments in other critical areas, including housing and health care.

    The proposed FY23 budget is based on the $36.915 billion consensus tax revenue estimate, which anticipates a 2.7% growth in total collections over revised FY22 tax estimates. The House 2 budget, by which the Governor’s budget is referred, includes a $749 million increase to the Stabilization Fund, whic, in combination with projected FY22 transfers, will grow the fund to an all-time high of $6.64 billion by the end of FY23. With a current balance of $4.64 billion, the Commonwealth’s Stabilization Fund, otherwise known as the “Rainy Day Fund,” is already more than four times greater than its balance at the start of the Administration.

    Key highlights in the FY23 budget include the following:

  • Increased unrestricted General Government Aid (UGGA) investment by $31.5 million compared to the FY22 budget, consistent with the expected 2.7% growth in tax revenue.
  • Restored funding for the Clean Water Trust’s Contract Assistance line-item back to $63.8 million. While the FY22 budget eventually included this funding, the Baker-Polito Administration initially proposed the line-item to be funded at $39 million.
  • A $4 million increase to the Department of Environmental Protection for a total of $36.2 million in new funding.$6 million in funding for Community Compact related programs including best practices and regionalization and efficiency grants, an increase of $2.4 million (66%) above FY22.
  • $485 million in Chapter 70 funding, for a total Chapter 70 investment of $5.989 billion.
  • $440.1 million for workforce development programs and initiatives across a wide range of state agencies.
  • $16.9 million in total funding to continue transforming vocational high schools into Career Technical Institutes running three shifts per day to provide pathways to high-demand vocational trade careers, including plumbing, HVAC, manufacturing, and robotics.
  • $1.512 billion in total budget transfers for the MBTA.
  • $456 million for the Massachusetts Department of Transportation (MassDOT), including $95 million for snow and ice operations and $3.4 million to support implementation of new funds provided through the Infrastructure Investment and Jobs Act.
  • $3.7 million for climate change and adaptation preparedness.

  • In addition to the fiscal year budget recommendations, the Baker-Polito Administration also filed a tax proposal to provide relief for housing and childcare costs, eliminate the income tax for hundreds of thousands of low-income taxpayers, and maintain Massachusetts’ competitiveness. The proposed changes would allow nearly $700 million to remain in the hands of taxpayers on an annual basis starting immediately in tax year 2022.

    The plan proposes to:

  • Double the maximum Senior Circuit Breaker Credit to lower the overall tax burden for more than 100,000 lower-income homeowners aged 65 or older.
  •  Increase the rental deduction cap from $3,000 to $5,000, allowing approximately 881,000 Massachusetts renters to keep approximately $77 million more annually.
  • Double the dependent care credit to $480 for one qualifying individual and $960 for two or more, and double the household dependent care credit rate to $360 for one qualifying individual and $720 for two or more to benefit more than 700,000 families.
  •  Increase the Massachusetts adjusted gross income (AGI) thresholds for “no tax status” to $12,400 for single filers, $24,800 for joint filers, and $18,650 for head of households, which will provide direct relief to more than 234,000 low-income filers.
  • Double the estate tax threshold and eliminate the current “cliff effect” that taxes the full amount below the threshold.
  • Change the short-term capital gains tax rate to 5% to align the Commonwealth with most other states.

  • To review the Governor’s filing letter, budget message, and specific line-item information, please visit: https://budget.digital.mass.gov/govbudget/fy23/appropriations/.

    
    Joint Rule 10 Day: UCANE Priorities Advance, But Work Remains

    The month of February saw the Massachusetts legislature reach its first mandatory deadline for reporting on legislation before it: Joint Rule 10 Day.  Under the Joint Rules adopted by the House and Senate, all joint committees of first referral for legislation must take action on legislation before them by the first Wednesday of the second month in the second year of the two-year session. (February 2).  The rule, which was moved forward from its historical day in March at the start of the 2017-2018 legislative session, significantly whittles down the number of legislative initiatives the body can consider before the end of formal sessions on July 31^st.  For non-controversial matters, the deadline for passing legislative matters is technically January 3, 2023.

