WITH THREE state-funded youth mental health programs at risk of closing, lawmakers and providers ramped up their opposition this week to Gov. Maura Healey’s proposed budget cuts that come as Massachusetts continues to grapple with a behavioral health care crisis.

Two 15-bed intensive residential treatment programs (IRTP), operated by NFI Massachusetts in Westborough, that serve teenagers with serious mental health and safety issues would close under Healey’s fiscal 2026 spending plan. That would leave just two other IRTPs in the state.

The governor’s budget would also shutter the state’s only clinically intensive residential treatment (CIRT) program, called Three Rivers in Belchertown, that has a dozen beds and treats children ages 6 to 12.

At a budget hearing Monday in Attleboro, Department of Mental Health Commissioner Brooke Doyle said those facilities are slated to close due to low patient counts, inadequate staffing and location hurdles. The cost-saving measure comes as DMH — which would receive a 7 percent overall budget increase under Healey’s proposal — looks to prioritize resources for its over-capacity psychiatric hospitals.

“These programs have been very difficult to maintain adequate and safe staffing within. They’ve been understaffed for extended periods of time, and that has contributed in large part to why we had difficulty keeping all the beds filled,” Doyle said in Attleboro. “The programs do provide a specialized service need, and the reality is, that we haven’t been able to operate them fully today. So what we’re proposing to do is to right-size the IRTP, reflecting the volume that does get utilized.”

Doyle said the state pays for those beds “in full,” regardless of whether or not they are occupied. She argued that makes it “not sustainable to continue to pay for 50 percent utilization.”

Doyle highlighted the state’s investment in community-based mental health resources, though the IRTP and CIRT programs are seen as a last resort to stabilize young patients who repeatedly end up in the hospital and pose significant safety risks to themselves and their family.

“Without these services, youth will continue to cycle through expensive and disruptive emergency and acute hospital services,” Lydia Todd, executive director of NFI Massachusetts, said at a State House budget hearing Tuesday, according to a copy of her prepared remarks. “Their families face income loss because it is impossible to maintain employment when they are regularly needed to respond to mental health crises.”

Todd added, “If this program is closed, the commonwealth will lose a recently renovated facility, a highly credentialed, experienced and skilled multi-disciplinary team of 95 staff, a Joint Commission-accredited program, and most importantly, the ability to help youth and families with the most serious needs to manage their mental health issues in their natural communities, and be less likely to end up in one of our adult systems.”

Todd told the News Service 95 out of 100 positions are filled. 

“We could be fully utilized — no problem,” she said. 

Program leaders and lawmakers contend the programs are underutilized due to a complicated DMH referral process that can leave youth languishing in hospitals for weeks or months before they secure placement. Due to high staff turnover during the COVID pandemic, some hospital mental health providers also were unaware the IRTP and CIRT programs existed, said Sen. Jake Oliveira of Ludlow. 

“It’s my hope that we can restore the funding for these critical programs because everything that we hear from constituents and everything that we read, there is a dire need for youth beds, particularly adolescent mental health beds throughout Massachusetts,” Oliveira told the News Service. “If we have programs that are underutilized, then DMH needs to do a better job with the referral process to get help to families across Massachusetts.”

Doyle admitted the referral process was “too clunky” at the hearing Monday.

“So I’ve actually made some changes to that referral process, going to preview it with stakeholders this month, with a go-live plan for May,” Doyle said.

In another major budget cut, DMH plans to slash the case management workforce in half, which would save the state $12.4 million. That move recently triggered DMH workers represented by SEIU Local 509 to take a vote of no confidence in Doyle. 

Gov. Maura Healey has already hit pause on a controversial plan to shutter a 16-bed psychiatric hospital in Cape Cod. That closure, combined with the three youth mental health programs, would have saved the state a total of $20.1 million, according to a presentation from the Executive Office of Health and Human Services.

As House Democrats prepare to release their budget next week, Rep. Aaron Saunders of Belchertown said he plans to fight to ensure the CIRT, operated by Cutchins Programs for Children & Families, receives funding.

“We need it to be there,” Saunders told the News Service. “It is a level of intervention and service that other programs are not designed to provide, and that to me really is the linchpin.”

Saunders added, “In my conversations with the administration, I’ve tried to impress upon them that there needs to be access, in some way, shape or form, to this level of service.”

Tina Champagne, CEO of Cutchins Programs for Children & Families, urged lawmakers Tuesday to “dig deeper and to save our programs.” In prepared remarks, Champagne said the state remains in the throes of a “children’s mental health crisis” and argued “this is no time for a reduction in intensive mental health services in our state.”

“The decision to cut the CIRT is not only in direct opposition to well-established evidence-based practices for children and families with some of the most persistent and challenging mental health and safety concerns, but also puts the the most vulnerable children and families in the commonwealth at even greater risk by perpetuating the cycle of ACES and traumatic experiences,” Champagne said, referring to adverse childhood experiences.

She added, “The degree of safety and mental health challenges that must occur for youth to be considered for a DMH referral for the CIRT is highly intensive and the youth’s safety concerns are typically quite serious. If these youth could be treated elsewhere in the community, they would have been referred to those services, and usually have already utilized these services, but they are not intensive enough to maintain safety and mental health stabilization.”

At the hearing, Oliveira told Doyle he was insulted by her remarks that signaled the Belchertown program was not viable due to its location in western Massachusetts.

“That’s insulting to any western Mass. lawmaker who might be sending people halfway across the state, hours away to get the programs to utilize them,” Oliveira said.

The commissioner told Oliveira she regretted if her testimony seemed to be “disrespectful.”

“It’s more of a matter that we have to weigh parents’ requests and parents’ priorities, as well,” Doyle said. “So, it has always been a western Mass.-located program. It’s not new. And what we’re seeing is that it is getting a bit more challenging, particularly with workforce constraints, that when we don’t have full staff operating, it requires that the department have to make decisions with parents about whether or not their their child can be safely treated in that environment, based on staff that are available at that time.”

