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Massachusetts Supreme Court shoots down legal challenge to Gov. Baker’s emergency powers, similar case to be heard in Connecticut

COVID-19, Good Government , , , , , , , , , , , 0 Comments

The Massachusetts Supreme Judicial Court on Thursday struck down a challenge to Gov. Charlie Baker’s emergency powers in a lawsuit similar to those filed in Connecticut, including one that will be heard in Connecticut Supreme Court. 

The lawsuit was filed on behalf of several businesses and organizations, including hair salons, churches, gyms, a family entertainment center and two restaurants and was supported by the New Civil Liberties Alliance, a civil rights agency founded by legal scholar Philip Hamburger and based in Washington D.C.   

The plaintiffs challenged the Constitutionality of Baker’s orders to close non-essential businesses under the state’s Civil Defense Act.

According to the NCLA, “Covid-19 is a serious matter of public health, but it is not a ‘civil defense’ emergency. The Civil Defense Act is a Cold War-era statute designed to protect the Commonwealth from foreign invasions, armed insurrections, and destruction associated with fires, floods, earthquakes, and similar cataclysms.”

The NCLA filed the complaint in the Massachusetts Superior Court and the case was transferred straight to the Supreme Judicial Court with the goal to “restore constitutional governance to the Commonwealth by returning the power to protect the health and welfare of Massachusetts residents to local boards of health and the legislature,” according to NCLA.

However, the court concluded “that the [Civil Defense Act] provides authority for the Governor’s March 10, 2020, declaration of a state of emergency in response to the COVID-19 pandemic and for the issuance of the subsequent emergency orders.”

The court determined that Massachusetts’ Civil Defense Act statute includes the term “other natural causes,” when determining whether or not to declare a state of emergency and that the phrase encompassed pandemics even though they are not specifically mentioned in the statute.

The case is similar to many brought to courts around the country over the course of 2020 in response to emergency declarations, business closures and mask mandates.

Lawsuits in Connecticut have challenged Gov. Ned Lamont’s emergency powers as well and thus far have met with similar results

A lawsuit brought filed by several Connecticut business owners, individuals and a state representative challenged Lamont’s emergency declaration under the Civil Preparedness Emergency statute which, like Massachusetts’ Civil Defense Act, accounts for a variety of war-time scenarios and natural disasters but never mentions a pandemic.

That lawsuit was dismissed by Superior Court Judge Barbara Bellis in October.

Another lawsuit brought by Sen. Rob Sampson, R-Wolcott, which claimed the governor violated the rights of business owners when they were forced to close, was also dismissed in Waterbury Superior Court.

The Connecticut Supreme Court is expected to hear arguments in case brought by a Milford pub owner challenging Lamont’s emergency powers and his ability to close bars during the pandemic.

Like the Massachusetts case, Casey et al. v. Gov. Ned Lamont is focused on whether the business shut down violated the owner’s constitutional rights and whether the governor could declare a state of emergency under the Civil Preparedness statute.

Another lawsuit challenging the requirement that school children wear masks in school might make its way to Connecticut’s Supreme Court. 

The lawsuit, brought by the Connecticut Freedom Alliance and several parents, alleges the requirement by the Connecticut Education Department had no statutory authority to require face masks and that “wearing face coverings, masks, and face shields all day as mandated by the [Adapt, Advance, Achieve plan] is dangerous and damaging to the Children’s health, safety and emotional well-being.”

The suit did not appear to be playing out in the defendants’ favor as Superior Court Judge Thomas Moukawsher ruled against an injunction to stop the mask mandate for schools, and the state has filed a motion to dismiss the suit. 

Well-known attorney Norm Pattis has taken over representing the families and CT Freedom Alliance and is now attempting to appeal that decision in Connecticut Supreme Court. 

In a press release, NCLA derided the Supreme Judicial Court’s decision, saying it relied “heavily upon superseded U.S. Supreme Court precedent to justify its rejection of the plaintiffs’ First and Fourteenth Amendment claims, the decision is fundamentally flawed and ripe for review by the U.S. Supreme Court.”

“John Adams must be spinning in his tomb,” remarked NCLA Senior Litigation Counsel Michael P. DeGrandis.

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Regional gas tax estimated to cost average Connecticut family between $258 and $450 per year, according to analysis

Regulation, Taxes, Transportation , , , , 4 Comments

An initiative aimed at curbing gasoline usage and fighting climate change would cost the average Connecticut family $258 per year, according to an analysis conducted by the Ceasar Rodney Institute’s Center for Energy and Environment, based in Delaware.

