MassBudget: A preview of the Fiscal Year 2018 budget challenges

Two transparency reforms would improve the process

MassBudget    Information.    Participation.  Massachusetts Budget and Policy Center    Democracy. A Preview of the Fiscal Year 2018 Budget Challenges  Our state budget is how our Commonwealth funds the things we do together to strengthen our communities, make life better for our people, and build a vibrant economy. The budget process works best when the choices are clear to everyone and made in as deliberate of a manner as possible, considering long-term issues as well as immediate challenges. As budget writers prepare for Fiscal Year (FY) 2018, it appears that the Commonwealth again faces a significant gap between ongoing revenue sources and the cost of maintaining current services. This has been the case for many years in Massachusetts, with a series of budgets balanced using temporary revenue sources and savings initiatives that may prove to be temporary in nature (such as early retirement strategies that can lose their fiscal effectiveness if it turns out that the people who retired need to be replaced). Because the Commonwealth has been using temporary revenue to balance the budget during this period of economic expansion, we have not been able to build up the level of reserves to be prepared for the next recession. We have also seen a pattern of instability, with mid-year budget cuts and, this year, major changes to the budget very late in the budget process. This pattern is caused partly by a lack of adequate transparency in the budget process. Two steps by state government would allow for a significantly more transparent process and, likely, fewer unwanted budget surprises in the future. Continue reading the entire Budget Preview here... The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 15 COURT SQUARE, SUITE 700 BOSTON, MA 02108

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A Preview of the Fiscal Year 2018 Budget Challenges - Table 1

"the toll structure may not meet the Legislative intent to ensure equitable tolling"

"State Sen. Karen Spilka is taking the lead in questioning the rates and privacy of the Mass. Pike's new All Electronic Tolling System by sending a letter to state transportation officials. 

The system is set to go live on Oct. 28. 

In the letter sent to Secretary of Transportation Stephanie Pollack Friday, the Ashland Democrat says many in Legislature worry about the impact to drivers based on recent news reports. The letter is signed by 10 other senators."

Continue reading the article online (subscription may be required)
http://www.milforddailynews.com/news/20160826/ashland-state-senator-takes-aim-at-tolls

• The text of the letter from Senator Spilka:

Dear Secretary Pollack,

Based on a series of articles over the past week related to the transition to an All Electronic Tolling System (AETS) on the Western Turnpike, Metropolitan Highway System, and the Tobin Bridge, we are concerned about the impact of changes to the toll structure and the privacy rights of those traveling on Massachusetts roads.

In particular, we are surprised to read about proposed changes to the toll rates on the Western Turnpike. According to these articles, the Massachusetts Department of Transportation noted that some drivers will see increases while others will see decreases depending on where they enter and exit the turnpike. As you know, the Legislature has long advocated for toll equity and we are deeply concerned about the impact of any toll increases either overall or individually on our constituents. In fact, the 2013 transportation finance law includes language prohibiting revenue collected from toll increases from counting toward the Massachusetts Department of Transportation's own source revenue benchmarks unless an equitable system is established to place tolls on other non-tolled roads. As currently proposed, the toll structure may not meet the Legislative intent to ensure equitable tolling on the Western Turnpike and other roads.

In order to get a better understanding of the proposal, please provide a response to the following questions:

1. What are the exact locations of the gantries as compared to the current toll plaza locations?
2. How do the toll rates compare based on the location of each current toll plaza and each gantry, including differences based on having a Massachusetts-issued transponder, an out of state transponder, and no transponder (including processing fees)?
3. Will there be a grace period to give travelers time to obtain E-ZPass transponders?
4. What is the proposed amount of the assessment, in addition to the toll, for drivers who do not obtain a transponder?
5. How will the new toll rates be conveyed to drivers? Will there be signs or other forms of notification posted at the gantries?
6. What was the methodology used to determine the location of the gantries, the number of gantries, and the amount each toll proposed at each gantry compared to the current toll plazas?
7. If the hearings result in significant feedback, will the timeline for the new toll structure be delayed or comments incorporated?
8. Will all current toll plazas be taken down at the same time? What is the cost of tearing the toll plazas down?
9. What is the expected cost of the early retirement incentive program for toll collectors?
10. What is the expected savings of the AETS broken down by fiscal year?
11. What is the expected toll revenue collected on the Western Turnpike under the AETS compared to the current toll revenue collected on the Western Turnpike?
12. When will the bond obligations be paid in full? If, in January 2017, the bonds are fully paid how much is expected to be required on a fiscal year basis to deem the turnpike in good condition and repair?
13. How much toll revenue was collected in fiscal year 2015 and fiscal year 2016? How much of that toll revenue was used to pay the bond obligations and how much was used for maintenance and repair on the turnpike? Was there any surplus from the toll revenue on the turnpike in any of the previous 5 years?
14. What region or district on 1-90 from the New York state border to mile marker 122.6 will face the greatest impact, either an increase or a decrease, as a result of the proposed changes to the toll structure?
15. What specific driver and vehicle information be maintained? 
16. How long will driver and vehicle information be maintained?
17. Will the data be maintained by a third party or by the Massachusetts Department of Transportation?
18. Who will have access to the data collected by the gantries?
19. How will gantry data collection differ from current data collection?