Rep. Kelly Pease, a Westfield Republican, questioned whether the adolescent mental health programs represented the “smart place” for DMH to make cuts. Without providing sufficient care to young Bay Staters early on, the state may exacerbate the prison pipeline and end up incurring more costs in the future, Pease told Health and Human Services Secretary Kate Walsh.

Walsh insisted those programs were 50 percent occupied and emphasized EOHHS’s push to “right-size our behavioral health infrastructure.” Pease argued the low patient census was a function of DMH’s “antiquated process to get a referral.”

“I think the question for the Legislature is: Do you want to pay for standby capacity in two or three programs across the state that may or may not be used?” Walsh said at the hearing Monday. “In the meantime, you should challenge us to significantly improve our antiquated or very complicated processes to get people into these systems — some of which, I will remind us, were the result of court decisions. So we have patient referral pathways for people with, for children with behavioral health challenges that were built by lawyers, with due respect.”

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THE TRUMP ADMINISTRATION’S move to pause trillions of dollars in federal spending triggered an avalanche of uncertainty, panic and outrage, including a lawsuit from Attorney General Andrea Campbell and several of her counterparts.

Policymakers, nonprofit leaders, watchdogs and other affected parties spent most of Tuesday trying to unravel the implications of a sweeping freeze on grants and loans while President Donald Trump’s deputies try to align government spending with his political and ideological aims.

They could have at least a few more days to figure out the landscape. A federal judge in Washington, DC, temporarily blocked the proposed freeze late Tuesday afternoon, according to POLITICO. The judge’s order is due to expire at 5 p.m. Monday.

Reports emerged over the course of the day about federal dollars left out of reach, including for Medicaid in Massachusetts, even as Trump’s team sought to clarify that some popular aid programs are exempt.

Campbell joined with at least five other Democratic attorneys general to pledge a lawsuit challenging the pause, which they argued is unconstitutional.

“Congress controls the purse strings, and the executive branch cannot decide to halt funding just because they don’t like how Congress chooses to spend it,” Campbell said.

The full impact of the administration’s pause remains unclear. Campbell said Massachusetts has been unable to access tens of millions of Medicaid dollars it tried to withdraw Monday. Nonprofit leaders in the state worried they might have to reduce employee hours or lay off workers. School superintendents warned that programs providing meals to students might be affected.

Gov. Maura Healey said she worries the pause will impact funding for a host of services, ranging from child care to road maintenance to energy affordability.

“It’s devastating, and it touches all aspects, which is why I don’t understand this,” Healey said. “Donald Trump ran on a promise to lower costs. All he’s done is offer proposals and take actions that are going to raise costs for people, raise costs for businesses and hurt our economies.”

The interim head of the federal Office of Management and Budget on Monday wrote to the heads of federal executive departments and agencies instructing them to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance” while undertaking a review of their funding distributions.

While federal aid is governed in part by congressional appropriations and longstanding funding formulas, OMB Acting Director Matthew Vaeth said the administration wants to ensure trillions of dollars the federal government spends in grants and loans match Trump’s goals.

“Financial assistance should be dedicated to advancing Administration priorities, focusing taxpayer dollars to advance a stronger and safer America, eliminating the financial burden of inflation for citizens, unleashing American energy and manufacturing, ending ‘wokeness’ and the weaponization of government, promoting efficiency in government, and Making America Healthy Again,” Vaeth wrote in the memo, a copy of which was published by The New York Times. “The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”

Medicare and Social Security benefits would not be impacted by the pause, the memo said.

The memo dated Monday said the pause would take effect at 5 p.m. Tuesday. The White House reportedly sent a second memo Tuesday pledging that some programs such as the Supplemental Nutrition Assistance Program would not be affected.

White House press secretary Karoline Leavitt defended OMB’s move in a briefing Tuesday afternoon, saying it was “not a blanket pause on federal assistance and grant programs from the Trump administration.” Individual assistance programs such as welfare and nutrition aid would not be affected, she said.

“The reason for this is to ensure that every penny that is going out the door is not conflicting with the executive orders and actions that this president has taken. So what does this pause mean? It means no more funding for illegal [diversity, equity, and inclusion] programs. It means no more funding for the green new scam that has cost American taxpayers tens of billions of dollars. It means no more funding for transgenderism and wokeness across our federal bureaucracy and agencies. No more funding for Green New Deal social engineering policies,” Leavitt said. “Again, people who are receiving individual assistance, you will continue to receive that. And President Trump is looking out for you by issuing this pause, because he is being [a] good steward of your taxpayer dollars.”

Leavitt described the pause as “temporary,” but did not specify an end date.

States across the country reported Tuesday they were unable to access federal payment portals for Medicaid, which funds health insurance coverage for millions of low-income Americans. Democratic Sen. Ron Wyden of Oregon said the platform was down in all 50 states.

During a virtual press briefing alongside other AGs, Campbell said Massachusetts officials on Monday tried to draw almost $40 million in Medicaid funding “and haven’t received the payment yet.”

“This is just one potential funding stream that could be impacted by this reckless order,” she said.

After a rapid back-and-forth with a reporter at the White House, Leavitt was asked if Medicaid would be affected by the freeze.

“I gave you a list of examples — social security, Medicare, welfare benefits, food stamps — that will not be impacted this federal pause. I can get you the full list after this briefing from the Office of Management and Budget,” she replied.

Another reporter followed up later in the briefing and asked for clarification from Leavitt about whether any individuals on Medicaid would see their coverage cut off.

“I’ll check back on that and get back to you,” Leavitt said before turning to the next question.

Later in the afternoon, Leavitt posted on social media that the White House was aware of a “Medicaid website portal outage.”

