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Legislation as Filed

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View the Signed Filing Letter, Additional Filing Documents, and Legislation as a PDF pdf format of 10-15-08 9C Budget Legislation.pdf
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Text of Filing Letter

October 15, 2008

To the Honorable Senate and House of Representatives:

Pursuant to Section 9C of Chapter 29 of the Massachusetts General Laws, Administration and Finance Secretary Leslie A. Kirwan has advised me of a probable deficiency of revenue of approximately $1.4 billion with respect to the Fiscal Year 2009 General Appropriation Act and certain non-discretionary spending obligations, including snow and ice removal costs, health and human services caseload exposures, increased debt service and public safety costs. This report, the attached supporting documents, and the legislation I am filing with this report explain the budget reductions and other actions I have identified to close this projected $1.4 billion shortfall.

The most significant element of my plan is $1.053 billion in spending reductions and controls. This total includes a voluntary reduction of $1.17 million in the budget for the Governor's Office and similar voluntary reductions offered by the Legislature, the Judiciary, Constitutional Officers and independently elected officials. Additionally, many of the state's quasi-public agencies have offered funds to mitigate the impact of state cuts. I commend these valued partners for their unprecedented contributions and their leadership. Their voluntary reductions have helped to avoid the need for expanded 9C authority, and as a result we are able to address the shortfall without reducing local aid to the Commonwealth's cities and towns.

Other reductions are being made pursuant to Section 9C to accounts within the Executive Department and through other spending controls. The Section 9C reductions as reflected in the attached spreadsheet total approximately $624.5 million. The other spending controls will result in savings of $146 million from deficiencies not being funded and $52 million from pension reconciliation.

To arrive at these reductions, I have engaged my Cabinet Secretaries, their department heads and staff. My direction to them was to identify reductions to balance the budget while to the extent possible preserving our key targeted investments including those in education, clean energy, health care reform and infrastructure; to avoid making any reductions in accounts comprising "Cherry Sheet" aid to cities and towns; and to preserve, and if possible, enhance the safety net of programs for the Commonwealth's most vulnerable individuals and families. I recognize that the programs slated for reduction or elimination also represent valued programs and services, and the impact of these cuts will be felt by the citizens who rely on them. In the spirit of shared responsibility, I have made reductions in some of my own priority areas including municipal policing and universal pre-kindergarten grants. I have directed Secretary Kirwan to begin implementing the 9C reductions immediately.

To implement the voluntary reductions and address the remainder of the deficiency, I am filing for your consideration the enclosed emergency supplemental budget legislation, entitled, "An Act Making Appropriations for the Fiscal Year 2009 to Provide for Supplementing Certain Existing Appropriations and for Certain Other Activities and Projects." In addition to implementing the voluntary budget reductions agreed to by the Legislature, the Judiciary, Constitutional Officers and independently elected officials, the legislation sets forth the following additional components of the fiscal plan.

First, I propose a modest extension of the state pension funding schedule, from 2023 to 2025. Accounting rules would permit extending the schedule from 2023 to 2028, but I propose using only a portion of that flexibility to address the current budgetary challenge. I am fully committed to maintaining the stability of the state's pension system, and I will soon file a comprehensive legislative proposal to enhance the system, including steps to curb pension abuse, adopt a new funding schedule and address unfunded retiree health care liability.

Second, I propose drawing down an additional $200 million from the Commonwealth Stabilization Fund. This would bring the total of stabilization funds used to balance the FY09 budget to $601 million, approximately equal to the amount of reserve funds budgeted in FY08, a year that saw positive revenue growth. Given the uncertainty of the economy, I feel it is important to retain the balance of our valuable reserve fund for adjustments that may need to be made later in the year should revenues fall further.

Third, the legislation authorizes transferability among line items within the executive offices and within the trial court. This transferability is essential to helping agencies manage their reductions.

Finally, the bill establishes tiers of state employee health insurance contributions based on ability to pay; an extension of the deadline for municipalities to join the GIC; authorization for additional spending on snow and ice removal; the transfer of certain appropriated funds into the General Fund; and the enactment of those provisions from the Municipal Partnership Act relating to telecommunications companies. The bill also authorizes the Division of Insurance to assess certain police training expenses against property and casualty insurance companies that write motor vehicle policies.

Along with the proposals contained in the legislation, we have identified $168 million in additional revenues not previously budgeted for the fiscal year, including $100 million in anticipated Department of Revenue judgments and settlements, $55 million in federal grants under the Temporary Assistance for Needy Families program, and $13 million in revenue anticipated under the proposed Municipal Partnership Act provisions pertaining to telecommunications companies.

