Patrick Scraps Jobs Bill Tax Credits
Gov. Deval Patrick put his mark on an end-of-session job creation and economic development bill Tuesday, vetoing key tax credit programs, and returned a separate bill concerning ambulance payments with an amendment that one Senate supporter said would be a death knell for the bill.
Patrick signed a flurry of bills on Tuesday, a week after the Legislature concluded its formal sessions for the year by sending an avalanche of legislation to his desk, including the economic development bill championed by House Speaker Robert DeLeo.
The governor used his line-item veto power to strike components of the bill that he said would "create unaffordable tax benefits," eliminating a tax credit for start-up companies, expansion of brownfield tax credits, an increase in historic rehabilitation tax credits, and a change designed to qualify more communities for Gateway Cities grants.
As he did in 2010, Patrick also returned with an amendment a bill banning health insurers from reimbursing ambulance costs directly to patients, who in turn are expected to pay ambulance service providers.
The practice of paying patients was started by insurers such as Blue Cross Blue Shield of Massachusetts as a way to encourage private ambulance providers to join their networks and negotiate contracts for lower rates. But private ambulance companies have said it makes collecting payment more difficult.
The bill would require insurers to pay ambulance service providers directly, but Patrick disagreed with the Legislature over whether the providers or the insurers should help set the cap on rates. Patrick's amendment would cap ambulance rates at the lower of the customary rate paid by insurers, or 300 percent of the current rate paid by the Centers for Medicare and Medicaid Services.
"This piece was a public safety piece and the governor absolutely muffed it," said Sen. Kenneth Donnelly, an Arlington Democrat and former firefighter.
"The insurers won over public safety," Donnelly continued. "I think there was very little appetite to get this done to begin with, so I think it will be difficult to get this done in an informal session."
Insurers applauded Patrick's amendment to the ambulance payment bill as a "reasonable compromise" identical to the one he proposed at the end of the 2009-2010 session that effectively killed the bill when the Legislature failed to take it up.
Lawmakers will also have to live with changes Patrick made to the job creation bill, which includes $50 million to support research and development, and $1 million for a talent pipeline to support paid internships at technology companies. It also establishes a sales tax holiday this weekend, Aug. 11-12, for most purchases under $2,500.
"Jobs are our top priority, and creating the right environment for job growth means improving our infrastructure, preparing our workers, and encouraging industrial and commercial innovation," Patrick said in a statement. "That's why Massachusetts is recovering faster than the nation, and why this bill matters."
Rather than extend the brownfields tax credit for two years until 2015 at a cost of $27.8 million a year, Patrick said his administration would analyze the program and make recommendations before its August 2013 expiration. The governor also rejected a $10 million increase to $60 million of the historic preservation tax credit, and nixed a proposed $456 tax credit for new corporations during their first three years in business that he said could cost $7 million in fiscal 2014 and up to $19 million in 2015.
"Why not take this shot on new companies starting up that will be the future of Massachusetts? If these companies don't set up, we're not going to get any money from them," House Minority Leader Brad Jones said.
Jones questioned Patrick's commitment to improving the business climate in Massachusetts, and criticized the Democratic leadership of the House and Senate for waiting so long to finish the economic development bill that the Legislature can no longer override Patrick's vetoes – no formal sessions are planned for the next five months.
"Unfortunately, it's frustrating that jobs and the economy should have been one of the first things out of the gate instead of one of the last things across the finish line, leaving us in a scenario where we can't deal with these things," Jones said.
Jones also whacked Patrick's decision to veto a provision that would have spread corporate tax payments equally over four quarters, rather than require companies to pay 40 percent in the first quarter.
"I thought that was an easy thing to do that would have been a benefit to the business community that in the end didn't cost us anything," Jones said.
The Patrick administration said the change would have incurred a one-time cost of $191 million to restructure corporate tax payments.
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