    A number of matters which UCANE supports were advanced at or before the legislative deadline.  An Act Relative to the Timely and Consistent Payment of Law Enforcement Personnel (HB2568), which received a favorable report from the Joint Committee on Public Service, currently sits before the House Committee on Bills in 3^rd Reading.  Meanwhile, An Act Relative to Improving Public Safety in Excavation (HB3265) was held on extension from the Joint Committee on Telecommunications, Utilities

    and Energy, while its Senate counterpart (SB2293), received a favorable report from the Joint Committee on Transportation. UCANE’s water infrastructure funding initiative, SB505, received a favorable report from the Joint Committee on the Environment, Natural Resources and Agriculture. Finally, the Joint Committee on State Administration previously issued a favorable report to UCANE’s legislative effort to increase competition in the constructing or renovating of water treatment plants (SB2122 / HB3220), which sit before the respective Committees on Ways and Means.

    While UCANE was pleased that certain legislation was able to move favorably from Committee, our Association remains vigilant about other important legislation that could impact the construction industry.  The Joint Committee on Labor and Workforce Development continues to hold wage theft legislation under an extension with the expectation that amended legislation will be released shortly. Additionally, legislation changing the common law definition of fraud; restructuring MBE / WBE requirements, as well as impacting construction vehicles received favorable reports from a variety of committees. As the legislative session continues to pick up pace, expect more information about these and other matters. Be prepared to act if contacted by our Association.

    Again, formal legislative sessions end on July 31, 2022 with informal sessions continuing through the end of the year. To review UCANE’s filed matters, please visit: https://malegislature.gov/Bills and enter the bill number of interest.

    Water Infrastructure Champion Dykema Leaving Legislature

    Longtime water infrastructure champion, Carolyn Dykema, a seven-term State Representative announced her plans to resign her position for a job in the solar energy industry. The current House Chair of the Joint Committee on the Environment, Natural Resources and Agriculture, Representative Dykema will join a number of her colleagues who have left the Massachusetts legislature this session. In taking the position as Northeast Policy Director at Nexamp, Chair Dykema will work to expand the presence of solar power throughout New England by advocating for solar friendly policies throughout the region.

    Elected to the House of Representatives in the fall of 2008, Representative Dykema represented the residents of the Massachusetts 8^th Middlesex District, which includes the communities of Holliston, Hopkinton, Southborough and precinct 2 of Westborough.

    Prior to entering the legislature, Representative Dykema worked as a marketing professional in the fields of financial services and environmental consulting. She became engaged with local government in 1999 with an appointment to the Holliston Sewer Action Committee, and has since served continuously in public service at both the local and State levels, including service on the Holliston Planning Board, MetroWest Growth Management Committee, and State Energy Facilities Siting Board, to which she was appointed by Governor Patrick in 2007.

    For UCANE’s purposes, Chair Dykema was the Co-Chair of the important Water Infrastructure Finance Commission of 2012, which studied the Commonwealth’s water infrastructure needs. Having identified the Commonwealth’s $18 billion to $21 billion water infrastructure funding gap, excluding stormwater management costs, Chair Dykema was instrumental in then publicizing these findings before local, State and Federal officials. Subsequent to her Chairing the WIFC, Representative Dykema was a key voice in the passage of Chapter 259 of the Acts of 2014, An Act Improving Drinking Water and Wastewater Infrastructure. She then sponsored and led water infrastructure efforts to improve awareness and the action needed to close the water infrastructure gap.

    UCANE greatly appreciates the dedication and work of Chair Dykema and her staff over the years. Whether discussing efforts to address water infrastructure funding or any number of issues, Representative Dykema was a thoughtful and conscientious team-builder. UCANE wishes her the best of luck in her new endeavors!

    Baker-Polito Administration Awards Grants to Help Local Communities Meet Stormwater Permitting Requirements

    The Baker-Polito Administration announced that it has awarded $288,570 in grants to five multi-community stormwater coalitions across Massachusetts to help local cities and towns in meeting existing and upcoming stormwater management requirements. The projects, selected by the Massachusetts Department of Environmental Protection (DEP), were awarded to the Statewide Stormwater Coalition, the Merrimack Valley Planning Commission, the Charles River Watershed Association, the Massachusetts Maritime Academy, and the Mystic River Watershed Association.

    The funding will enable Massachusetts municipalities to expand their efforts to meet Municipal Separate Storm Sewer System (MS4) permit requirements and reduce stormwater pollution through coordinated partnerships that emphasize resource sharing. There are more than 260 Massachusetts municipalities subject to the current MS4 permit, issued jointly by the U.S. Environmental Protection Agency and MassDEP, which took effect on July 1, 2018. Permit requirements that the MS4 communities must meet include the development and implementation of a public education program, adopting more stringent local development rules, locating and removing pollutants that are illegally entering municipal stormwater systems, and installing stormwater management systems.

