Week Ending August 27, 2010

Governor Patrick, Senate President Murray and House Speaker DeLeo met last week to discuss how to allocate into the state budget the $450 million in Medicare reimbursement authorized for Massachusetts by the U.S. Congress earlier in the month. However, they did not make any announcement of a path forward.

Speculation has been rampant about whether the Legislature would convene in a special formal session this year or not to allocate the funding.  If they did reconvene, the Legislature could potentially take action on other legislation such as the expanded gaming bill.  In response to this debate, Speaker DeLeo said this week that a special formal session to take up the gaming bill is “not an option” mainly because Senate President Murray does not have enough votes to call a special session. Further, DeLeo said the $450 million in Medicaid funds could be appropriated in an informal session and does not necessarily require a formal session.

Complicating budget matters further, the office of Administration and Finance announced on Thursday that Massachusetts is already $300 million short in its Medicaid account and the deficit could be as much as $500 million below appropriations for the state’s Medicaid program. Whether or not part of the $450 million in federal funding will be used to help close that deficit remains under consideration by the Administration and the Legislature.

As part of the US House’s vote in mid-August, Massachusetts will also receive $204 million in education grant money. According to the Patrick Administration, the earmarks are as follows: $10.2 million for Boston, $5.2 million for Springfield, $3.1 million to Lawrence and $1.9 million to Worcester. Smaller amounts will be designated for local and regional school districts based on the state’s funding formula. Massachusetts was also selected this week as a winner of a share of $4.35 billion in education funds as part of the federal “Race to the Top” competition. As part of this program, the state’s school districts will be awarded $125 million for teacher training and evaluation, which they could receive as early as October.

The seasonally adjusted unemployment figures were released on Tuesday and provide an addendum to last week’s news that Massachusetts employers added more jobs in July than in any month over the past two decades. According to the new numbers, the statewide seasonally adjusted unemployment rate increased from 8.8% to 9.1% in July. The new statistics show that in the state’s 22 labor market areas, the jobless rate was up in 18 of these areas. Worcester, Fitchburg, Haverhill, Barnstable and Springfield all lost jobs compared to last year. Springfield was especially hard hit, with 8,900 fewer jobs in July compared to one year earlier. Boston, Cambridge and Quincy added a total of 10,400 jobs in the past year.

The Warren Group and the Massachusetts Association of Realtors both released reports this week which showed a dramatic decrease in single family home and condo sales in July. July had the lowest home sales volume of any month in the last 20 years and also saw the first drop for home sales in the last twelve months. Tim Warren, CEO of the Warren Group attributes the large drop in sales to the expiration of the homebuyer tax credit and said it could be a temporary dip or a potential sign of a declining market. Last month the median sale price for a single family home was still significantly higher than one year prior: $333,000, up from $310,000 in July, 2009.

John Nunnari, Assoc AIA
BSA/AIA MA Public Policy Director
jnunnari@architects.org
617-951-1433 x263
617-951-0845 (fax)

Week Ending August 20, 2010

State tax revenue figures from the first month and a half of the fiscal
year were announced this week, and Massachusetts collected 6.9% more
over the comparable period from FY2010. Through July and the first half
of August, the Department of Revenue collected $611 million, an increase
of $24 million from 2009. The higher revenue figures can be attributed
in part to a $42 million increase in month-to-date withholding tax
collections. Revenue Commissioner Navjeet Bal also made clear that the
July and August numbers do not include the potential increase in
economic activity, along with decrease in tax revenue, attributed to the
sales tax holiday that took place last weekend.

The first gubernatorial issues debate, organized by MassINC was held at
Suffolk University on Monday. The four candidates participating in the
debate were Republican Charles Baker, Treasurer and Independent Tim
Cahill, Democratic Governor Deval Patrick and Dr. Jill Stein of the
Green-Rainbow party. Billed as an in-depth single issue debate on Cape
Wind, the candidates were asked to give a two minute summary of where
they stand on Cape Wind. Of the four candidates, only Governor Patrick
was in support of the Cape Wind project. Patrick said he was in favor of
Cape Wind, and strongly so because it represented an emissions free,
reliable, locally generated renewable energy source. Charlie Baker made
clear his opposition to Cape Wind because of the already high
electricity costs borne by ratepayers. Cahill said Cape Wind was the
wrong approach because out of state companies will receive the vast
majority of Massachusetts tax subsidies. Cahill also made clear his
support for on-shore wind development, saying that on-shore wind is much
more efficient use of resources. In their closing statements, Charles
Baker said that Cape Wind will raise utility rates, Tim Cahill called
Cape Wind the “wrong project at the wrong time” and Patrick pointed to
the reliability of a long term power contract with Cape Wind and its
effect on stabilizing energy prices. The Governor’s tentative support of
nuclear power also made headlines following the debate.

Massachusetts employers added more jobs in July than in any month over
the past two decades. According to the Office of Labor and Workforce
Development, employers in the state added 13,200 jobs in July. This
total reflects the 19,200 jobs that were added in the private sector,
minus the 6,000 government jobs lost last month. The government job
losses resulted from the temporary Census positions, which had driven up
the number of state jobs earlier this year. Governor Patrick was quick
to claim success from Massachusetts’s investment in biotech, clean
energy and film production. His opponents, Republican Charles Baker and
Independent Tim Cahill, noted the significant job losses since Patrick
took office and the overall number of lost jobs in the past year.
Despite these gains, the unemployment level in Massachusetts for July
remained at 9%, unchanged from last month.

Legislative action remained light this week as the Legislature continued
holding informal sessions with few attendees who act on
non-controversial legislation.

John Nunnari