“We have confirmed no payments have been affected — they are still being processed and sent,” Leavitt wrote. “We expect the portal will be back online shortly.”

New York Attorney General Letitia James described several other reports of frozen funding, including Head Start grants in Michigan, child development block grants in Maryland, and child support enforcement in another unnamed state.

The AGs on the call, all Democrats, pledged to file a lawsuit asking a court to intervene. It was not immediately clear Tuesday in which jurisdiction they would file their case.

“The president in this country is powerful. He is not a king,” New Jersey Attorney General Matt Platkin said. “He does not get to wake up in the morning or after an afternoon nap and direct his entire government to stop funding critical services that Congress has duly authorized and appropriated, that millions and millions of Americans, Republicans, Democrats, independents, children, adults, [and] seniors depend on for life-saving care because he doesn’t like something that he woke up thinking about.”

Federal aid is a major source of revenue for states. According to Pew Charitable Trusts, federal grants represented 36.4 percent of total revenue for state governments in fiscal year 2022.

State records show Massachusetts expects to receive more than $15 billion in federal reimbursements in fiscal year 2025, a year when the state budget carries a $57.78 billion bottom line.

Healey did not say if she would file legislation to put state dollars to work to cover any lost federal funding, telling reporters that “we’ve got to take everything a step at a time.”

Asked about options to keep payrolls flowing amid a federal funding pause, Healey replied, “We’ve got to see what happens in the courts.”

“This is not just a blue state issue. This is a blue state, red state, every state issue,” she said. “All of our states rely on this federal funding, so my hope is that a court will quickly put an end to his overreach of executive authority. He doesn’t have the power to do this, and more than that, it’s really, really harmful.”

Doug Howgate, president of the Massachusetts Taxpayers Foundation, noted that Medicaid reimbursements are the second-largest source of revenue in the state budget. He called the OMB pause “incredibly problematic.”

“The uncertainty in and of itself is a huge problem, and there’s a chance that when we get past uncertainty to more certainty, the problem is even bigger,” Howgate said.

Significant federal money also flows to nonprofits, local governments and many other entities, which use it to fund a suite of programs and services.

Massachusetts Nonprofit Network CEO Jim Klocke said the freeze would affect nonprofits “in every city and town in Massachusetts, large, medium and small,” even if federal funding for individual assistance programs is not affected.

Nonprofits on Tuesday had to “immediately shift into triage mode,” Klocke said, calling the risk of cutting employee hours or layoffs “very real.”

“Federal funding is hugely important to the nonprofit sector, and more importantly, to the people served by nonprofits. Billions of dollars come every year from the federal government to nonprofits in Massachusetts. Tens and tens of thousands of nonprofit jobs depend on that funding,” Klocke said. “It’s in every sector. Housing, crime prevention, research, after-school care — they all have federal funding in them to one degree or another. So when OMB says we’re going to put a blanket freeze in place … what that does is it freezes all those services.”

Associated Industries of Massachusetts, one of the state’s largest business groups, sent an alert to members just before 1:30 p.m. urging them to get in touch with the organization to share concerns.

“Many Massachusetts companies receive federal grants and loans for a variety of purposes. Some of those companies could now face issues making payroll at the end of the month,” AIM wrote in its alert. “AIM is working with members of the Massachusetts Congressional delegation to determine the moratorium’s potential effect on employers.”

Federal offices and agencies must identify “any legally mandated actions or deadlines for assistance programs arising while the pause remains in effect” and report that information to OMB under the memo Vaeth issued Monday. They are also required to submit detailed information about affected spending activity by February 10.

Vaeth instructed agencies to review pending federal financial assistance announcements to ensure they comply with Trump’s priorities. To the extent allowed by law, agencies could modify unpublished aid announcements, withdraw already-announced funding or cancel awards “that are in conflict with Administration priorities” under the OMB memo.

The administration also ordered agencies to give a “senior political appointee” responsibility to ensure each federal aid program “conforms to Administration priorities,” and to investigate programs to “identify underperforming recipients.”

“OMB may grant exceptions allowing Federal agencies to issue new awards or take other actions on a case-by-case basis,” Vaeth wrote. “To the extent required by law, Federal agencies may continue taking certain administrative actions, such as closeout of Federal awards (2 CFR 200.344), or recording obligations expressly required by law.”

Sam Doran and Ella Adams contributed reporting.

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GOV. MAURA HEALEY’S task force on transportation funding spent months looking at new ways to pay for the long-term financing of improvements and upgrades to the state’s crumbling transportation infrastructure.

But in the end, they’re focusing on the revenues from an existing tax that was under their noses the entire time: The Fair Share Amendment to the state constitution, also known as the millionaires tax, since it levies a 4 percent surtax on income above $1 million.

“This does not require new taxes,” Healey said Tuesday, with task force members standing behind her inside Worcester’s Union Station. “No new taxes. What it required is smart fiscal management and what it’s meant is a bigger investment over a longer period of time that we can make in transportation infrastructure.”

Healey administration officials are attempting to deploy the revenue in a way that was first tested on a smaller scale in last year’s state budget.

The budget proposal Healey intends to file with state lawmakers will seek to send $765 million in surtax money – $500 million more than last year – to a special transportation-focused fund that already exists. The money sent to the transportation-focused fund will also be available for the state to borrow against, allowing billions of dollars in capital spending.

The budget proposal also focuses on stabilizing the MBTA, which is still recovering from a hit to ridership, and ensuing drop in fare revenue, that came with the Covid pandemic. 

Healey painted a dire picture of the state of transportation infrastructure before she came into office in 2023. “Projects that had been talked about for years and years and years never seemed to move forward, from west-east rail to the I-90 rebuild in Allston to the Cape Cod bridges,” she said. “The MBTA had many days where it was barely moving at all.”

