June 2020

Governor Lays Out Reopening Phases; Plan Still Requires Favorable Public Health Data

As widely reported, Governor Charlie Baker issued an Executive Order at the beginning of June that provides a detailed list of businesses and activities that fall into Phases II, III, and IV of the Commonwealth’s Reopening Plan. The Executive Order also permits all Phase II enterprises, including retail, to begin preparations to safely resume operation in advance of the start of the second phase. In addition to the retail sector, the Executive Order details further requirements for the safe resumption of amateur youth and adult sports and outdoor dining.

Of note, effective immediately, the Executive Order permits Phase II businesses to reopen their physical workplaces to workers only to conduct necessary preparations prior to the start of Phase II. Preparations include but are not limited to completing a COVID-19 Control Plan, implementing sector-specific protocols, and complying with Mandatory Workplace Safety Standards. Retail stores will transition from curbside pickup and delivery-only to browsing and in-store transactions with restrictions at the start of Phase II. Social distancing guidance requires each retail store to monitor customer entries and exits and limit occupancy at all times to either 8 persons (including store staff) per 1,000 square feet of accessible, indoor space, or 40% of the retail store’s maximum permitted occupancy, whichever is greater.

Grocery stores and retail stores with pharmacy services must provide at least one hour of dedicated time for adults 60 years of age and older, while all stores are encouraged to offer exclusive hours or other accommodations for high-risk populations. For staffing, stores should adjust workplace hours and shifts, including leveraging staggered arrival / departure, to minimize contact across workers and to allow for on-going and off-hour sanitation and cleaning. Stores should also conduct frequent disinfecting of heavy transit areas and high-touch surfaces.

Operators of enclosed shopping malls and other indoor, multi-tenant retail spaces must monitor customer and worker entries and exits to common areas and limit occupancy of common areas at all times to 40% of maximum permitted occupancy levels. Mall amenities like seating in food courts, children’s play areas, and arcades must remain closed, while mall food vendors and restaurants may only provide take-out or delivery service.

Once Phase II begins, the new standards will apply to all retail businesses except for Farmers’ Markets, which shall continue to be governed by Massachusetts Department of Public Health guidance. These standards will supersede and replace existing Department of Public Health guidance governing grocery stores and pharmacies.

The Executive Order also allows organizers of amateur sports programs for youths and adults to open their premises to staff only to make preparations in advance of the start of Phase II. In addition to requiring generally applicable COVID-19 workplace standards, the Order specifies that during Phase II organized sports programs will operate under the following provisions:

Restricting the use of indoor athletic facilities to supervised sports programs and sports camps for youths under the age of 18.  Further sector-specific guidance for youth and adult amateur sports programs will be issued in the coming days. Lastly, the Order permits restaurants to provide outdoor dining service with restrictions upon the start of Phase II; providing continued positive progression of public health data, indoor dining may be authorized by a subsequent order during Phase II.

To access information about the Baker-Polito Administration’s plan for reopening, please visit: www.mass.gov/reopening.

Leading Economic Policy Group Updates FY’21 Budget Forecast

The Massachusetts Taxpayers Foundation (MTF), in a report posted to its website, recently downgraded its fiscal year 2021 tax revenue forecast to reflect a loss of $6 billion.  This represents a nearly 20% decline from the $31.15 billion consensus benchmark. At 20%, the revised forecast places Massachusetts towards the higher end of preliminary estimates of revenue losses among all states for fiscal year 2021. In an effort to determine how long before Massachusetts tax revenues are restored to pre-pandemic levels, the MTF specifically examined past recessions.

In particular, following the recessions of 2002 and 2009, it took three years for state tax revenues to recover to pre-recession levels, straining the Commonwealth’s operating budgets during that period. Given the steep and widespread decline in fiscal year 2021 tax revenues, the MTF asserts that it will take at least as long to recover as the two previous recessions. Key sectors of the Massachusetts economy, including health care, higher education, tourism, and commercial real estate, will likely emerge from the pandemic fundamentally altered and those changes could further prolong the time it takes for the economy to bounce back.