Related to this plan and to the Commonwealth's economic recovery, I will be filing additional legislation in the coming weeks and months. These initiatives will include but not be limited to an Article 87 Reorganization Plan to carry out certain agency changes to make state government more efficient, the comprehensive pension reform referenced above, and an act to dismantle the Massachusetts Turnpike Authority and reassign its assets and operating responsibilities to address urgent deficiencies.

Taken as a whole, these steps will ensure that the Commonwealth aggressively solves this projected shortfall and responsibly plans for the future. The plan reflects shared sacrifice by many state leaders, and I am indebted to them for their leadership. The plan also anticipates shared sacrifice by our citizens, businesses and non-profits. While we will all feel the impact of the current national and international economic upheaval, I am confident that the steps we take today - and, most importantly, the unparalleled talent and resourcefulness of our people and institutions - will keep the Commonwealth moving forward to a better future.





Respectfully submitted,
Deval Patrick

Full Text of Legislation


AND EIGHT


MAKING APPROPRIATIONS FOR THE FISCAL YEAR 2009 TO PROVIDE FOR SUPPLEMENTING CERTAIN EXISTING APPROPRIATIONS AND FOR CERTAIN OTHER ACTIVITIES AND PROJECTS.

Whereas, the deferred operation of this act would tend to defeat its purposes, which are forthwith to make supplemental appropriations for fiscal year 2009 and to make certain changes in law, each of which is immediately necessary to carry out those appropriations or to accomplish other important public purposes, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

To provide for supplementing certain items in the general appropriation act and other appropriation acts for fiscal year 2009, the sums set forth in section 2 are hereby appropriated from the General Fund unless specifically designed otherwise in this act or in those appropriation acts, for the several purposes and subject to the conditions specified in this act or in those appropriation acts, and subject to the laws regulating the disbursement of public funds for the fiscal year ending June 30, 2009. These sums shall be in addition to any amounts previously appropriated and made available for the purposes of those items.

SECTION 2.
EXECUTIVE OFFICE OF PUBLIC SAFETY AND SECURITY

Municipal Police Training Committee
8200-0210 For the estimated expenses of the operation of expanded annual, specialized and statutorily mandated training programs for veteran and reserve municipal police officers conducted by the municipal police training committee; expanded recruit training conducted by the municipal police training committee; development and delivery of distance learning programs for municipal police officers; development and execution of a standards and evaluations program for training courses and instructors of, or certified by, the municipal police training committee; for the estimated cost of fringe benefits associated with this training; and, notwithstanding any general or special law to the contrary, for the training fee for new recruits of municipal police departments and those law enforcement officers employed by agencies of the commonwealth who exercise police powers, including but not limited to environmental police officers and campus police officers of the University of Massachusetts and state colleges who exercise police powers; provided, that 100 per cent of the amount appropriated in this item shall be assessed upon property and casualty insurance companies writing motor vehicle insurance policies in the commonwealth and paid within 30 days after the date of notice of such assessment from the commissioner of insurance. The commissioner of insurance may make and collect an assessment to pay for these estimated expenses against all property and casualty companies licensed, admitted, authorized or approved by the commissioner of insurance. The commissioner of insurance shall apportion the estimated charges among all such companies on the basis of direct and written premium of each insurance company in the most recent calendar year and shall assess them for the same on a fair and reasonable basis. The commissioner of insurance shall subsequently apportion actual costs among all such companies and shall make assessment adjustments for the same for any variation between estimated and actual costs. The assessment adjustments shall be apportioned on the basis of direct and written premium of each insurance company in the most recent calendar year and assessed on a fair and reasonable basis. The estimated and actual costs shall include an amount equal to the cost of fringe benefits as established by the secretary of administration and finance under section 6B of chapter 29…………………………………………………$3,100,000


Department of State Police

8100-0515 For the estimated expenses of hiring, equipping and training state police recruits to maintain the strength of the state police, provided that 100 per cent of the amount appropriated in this item shall be assessed upon property and casualty insurance companies writing motor vehicle insurance policies in the commonwealth and paid within 30 days after the date of notice of such assessment from the commissioner of insurance. The commissioner of insurance may make and collect an assessment to pay for such estimated expenses against all property and casualty companies licensed, admitted, authorized or approved by the commissioner of insurance. The commissioner of insurance shall apportion the estimated charges among all such companies on the basis of direct and written premium of each insurance company in the most recent calendar year and shall assess them for the same on a fair and reasonable basis. The commissioner of insurance shall subsequently apportion actual costs among all such companies and shall make assessment adjustments for the same for any variation between estimated and actual costs. The assessment adjustments shall be apportioned on the basis of direct and written premium of each insurance company in the most recent calendar year and assessed on a fair and reasonable basis. The estimated and actual costs shall include an amount equal to the cost of fringe benefits as established by the secretary of administration and finance under section 6B of chapter 29…………………………………………………$3,200,000


