Tag: Taxes

The Rundown – March 2023

I would apologize for not writing a February edition of “The Rundown”, but honestly there wasn’t enough to write about at the state and mainly the federal level to justify a rundown.

Federal Recap

At the federal level, over the last month and a half, Members of Congress have basically spent their time creating sounds bites for news stations and click bate twitter posts. For an example, On Presidents Day, Georgia Rep. Marjory Taylor Greene, wrote a tweet saying “We need a national divorce. We need to separate by red states and blue states and shrink the federal government. Everyone I talk to says this. From the sick and disgusting woke culture issues shoved down our throats to the Democrat’s traitorous America Last policies, we are done.” And she doubled down after on Fox news saying that a national divorce would be better than a civil war. Now as a child of divorced parents I can say from experience that while it’s great in the beginning for the child (U.S. citizens) beginning when both parents fight to show that they love their kids more by showering them with presents (tax cuts, tax relief etc.), that part ends quickly and the child is just left with a broken home (divided country) and a new bike. Have we not learned from history that, that never works. Yugoslavia in the 90s, Korea and Ireland in the early 1900s, and let us not forget……. The U.S. and the civil war. How would it even work? Where would purple states like Georgia, Arizona and Nevada, go?? What about interstate commerce. Anyway, I feel like that sums up what Members of Congress have been up to the last month and a half.

Look Ahead

Having to think about what lies ahead at the federal level honestly scares me The Republican will continue to use their majority in the House to hold hearing after hearing on topics that would make the Biden administration and Democrats look bad in the run up to the next presidential election. Democrats will continue to get nothing passed in the Senate where they hold a slim majority, and we will probably continue to hear rumors about more people entering the field for the Republican presidential race. Which all means more hearings and sounds bites from members such the human equivalent of a rat with hair gel, Rep. Matt Gaetz, and the growing example for why we need mandatory cognitive test for senior members, Sen. Dianne Feinstein.

I would recommend that people stay away from the news for a couple of months and just enjoy that both the Celtics and the Bruins are the best teams in their sports. As for me, as a born and raised New Yorker I can’t enjoy Mass sports teams so I will keep track of the non-sense and will keep you all updated if anything is noteworthy. I will be using the federal section over the next couple of months to vent my frustrating that we actually pay these people 100,000s of dollars to do nothing but be on fox news and MSNBC. So keep that in mind and maybe just skip to the State section of these rundowns

State Recap

Finally, to the state level where for the first time this year things are actually happening. For a brief recap before we get to the Governor’s budget and tax relief packages, the legislature finalized leadership and committee position in the Senate and the House. It took the legislature almost a full 2 months to finalize the positions, which means that the legislature could finally get down to business and start voting on bills that could have a real impact and not just legislation that names a bridge.

The House passed its first significant bill of the session, voting 153-0 to pass a House Ways and Means redraft of Governor Healey’s FY2023 supplemental budget, includes elements of her $1 billion “immediate needs” bond bill. The $353 million billon, which also includes $585 million worth of bond authorizations, temporarily extends pandemic-era programs such as enhanced food assistance and free school meals. It also gives $44 million to the emergency shelter system to help offset medical costs for migrant families. The Bond authorizations include $400 million for the MassWorks grant program and $104 million for the Clean Water Trust, among other initiatives. 27 amendments were filed but quietly disregarded behind closed doors, which included $50 million in bond authorization for the Massachusetts Technology Park Corporation.

Governor Healey Tax Relief Package

Governor Healey jumped into the game as well in the end of February when she released an aggressive $859 million tax relief proposal, restarting a heated debate on Beacon Hill on tax relief. The plans main focus is to help keep people in the state by relieving the growing cost of living in Massachusetts and boost the state’s economic competitiveness. Healey included in her package a couple of proposals that were previously recommended by former Republican Governor Charlie Baker, including lowering the short-term capital gains tax from 12% to 5% and creating a new estate tax credit of up to $182,000, which would effectively eliminate the estate tax for all estates valued up to $3 million, higher than the current level of $1 million.

The largest share of the proposed relief, about $458 million, would come in the form of a new child and family tax credit, which would create a $600 refundable credit for each qualifying dependent, including children younger than 13 years old, adults who are disabled, and seniors. To help with rising rent and housing cost in Massachusetts, Healey is reviving a proposal to boost the maximum rental deduction from $3,000 to $4,000, which would affect 880,000 renters, and to double the maximum allowable credit for the senior circuit breaker credit, assisting 100,000 households. The package also includes a number of smaller proposals including increasing the apprenticeship tax credit to $5 million, including an exemption for employer assistance with student loan repayment, expanding the dairy tax credit from $6 to $8 million, expanded commuter transit benefits, and more.

