January 2020

Legislature Closes FY19 with Supplemental Budget; Includes Water Infrastructure Funding

As reported by the State House News Service, the Massachusetts legislature passed a supplemental budget to close out fy19 in mid-December.  The supplemental budget, also known as a “deficiency budget,” was comprised of $541 million, which was significantly less than previous iterations of the bill that ranged from $723 million to $853 million. Instead of spending more of the surplus, the budget bill deposited $587 million into the state’s “rainy day” fund, which now has a balance of approximately $3.45 billion.

As originally filed, Governor Charlie Baker included funding for the Commonwealth’s overall water infrastructure needs, addressed the presence of per- and polyfluoroalkyl substances (PFAS) in certain water supplies, and the discovery of lead in school water fountains.  Specifically, the Governor proposed allocating $8.4 million for testing for PFAS in local communities, as well as $20 million for beginning to address the same.  The Governor also reiterated his commitment to closing the water infrastructure funding gap by including an additional $35 million for the Clean Water Trust’s contract assistance line-item.  Finally, the Governor indicated his interest in allocating $5 million of previously appropriated funds for addressing lead in schools throughout the Commonwealth.  Both the Massachusetts House of Representatives and Massachusetts Senate embraced the same programs in their passage of the legislation.

Unfortunately, the fiscal picture for the upcoming year began to crowd into the supplemental budget deliberations.  At a Joint Committee on Ways and Means revenue hearing in December, the Massachusetts Taxpayers Foundation President Eileen McAnneny warned legislators that the state appears poised to return to the slower revenue growth rates of FY16 and FY17, rather than the “super-charged” growth rates of FY18 and FY19.  The organization projected a more limited revenue growth rate — 2 percent in FY20 and 2.5 percent in FY21.  This type of news, which was reiterated by other economists and revenue focused entities, forced a rejiggering of funding priorities.

As a result, the supplemental budget was scaled back to ensure greater savings in the short term.  The new budget appropriated over $4.2 million for PFAS testing and $10.6 million for PFAS remediation programs.  It also included $9.05 million for the Clean Water Trust in unfettered funds for addressing the program’s efforts to close the water infrastructure funding gap.  Finally, the funding plan included $5 million for the remediation of lead from school drinking water supplies throughout the Commonwealth.

UCANE, as well as other interested organizations, will continue to push for providing more funding to close the Commonwealth’s $18 billion to $21 billion water infrastructure funding gap.  In the meantime, UCANE appreciates the work of the House and Senate as well as the Governor and Lt. Governor in bringing this additional funding to fruition.

To review the final supplemental budget for FY19, please visit: https://malegislature.gov/Laws/SessionLaws/Acts/2019/Chapter142

 

States Lay out TCI Framework; Details About Increases in Actual Fuel Prices Still to Follow

As reported in a presentation to all interested parties in mid-December, the bipartisan group of Northeast and Mid-Atlantic jurisdictions that make up the Transportation and Climate Initiative (TCI) invited public input on a new draft proposal for a regional program to establish a cap on global warming pollution from transportation fuels and the investment of millions of dollars annually to achieve additional benefits through reduced emissions, cleaner transportation, healthier communities and more resilient infrastructure.

The draft “Memorandum of Understanding” (MOU)  builds on a program framework made public on October 1, 2019. A final MOU is expected in the Spring of 2020, following additional public input and analysis. At that time, each of the 12 TCI states and the District of Columbia will decide whether to sign the final MOU and participate in the regional program, which could be operational by 2022.

The TCI is a regional collaboration of 12 Northeast and Mid-Atlantic states and the District of Columbia that seeks to improve transportation, develop the clean energy economy, and reduce carbon emissions from the transportation sector. The participating states are: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia.

The initiative builds on the region’s interest in energy efficiency and clean energy issues, and its programs to reduce carbon emissions in the power sector, which have resulted in the region becoming one of the most energy efficient areas in the nation.  Known as the Regional Greenhouse Gas Initiative, many of the same member states turned their attention to transportation fuels. Recognizing that more than one third of all carbon emissions come from the transportation sector, participating states started taking action through working groups focused on regional priorities, such as clean vehicles and fuels. Several TCI states are also now working together to explore potential regional policies to improve transportation systems and reduce pollution.