According to the MTF report, ongoing adjustments to the economic picture will be necessary depending on the trajectory of the virus, the timing of a vaccine, the ability of the economy to regain traction. To address this budget shortfall, the Massachusetts Legislature is expected to look at a variety of measures including, but not limited to, additional federal funding, state reserves and, potentially, a reduction in services.  The Commonwealth’s $3.4 billion Stabilization Fund, which is one of the strongest in the region, cannot bridge the entire funding gap alone.

To review the MTF report, please visit: https://www.masstaxpayers.org/publications/public_finance/budget/fy_2020/20200527/massachusetts_fiscal_challenges_could_last_years.

As Data Shows Drop-Off in Water Usage; MWRA Reduces Proposed Rate Increase

The Massachusetts Water Resources Authority (MWRA) recently announced that due to the uncertain economic climate caused by the COVID-19 virus, the MWRA Board of Directors and the MWRA Advisory Board have voted to reduce the planned fiscal year 2021 combined water and sewer increases to member communities by $29 million. The MWRA Board also approved a recommendation by the MWRA Advisory Board to potentially defer over $71 million in community loan payments.

While the MWRA proposed a 3.6% increase in February, with reductions to its operating budget and capital financing, the rate increase, which goes into effect July 1, 2020, was lowered to 1.0%. As reported by the MWRA, the proposed cuts will not result in any loss of service. In addition to the reduction of the proposed rate increase, the MWRA announced that it has received $891,535 from the Commonwealth from the Massachusetts Department of Revenue’s Debt Service Assistance Program. The program is intended to provide relief to communities paying off sewer projects, including the cleanup of Boston Harbor. This year, the funding will be used to reduce each communities’ June 2020 assessment downward by their share of the program funding.

Finally, the MWRA approved a recommendation from the MWRA Advisory Board to allow communities to defer payments on any Local Water Pipeline and Infiltration/Inflow loans with repayments due to MWRA in fiscal year 2020, fiscal year 2021, and fiscal year 2022. Restructuring these loans will allow for cash flow relief to communities by reducing the principal payments due during the fiscal year.

Within the backdrop of the MWRA rate reduction, data from the agency showed that water use has dropped nearly 6% across the region during the Governor’s stay-at-home order. With non-essential businesses shuttered and Boston and Waltham, both home to large commercial districts, experienced heavy drop-offs of 13.7% and 13.1%, respectively. Milton and Nahant have also used significantly less water in their areas, with Nahant down 9.1% from an average year. Not surprisingly, more residential areas like Stoneham, Swampscott, and Winthrop have all seen double-digit percentage gains in their usage as people stay home from work and school, with Stoneham showing a 16.7% gain.

City of Worcester Also Looks to Provide Potential Rate Relief

According to an article in the Worcester Telegram & Gazette published at the end of May, the City of Worcester is seeking to hold the line on any significant increase to its water and sewer rates. In most years, both the water and sewer-use rates have both gone up, while in the past three years only the sewer rate has increased. That has resulted in smaller annual bill increases for water users, but they are increases, nonetheless.

This year, residents and businesses in Worcester may find themselves paying about the same next fiscal year, provided they do not significantly increase their water usage. To achieve this goal, the City of Worcester has recommended holding the water rate next fiscal year at $3.67 per hundred cubic feet – the same rate it has been the previous three years, while increasing the sewer-use rate by only 35 cents to $8.15 per hundred cubic feet.

As reported by the City of Worcester, when the water rate is coupled with the recommended increase to the sewer-use rate, it means the average annual combined cost of water and sewer services for the average single-family home would increase by $17.41, or 2.83%, based on the average usage of 62 hundred cubic feet of water.  In proposing the relatively small increase, City Manager Edward M. Augustus Jr. stated that the rates recommended by the administration reflect only the minimum increase that is necessary to maintain solvency in both utilities. The decision was based on current economic conditions caused by the COVID-19 pandemic.

While portions of the Worcester City Council have sought to use reserve funds to address water and sewer rate stabilization, City of Worcester officials expressed concern due to the reduced usage of water and sewer services due to COVID-19. For example, the City’s sewer department is expected to go through its $2.8 million reserves by the end of this fiscal year because of an anticipated shortfall resulting, in part, from an 80% reduction in sewer use in the commercial sector because of COVID-19. As other municipalities have noted, reduced water and sewer usage has forced cities and towns to account for reduced revenues.

