Withdrawal from rainy-day fund OK'd

By Michael P. Norton and Andy Metzger, State House News Service

Updated:
02/08/2013 08:32:17 AM EST

BOSTON -- House Republicans pressed to attach welfare system and drug-lab oversight riders to a spending bill Wednesday, but their quest for reforms was overwhelmed by Democrats who pushed through a time-sensitive bill that makes $115 million in new investments, drains $200 million more from the rainy-day fund, and calls on some agencies to make 1 percent budget cuts.

In their first prolonged debate of the new two-year session, House Democrats also turned back a Republican effort to shore up local aid accounts slashed in December by Gov. Deval Patrick, saying many of those accounts are larger than in the last state budget even after they were trimmed back by Patrick.

The House voted 141-13 for a bill delivering $44 million for the emergency shelter system, $25 million for public counsel services to eligible defendants, and $30 million to cover costs associated with an evidence-tampering scandal at a state drug-testing lab. Lawmakers said costs to taxpayers from the drug-lab scandal, which House budget chief Rep. Brian Dempsey called a "disgrace," could rise even higher.

The bill also freezes unemployment insurance rates to avoid a 28 percent, or $500 million increase on business owners this year. Lawmakers have frozen rates repeatedly in recent years to provide financial relief to employers, who have struggled to add jobs in the midst of a long, weak economic recovery.

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The Senate plans to debate its version of the bill on Tuesday. Under an order adopted Thursday, senators were instructed to file amendments to the bill by 5 p.m. on Friday.

The supplemental budget submitted by Patrick draws another $200 million out of the state's rainy-day fund and makes about $25 million in cuts to nonexecutive branch agencies on top of the $225 million Patrick slashed within the executive branch to help bridge a projected $540 million mid-year budget gap brought about by lower-than-expected tax revenues. The House jettisoned Patrick's request to further cut local aid by $9 million and did not include another $10 million in cuts that required legislative approval.

House Ways and Means Chairman Brian Dempsey said greater-than-expected January tax collections, which were $173 million above benchmark, were not a reason to forgo action, saying that the tax haul was a unique event, and there was a risk in putting off budget cuts that are part of the budget solution.

"I know most folks would prefer not to have to go forward with the idea of cuts to solve the problem. In fact any time we can prevent 9C cuts, I think it's always preferable," Dempsey said. "When you look at the revenues that have come in just yesterday for the month of January you get optimistic again about the balance of the fiscal year. I would respectfully suggest to the membership today that the action that was outlined by the administration are the correct response."

Dempsey said January's revenue numbers were related to actions taken around the so-called "fiscal cliff" around New Year's Day, and that if that increased tax revenue does not become a trend, spending cuts at the end of the fiscal year will be more drastic. Dempsey also lamented the $200 million draw from the state reserve fund and said he'd be more comfortable if the rainy-day fund balance topped $2 billion.

Even after the draw from the state's reserves, which comes in addition to the use of $350 million from reserves in the budget approved last summer, Massachusetts will have $1.2 billion in its rainy-day fund, making it one of only four states with balances in such funds of more than $1 billion, Dempsey said.

During debate Wednesday, several lawmakers noted that December and January tax collections have surpassed budget benchmarks by more than $300 million and questioned both the use of additional state reserves to support spending and the necessity of the budget cuts made by the governor late last year.

"There are those who have suggested that perhaps we can wait a couple more months to see how things go," Dempsey said. He said, "If we were to wait another month or two, or three, the problem potentially could be a lot worse, because then you're looking at 9C cuts in which you have fewer months for any line item to withstand that cut."

Patrick last December made unilateral budget cuts and asked for the $200 million rainy-day fund draw. At the time, tax collections were falling well short of budget benchmarks and the Patrick administration's plan was designed to address a $540 million midyear deficit.

"It's very encouraging that we're above, but we expect that April and June will not be as robust so we really have to wait and see what the rest of the numbers are," Senate President Therese Murray said Wednesday.

Murray, Dempsey and Rep. Viriato deMacedo, the ranking Republican on the Ways and Means Committee, all said they believe strong December and January tax collection totals may have been due to upper income residents selling off assets and taking other strategic steps in anticipation of capital gains and other tax rates increasing at the federal level in the new year.