According to the Georgetown Climate Center, the transportation sector is currently responsible for more than 40 percent of climate-changing greenhouse gas emissions in the region, and soot and smog from cars and trucks are major contributors to lung disease and other health problems region-wide, particularly in low income communities. According to the TCI presentation, plans to reduce carbon emissions from vehicles by 25 percent would add an estimated 17 cents to the price of a gallon of gas at the pump starting in 2022. If states elected for a smaller reduction goal of 22 percent, the cost per gallon, based on the group’s modeling, would drop to 9 cents.  The third option presented is for a 20 percent emission reduction by 2032 at a cost to drivers of 5 cents per gallon.

The associated auction of pollution allowances under the proposal is projected to generate up to nearly $7 billion annually that participating jurisdictions could invest in solutions to further reduce pollution and to improve transportation choices for rural, urban and suburban communities. Each participating jurisdiction will decide how to invest the auction proceeds to support TCI program goals.

The TCI discussion is occurring as the Massachusetts Legislature and the Governor debate the need for additional transportation financing.  The Governor, for his part, has suggested that a combination of reforms in addition to the TCI funding will be sufficient to address the Commonwealth’s transportation funding needs.  However, the Massachusetts House of Representatives has pointed out that the TCI will not start generating any revenue until 2022 at the earliest.  Accordingly, the House has looked to initiatives, such as a direct fuel tax or more regionally focused means of increasing transportation revenue.  The Massachusetts Senate, which has been cautious given their session long review of the Commonwealth’s tax code overall, acknowledges that more than a TCI revenue stream is likely necessary in the short term.  It is interesting to note that Massachusetts is only one of three states within the TCI that does not require statutory authority to sign a regional pact, such as the one contemplated.  The Massachusetts legislature has pointed out that the revenue from a TCI agreement would not necessarily be applied towards transportation needs solely.

With the draft MOU now public, the various TCI jurisdictions are encouraging interested parties to provide their input on the modeling findings and draft MOU to inform the final program design. Feedback is welcomed on all aspects of a potential program. TCI jurisdictions are highlighting specific topics on which public input is of particular interest.

In developing the TCI draft MOU, over 1,200 submissions to TCI’s online portal, as well as in public engagement sessions organized in individual states, were received. The draft MOU released was based on the input and incorporates additional details on the goals and mechanics of such a program. For more information, please visit: https://www.transportationandclimate.org/main-menu/tcis-regional-policy-design-process-2019#Latest%20Updates.

 

EPA Reaches Negotiated Settlements Regarding MS4 Water Permits in Massachusetts and New Hampshire

According to a press release issued by its office, the United States Environmental Protection Agency (EPA) has reached proposed settlement agreements resulting from two years of negotiated discussions with members of the regulated community and environmental groups, regarding implementation of small Municipal Separate Storm Sewer System (MS4) permits affecting many cities, towns, and other entities in Massachusetts and New Hampshire (the 2016 Massachusetts MS4 General Permit and the 2017 New Hampshire MS4 General Permit).

Under the Clean Water Act, municipalities and other public entities that discharge stormwater into rivers and streams must comply with the MS4 general permit, which is issued by the EPA. Stormwater is the largest contributor of pollutants to impaired rivers, lakes, streams, ponds, and other waters in both states and the MS4 permits represent an important step to reduce the impacts of stormwater on these waterbodies. The MS4 permit requires municipalities to reduce stormwater pollution, by removing illicit sewer connections to storm drains, and taking other steps to reduce the amount of nitrogen, phosphorous, bacteria, and other toxins into storm drains.