Some transportation advocates indicated that there is more to be done and called dedicating more Fair Share revenue to transportation is a “good first step.” “Swift action is needed to pull the MBTA out of a deficit that otherwise will lead to devastating consequences for riders and communities,” said Reggie Ramos, executive director of Transportation for Massachusetts.

She added that the Healey administration and state lawmakers must also dive into the task force report’s mentions of new user fees and other new revenue. “Fair Share funding is necessary for stabilizing our system, but to bring to life the system residents across the state deserve, we must also do more,” she said.

Overall, the Healey administration’s proposal calls for investing $8 billion over 10 years to improve transportation across the state, beyond just the MBTA, which has been facing a “fiscal cliff” – a shortfall of $700 to $900 million that could lead to massive layoffs and service cuts if it doesn’t receive an infusion of funds.

“We’ll put our entire transportation system on stable footing, something that we haven’t had for decades,” Healey said.

The MBTA’s $89 million legacy debt will also be wiped out.

Healey also pledged more frequent MBTA trains and buses and station upgrades. “Bottom line: You’re going to wait less and you’re going to move faster. When we fix the foundations we can do so much more,” she added.

The plan calls for $615 million for the multibillion dollar Allston I-90 project, which includes a new commuter rail station. The project is also expected to receive $335 million from the federal government, as well as $300 million from the city of Boston and neighboring Harvard University. The balance of the $2.07 billion projected is expected to be covered from federal loan program and “existing capital resources,” according to state transportation officials.

Monica Tibbits-Nutt, Healey’s transportation secretary and the task force’s co-chair, called the panel’s work a “very difficult conversation” that focused on both the system’s short-term and long-term challenges.

Doug Howgate, the president of the business-backed Massachusetts Taxpayers Foundation and a task force member, was one of the architects of the proposal to focus on tapping the millionaires tax rather than new taxes or fees, a somewhat ironic move since business groups opposed the tax when it was a ballot question in 2022.

Matthew Gorzkowicz, Healey’s budget chief who also co-chaired the transportation task force, said early on the panel wasn’t initially sure how much money the state would end up with from the millionaires tax.

“We started to realize that we may have more to work with than we had thought,” he told reporters on Tuesday. “I will also say that part of our evolution with the task force was that many of the task force members felt like it was difficult to both size how much revenue we needed, as well as what revenues we should go for, when we hadn’t spent the revenues that were just recently approved by the voters in [2022]. I think folks started to feel as though we needed to make sure we were doing the right thing by voters, doing the right thing by our residents, by making sure that money was spent responsibly, leveraged to do what they envisioned it was going to do when they voted on it, and that’s really when it became our focus.”

When asked about a pair of transportation borrowing bills signed by Gov. Charlie Baker, both of which exceeded $8 billion, Gorzkowicz said those bills were simply authorizations to issue debt while what the Healey administration proposes is “fundamentally different.”

“Unless you have revenue to support that debt, you can’t really issue it. That’s the game changer here,” he added, referring to the Healey plan to leverage millionaires tax revenue in the special transportation-focused fund.

Gorzkowicz said the millionaires tax appears to be a stable revenue source. “We’re going to grow into this over a period of time and we’re going to make sure we don’t over-extend ourselves and make sure we don’t build in operating costs that can’t be supported long-term,” he said.

The proposal drew a sharp rebuke from the conservative-leaning Massachusetts Fiscal Alliance, an outside group that opposed the millionaires tax at the ballot box. “This proposal is a textbook example of fiscal irresponsibility. Rather than tackling the deep-rooted inefficiencies and mismanagement plaguing the MBTA,” spokesman Paul Craney said in a statement, “Governor Healey is opting to throw more taxpayer dollars at the problem, all while leveraging Massachusetts’ financial future with unsustainable borrowing.”

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THE QUESTION of how to split the money flowing into state coffers from the millionaires tax between education and transportation accounts is likely to be a key focus of state budget discussions this year.

Members of a task force on transportation funding, as they’ve set about crafting a final report, have indicated that there should be a more even split than the way the pie was divided in the most recent budget cycle. The House’s top budget-writer, Rep. Aaron Michlewitz, has also suggested that the funds were “designed to be split evenly.”

But one of the main backers of the 2022 ballot question that created the 4 percent income tax surcharge on income over $1 million says the split shouldn’t be locked in.

“I don’t land on a particular number,” said Max Page, the head of the Massachusetts Teachers Association, when asked about whether the split should be 50-50. There could be budget cycles where education needs outpace transportation needs, he said.

Page’s union, along with the National Education Association, was responsible for the vast majority of campaign spending on the ballot measure, pouring millions of dollars into an effort to pass the question, which 52 percent of voters statewide supported. Boston, Cambridge, Holyoke, Fall River and Page’s hometown of Amherst backed the measure, but business groups opposed the measure, which was voted down in Plymouth, Needham, Milton, and Hingham.

Page, whose union has 117,00 members across 400 local groups in the state, is quick to add they back the investments in transportation, since they ride the struggling MBTA, drive down roads and bridges, and walk on the sidewalk.

But “landing on an exact number as needs shift from year to year doesn’t make sense,” he added. “Saying it must be x percentage or y percentage, that may shift a bit over time depending on particular needs in any given area.”

In talking about spending priorities, Page expects them to shift year to year, depending on the needs. His union is noting deferred maintenance at schools and colleges, and pointing to a “real fiscal crisis” within school districts, as some were forced to implement layoffs and others attempted property tax overrides.

Salaries for staff and faculty across the system are low, Page contends, when the state’s high cost of living is factored in.

Paid family leave is another issue. State law provides 12 weeks of paid leave for an employee to care for a family member or bond with a child, except for municipal departments. “Our educators, who are two-thirds women, do not have access to the state paid family leave program,” he said. “That’s a wrong that needs to be righted.”