Healey’s office said the tax package would carry a total cost in fiscal year 2024 of $859 million. It said the measure has a net cost of $742 million because the $117 million in affected short-term capital gains tax revenue by law would need to be placed into reserves and could not be spent as part of the annual budget. Healey also said that the relief package will be factored into her recently released budget proposal for FY24. It is now up to the legislature to decide if they want to increase or decrease the Governor’s tax proposal. The legislator previously shut down their own tax relief bill last year after they realized that Massachusetts owed nearly $3 billion in excess tax revenues back to taxpayers under a voter-approved law known as Chapter 62F. Since then, the legislature has shown little interest to re-address a tax relief package.

Governor Healey FY24 Budget Proposal

To kick off the month of March with some flare, Governor Healey released her first state budget proposal. Healey’s administration described the proposal as a “downpayment” on its goals of making Massachusetts a more affordable place to live, tackling climate change, and preparing students for careers in an evolving economy. The $55.5 billion budget proposal would increase spending by 4.1% over the current year (FY23) budget, which would account for the expected the growth rate in state revenues in FY2024 when accounting for $1 billion from the state’s new millionaire income surtax. Healey plans to use the $1 billion from the new surtax to increase funding for education ($510 million), including $100 million in childcare grants to providers, and transportation ($490 million), which includes $181 million in MBTA capital investments. The budget would also pump new money towards energy and environment initiatives, human service provider rates, housing programs and much more.

The proposal also includes a $3 billion increase for funding for EOHHS, compared to what former Governor Charlie Baker proposed in his budget proposal last year. Though MassHealth, would be funded in Healey’s budget at $19.8 billion, which would have a net cost to the state of $7.9 billion. That’s a decrease of $1.9 billion on a gross basis or $254 million after reimbursements compared to fiscal year 2023 spending projections. The decrease is driven, the administration said, by “caseload decline and intentional distribution of funds across fiscal years to mitigate a revenue cliff due to the end of the federal COVID Public Health Emergency.” As expected, Healey’s proposal did not include funding for the Enough Pay to Stay rate add-on. The Enough Pay to Stay rate add-on has never been included in a Governor’s proposal, if it were to be included, it would be added in later by the legislature.

Look Ahead

The release of Governor Healey’s budget recommendations marks the beginning of a long budget cycle that will see a lot of Healey’s proposed budget items be either changed or taken out. The House generally puts out, debates, and passes its own budget proposal in April, followed by the Senate in May. Those two budgets then typically spend much of June in a conference committee before lawmakers agree to a compromise version. Fiscal year 2024 begins July 1, but Massachusetts lawmakers seldom have the budget done in time for it to be in place for the start of the fiscal year, which could result in supplemental budgets being passed till they pass a full budget for FY24.

It is also now up to the legislature to decide if they want to increase or decrease the Governor’s tax proposal. The legislator previously shut down their own tax relief bill last year after they realized that Massachusetts owed nearly $3 billion in excess tax revenues back to taxpayers under a voter-approved law known as Chapter 62F. Since then, the legislature has shown little interest to re-address a tax relief package. We will have to wait and see what happens next.

The Rundown – October 2022

Federal Recap

Jake Krilovich flew down to D.C. to meet with members of the Massachusetts delegation to gain their support for The Preserving Access to Home Health Act of 2022, which would delay CMS’s from implementing their proposed 7.69% payment cut, and an additional $2 billion in “clawback” cuts to home healthcare services. We are happy to report that Congressman McGovern will be signing onto the bill, marking the first member of the Massachusetts delegation to co-sponsor the bill. We want to thank everyone who took the time to reach out to their Member of Congress asking for their support of this important bill.

In superficial news, House Speaker Nancy Pelosi said in early September that the House would work to introduce and pass a bill that would place new restrictions on lawmakers stock trading abilities. To absolutely no one’s shock the bill that was introduced received weak support from legislators on both sides of the aisle, killing any prospect of a stock trading bill in the near future. Who would have thought that lawmakers who currently subjected too little to zero oversight/penalties for the stocks they purchase, would be open to more regulations on their actions. Both Republicans and Democrats have been under constant scrutiny over the last couple years for their sometimes-blatant conflict of interest when it comes to buying stocks. As an example, 4 legislators  sold stocks in early 2020 after private briefings on the risks of a coronavirus outbreak in the United States. An analysis by The New York Times showed that from 2019 to 2021, 97 representatives and senators or their immediate family members reported trades of stocks, bonds or other financial assets that could have been influenced by committees they were serving on. Abigail Spanberger (D-VA-7), leading proponent of banning trading by members of Congress called out party leadership for not supporting a stock trading bill more aggressively. Rep. Spanberger called the delay an example of why her party needed new leaders in Congress, branding it “a failure of House leadership.”

