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A Bit Of Deduction Reasoning On Beacon Hill

Jan 13, 2018 05:55AM ● Published by State House News

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Marijuana's major medical use is the alleviation of pain and anxiety - and after this week, Gov. Baker and his budget-writing team might consider availing themselves of the nearest dispensary.Recap and analysis of the week in state government

But they'll need to bring cash...

One would think with revenues performing decently and the economy in great shape, spending planners could ride those trends through a fairly agreeable and straightforward budget process, even in an election year charged with ferocious partisanship.

Ah, but a much more compelling trend strengthened this week: governors and lawmakers in high-wage, high-tax states across America unveiling and advancing plans to sidestep, circumvent, and contravene the effects of federal tax reform on state taxpayers and tax collections.

Gov. Andrew Cuomo of New York declared the Republican tax law an act of "economic civil war" on high-income, high-property value states like his, and Massachusetts, and promised to promote measures to protect upper-middle income earners from the hit they're about to take as the state and local tax (SALT) deduction is capped at $10,000. The California Assembly is working on a plan to let people make, and then deduct, donations to a new fund to offset the SALT deduction reduction. And the movement is just getting started as budget clocks tick nationwide.

The politically-driven countervailing proposals overlay a fiendishly-nuanced accounting situation to begin with. Every millionaire who can no longer deduct much of her state income tax on the federal form nonetheless gets a wonderful windfall from the new tax brackets. In states like Maryland, lots of state tax deductions are linked to federal equivalents - and that actually means more revenues for state treasuries, not less.

State revenue department officials haven't made clear yet if that's the case in Massachusetts, and if it is, officials may want to take the money and run for re-election on a platform of preserving services with a revenue-neutral sort of response to all the changes and complexity. Everyone who pays taxes is simultaneously considering whether to modify their behavior, and Baker's budget is due in 12 days.
Republican Gov. Larry Hogan of Maryland has already advanced legislation unlinking state deductions from the federal rules, in order to eliminate the state-level windfall there and lower state tax bills. So far, Gov. Baker's done nothing of the sort - it may not be possible or necessary anyhow. The effects of tax reform aren't really about politics or nuance, not at the budgetary policy level. The governor, and later the Legislature, have to quantify the unknowable and hope they guess right as they set a top line for fiscal 2019. Then it'll be right back to the politics.

So you can see why some pain relief might be in order - and all kidding aside, people who really are using pot to ease their distress report it's a powerful antidote to debilitating symptoms. Surely many are looking forward to the day, just around the corner, when people suffering milder affiliations of daily stress and care can more easily join them in seeking relief via the ancient weed, perhaps making tightly-wound Massachusetts a somewhat mellower place.

Actually, wait, no - hang on there, people. Because in the past fortnight's other maddeningly complicating development, U.S. Attorney General Jeff Sessions eliminated a Justice Department guidance resolving the conflict between federal law, under which marijuana is illegal, and state laws, under which increasingly it is not. Then Monday, newly-appointed Massachusetts U.S. Attorney Andrew Lelling said he "cannot provide assurances that certain categories of participants in the state-level marijuana trade will be immune from federal prosecution."

Start-ups HATE it when they might go jail, and Lelling's declaration he's going to prosecute if ordered to do was an extreme buzzkill for an industry just getting organized, both in the marketplace and the halls of regulation. The immediate effect of Sessions' and Lellings' pronouncements: a majority of medical-pot dispensaries, operating legally under state law, lost their ability to accept debit cards as transaction processors disengaged from what might be treated now as criminal enterprise.

So that threw THAT particular burgeoning sector of the economy into total turmoil, even though the Cannabis Control Commission did issue a 10-page guidance document for municipalities Thursday to let them know what it expects from communities hosting new dispensaries. Beyond the basic question of whether anyone new will want to enter the sector for the time being, the $500 million in new legal pot sales next fiscal year was projected to generate $50 million in state revenue, conservatively. But will budget-writers really keep that money on the table if the people moving large quantities of marijuana are liable to busted at any time? There's a word for this sort of situation, and that word is: "Oy."

Baker maintained his unflappable approach to the turmoil this week. While individuals taxpayers and corporations are sizing up the immediate impacts of the law on their own operations, Baker observed that it'll be years before tax reform's effect on the economy is properly known. He continued more or less running against Trump - and he might as well, because for the time being he's got no one else to run against though people are trying to run against him.

To be sure, Jay Gonzalez and Setti Warren were going at Baker full time and full force, and Bob Massie continued inveighing from the far left, the three Democrats trying to make the case that Baker's squishiness on the issues is failing Massachusetts voters. The problem is, their efforts are not making them noticeable to the vast majority of those voters, as far as the MassINC Polling Group can tell. MIPG released a WBUR poll Monday showing the Democratic trio has an average name recognition of 27 percent. Meanwhile, Baker enjoys a favorable rating of 74 percent, never mind universal name recognition.
So, understandably, Baker did not have a lot to say about his critics' helpful suggestions on the travails of the T - but he made sure to get in his weekly condemnations of the way the president is running the country.

Baker said he will not have Massachusetts impose a work requirement on able-bodied Medicaid recipients, after the federal Centers for Medicaid and Medicare Services issued guidance intended to help states do just that. A number of states, including Maine and New Hampshire, are already pursuing such a requirement, which advocates for the recipients view as cruel and punitive.

And he reiterated his objection to a Trump-administration expansion of plan to allow offshore oil drilling. Matthew Beaton, secretary of energy and environmental affairs, told the News Service Thursday, "I think we have made it very clear under no circumstances would we support offshore drilling off the coast of the Commonwealth." Whether that objection will suffice to block new drilling, time will tell.

With all the anti-Trump folderol, and there's always plenty in Massachusetts, it was surpassing strange to see congressman Ed Markey standing almost shoulder to shoulder with the President in the Oval Office Wednesday. Markey was on hand as Trump signed the senator's International Narcotics Trafficking Emergency Response by Detecting Incoming Contraband with Technology - INTERDICT - bill. It equips border patrol agents with fentanyl-detecting devices; Trump said Markey's bill was "an important step to halt the flood of deadly drugs that are pouring into our country like never before." Markey, who lambastes Trump approximately as often as most people check their smartphone, thanked the president for his signature.

Another, erstwhile, president made a routine but simultaneously exceptional appearance Thursday, as Sen. Stanley Rosenberg (D-Amherst) returned to public view after resigning his presidency Jan. 4 in the face of an ethics investigation. Rosenberg was warmly greeted as he attended farewell ceremonies for former senator and newly-installed Lynn Mayor Tom McGee Jr. He said he is separated from his husband Bryon Hefner, whose alleged misconduct caused Rosenberg and the Senate so much woe, and that along with the rest of the state, he awaits the findings of a probe as to whether he violated Senate rules by countenancing Hefner's behavior. Rosenberg's acknowledged lack of clarity about his own future was a fitting coda of uncertainty for the week.


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