In the most recent state budget, 59 percent of millionaires tax revenue went towards education (universal free school meals and free community college, for example), while 41 percent went to transportation (fare relief for low-income riders and free regional transit beyond the MBTA lines, among other spending items).

The left-leaning Massachusetts Budget and Policy Center, also known as MassBudget, in a report issued Monday, indicated that ridership on the Southeastern Regional Transit Authority fare-free buses rose by 56 percent last summer into the fall, and the buses improved their on-time performance, since they weren’t slowed down by people fumbling to pay their fare.

But some experts are also warning that the millionaires tax comes with tradeoffs. “The key thing to understand about the millionaires tax is that it doesn’t simply create a new stream of revenue; it also reduces the revenue we collect through the standard income tax, thanks to taxpayers who leave the state or engage in tax avoidance,” Tufts University’s Evan Horowitz testified to a panel of Beacon Hill budget-writers in December.

Even so, for Beacon Hill policymakers, there’s still a billion dollar surplus from the millionaires tax to play with, too, as state budget writers ready to write the spending plan for the fiscal year that starts this July. A revenue estimate recently agreed upon by Beacon Hill leaders points to $2.4 billion coming from million-dollar incomes.

“That’s a tremendous boon to the Commonwealth,” Page said.

The post The dividing line on millionaires tax money appeared first on CommonWealth Beacon.

THERE’S A LOT of millionaires at Gillette Stadium, the home of the New England Patriots, and apparently a lot of opinions about the state’s millionaire tax.

Robert Kraft, the owner of the team, opposed the tax. One of his companies donated $1 million in 2022 to the unsuccessful effort to defeat the ballot measure that created the 4 percent surtax on income over $1 million. 

And Bill Belichick, the former coach of the Pats, acknowledged in August that the tax was often a sticking point in negotiations with free agent players. “That’s Taxachusetts,” Belichick said. “Virtually every player, even the practice squad … even the minimum players are pretty close to $1 million. So once you hit the $1 million threshold, you pay more state tax in Massachusetts.”

At a forum on voting earlier this week at the JFK Presidential Library and Museum, defensive lineman Keion White revealed that players have political conversations and sometimes they get heated. But he said the millionaire tax is generally not a hot topic. 

“That’s not really a thing that comes up,” he said after the forum. “Personally, yeah, we pay an extra 4 percent. But Massachusetts does a good job of funding social programs, and we feel our money is going to a good cause.”

White, who reportedly signed a four-year contract with the Patriots totaling $7.8 million, acknowledged his positive feeling about the millionaire tax does not extend to everyone in the locker room. “There’s different levels of understanding of how policy and taxes and things work,” he said. “Some people see it at the surface level, which is not any knock to them, but (that is) why we have those conversations (about) how policies and taxes and politics work.”

The money from the millionaire tax goes toward education and transportation accounts. Advocates say that, so far, it’s paid for universal free school meals, free community college, child care, a low-income MBTA fare, and fare-free bus service around the state.

Walsh: Hockey players are humble

Former Boston mayor Marty Walsh, who visited 44 states as President Joe Biden’s labor secretary, is now the globe-trotting head of the Toronto-based NHL Players’ Association, jetting off to Prague and dealing with Russian members struggling to play due to their home country’s imperial ambitions.

But Walsh, who still keeps his home in Boston’s Dorchester neighborhood, was back on familiar ground earlier this month when he dropped by a meeting of the Quincy Chamber of Commerce for a fireside-style chat.

“You’re a union leader. You have 750 members,” he said simply, when South Shore Bank CEO Jim Dunphy, playing the role of moderator, asked about his multimillion-dollar job.

Once he became head of the NHL players union, he confided that he ran into problems as a longtime fan of the Boston Bruins. “I kept referring to the Bruins as ‘we’ when I started the job,” he said. “It still occasionally slips out. I do have a picture of Bobby Orr in my office. But I do have to be careful about the ‘we.’”

Pressed on the differences between dealing with Washington politicians and hockey players, Walsh quipped, “Hockey players are humble. Not every member of Congress is humble.”

But Walsh added that press coverage of him now isn’t that different from when he was in politics. “The Canadian press is rabid [about hockey], it’s like the political press here,” he said.

No women, people of color

It’s not certain yet who will be the next executive director of the Cannabis Control Commission but it will not be a woman or a person of color. 

The embattled state agency has been without an executive director since Shawn Collins quit the position in November 2023. About 170 people applied for the job, and four finalists remain – two people who have occupied leadership positions at the commission, the town administrator of Holliston, and a senior director at a health care company called Cityblock. All are men and present as white.

The makeup of the finalists is a bit eyebrow-raising, given the agency has social equity in its mandate and the fact that the commission has a track record of turmoil marked by racial and gender politics. Leadership and staff at the commission have flung complaints at each other for racial insensitivity, sexism, and bullying – and some of those complaints played a role in the firing of Shannon O’Brien as chair of the commission.

The commissioners will interview the four finalists on October 28 and will choose one by the end of that day. 

The post Political Notebook: Diverse tax talk at Gillette appeared first on CommonWealth Beacon.

BOSTON MAYOR Michelle Wu and business groups on Monday were locked in a staredown over her property tax proposal, which would shift a greater share of the property tax burden over to the commercial side in order to help the city’s residents avoid a spike next year.

“We have made significant progress over just the last few days,” Wu told reporters on Monday while leaving an unrelated event. “I’m glad to see that we’re getting close.”

The difference between the two current proposals from Wu and business leaders doesn’t appear that large. According to Wu, her proposal would save the typical single-family home about $21 a year in property taxes compared to the proposal put forward by business leaders.

Commercial property owners would pay $319 less on average under the proposal put forward by business leaders and slightly less than that under Wu’s plan.

Business groups, with the apparent support of Senate President Karen Spilka, an Ashland Democrat, are pushing for the bigger decrease saying it is justified by the decline in value of their properties.