By way of background, the EPA’s New England Regional Office issues CWA National Pollutant Discharge Elimination System (NPDES) permits in Massachusetts and New Hampshire. MS4 permits are NPDES permits that authorize certain discharges of municipal stormwater to surface waters. EPA issued the Massachusetts Small MS4 General Permit in 2016 and the New Hampshire Small MS4 General Permit in 2017. These permits replaced a single MS4 permit that EPA issued in 2003, which covered municipal stormwater discharges in both states for municipalities subject to the permit. The 2016 and 2017 MS4 permits build upon the requirements of the 2003 permit in order to address the largest sources of pollutants, specifically nutrients and sediment, discharged to waterbodies in Massachusetts and New Hampshire.

After EPA issued both permits, various parties filed petitions for review: the National Association of Homebuilders (NAHB), the Home Builders and Remodelers Association of Massachusetts, Inc. (HBRAMA), the New Hampshire Home Builders Association (NHHBA), the Center for Regulatory Reasonableness (CRR), the Massachusetts Coalition for Water Resources Stewardship (MCWRS), the Town of Franklin, Massachusetts, the City of Lowell, Massachusetts the Conservation Law Foundation (CLF), and the Charles River Watershed Association (CRWA). These petitions were consolidated in the U.S. Court of Appeals for the District of Columbia Circuit (DC Circuit) and then entered the DC Circuit’s mediation program. After more than two years, the parties have negotiated the three proposed settlement agreements.

Upon execution of these settlement agreements (or subsequently modified and noticed settlement agreements, as necessary), EPA will then propose and offer the opportunity for public comment on the agreed-upon permit modifications to both the Massachusetts and New Hampshire MS4 permits.  For more information on the proposed negotiated settlements, please visit: www.federalregister.gov/documents/2019/12/27/2019-28014/proposed-settlement-agreements-clean-water-act-claims.

 

News in Brief

Kafka Announces Plans to Retire.  State Representative Louis Kafka, a Stoughton Democrat, who has served in the House since 1991, announced in December that he does not plan to run for re-election.  A well-respected legislator with an ability to work with Republicans and Democrats alike, Kafka played key roles in a variety of legislative initiatives ranging from nursing homes receiving funding for the cost of providing kosher meals, creating protections for patients suffering from Crohn’s disease, and insurance coverage for children afflicted by cleft palate or cleft lip.  One of the hardest working legislators on Beacon Hill, Kafka has achieved hard won respect from elected officials and advocates throughout the Commonwealth for his strong work ethic, amiable personality, and thoughtfulness.

Philips to Run for Kafka Seat.  In light of the aforementioned news, Mr. Edward “Ted” Philips, Representative Kafka’s Chief of Staff, announced that he will seek to represent the 8th Norfolk District. Mr. Philips, who has worked in the Massachusetts House of Representatives and the Massachusetts Senate, is a graduate of the University of Massachusetts-Amherst as well as the Suffolk University Sawyer School of Management

Benson to Take Reins at Alliance for Business Leadership.  The progressive business association, Alliance for Business Leadership, announced in mid-December that it had hired State Representative Jen Benson as its next President. Benson, who served in the legislature since 2008, was most recently serving as the House Chair of the Joint Committee on Health Care Financing.  A versatile legislator, Benson formerly chaired the Joint Committees on State Administration and Consumer Protection, respectively.  The Alliance for Business Leadership is a non-partisan coalition of CEOs, entrepreneurs, investors, and business leaders who focus on social responsibility and the sustainable growth of the Massachusetts economy.

House Passes PFAS Task Force Legislation. Legislation creating an interagency task force to review and investigate water and ground contamination of PFAS across Massachusetts was passed by the Massachusetts House of Representatives in December.  PFAS chemicals have been used since the 1950s on non-stick, water-resistant, and stain-resistant products. They can also be found in types of firefighting foam used by military and civilian firefighters and at airports. PFAS contamination has been detected in public water supplies in Ayer, Barnstable, Harvard, Hudson, Mashpee, Middleton, Shirley and Westfield.  Spearheaded by House Division Chair Kate Hogan and Senator Julian Cyr, the PFAS Task Force had originally been included in the House version of the FY19 deficiency budget.