Following receipt of the above-referenced information, we request a meeting to discuss the proposal in detail. Thank you for your time and consideration in regard to this request. We look forward to hearing from you on this matter.

Devices on new gantries above the Massachusetts Turnpike will soon collect tolls. For now, they’re capturing data on driving speeds.- ARAM BOGHOSIAN FOR THE BOSTON GLOBE

A PDF copy of the letter including the ten signatures

MassBudget: Conference Preview - Differences Between House & Senate Budgets for FY 2017

What's at stake in each budget area?

MassBudget    Information.    Participation.  Massachusetts Budget and Policy Center    Democracy. Conference Preview: Differences Between House and Senate Budgets for FY 2017  During three days of budget debate last week the Senate adopted 453 amendments adding $61.3 million to the bottom line of the Ways and Means proposal (about one seventh of one percent). To read MassBudget's full analysis, click HERE. In the end, the House and Senate budgets are very similar. Not only are the budget totals within 0.1 percent of each other (which makes sense since they had essentially the same amount of revenue to work with), but the two proposals are also within half of one percent of each other in every major category. For example, the House proposes 0.2 percent more for Health Care, including slightly larger investments in public health and more support for MassHealth, while the Senate proposes 0.45 percent more for education, including modestly more than the House for local public schools and higher education. Over the next few weeks a House and Senate Conference Committee will work to compromise on these difference and build together a final budget that funds our schools and local services; maintains our roads, bridges, and public transit; keeps our air and water clean; provides supports for those facing difficult challenges; protects our public health; and keeps open our parks, playgrounds, swimming pools and libraries. This Budget Monitor describes the funding and policy differences between the House and Senate in each major area of the budget, and provides links to in-depth descriptions of programs and issues addressed in each budget proposal. The tables near the end of this Monitor also show funding differences between the House and Senate budgets not discussed elsewhere. You can read the new Budget Monitor HERE. The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 15 COURT SQUARE, SUITE 700 BOSTON, MA 02108

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MassBudget revenue comparison for FY 2017

Division of Local Services: City & Town - November 21st, 2013

The MA Dept of Revenue Division of Local Services publishes this newsletter. This issue has a good analysis of the motor vehicle excise tax that we all pay. It explains how the tax is calculated and that the current depreciation table perhaps should be revised. It also explains how the tax has been affected by the decline in auto purchases which is reflected in the average age of vehicles on the road growing from about 8 years to 10 years.