“I’m livin’ life, do or die, what can I say I’m 23 now, but will I live to [own a home]? The way things is going, I don’t know”– Coolio (RIP the legend). The Biden administration and legislators have been closing following the Federal Reserve’s (Fed) continuous interest rate hikes, which they say is to combat rising inflation. The Fed raised the federal funds rate again in September by .75 percentage points, bringing the benchmark rate to a range between 3% and 3.25% for the first time since 2008. The increase interest rates have caused the housing and stock market to plummet over the last month, with the S&P tumbling down 9.3% in September and average mortgage rate to sky-rocket over 6%, the highest since 2008. Increased interest and mortgage rates have made the prospect of younger people owning homes a pipe dream with no immediate hope around the corner.

Finally, just before the end of school bell was about to ring, legislators quietly (maybe too quiet) struck an agreement on short-term spending measure before a midnight deadline to avoid a government shutdown. Only 10 Republicans voted in favor of the bill along with all Democratic members of the House. The Senate had approved the measure a day earlier, on September 29. The agreement funds the government through December 16th, when Congress would be hoping to pass an omnibus bill to fund the government for fiscal year 2023. The stopgap measure includes $12.3 billion in emergency economic and military aid for Ukraine, $1 billion in heating assistance for low-income families through the Low-Income Home Energy Assistance Program, $20 million for the water crisis in Jackson, Mississippi, billions in disaster aid, and over $112 million for federal court security.

Look-Ahead

“As I walk through the valley of the shadow of death, I take a look at my life and realize [just the campaigns are left]” – Coolio (couldn’t resist). October marks the final stretch of campaigning for the upcoming midterm elections in November. One more month of having to endure annoying campaign ads during commercials breaks of the Patriots games (is it just me? or is everyone else also getting ads for New Hampshire races). A year ago, experts widely predicting a red wave to crash the elections with Republicans winning both the House and Senate easily, but that is no longer the case. Recent polls have shown that Democrats have scraped their way back in both the House and Senate races. Polls show that Republicans are only slightly favored to take back the House while in a shocking turn of events Democrats are slightly favored to hold control of the Senate (Herschel Walker has some explaining to do to his party). But if 2016 taught us anything it’s that we need to take all polls with a grain of salt. These are only projections; at the end of the day no one really knows what will happen on election day.

We are continuing to focus our attention on CMS’s annual proposed rule for Medicare home health services, that included a proposed 7.69% permanent cut, and an additional $2 billion in “clawback” cuts for CY2023. While we are excited that Congressman McGovern signed on, we need to keep the momentum going. HCA will continue to work with members of the delegation in hopes to get more members to sign on with Congressman McGovern. We need your help to get this bill over the finish line. Power comes in numbers. We are asking everyone to continue to reach out to their member of Congress to urge them to support this bill. Please use this action alert to write to your member of Congress urging them to support the Preserving Access to Home Health Act of 2022.

Lastly, Jerome Powell, Chair of the Fed, signaled the Feds plan to lift interest rates by another 1.25 percentage points before years end, which would bring the federal funds rate to 4.25-4.5% just in time for holiday shopping. Considering the Fed only has two meetings left, that could mean another 75-basis point hike in November followed by a half-point increase in December. Looking even farther into the future, the Fed is bracing to lift rates to 4.5-4.75 percent by next year. Six officials, however, see rates soaring to 4.75-5.0 percent in 2023, which would be the highest since 2007 if it comes to fruition. On Monday the United Nations warned that the Fed and other central banks risk pushing the global economy into recession followed by prolonged stagnation if they keep raising interest rates. The agency estimated that a percentage point rise in the Fed’s key interest rate lowers economic output in other rich countries by 0.5%, and economic output in poor countries by 0.8% over the subsequent three years.

State Recap

Extra! Extra! Read all about it! The Home Care Alliance was quoted in two recent articles that were published by State House News and the Commonwealth about the Enough Pay to Stay legislative add-on rates and the Home Care Alliances fight for better base rates through the upcoming rate review for home health aides. The Home Care Alliance is working tirelessly to grow awareness for the need for a proper rate review and for base rates to be increased to a level that can sustain the industry that allows for providers to meet growing demand for services.

