Budget Debate Begins, While Reforms Continue

APRIL 27, 2009: The Massachusetts House of Representatives begins debate on the Fiscal Year 2010 state budget this week. While the budget does include a full 3% COLA for state and teacher retirees and does not change state retiree insurance contribution rates, our Association is closely monitoring developments on Beacon Hill.

Association officials are deeply concerned about a proposed 25% reduction in local aid, along with a $1.9 billion cut in overall state spending. Tax receipts have plummeted in the past six months as unemployment numbers worsen. What long-term impact the recession may have remains to be seen.

Unions representing active public employees are fighting to prevent a sharp increase in health instance costs that has been proposed in the House budget. The FY 10 state budget would increase employee contributions toward state Group Insurance Commission health plans to a 70/30 split. Most active state employees now contribute 15% toward their insurance. Local employees and retirees who are now or soon will be insured under the GIC are not impacted. Insurance contribution rates for local retirees and employees are governed by local Public Employee Committee (PEC) agreements.

Local police unions, who are close allies of our Association, are in a pitched battle to restore some $51 million in educational incentive funds to the budget. The funds, which pay for the state’s share of the “Quinn Bill”, are essential to the salaries of local police officers.

“This week the focus, at least in the House, will be almost entirely on the budget,” predicted Association President Ralph White. “Local aid is a big concern to us. Without those funds the cities and towns will be searching for areas to cut spending. This could leave local insurance plans vulnerable to cuts and cost shifting.

“We are also closely monitoring developments with the Pension, as well as Transportation Reform legislation. Both bills are being negotiated before House and Senate conference committees. These are very busy times on a number of fronts.”

Pension Reform legislation, which does not impact current retirees, aims to close a handful of so-called loopholes in the public retirement law that allow some employees to increase their retirement allowance. Differing versions of the proposal have now passed the Senate and House. A conference committee has been appointed to negotiate a compromise bill. Senate conferees are Steven Panagiotakos (D-Lowell), Thomas McGee (D-Lynn) and Scott Brown (R-Wrentham). House conferees include Robert Spellane (D-Worcester), Michael Rodrigues (D-Westport) and Todd Smola (R-Three Rivers).