SECTION 3. Chapter 6 of the General Laws is hereby amended by inserting after section 116D the following section:-

Section 116E. Sums for the estimated expenses of providing annual in-service, specialized and statutorily-mandated training programs conducted by the municipal police training committee for veteran and reserve municipal police officers and for those officers employed by agencies of the commonwealth who exercise police powers and receive such training from the municipal police training committee, including but not limited to environmental police officers, and campus police officers of the University of Massachusetts and state colleges who exercise police powers; new recruit training provided by the municipal police training committee; development and delivery of distance learning programs by the municipal police training committee; a standards and evaluations program for training courses and instructors of, or certified by, the municipal police training committee; the development and updating of training programs, including curricula by the municipal police training committee; hiring, equipping and training new state police recruits; and the development and operation of a state police cadet program, including the hiring, equipping and training of state police cadets, all as may be appropriated therefor, and in addition the estimated cost of fringe benefits associated with this training, hiring, and employment, shall be paid to the commissioner of insurance by property and casualty insurance companies writing motor vehicle insurance policies in the commonwealth, within 30 days after the date of notice from the commissioner of insurance of such estimated expenses. The commissioner of insurance may make and collect an assessment to pay for these estimated expenses against all property and casualty companies licensed, admitted, authorized or approved by the commissioner of insurance. The commissioner of insurance shall apportion the estimated charges among all such companies on the basis of direct and written premium of each insurance company in the most recent calendar year and shall assess them for the same on a fair and reasonable basis. The commissioner of insurance shall subsequently apportion actual costs among all such companies and shall make assessment for any variation between estimated and actual costs. The assessment adjustments shall be apportioned on the basis of direct and written premium of each insurance company in the most recent calendar year and assessed on a fair and reasonable basis. The estimated and actual costs shall include an amount equal to the cost of fringe benefits as established by the secretary of administration and finance under section 6B of chapter 29. Any such assessment collected in any given fiscal year but not expended by the municipal police training committee or the department of state police for the purposes set forth in this section may be retained by the commissioner of insurance for use by the municipal police training committee or department of state police in the following fiscal year. The retained assessment shall be credited against the assessment to be made in the following year, and that assessment shall be reduced by the amount of this credit.

SECTION 4. Section 22C of chapter 32 of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by striking out, in line 29, the words "as of June thirtieth, two thousand and 23" and inserting in place thereof the following words:- on June 30, 2025.

SECTION 5. Section 19 of chapter 32B of the General Laws, as amended by section 4 of chapter 67 of the acts of 2007, is hereby further amended by striking out, in the second sentence of paragraph (e), the words "October 1" and inserting in place thereof the following words:- December 1.

SECTION 6. Section 5 of chapter 59 of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by inserting after the word "than", in line 220, the following words:- a telephone or telegraph corporation taxed under section 52A of chapter 63 or.

SECTION 7. Said section 5 of said chapter 59 of the General Laws, as so appearing, is hereby further amended by inserting after the words "two A", in line 223, the following words:- , other than a telephone or telegraph corporation,.

SECTION 8. Clause Sixteenth of said section 5 of chapter 59 of the General Laws is hereby further amended by striking out paragraph (2), as inserted by section 2 of chapter 173 of the acts of 2008, and inserting in place thereof the following paragraph:-

(2) In the case of a business corporation subject to tax under section 39 of chapter 63 that is not a manufacturing corporation, or a telephone or telegraph corporation taxed under section 52A of chapter 63, all property owned by the corporation other than the following:- real estate, poles, underground conduits, wires and pipes, and machinery used in the conduct of the business, which term, as used in this clause, shall not be considered to include stock in trade or any personal property directly used in connection with dry cleaning or laundering processes or in the refrigeration of goods or in the air-conditioning of premises or in any purchasing, selling, accounting or administrative function.

SECTION 9. Clause Fifth of section 18 of said chapter 59, as appearing in the 2006 Official Edition, is hereby amended by adding the following 2 sentences:- Poles, underground conduits, wires and pipes of telecommunications companies laid in or erected upon public or private ways and property shall be assessed to their owners in the cities or towns where they are laid or erected. For purposes of this clause, telecommunications companies shall include cable television, internet service, telephone service, data service and any other telecommunications service providers.