City & Town - November 21st, 2013

Local Officials Directory Municipal Calendar IGR's & Bulletins Workshops, Seminars & Events What's New DOR 360       City & Town is published by the Massachusetts Department of Revenue's Division of Local Services (DLS) and is designed to address matters of interest to local officials. Editor: Dan Bertrand Editorial Board: Robert Nunes, Robert Bliss, Zack Blake, Amy Handfield, Sandra Bruso and Patricia Hunt	In this Issue: What's Happening with the Motor Vehicle Excise? Ask DLS Locations? Locations? Locations? Municipal Health Care Reform Forum Scheduled for December 3rd in Boston Community Innovation Challenge Grant Application Deadline is  Tomorrow What's Happening with the Motor Vehicle Excise? Municipal Data Management and Technical Assistance Bureau With all of the recent discussion around transportation funding, we thought it would be an opportune time to review the role of the motor vehicle excise (MVE) in municipal finance. In the analysis that follows, we examine the recent performance of this local receipt in terms of both budget estimates and actual collections and discuss some of the underlying reasons for recent trends. We evaluate whether lackluster performance of the MVE foreshadows a long-term trend where this revenue source continues to decline in prominence or whether recent declines are the natural result of the recession and will rebound as the economy improves. Pursuant to MGL c.60A, the motor vehicle excise is imposed for the privilege of registering a motor vehicle in Massachusetts. Although most people view Proposition 2 1/2 as a limit on property taxes, the initiative petition approved by Massachusetts voters in 1980 also lowered the motor vehicle excise rate from $66 per thousand to the current $25 per thousand rate. The amount of the excise is calculated by multiplying the value of the vehicle by this $25 per thousand tax rate. The valuation for a particular vehicle starts with the manufacturer's suggested retail price rather than the actual sale price and then this value is multiplied by the percentage in the statutory depreciation schedule shown below:  In the year preceding the year of manufacture: 50% In the year of manufacture: 90% In the second year: 60% In the third year: 40% In the fourth year: 25% In the fifth and succeeding years: 10% It isn't hard to see a potential problem with this depreciation schedule as the valuation decreases sharply from 90 percent in the first year to 60 percent in the second year. In order for the MVE to be a steady, reliable revenue source for municipalities, new cars must be purchased at a rate at least roughly as great as the year before. When this doesn't happen, revenues from MVE decline and become a less significant factor in local budgets. To illustrate, though MVE revenue contributed 3.44 percent of total estimated municipal revenues statewide in FY2003, by FY2013 this revenue had become less important dropping to 2.59 percent as a percent of total estimated revenues. Although the MVE may be declining as a revenue source, it still comes with a significant workload at the local level. For example, most municipalities annually issue approximately one MVE bill per resident. Of the state's 351 communities, 221 issued at least one bill per resident, with the island community of Chilmark being the only community in the state to issue two bills for every resident. The other towns on Martha's Vineyard and Nantucket follow closely behind Chilmark in this ranking. Other communities high on the list tend to be on Cape Cod or in the Berkshires. In these locations, numerous vacation homes where vehicles may be garaged tend to drive up the bill numbers. In the majority of the state's largest cities, where parking may be limited and public transit is a viable option, the number of bills issued may be as low as five or six bills for every ten residents. Next, we look at the data on estimated and actual MVE from FY2003 through FY2013 (See chart below). Noteworthy is the fact that the FY2013 estimated receipts from MVE totaled $605.9 million statewide, yet this level still lagged previous estimated totals from this source used in setting tax rates from FY2005 through FY2009. Actual motor vehicle excise collections over the ten year period from FY2003 through FY2012, peaked in FY2006 at $694.3 million, but by FY2010 actual revenue from this source statewide had decreased to $605.2 million. Compared to the FY2006 peak, this was a decrease of close to $90 million or 12.8 percent and was the low point for the ten year period. Revenues gradually rebounded in subsequent years, hitting $637.1 million in FY2011 and $644.5 million by FY2012. Despite this growth, actual FY2012 revenues did not match the peak performance of this receipt between FY2005 and FY2008 in 338 of the state's 351 communities. (See spreadsheet for detail) Although common sense dictates that people will defer large purchases such as motor vehicles when the economy is poor, a review of the average age of motor vehicles offers empirical support for this axiom. A review of data from the Registry of Motor Vehicles reveals that the state average vehicle age in calendar 2003 was only 8.13 years, though by calendar 2011 this average had risen to 11.18 years, an increase of more than three years.    Year         Average Vehicle Age FY2003                8.13 FY2004                8.43 FY2005                8.65 FY2006                8.87 FY2007                9.80 FY2008               10.09 FY2009                9.89 FY2010               10.30 FY2011               11.18 FY2012               10.03 These findings are reflected in national markets as well. According to automotive market research firm R. L. Polk, the average age of all passenger cars and light trucks in the United States reached an all-time high in 2013 of 11.4 years.(1) Polk projected this trend will continue for the next few year, but forecast growth for vehicles that were zero to five years old, in part reflective of pent-up demand for new vehicles given the decline in new vehicle registrations over the past five years. When assessed in the context of the depreciation table shown earlier, the increasing average age of vehicles highlights an underlying issue that may impact the future performance of MVE revenues. Though the economic recession that began in the fall of 2008 explains some consumer reluctance to replace their vehicles, are there other influences at work here as well? One factor is that vehicles actually last longer now than they did in say the 1960s and 1970s. It was not uncommon for the bodies of cars of this vintage to "rust out," often well before mechanical systems failed. Now, with better undercoating and anti-corrosive protection, this seems to happen much less frequently even with the high use of road salt during New England winters. Environmental regulations around emissions have also forced automakers to "reduce the amount of oil being used by the engine to reduce the oil that reaches the catalytic converter." At the same time, materials used in engines now frequently use extremely hard "carbon finishes" to minimize wear on engine parts.(2) Given that the average age of vehicles has been trending up since 2000, well before the recession began, indications are that longer lasting vehicles are likely a contributing factor to this trend as well. Recent national sales reports signal that August 2013 was a very strong month for auto sales. When these sales are projected on a seasonally adjusted annualized basis, new auto sales in 2013 are expected to come close to or equal the pre-recession 2007 level. (3) While this is promising news, it's too early to tell if this represents a one-time event reflective of low interest rates for new cars and pent up demand left over from the recession years or if it reflects a more sustainable trend for future years. Conclusion Although the MVE is considered a general fund revenue that may be spent for any lawful municipal purpose, it isn't hard to make a connection between this revenue source and local transportation needs. However, analysis shows that the MVE is not a recession proof local receipt and that underlying market factors such as longer lasting vehicles may limit future growth of this revenue given the current depreciation schedule. While the MVE is often viewed by assessors, tax collectors and taxpayers alike as a nuisance, reconsideration of the depreciation scale set out in the statute may be in order. Recognizing that recently manufactured vehicles are more durable and have longer useful lives, a more gradual depreciation of the valuation would strengthen the long-term outlook for this revenue. 1.) R. L. Polk and Co., "Polk finds Average Age of Light Vehicles Continues to Rise," August 6, 2013 2.) Dexter Ford, "As Cars Are Kept Longer, 200,000 Is New 100,000," New York Times, March 16, 2013 3.) Angelo Young, "August 2013 US Auto Sales: Detroit Three Sold 662,669 Vehicles in US Last Month", International Business Times, September 4, 2013 Ask DLS This month's Ask DLS question comes from Town of Hardwick Assessor Jen Kolenda and is about the Levy Limit Worksheet. Jen asks... What amounts may be included as "Other Adjustments" on the FY2014 Levy Limit Worksheet? Other adjustments to the levy limit are for general laws or special acts that authorize such an increase. Three examples include (1) the Cape Cod Commission annual assessment, (2) Chapter 111 s127B1/2 that exempts appropriation or borrowing for underground storage tank removal, removal of dangerous levels of lead paint, or repair, replacement or upgrade of a home's septic system and (3) assessment of debt service upon the members of the Greater New Bedford Refuse Management District and Martha's Vineyard Regional Refuse Disposal District. We'd like to hear from you. Please send any questions you may have to cityandtown@dor.state.ma.us. Locations? Locations? Locations? The Division of Local Services conducts trainings, workshops and seminars throughout the year across the Commonwealth. As an organization with offices in Boston, Worcester and Springfield, we make a concerted effort to accommodate our stakeholders in a variety of locations and are always looking for different parts of the state to host these events. In order to continue to provide low and no-cost learning opportunities, we are compiling a list of communities with free space available for future events. This could include a conference room in the library, city or town hall, a senior center, or any similar public building. Ideally, we are looking for a space that could hold 60 individuals in a classroom setting or 75+ in an auditorium setting. Wireless internet accessibility and overhead projectors are also appreciated. We greatly appreciate any and all suggestions. If your community is willing to host a DLS workshop, event or training, please contact Training Coordinator Donna Quinn at dlsregistration@dls.state.ma.us. Municipal Health Care Reform Forum Scheduled for December 3rd in Boston Mayors, managers, and human resource officials involved in the implementation of municipal health reform are invited to the Metropolitan Area Planning Council's (MAPC) breakfast forum on Tuesday, December 3, 2013, for an informal discussion with Dolores L. Mitchell, Executive Director of the Group Insurance Commission (GIC). This event will be held at MAPC's office at 60 Temple Place, 3rd Floor, Boston, MA from 9-11:30 AM. Space is limited. Please RSVP by Wednesday, November 27th to Nicholas Downing at ndowning@mapc.org or at (617) 933-0711. Community Innovation Challenge Application Deadline is Tomorrow The application deadline for the third round of the Community Innovation Challange grant program is Friday, November 22nd. The CIC program supports innovative projects at the local level, including regionalization. Over the past two years, the Patrick Administration has invested $6.25 million in 49 unique projects involving 197 municipalities across the Commonwealth. For more information on the CIC program, including the application, please visit: http://www.mass.gov/ANF/CIC. Please contact cicgrants@state.ma.us with any questions. Awards will be announced in February.