A spokesperson for Spilka said Monday she is “encouraged” by the business community’s latest version of the proposal, and she “hopes productive conversations continue to reach consensus, as it will be difficult to get a final bill through the Senate without the full support of the business community.”

The statement effectively means business groups may have something akin to veto power over whatever proposal comes before the Senate.

Wu has revised her proposal several times since first introducing it back in April. The initial proposal had what’s known as a maximum tax shift of 200 percent on commercial businesses, up from the 175 percent allowed without a change in state law. The shift  would have also occurred over five years.

Boston has long taxed business properties at a higher rate than residential properties, resulting in a 60-40 split. But declining commercial property values, driven by the rise of remote work, have endangered that split, leading the Wu administration to push for a greater tax shift to businesses to smooth out an increase in residential bills.

The current proposal offered from the Wu administration is a 182 percent shift for fiscal year 2025, before drifting back to 175 percent over three fiscal years. Business groups are seeking a 181.5 percent shift for fiscal year 2025, meaning the two sides are 0.50 percent apart.

Business groups have made their own concessions. In a letter sent to Senate President Spilka and House Speaker Ron Mariano on Friday, the groups agreed to the idea of a property tax shift and backed off a previous call for Boston to tighten its belt through budget cuts.

The business groups are led by Greater Boston Chamber of Commerce CEO Jim Rooney; Tamara Small of NAIOP Massachusetts; Marty Walz, the interim president of the Boston Municipal Research Bureau; and Doug Howgate, the president of the Massachusetts Taxpayers Foundation.

Both Wu’s and the business community’s proposals require a brand new home rule petition, meaning the legislation would have to go through the Boston City Council, the House, the Senate, and the governor. When Wu modified her proposal for a 190 percent tax shift, in part through a draft executive order, it cleared the House but stalled out in the Senate.

Wu administration officials on Friday began circulating a draft home rule petition that included the 182 percent number and incorporated elements of the draft executive order. Rooney on Saturday sent an email to lawmakers asking them to lobby the mayor to take the 181.5 percent number and stop negotiating, Politico Massachusetts reported.

A Rooney spokesperson on Saturday described the 181.5 percent as the “final offer” from the business groups, and the 182 percent “will not be accepted.”

The Wu administration has said action on the legislation is necessary before members of the Boston City Council sign off on tax rates, triggering bills going out to property owners. That vote could occur in late November.

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THE CONSTITUTIONAL amendment creating the millionaire tax was pretty vague about what could be done with the revenue it would generate. The law said the money would provide “the resources for quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges, and public transportation.”

Despite the wide latitude afforded by the language, a budget-balancing maneuver by Gov. Maura Healey using millionaire tax money is drawing criticism on Beacon Hill and shaping up as the first real test of what exactly voters intended for the money.

In crafting the budget for the fiscal year that ended June 30, State House budget officials mutually agreed the millionaire tax would generate $1 billion for transportation and education. Instead, the tax generated $2.2 billion, leaving the state with a $1.2 billion surplus of millionaire tax funds.

At the same time, regular state tax revenues came in lower than expected, leaving the budget with a $225 million shortfall. In a closeout spending bill intended to resolve any lingering budget issues, Healey took $225 million from the millionaire tax surplus and used it to help pay for education and transportation programs that previously had been paid for using a blend of regular and millionaire tax funds.  By supplanting the regular funds with millionaire tax revenues, Healey planned to free up enough regular state tax revenues to bring the budget into balance.

The move raised eyebrows and eventually a letter of protest from a group of activists who felt Healey’s budget maneuver violated the intent of the millionaire tax constitutional amendment, which established a 4 percent surtax on any income over $1 million.

“We felt that this sets a bad precedent of finding accounts that have deficiencies using those Fair Share dollars to backfill or close the books or pay the bills on accounts that you’ve either overspent or underfunded. Potentially, that takes away from new investments going forward,” said Pete Wilson, the senior policy director of Transportation for Massachusetts, on The Codcast.

Wilson, who signed the letter of protest, used the term Fair Share to refer to the millionaire tax money, using the name of the coalition that led the campaign for the constitutional amendment.

Phineas Baxandall, like Wilson, is a big supporter of the millionaire tax. As policy director at the Massachusetts Budget and Policy Center, he did not sign on to the letter of protest but shared Wilson’s concerns.

“I was concerned about it because this is the first year of the Fair Share amendment rules that were set in the fiscal 2024 budget,” Baxandall said on The Codcast. “It’s a real good transparent system, as I was laying out earlier, but it needs to have a chance to roll out, to have a year to show that it can work and get established. I was troubled by seeing that maybe they were kind of messing with it even if  the principle of it, the law of it, all the dollars going to education transportation, were still OK. I’d still prefer a situation where this unambiguously is going [out] without tinkering at all with any of the rules.”

The House filed its closeout spending bill late last week, opting for a different approach from the governor. The House used surplus capital gains taxes, which normally would have gone into the state’s stabilization fund, to cover the budget deficit. The Senate hasn’t acted on the measure yet.

During the leadup to the vote on the millionaire tax, opponents raised concerns that the money would end up being mingled with other funds and not go, as promised, to support transportation and education projects. There was also a sense that the money would be used to fund new initiatives.

Baxandall said the law itself doesn’t say anything about “new” programs, but he said it was expected that the funds would be used for initiatives that wouldn’t happen otherwise. He outlined a “spectrum of newness,” ranging from free fares at regional transit authorities to free community college. “These are dreams that were only possible because of Fair Share,” he said.

He also said Massachusetts has used millionaire tax money to continue programs begun with federal funds during the pandemic. “We’ve done that in multiple instances only because we have the Fair Share funds to do it,” he said. “Now, does the fact that the federal money was paying for it before make it less new? I’d argue no. I’d say this is a new state commitment.”