    The groups receiving funding are:

  • Statewide Stormwater Coalition ($75,000). The Statewide Stormwater Coalition has developed a successful education and outreach program for more than 190 municipalities that satisfies one of the control measures required of the 2016 MS4 permit. 
  • Merrimack Valley Planning Commission ($65,000). The Merrimack Valley Planning Commission will collaborate with Greenscapes North Shore Coalition, which includes the Ipswich River Watershed Association and Salem Sound Coastwatch, to carry out local code review for 29 municipalities and identify how creation of impervious cover can be reduced and low-impact development can be promoted as part of development projects. 
  • Charles River Watershed Association ($49,470). The Charles River Watershed Association will host a series of four workshops that focus on the use of the Phosphorus Control Plan templates that were developed under this grant program in fiscal year 2021. 
  • Massachusetts Maritime Academy for Buzzards Bay Stormwater Collaborative ($69,000). The Massachusetts Maritime Academy will build on work carried out under the fiscal year 2021 grant that supported training of municipal staff in the use of their shared trailer outfitted for illicit discharge detection. 
  • Mystic River Watershed Association ($30,100). The Mystic River Watershed Association will support an Adopt-A-Drain program for 13 municipalities in its watershed as part of an education and outreach program to engage residents, organizations, and neighborhood groups in stormwater education and management. 

  The grants are funded through the Commonwealth’s fiscal year 2022 capital plan’s MS4 Municipal Assistance Grant Program. For more information on the MS4 permits and their requirements, https://www.epa.gov/npdes-permits/massachusetts-small-ms4-general-permit.

  News in Brief

  Regulations Requiring Public Notification of Sewage Discharges into Waterbodies Finalized. Final regulations establishing rules and procedures requiring permittees to notify the public of untreated or partially treated wastewater, including discharges caused by weather events, into the Commonwealth’s surface waters were finalized in January. Notifications must be issued within two hours of the discovery of the discharge to specific local, State, and Federal government agencies, as well as to any individual who has subscribed to receive such notifications. The regulations also require notifications to be sent to the two largest news organizations that report on local news in nearby communities and be published on permittees’ websites. The draft regulations went out for public comment in early October 2021, with two public hearings held in late October. The final regulations were the result of extensive public comments from watershed advocacy organizations, municipal wastewater officials, and municipal health officials. For more information about the sewer discharge regulations, please visit: https://www.mass.gov/regulations/314-CMR-1600-notification-requirements-to-promote-public-awareness-of-sewage-pollution.

  Treasury Department Issues Overview of Final Rule on ARPA Spending. The United States Department of the Treasury issued an overview of its Final Rule on the Coronavirus State and Local Fiscal Recovery Funds (SLFRF), a part of the American Rescue Plan, which delivers $350 billion to State, local, and Tribal governments across the country to support their response to, and recovery from, the COVID-19 public health emergency. The Overview of the Final Rule provides a summary of major provisions of the final rule for informational purposes and is intended as a brief, simplified user guide to the final rule provisions. The descriptions provided in the document summarize key provisions of the final rule but are non-exhaustive,  it does not describe all terms and conditions associated with the use of SLFRF, and does not describe all requirements that may apply to this funding. Any SLFRF funds received are also subject to the terms and conditions of the agreement entered into by the Treasury and the respective jurisdiction, which incorporate the provisions of the final rule and the guidance that implements this program. To review the overview, please visit: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf.

  Commonwealth Revenue Continues Upward Trend. Massachusetts Department of Revenue (DOR) announced that preliminary revenue collections for January 2022 totaled $4.026 billion, which is $679 million or 20.3% more than actual collections in January 2021, and $856 million or 27.0% more than benchmark. According to the DOR, the increase in collections is due in part to the recently-enacted elective pass-through entity (PTE) excise, which allows members of a PTE to avoid the federal limit on the deduction for State and local taxes by electing to pay tax on the PTE’s income at the entity-level, and then claim a credit equal to 90% of the PTE excise paid. FY22 year-to-date collections totaled approximately $21.872 billion, which is $4.219 billion or 23.9% more than collections in the same period of FY21, and $1.450 billion or 7.1% more than year-to-date benchmark. FY22 year-to-date collections were also impacted by the PTE excise. After adjusting for PTE excise payments, FY22 year-to-date collections are $2.982 billion or 16.9% more than collections in the same period of FY21 and $794 billion or 4.0% more than the year-to-date benchmark. January is a significant month for revenues because many personal income taxpayers are required to make quarterly estimated payments. Historically, roughly 10.2% of annual revenue, on average, has been received during January.