SECTION 10. Section 39 of said chapter 59, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following 5 sentences:- The valuation at which the poles, wires and underground conduits, wires and pipes of all telephone and telegraph companies shall be assessed by the assessors of the respective cities and towns where the property is subject to taxation shall be determined annually by the commissioner of revenue subject to appeal to the appellate tax board, as provided in this section. Other taxable personal property of telephone and telegraph companies shall be valued and assessed by the assessors of the respective cities and towns where the property is subject to taxation, in the same manner as other personal property is valued and assessed under this chapter. For purposes of sections 39 to 42, telephone and telegraph companies shall include only those telecommunications companies which own and operate two-way voice communications service over wires or cables. Towers and monopoles used to support machinery and equipment for wireless communications shall not be considered poles under this section and shall be considered part of the real estate subject to valuation and assessment by local assessors. Notwithstanding the preceding sentence, a telephone or telegraph corporation shall be subject to property tax assessment on machinery used in the conduct of its business and leased to it by a corporation that is not a telephone or telegraph corporation, and the telephone or telegraph corporation shall include such property on its list to the board of assessors where the property is situated under section 29 of this chapter.

SECTION 11. Section 26 of chapter 302 of the acts of 2008 is hereby amended by striking out the figure "$1,045,863,158" and inserting in place thereof the following figure:- $981,863,158.

SECTION 12. Section 27 of said chapter 302 of the acts of 2008 is hereby amended by striking out the figure "113,600,000" and inserting in place thereof the following figure:- $49,600,000.

SECTION 13. Section 28 of said chapter 302 of the acts of 2008 is hereby repealed.

SECTION 14. The comptroller shall, in consultation with the secretary of administration and finance and the secretary of health and human services, transfer $64,000,000 from the Commonwealth Care Trust Fund to the General Fund.

SECTION 15. Notwithstanding any general or special law to the contrary, the secretary of administration and finance may authorize the transfer of funds from any item of appropriation for fiscal year 2009 for any executive branch agency to any other item of appropriation for that agency or within its executive office. No transfer authorized by this section shall exceed 7 per cent of the amount appropriated for an item. The transfer may be made only with the written approval of the heads of the sending and receiving agencies and of the secretary of the executive office of each agency involved in the transfer.

SECTION 16. Notwithstanding subclause (a) of clause (xxiii) of the third paragraph of section 9 of chapter 211B of the General Laws, or any other general or special law to the contrary, the chief justice for administration and management may, from the effective date of this act through April 30, 2009, transfer funds from any item of appropriation within the trial court to any other item of appropriation within the trial court. These transfers shall be made in accordance with schedules submitted to the house and senate committees on ways and means. The schedule shall include the following: (1) the amount of money transferred from 1 item of appropriation to another; (2) the reason for the necessity of the transfer; and (3) the date on which the transfer is to be completed. A transfer under this section shall not occur until 10 days after the revised funding schedules have been submitted in written form to the house and senate committees on ways and means.

SECTION 17. Notwithstanding chapter 150E of the General Laws and as provided in section 8 of chapter 32A and for the purposes of section 14 of chapter 32A, the commonwealth's share of group insurance premiums for active state employees and their dependents where the employees' annual salary is less than $35,000 shall be 85 per cent; the commonwealth's share of premiums for active state employees and their dependents where the employees' annual salary is $35,000 or greater but less than $50,000 shall be 80 per cent; and the commonwealth's share of premiums for active state employees and their dependents where the employees' annual salary is $50,000 or greater shall be 75 per cent. The commonwealth's share of premiums for active state employees and their dependents shall be determined annually by the active state employee's salary used or collected by the commission to calculate premiums for additional insurance established in section 10A of chapter 32A and disability insurance established in section 10D of chapter 32A. The commission shall notify the house and senate committees on ways and means by April 1 of each year of the cost of the commonwealth's projected share of group insurance premiums for the next fiscal year, and the group insurance commission may pay premium and plan costs for political subdivision employees, retirees and their dependents who are enrolled in the group insurance commission's health plans subject to the commission's regulations.

SECTION 18. Notwithstanding any general or special law to the contrary, the department of highways and department of conservation and recreation may, for the purposes of accommodating timing discrepancies between the available appropriation in items 6030-7201, 6010-0002 and 2820-2000 of section 2 of chapter 182 of the acts of 2008 and expenditures associated with snow and ice control, including the purchase of materials and equipment and the payment of third party vendors, incur liabilities and expenses and the state comptroller may certify for payment invoices in excess of the appropriation in an amount not to exceed $80,000,000, but any such payment that would result in a deficiency shall be pre-approved by the secretary of administration and finance, in consultation with the secretary of transportation and public works and the state comptroller.