But Baxandall acknowledged there are gray areas. For example, would it be acceptable to use millionaire tax money to support the MBTA’s operating budget, which has grown rapidly to support new and better service. “There are a lot of things that make this a very novel situation,” he said. “Is it new to have [the money go for]an operating budget? No. Where do you define the newness is a question I wish I had a ready answer for, but I think we’re still figuring this out.”

Wilson said the MBTA’s looming operating deficit is not a result of misappropriation of funds. He said it’s due to years of underfunding, the failure of ridership to rebound in the wake of Covid, and the need to step up repairs and hiring to build back service levels.

“Should you use Fair Share funds to solve the T’s operating deficit?” he asked. “I don’t think that’s out of bounds, but I don’t think that should be the only source.” 

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THE HOUSE on Thursday unveiled its closeout spending bill, and tucked inside was an interesting policy difference with the Healey administration.

Closeout spending bills are intended to deal with fairly random budgetary issues left over from the previous fiscal year. One of those issues for fiscal 2024, which ended on June 30, was a small deficit of $233 million. The question for budget officials was how to cover that deficit.

Gov. Maura Healey gravitated to money from the state’s surtax on income over $1 million, which is often called the millionaire tax. Revenue from the millionaire tax totaled $2.2 billion in fiscal 2024, $1.2 billion more than had been budgeted. 

The governor proposed taking $225 million of the excess millionaire tax money and using it to pay for child care grants, universal school meals, and operation funds allowing the state Registry of Motor Vehicles to implement the Work and Family Mobility Act, which permits residents to obtain a driver’s license regardless of their immigration status.

All three initiatives had been funded in the fiscal 2024 budget using a combination of millionaire tax revenues and general tax revenues. Using the surplus millionaire tax revenues to cover the general tax revenue portion of those budget items freed up general tax revenues that could then be used to balance the fiscal 2024 budget.

But Healey’s accounting maneuver aroused opposition from a group of activists who worried that it set a bad precedent.  “Using the [millionaire tax] dollars to balance budgets rather than make new investments in transportation and education moving forward risks damaging public trust,” said the activists in a letter to House and Senate officials. “We believe a much better approach would be to use funds from the stabilization fund, as historically has been done, to close out prior year’s budgets.” 

The House in its closeout spending bill took the critique to heart, leaving the surplus millionaire tax money untouched and proposing instead to use surplus capital gains revenue to cover the deficit.

Normally, 90 percent of capital gains revenue above a certain threshold goes into the stabilization fund. The governor proposed directing 45 percent to the stabilization fund and 45 percent to an escrow fund that could be used for one-time funding emergencies. The governor has largely drained the fund in recent years to cover funding shortfalls in the state’s emergency assistance program.

In its closeout spending bill, the House directs 43 percent of the excess capital gains funds to the stabilization fund and 47 percent to the general fund to cover the small fiscal 2024 deficit and a few other items. 

House officials confirmed the spending arrangement but didn’t go into detail on why they adopted that approach. “The House felt like using excess capital gains revenue was a better way to balance the budget than using [millionaire tax] funds,” one official said in an email.

A Healey spokesperson declined comment, saying the House’s close-out budget is still being reviewed.

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THE MASSACHUSETTS Department of Revenue announced a tax amnesty program that will run from November 1 to December 30, 2024. The program will forgive penalties for some taxpayers who are able to pay in full their tax balances and interest. When the Legislature included the amnesty in the state budget it projected raising $100 million in revenue.

The program will resolve the tax burdens of those who can make amends within the limited time window. A win-win, it seems. Except for those distressed taxpayers who cannot quickly come up with a lump sum to pay off their outstanding debts.

Amnesties targeting a class of individuals who can pay up do not take into account the individual circumstances of a taxpayer who can’t. Though not well known, Massachusetts law includes an offer in final settlement program that has been on the books since 1998. These individual settlements are akin to personalized amnesties. In our practice, however, tax debtors with very limited resources have a much better chance at negotiating their troubles away with the IRS than with the state.

The IRS offer in compromise program is not perfect, and it is definitely not as easy as late-night infomercials or scam artists make it seem, but tax practitioners know that the federal program is much more accessible and transparent than the state version. Unsurprisingly, the state accepts vanishingly few offers and taxpayers are often reluctant to even try. Thus, we propose that the IRS model be adopted in Massachusetts.

There is a pending bill that if passed would update our state offer program making it accessible and more equitable. “An Act Providing for Settlement in Tax Liability” received a favorable review from the Committee on Revenue and is currently pending (languishing?) in the Ways and Means Committee. It would give more guidance to the Department of Revenue, eliminate high minimum payments that are out of reach of many residents, and it would demand as a condition that taxpayers granted this relief remain in compliance with their tax obligations for three years or the deal is rescinded.

By rehabilitating taxpayers who are suffering undue hardship and for whom it is impossible to repay the entire debt, we would actually increase the tax rolls and foster future compliance. By taking into account their particular circumstances, we can create a more humane tax system. Taxpayers who cashed their retirement savings due to a job loss or a disabling illness are among those who would benefit from a fair settlement offer.

The Department of Revenue has developed a strong financial hardship program that can put a hold on collections, such as levying bank accounts or garnishing wages, but it does not abate any penalties or interest. It keeps thousands of taxpayers in limbo and uncollectable debts on the state books.

There are administrative costs associated with overseeing accounts on hardship status, subjecting taxpayers to periodic reviews of income and status renewals, resources that could instead go toward screening viable offers. As with any amnesty, the DOR will receive a partial payment, and the taxpayer gets precious peace of mind.

One-shot tax amnesties are not directed at low to moderate income residents. Our current law has not served these taxpayers either. By adopting the IRS model, the Legislature would increase revenue as well as make “fresh starts” accessible to more low- to middle-income taxpayers who are suffering.