Dempsey said that even after the draw from the state's reserves, Massachusetts will have $1.2 billion in its rainy-day fund, making it one of only four states with balances in such funds of more than $1 billion.

Dempsey said credit rating agency officials have applauded states that act quickly to address budget problems. Recalling the state's budget problems in 1989 and 1990, when Gov. Michael Dukakis was in office, Dempsey said, "The biggest problem was that they weren't taking action."

Noting the $30 million in the bill to deal with the after effects of an evidence tampering scandal at a state drug lab, Dempsey said lawmakers were "painfully aware of the Hinton drug lab disgrace. It's an outrage that bothers each and every one of us."

Democrats sunk Republican amendments seeking to shift oversight of the state's welfare program, task the Department of Public Health with paying costs, and restore funding in areas such as mitigation for municipalities that host prisons.

Rep. James Lyons, an Andover Republican who was appointed to the Joint Committee on Public Health after Wednesday's session, said that the Department of Public Health should be on the hook for the $30 million fund to cover costs associated with former Hinton drug lab employee Annie Dookhan's alleged manipulation of criminal evidence. Lyons, who called the DPH "totally and completely out of control" said that DPH had demonstrated it has programs that could be looked at for cuts. Lyons cited a regulation -- which was scuttled and overrode by state law before it went into effect -- which could have banned bake sales at schools and what he deemed a questionable $600,000 grant in 2010 to Fenway Health.

Speaking about the grant and reading from headlines he found online, as he later told the News Service, Lyons told his colleagues from the House floor, "Let me share with you some of that information: Project Party reveals sex hosts, recruits for orgies at public parks. Youthful sex party host tells Project Party that orgies are a giant leap of faith. Project Party sex host used Union Street Park Playground as an orgy waiting room. Resume says Project Party got $600,000 for sex studies."

Lyons only garnered the support of five other Republican colleagues -- Reps. Peter Durant, Ryan Fattman, Kevin Kuros, Marc Lombardo and Leonard Mirra -- on that vote. DPH officials and Fenway did not respond to requests for comment. The vote was 6 to 145.

The House also rejected an amendment creating a five-member state drug lab oversight board. The proposal, offered by Whitman Republican Rep. Geoff Diehl, also called on the board to ensure that drug labs in Massachusetts are accredited with the American Society of Crime Laboratory Directors' Laboratory Accreditation Board. The proposal was backed by 29 House members and opposed by 126. No one spoke against the amendment, which Diehl described as an accountability measure.

In other votes, some Democrats joined their colleagues across the aisle. Lyons gained the support of Democrats, Reps. Bruce Ayers, Tom Calter, Christine Canavan, Diana DiZoglio, Jim Dwyer, Colleen Garry and Dennis Rosa, in his bid to prohibit "self-declaration of residency" for people "seeking taxpayer-funded individual benefits."

Rep. Carolyn Dykema, D-Holliston, led the opposition to that proposal, asking whether that meant seniors would need to present identification to use a senior center, and asking what the punishment would be for senior center officials who did not enforce the requirement.

Lombardo said it was "interesting" that House members worked at finding reasons for certain reforms could not work.

The House sent to study another Lyons proposal to ban everyone but citizens and permanent residents from receiving in-state tuition rates for public higher education -- which would end Patrick's policy of providing young immigrants lower in-state public higher education rates if they've been granted "deferred status" under President Barack Obama recent deportation policy.

The study amendment evolved into a debate over procedure, as Lyons attempted to make the case for the underlying amendment and fighting government waste and was interrupted by Rep. Jeffrey Sanchez, D-Jamaica Plain, and others who objected that Lyons had not limited his comments to whether the vote should be reconsidered. A motion to reconsider the study vote failed along party lines.

Thirteen Republicans voted against passing the bill.

Rep. Brad Hill proposed a $500,000 school safety grant program that would have offered money to rural and suburban schools ineligible for similar federal grants. The House rejected the idea after Rep. Harold Naughton, D-Clinton, said that idea could be part of a comprehensive look at reducing gun violence.

Republicans also attempted to shift welfare fraud prevention to the Inspector General, and later changed that amendment to require the IG, attorney general and state auditor to develop a new oversight plan for the agency. Democrats defeated the amendment, as Dempsey said the oversight issue would be addressed, saying Speaker Robert DeLeo plans "to provide additional recommendations around this issue."

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