Like the Red Sox, things in Massachusetts State House were mostly quiet in September. State legislators continue their never-ending negotiations on a final economic development bill. the $4 billion package includes amongst other provisions, $1 billion in tax rebates and reforms. Senate budget chief Michael Rodrigues told 1420 WBSM this week. “I do expect we will [be] able to pass an economic development bill in the neighborhood of maybe $2.5 billion,” Rodrigues said, forecasting a bottom line lower than the combined surplus and American Rescue Plan Act spending in the original bill.

Governor Baker has spent the last month on a press tour as he plans to leave office when his current term ends. This past week Baker made his final annual address to the Providers’ Council, highlighting all he has done over the last 8 years. Baker highlighted  the saga he went through as a candidate for governor and then as governor to increase Chapter 257 provider rates. “Chapter 257 was enacted in 2008 and it’s just a bunch of letters and numbers. But it was supposed to be a framework and that framework was supposed to ensure that human service organizations were adequately funded from that point forward. It didn’t get funded in 2009. It didn’t get funded in 2010 — by the way, those of you who have really long memories, when I ran for governor in 2010 I said we would fund Chapter 257,” Baker said. “It didn’t get funded in ’10, it didn’t get funded in ’11, it didn’t get funded in ’12, it didn’t get funded in ’13 and, in fact, by the time we were all running for office in 2014, the provider community was spending precious resources on a lawsuit to force the commonwealth to implement its own statute and live up to the requirements and the commitments that were made in Chapter 257.” By May of 2015, Baker said his administration had struck an agreement with providers that laid out the state’s commitments very specifically. “And that agreement has paid off,” Baker said, adding that his administration has overseen $813 million in incremental rate increase for human service providers through Chapter 257 since 2015.

Last month I reported that the MBTA shut down the orange and green line for a full month, and that I was highly skeptical that it would re-open in a month like they promised. Well I was wrong….. but not fully. Both the orange and green line re-opened a month after closure as promised, but with limited service. And by limited, I really mean limited. As someone who takes the orange line to work. Missing your train means the difference between being on time and being 20 minutes late to work. MBTA is still suffering from massive labor shortage which has caused them to reduce services. MBTA also has not thrown out the possibility of closing other lines for further repairs.  So technically things are better with the T, but I think that just goes to show how bad things have been recently.

A report released on in September by the Massachusetts Health Policy Commission (HPC), an independent state agency charged with monitoring health care spending growth in Massachusetts, showed a surprising drop in health care spending in Massachusetts in 2020 for the first time since implementation of a landmark cost control law in 2012. HPC report shows that from 2019 to 2020, statewide total health care spending per capita fell 2.4 percent, bucking seven straight years of annual growth, while total health care spending per capita also decreased nationally in 2020, but at a smaller drop of 0.3 percent compared to the 2.4 percent drop in Massachusetts. HPC officials contend that this downward trend is only an anomaly and that they do not view the shift as meaningful progress toward containing prices. The spending growth that dominated recent years is “likely to continue” on an upward trajectory in 2021 and beyond, HPC analysts wrote in their report.

Look-Ahead

Just like I reported in my piece last month, everyone will be focusing on the upcoming elections in November. Everyone will be watching the race between Democrat Maura Healey and Republican Geoff Diehl for Governor.

Healey, 51, currently serves as attorney general, a position she’s held since 2014. If elected Healey would be the first woman elected governor in the state’s history. Diehl, 53, is a former state House Representative, who unsuccessfully challenged Senator Elizabeth Warren for her Senate seat in 2018. Originally from Texas, Diehl has the backing of the state Republican party along with Trump’s. Diehl is considered a more moderate alternative for Republican voters in the primary.

With everyone focusing on the upcoming election and the state legislator currently in informal session, I do not expect much action to happen at the state house in October. At most we would see movement on the economic development bill and possibly (I can only hope) the announcement of when sports betting will becoming legal in Massachusetts.  It’s been two months sense a Governor Baker signed a bill allowing for sports better and regulators are yet to come up with a timeline for when legal wagering might start in Massachusetts. In the meantime, everyone will just have to survive on fantasy sports and survival pools.

HCA will continue to closely track bill that are important to our industry, including the Licensure bill (H.4471) and a rate setting bill (S.774). While the chances are low, HCA has been meeting with legislators and their staff to urge them to take up and pass these bills during informal session. We will provide updates on the bills as needed.

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