The stress associated with tax debt cannot be overstated. The commissioner of the Department of Revenue has enormous collection powers, among them bank account garnishment, suspension of driver’s and professional licenses, or issuances of liens on property. Many taxpayers honestly trying to resolve their debts are often disheartened to find that the accumulated penalties and interest may be as large as the original tax owed. By settling in appropriate cases, more taxpayers will be encouraged to come into compliance, bringing in revenue to the Commonwealth, and the Department of Revenie saves administrative resources better used elsewhere.

Rather than pushing struggling residents deeper into hardship, we can strive toward a tax system that works for more working-class households and small business owners who have fallen on hard times. While we are glad for those taxpayers who will be able to sleep better after taking advantage of the upcoming amnesty, we would like to see more residents helped going forward by improving the offer in final settlement program. That would be a long-term win-win for both taxpayers and the Commonwealth.

Luz Arevolo and Angela Divaris are attorneys with the low-income taxpayer clinic at Greater Boston Legal Services.

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IT’S BEEN BEACON HILL’S favorite buzzword for the last few years and “has been kind of discussed to death,” as one policy expert put it, but a discussion among business leaders last week put a fine point on the complexity of the competitiveness conversation.

“There’s implications across the entire spectrum and I think that it’s not one thing … it’s this tsunami of little things that are having the biggest impact,” Sara Fraim, CEO of the Massachusetts Technology Leadership Council, said Wednesday during an event co-hosted by the Greater Boston Chamber of Commerce and the Massachusetts Taxpayers Foundation.

In the post-pandemic environment of weaker links between employment and residency and amid economy-wide cost pressures, Massachusetts and other states have put a particular emphasis on marketing themselves to both businesses and workers. Complaints about the high cost of living, traffic, unreliable transportation, and the business and tax environment carry even greater weight with policymakers at a time when it’s easier than ever for people to relocate.

But asking what it means to be competitive as a state and what Massachusetts should do to improve its standing will produce a wide variety of answers. Fraim said the “lens is so different” among the different tiers of the tech industry she speaks with, from startups to large enterprise companies. The people behind startups, for instance, generally want to stay in Massachusetts.

“But they have a hard time. They can’t afford rent — to live in or to work in — and they can’t afford to hire because they can’t afford the salaries to attract people so they can come and live here. … And then you talk about sort of that middle — those are people that are grounded here — they have their kids here, education, the social aspects of what makes Massachusetts amazing — they stay, [but] they can’t hire here,” she said.

“At the enterprise level,” Fraim added. “I had a dinner with several CFOs last night and what surprised me is that the surtax, the millionaire tax, came up in conversation — again — but with real implications. Somebody was saying that more than half of their leadership team, out of 11 people, VPs and up, six of them have left.”

Jane Steinmetz, the managing principal of EY’s Boston office, said it’s the “complexity” of the state’s competitiveness picture and the breadth of potential policy prescriptions that stands out to her.

“It’s not one factor that’s going to be the silver bullet that makes Massachusetts competitive vis a vis other states. It’s really going to be multifaceted,” she said. “So I believe that if we’re going to be competitive, we’re going to have to come up with solutions that really span the spectrum of the issues that help to retain our low-wage, middle-income and high-net worth individuals, that helps to retain and attract entrepreneurs, small businesses, and our large employers. And there’s just different factors that are going to come into play.”

The Mass. Taxpayers Foundation had that complexity in mind when it produced its new Massachusetts Competitiveness Index, a report released last month that aims to take a data-driven look under the state’s hood to help inform actionable public policy changes, said president Doug Howgate.

Howgate said the topic of competitiveness “has been kind of discussed to death,” but that much of the analysis isn’t all that constructive for “doing something about making sure Massachusetts continues to be competitive, continues to be strong in the areas that we’re historically strong at, and gets better in new areas.”

He said he hopes the index, which MTF plans to update annually, will help policymakers “find things here that start to connect to policy levers Massachusetts may have in the years going forward.”

When moderator and Greater Boston Chamber head James Rooney asked the panelists to give one, two, or three issue areas the state should tackle soonest, Fraim was quick with an answer.

“It’s got to be housing, like one, two and three,” she said. “It really does have to be housing, because if people can’t afford to live here and they do have the option to go someplace else, they will.”

Steinmetz said she has four kids going off to college “and all I hear is southern schools.” She said a recent Wall Street Journal article pointed out that a lower cost of living and “fun on social media” are helping fuel interest in schools in the south.

“But what really struck me is it says a lot of students are looking to southern schools. Two-thirds stay, so not only do we have this phenomenon going on with southern schools, two-thirds stay because of jobs and lower-cost housing,” Steinmetz said. “So we have to fix the housing problem so that they want to come back here and they can afford to come back here.”

Transportation also got significant attention during Wednesday’s event. Howgate noted that while financial issues like the cost of housing and paying taxes in Massachusetts are important, things like commute time have become costs that businesses and workers take into account more and more in the post-pandemic world.

“When you no longer have to be in the office every day, the fact that in Massachusetts you’re likely to be stuck in traffic for longer than you are in other places, that’s going to be a competitive disadvantage for Massachusetts,” he said.

Rooney, who has been involved in transportation policy for decades and also has been one of the state’s leading marketers as the head of the chamber and in his last job running the Mass. Convention Center Authority, told the audience that the Bay State’s traffic is a weakness that other states try to take advantage of.

“When I was in North Carolina, I asked the person who’s in charge of economic development for the state, ‘you know, what do they say about Boston and Massachusetts when they’re competing against us for something?’ And the guy didn’t hesitate, and he said, ‘I tell them about your commute time and traffic and congestion,'” Rooney said. “So having been in the business of competing with others, it’s not just telling your story. You weave in a little bit about your competitors too, and that’s what they say about us.”

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