November Municipal Calendar 1 - Taxpayer - Semi-Annual Tax Bill - Deadline for First Payment According to M.G.L. Ch. 59, Sec. 57, this is the deadline for receipt of the first half semi-annual tax bills or the optional preliminary tax bills without interest, unless bills were mailed after October 1, in which case they are due 30 days after mailing. 1 - Taxpayer - Semi-Annual Tax Bills - Application Deadline for Property Tax Abatement According to M.G.L. Ch. 59, Sec. 59, applications for abatements are due on the same date as the first actual tax installment for the year. 1 - Taxpayer - Quarterly Tax Bills Deadline for Paying 2nd Quarterly Tax Bill Without Interest 1 - Treasurer - Deadline for Payment of First Half of County Tax 15 - DESE - Notify Communities/Districts of Any Prior Year School Spending Deficiencies By this date, or within 30 days of a complete End of Year Report (see September 30), DESE notifies communities/districts in writing of any additional school spending requirements. 30 - Accountant - Submit Schedule A for Prior Fiscal Year This report is a statement of the revenues received, expenditures made and all other transactions related to the community's finances during the previous fiscal year. The Schedule A classifies revenues and expenditures into detailed categories that will provide information essential for an analysis of revenues and expenditures generated by various departments. This data, like other financial information reported to DOR, is entered into DOR's Municipal Data Bank; as such, the Department may provide time series, comparative and other types of analyses at the request of a city or town. This information is also sent to the US Census Bureau and eliminates a prior year federal reporting requirement. Failure to file by November 30th may result in withholding major distributions of state aid until the Schedule A is accepted by BOA. 30 - Selectmen/Mayor - Review Budgets Submitted by Department Heads This date will vary depending on dates of town meeting. 30 - Treasurer - Notification of monthly local aid distribution. Click www.mass.gov/treasury/cash-management to view distribution breakdown. To unsubscribe to City and Town and all other DLS Alerts, please click here.