SECTION 19. (a) Notwithstanding any general or special law to the contrary, the comptroller may, on or before June 30, 2009, transfer up to $200,000,000 to the General Fund from the Commonwealth Stabilization Fund, but the comptroller shall instead transfer a lesser amount if the secretary of administration and finance so requests in writing.

(b) The comptroller, in consultation with the secretary of administration and finance, may take the overall cash flow needs of the commonwealth into consideration in determining the timing of any transfer of funds. The comptroller shall provide a schedule of transfers to the secretary of administration and finance and to the house and senate committees on ways and means.

SECTION 20. (a) Notwithstanding any general or special law to the contrary, the appropriations for fiscal year 2009 under section 2 of chapter 182 of the acts of 2008 shall be reduced as follows: (1) the judiciary shall be reduced by $22,104,009; (2) the office of the governor shall be reduced by $1,173,129; (3) the office of the secretary of state shall be reduced by $3,800,000; (4) the office of the treasurer and receiver-general shall be reduced by $388,000; (5) the office of the state auditor shall be reduced by $1,050,493; (6) the office of the attorney general shall be reduced by $500,000; and (7) the legislature shall be reduced by $9,000,000.

(b) Notwithstanding any general or special law to the contrary, the appropriations for fiscal year 2009 under section 2 of chapter 182 of the acts of 2008 shall be reduced as follows: (1) the Suffolk district attorney's office shall be reduced by $424,441; (2) the northern district attorney's office shall be reduced by $370,160; (3) the eastern district attorney's office shall be reduced by $232,478; (4) the middle district attorney's office shall be reduced by $242,480; (5) the Hampden district attorney's office shall be reduced by $217,217; (6) the northwestern district attorney's office shall be reduced by $137,632; (7) the Norfolk district attorney's office shall be reduced by $224,825; (8) the Plymouth district attorney's office shall be reduced by $196,661; (9) the Bristol district attorney's office shall be reduced by $201,385; (10) the Cape and Islands district attorney's office shall be reduced by $101,642; (11) the Berkshire district attorney's office shall be reduced by $97,477; and (12) the district attorneys' association shall be reduced by $584,436.

(c) Each department or office with an appropriation that has been reduced under this section shall provide a detailed listing of each reduction by line item to the secretary of administration and finance by October 31, 2008.


(d) The comptroller, at the direction of the secretary of administration and finance, shall take all necessary action to implement this section by reducing the allotment for the line item amounts identified by each department and office under subsection (c).

SECTION 21. Notwithstanding any general or special law to the contrary, the comptroller shall transfer the following amounts to the General Fund after notice from the secretary of administration and finance that sufficient funds are available: (a) $5,000,000 from the e-Health Institute Fund, established by section 6E of chapter 40J of the General Laws as inserted by section 4 of chapter 305 of the acts of 2008; (b) $5,000,000 from the Massachusetts Alternative and Clean Energy Investment Trust Fund, established by section 35FF of chapter 10 of the General Laws, as inserted by section 10 of chapter 140 of the acts of 2007; and (c) $5,000,000 from the Massachusetts Life Sciences Investment Fund established by section 6 of chapter 23I of the General Laws, as amended by section 13 of chapter 130 of the acts of 2008. Transfers under this section shall be made no later than June 30, 2009.

SECTION 22. Notwithstanding any general or special law to the contrary, and subject to section 9 taking effect as of January 1, 2008 and sections 6, 7, 8, and 10 taking effect on January 1, 2009, the amount of General Fund Supplement to Hold Harmless Lottery Aid to be distributed and paid to each city and town under section 3 of chapter 182 of the acts of 2008 shall be reduced by 50 per cent of the amount of fiscal year 2009 tax base growth certified by the commissioner of revenue under subsection (f) of section 21C of said chapter 59 as being attributable to the assessment of the poles and wires owned by telephone and telegraph companies and erected on public ways. For purposes of this section, telephone and telegraph companies are corporations subject to valuation by the commissioner under section 39 of said chapter 59.

SECTION 23. Section 9 shall take effect as of January 1, 2008 and shall apply to property taxes assessed for fiscal years beginning on or after July 1, 2008. Notwithstanding any general or special law to the contrary, for fiscal year 2009, the assessors of any city or town may assess taxes for any personal property taxable under section 9 not included in the fiscal year 2009 annual tax assessment to its owner in the manner and within the time provided by section 75 or 76 of said chapter 59.

SECTION 24. Sections 6, 7, 8 and 10 shall take effect on January 1, 2009.

SECTION 25. Section 17 shall take effect on January 1, 2009.