For more information on the City of Worcester water resource management plans, please visit: http://www.worcesterma.gov/worcester-waters/worcesters-water-resources.

Coalition Advocates for Expansion of Paid Sick Time; Employer Organizations Urge Caution

The Joint Committee on Labor and Workforce Development recently took testimony on legislation filed by Representative Paul Donato and Senator Jason Lewis that would provide 10 additional work days, or 80 hours, of job-protected, paid sick time for immediate use during the COVID-19 pandemic, for workers who were not covered under the extra sick time provisions of the federal Families First Coronavirus Response Act.

The legislation (HB4700 / SB2701), supported by the Raise Up coalition, has 81 sponsors in the House and 23 in the Senate. Under the legislation, workers taking the emergency sick time would be paid by their employers at their regular rate, up to $850 a week. The employers would be reimbursed by the Commonwealth unless the employer was receiving certain federal tax relief. While the sick time provision would be available for workers diagnosed with COVID-19, experiencing symptoms and waiting for a diagnosis, quarantining, or who reasonably believe their health is at risk, and to care for family members in any of those categories, the legislation would extend to any declared state of emergency.

UCANE, in addition to a number of other business and employer organizations, submitted testimony asking the Committee to take a closer look at the legislation given its far reaching impact. Of note, UCANE testified that:

“While ostensibly filed as providing relief for employees in light of the current COVID-19 pandemic, the legislation could have far more reach, extending to any declared state of emergency.  Given everything that has hit both employers and employees during these incredibly difficult times, now is not the time to pass legislation governing current or future states of emergency without a closer review as to the impacts on employers and employees alike.  While there are certainly financial impacts of this legislation, the bill also creates a series of recordkeeping and notice provisions. As well, the legislation would provide a private right of action for employees and would impose mandatory triple damages under the Massachusetts Wage Act for any employer mistakes, regardless of how minor or whether they were made in good faith.  There are simply too many pieces to this legislation that could harm both employers and employees without an extensive review of these matters.

During these incredibly unique times, UCANE has worked to ensure that its members and their employees are protected from exposure to COVID-19 and, to the degree possible, that companies are able to financially withstand this crisis.  Already, the COVID-19 pandemic has threatened the future of many construction firms throughout the Commonwealth.  Adding a series of new financial and administrative responsibilities at this time will simply be the tipping point that puts firms out of business.  HB4700, while well-intentioned, should not be passed without a significant study of the impacts of the legislation and, frankly, the impact of the COVID-19 pandemic overall – something that cannot happen while we are in the midst of it.”

The Joint Committee on Labor and Workforce Development, which has not voted on the measure yet, issued an extension order until July in early June. At the moment, there is no indication as to whether the Speaker of the House or Senate President will push the legislation to the floor.  Likewise, Governor Charlie Baker has not indicated his position on the matter if it were to arrive on his desk.

To review the legislation, please visit: https://malegislature.gov/Bills/191/H4700

Baker-Polito Administration Announces New Undersecretary of Energy

According to a press release from the Massachusetts Executive Office of Energy and Environmental Affairs (“EEA”), Secretary Kathleen Theoharides recently appointed Ms. Judy Chang as EEA’s Undersecretary of Energy. Ms. Chang replaces Mr. Patrick Woodcock, who held the position before being appointed Commissioner of the Department of Energy Resources (DOER) in February 2020.

In her role, Undersecretary Chang will advise Secretary Theoharides on the development and implementation of energy policy in the Commonwealth to achieve the Administration’s ambitious climate goals, protect ratepayers, and provide a diverse, resilient and safe energy portfolio. Ms. Chang is an energy economist and policy expert with a background in electrical engineering and over 20 years of experience in advising clients in planning, including improving designs for wholesale electricity markets; developing transmission and generation projects; and organizational/corporate strategic planning. Before joining EEA, she was the co-lead of The Brattle Group’s Energy Sector Consulting practice and is a founding Director of New England Women in Energy and the Environment.

Undersecretary Chang holds a Master of Public Policy from Harvard Kennedy School and a Bachelor of Science in Electrical Engineering and Computer Science from University of California, Davis.