Keeping You Informed

January 2012 Business Brief

In This Issue

Governor Releases Proposed Budget for Fiscal Year 2013

After Lengthy Holiday, Both House and Senate set Schedules

Senate Supports House in the Unemployment Insurance Rate Freeze

Labor and Workforce Development Committee to Present Legislative Solution on Independent Contractors and Employee Classification
 
Treasurer Grossman Beefs Up Loans to Increase Small Business Banking Partnerships  

Bleak Figures on Youth Employment in Massachusetts

Governor Releases Proposed Budget for Fiscal Year 2013

Days after his State of the State address, Governor Deval Patrick released his $32.3 billion spending plan for fiscal year 2013. Not surprisingly, the budget includes items related to health care, education, and job creation. 

The budget, which will be revised by both the House and Senate before it is returned to the Governor in the summer, would withdraw and spend $400 million from the state's rainy day fund, leaving it with just over $1 billion.

Some budget highlights include: 

$78.5 allocated to the Department of Veterans Services.

$15 million decrease in funding for MassDOT. It forecastthat the Registry of Motor Vehicles will likely take the brunt of the cuts.

New revenue opportunities from changes to the tax law by: increases to cigarette taxes and expanding the definition of the bottle bill to include containers for non-carbonated drinks like water, juices, coffee-based drinks and sport drinks.

Maintaining the state’s “universal” health care coverage as again the Commonwealth’s Mass Health programs take up a significant amount of funding.

$145 million hike in local aid funding.

After Lengthy Holiday, Both House and Senate set Schedules

After the long holiday break, both the House and Senate set their tentative schedules for formal sessions for the rest of the legislative session. In the month of January, the Senate has planned to hold four formal sessions. 

The schedule, which is subject to change, lists three formal sessions in February: February 2, February 9 and February 16 and five in March: March 1, March 8, March 14, March 22, and March 29. Also, a Constitutional Convention is slated
for March 14. 

The House on the other hand has scheduled only two formal sessions for this month, but has planned a rigorous schedule for the month of February, when they will meet every Wednesday. No further scheduled has been provided for the House.

It is important to note that under Joint Rule 12A, the last possible day for formal sessions during this calendar year is Monday, July 31, 2012. Joint legislative committees are required by legislative rules to report by March 21 on most of their pending bills. 

Senate Supports House in the Unemployment Insurance Rate Freeze

The Senate unanimously supported House efforts to approve the $131 million supplemental budget and the effort to freeze the unemployment insurance scheduled hike in insurance costs for Massachusetts businesses. 

With the full support of the legislature, Massachusetts businesses will be spared an increase of more than $500 million in unemployment insurance taxes preventing a 25% hike that was scheduled to take effect in April. If the rate freeze passes, it would mark the fourth straight year lawmakers have intervened to prevent a scheduled increase in the rate. 

Without the freeze, businesses across the state would see an average jump of $141 per-employee in their unemployment tax insurance, bringing the total cost to $935 per worker. 

The supplemental budget increases fiscal 2012 midyear spending to about $282 million. The supplemental budget will be sent to the Governor once differences in the House and Senate are reconciled. Two other supplemental budgets passed in October and November of last year.

Labor and Workforce Development Committee to Present Legislative Solution on Independent Contractors and Employee Classification

The Vice- Chairs of the Joint Committee on Labor and Workforce Development, Senator Michael J. Rodrigues (D-Westport) and Representative Lori A. Ehrlich (D-Marblehead) announced the creation of a working group on independent contractor and employee classification. The working group will bring together interested parties from all sides of the issue and intends to find a practical and reasonable solution to this serious policy problem. 

The 2004 law has brought unintended consequences to a diverse group of professions, including accountants, artists, couriers, financial planners, graphic designers, publishers, realtors and others. The newly developed working group will
review the variety of positions received by the Committee through testimony and intends to provide decision in hopes of ultimately rectifying employee misclassification. 

Over the next few months, the working group plans to accept additional public comments in order to provide the Joint Committee on Labor & Workforce Development with an eventual legislative solution.

Treasurer Grossman Beefs Up Loans to Increase Small Business Banking Partnerships

Under the Small Business Banking Partnership, Commonwealth businesses can now request up to $10 million, up from the previous $5 million amount, thanks to Treasurer Steven Grossman.

Presently, 37 banks participate in the program which moves Treasury reserve funds that are usually held by large national and international financial institutions and deposits them in Massachusetts’ community banks. In exchange for the infusion of new deposits, the banks sign a Memorandum of Understanding (MOU) signaling their intent to enhance their loan portfolios to small credit-worthy Massachusetts businesses.

Grossman reported that a number of banks have indicated that they have utilized either all of most of the $5 million deposit they had initially received, hence the need for the increase. The first deposits under the program were made in
May of last year, and this latest expansion of the Partnership will provided additional capital to community banks that have a demonstrated pattern of small business lending. Since being sworn into office, the Treasurer has traveled
across the state extensively to promote the substantial benefits of the program with bank officials.

All deposits that the Treasury makes in these community banks are protected through either insurance or collateral. In return the interest rate on the money is comparable to what the Commonwealth receives from out-of-state financial institutions.

Bleak Figures on Youth Employment in Massachusetts

Currently, Massachusetts has one of the lowest levels of youth employment and employment opportunities since.  In 2000, over 45 percent of youths held a job at some point in the year, but now that number has crept below 28 percent. 

President Obama and various major U.S. corporations announced they plan to join the Youth Jobs Coalition in a campaign to create 180,000 new youth jobs and alter the downward trend of youth employment. So far, the Youth Jobs Coalition has had a major impact nationwide on increasing state funding for youth jobs by $3.75 million last year.

A supporter of the President’s efforts, Governor Patrick’s budget includes state funding for two new youth jobs programs called YouthWorks and School-To-Career.