Friday, January 25, 2008

Stating the Obvious...

Yesterday, Governor Deval Patrick gave his State of the Commonwealth address before a joint session of the Massachusetts General Court, Lieutenant Governor Tim Murray, and other elected offiicals. The governor used the speech as an opportunity to highlight some areas where action is needed in the state. He tried to focus on where there is agreement, but he did spend time on issues where differences remain.

Patrick attempted to offer a more optimistic tone in his speech despite continued concerns about the economy. His mantra during the evening was "Massachusetts is on the move."

After praising Bay Staters in Uniform in Iraq and Afghanistan. Thereafter, Patrick urged that the legislature move on bills that would encourage green technology development and pursue new energy options. Furthermore, the state shot up from 48th to 15th in job creation. Given dismal numbers nation
wide, this was probably not too difficult. Between new energy and Life Sciences, Patrick stated that Massachusetts stood to gain speed in job creation.

Placing his new revenue issues mid-speech, Patrick was essentially burying two controversial issues that have stalled in the House. Patrick called again for casino legalization. WMassP&I has already stated its concerns on the issue, particularly with the placement of a casino near urban centers. While Patrick has touted the potential from the "resort" industry, with cities and towns nationwide looking to gambling to solve problems, it will not be long before outside existing places like Foxwoods, Las Vegas, and Atlantic City, "resort" development will be limited to casino parlors. The "resort" part will become unnecessary as most gamblers will be local. Who would travel to Massachusetts to gamble when you can do so elsewhere?

That being said, WMassP&I is not prepared to lose out to Indian Casino Gambling as Florida did. Any legalized gambling must be restricted to Indian reservations so the state can still get its share. Without state legalization, federal law provides a remedy for Indian reservations to legalize gambling without state approval.

Patrick also reiterated its pursuit of local options meals taxes. Technically, this also include hotel occupancy taxes, but as long as local add-on taxes are reasonable WMassP&I does not see this as any threat. However, meals taxes will harm cities that are
desperate. Suburbs, except with massive strip mall developments, are unlikely to pass these, especially if it would impede further development. Instead it would only serve to harm cities, which will enact the taxes in desperation (or delusions of grandeur to build a oceanfront City Hall) and harm competiveness. In addition, without a server minimum wage increase, it will impact servers' wages. Restaurant patrons may be disinclined to tip as well with more tax to pay. It may seem foolish, and it is, but people are often times cheap enough. In Connecticut, servers are paid $5+ dollars an hour compared to $2.63 in MA. In addition, although Patrick tries to call this an effort to relieve property taxes, it is really just shifting it. Furthermore, although proposition 2 1/2 has been a great handicap, local options could be an invitation for reckless local spending. Can anybody say world's most egotistic mega structure?

Patrick also announced formation of a Governor's Council of Economic Advisers and Transportation Bureaucracy streamlining. He reiterated his call for eliminating telecom property tax exemptions. From the outside this seems like a no brainer, but
Verizon provides many good-paying jobs in Massachusetts. Higher taxes may encourage them to reduce employment levels and reduce their investments in Massachusetts.

In addition, the International Brotherhood of Electrical Workers and Communication Workers of America are facing fresh contract negotiations this spring/summer with expiration in August. These may be some of the most contentious
after the 2003 negotiations in which the unions pulled a fast one on Verizon by in fact not striking and forcing Verizon to pay union workers and keep scab replacements on hand. Patrick must consider this in his calls for telecom tax reform. Perhaps in exchange for securing jobs in Massachusetts and permitting the tax change, Patrick could support a statewide franchise for Verizon's new FIOS cable service and high-speed Internet.

Overall the speech was not bad. Patrick was not visibly upset by the inertia of his agenda, but tried to phrase the debate around the people wanting action. Despite his mandate, however, given some of the surprise support Patrick had for some issues, like gambling, he should not be shocked that while Bay Staters want action they may not want his game plan.

In his defense, the legislature has not been very fair to his ideas. Used to running the Statehouse like Parliament, the Speaker and Senate President have acted more like prime ministers than congressional leaders of a coequal branch. Using autocratic
obstructionism to keep out bad policy is little more than a stalling tactic. Legislators, House Speaker DiMasi in particular, will need to form coherent arguments to defend their position and stop the bad policies by convincing people that this state cannot afford to kill the goose to get the golden eggs, whether it be with gambling or higher local taxes.
***See more photos from the State of the Commonwealth Address HERE!

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