MassBudget: After the Tech Tax Repeal: Remembering the Big Picture

MassBudget    Information.    Participation.  Massachusetts Budget and Policy Center    Democracy. After the Tech Tax: Remembering The Big Picture   In order to strengthen our economy and improve the quality of life in Massachusetts, the FY 2014 budget included new investments to fix and improve our transportation system and to make higher education more affordable.  One of the things that made such investments possible was $160 million in new revenue from a "tech tax" that covers computer design services and the modification of pre-written software. It now looks as if the "tech tax" is going to be repealed, without being replaced now by a new ongoing revenue source. In the longer term we are likely to see an ongoing debate in our Commonwealth about how best to pay for important investments in transportation, education, and other systems that play a critical role in helping people reach their full potential and enhancing the future prospects for our economy. Our new factsheet, "After the Tech Tax Repeal: Remembering the Big Picture," describes a variety of ways to generate additional revenue to support our long-term needs.  We consider three basic approaches:  Reforming or eliminating special business tax breaks      Reducing opportunities for tax avoidance      Reexamining other major tax cuts of the past two decades, including changes to the income tax that cost the state nearly $3 billion per year.    Rather than an exhaustive list, "After the Tech Tax Repeal: Remembering the Big Picture" summarizes some of the revenue options we could consider as we think about the best, fairest way to improve our schools, roads, bridges, and public transit systems.  Read AFTER THE TECH TAX REPEAL: REMEMBERING THE BIG PICTURE Learn More About THE MASSACHUSETTS TAX SYSTEM The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 15 COURT SQUARE, SUITE 700 BOSTON, MA 02108

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