That translates to $388.6 million per year in increased gasoline costs across the state. 

The Transportation Climate Initiative essentially requires gasoline suppliers and distributors to buy carbon allowances for gasoline sold in participating states in the Northeast, including Connecticut.

The purchase of allowances would be capped by TCI and could raise the price at the pump between 5 and 17 cents per gallon in the first year of operation, according to TCI’s own estimates. The price would then increase as TCI lowers the cap on allowances offered to gasoline distributors in the following years.

The cost to Connecticut drivers could rise to $450 per year if TCI implements the most stringent cap, according to the analysis.

According to David T. Stevenson, policy director for the Ceasar Rodney Institute, the price increase ranges between 26 and 41 cents per gallon between 2022 and 2032, with an average increase of 32 cents per gallon. 

“The result is an average family cost per year across the region over the eleven-year forecast of $254 with a state range of $200 to $310,” Stevenson wrote.

Stevenson based his calculations on TCI’s cost per metric ton of carbon dioxide and estimated that over the course of eleven years, the average Connecticut family with roughly two drivers would pay an additional $2,842 in gasoline costs.

The figure was reached based on the average miles driven per household, estimated at 22,333 per year, and average gasoline consumption of 1,001 gallons per year.

New York was estimated to have the lowest impact on drivers, with an average increase of $200 per year, while Vermont had the highest cost impact of nearly $310 per year.

The Transportation and Climate Initiative was developed by numerous different policy and activist organizations and is attempting to implement a “cap and invest” system.

Under TCI, the allowances purchased by gasoline wholesalers and distributors would be used by participating states to invest in public transportation, electric vehicles, bike lanes and other climate justice initiatives aimed largely at cities.

According to TCI, carbon emissions are projected to decrease by 19 percent between now and 2032, even without further regulation or implementation of their cap and invest system. 

The most stringent and expensive cap on wholesalers and distributors would decrease carbon emissions by an additional 5 percent but would also cost gasoline distributors upwards of $7 billion per year, according to TCI’s estimates.

In a September webinar presentation, TCI claimed the initiative would generate upwards of $3 billion in gross domestic product, 9,000 jobs and save between $3 and $10 billion in public health costs by lowering emissions.

Gov. Dannel Malloy signed onto the initiative in 2018 along with 12 other states. 

New Hampshire has since backed out of the agreement and Vermont and Maine appear to be wavering on any kind of commitment.

Gov. Charlie Baker of Massachusetts, a long-time backer of the TCI plan, indicated that he is reconsidering his support of the proposal, according to the Boston Herald.

“We’re living at a point in time right now that’s dramatically different than the point in time we were living in when people’s expectations about miles traveled and all the rest were a lot different,” Baker said.

Road travel dropped off dramatically during the COVID-19 pandemic and some businesses are switching more heavily to work-from-home models.

Gov. Ned Lamont has not definitively said whether or not he would move forward with Connecticut’s participation in the program, and the COVID-19 pandemic largely pushed aside many other legislative and political issues over the past year.

During a press conference on Nov. 19, Lamont said “it’s something a lot of regional governors are thinking about and one of the ideas the legislature should be thinking about.”

“I’m sympathetic to realistic ways we can fix our transportation system because its key to our economic future,” Lamont said.

However, even without a regional gasoline tax through TCI, Connecticut residents could be looking at higher gasoline prices as some lawmakers have floated raising the state’s gasoline tax to bolster Connecticut’s Special Transportation Fund.

Connecticut has two taxes that apply to gasoline; one is a flat 25 cent tax on gasoline paid at the pump and another tax on oil companies based on gross receipts.

TCI indicates that its next steps include release of a final Memorandum of Understanding between participating states and that states “take any legislative steps that could be needed to implement the regional program and conduct rulemaking processes to adopt regulations.”

A coalition of 200 activist organizations issued a letter demanding governors to adopt the TCI plan on November 12 and called for the most stringent TCI cap “requiring at a minimum a 25 percent reduction in transportation carbon pollution over the next decade.”

The Ceasar Rodney Institute joined numerous other policy groups across the region in issuing an open letter opposing the Transportation Climate Initiative in December of 2019, labeling the plan as “poorly conceived, fundamentally regressive, and economically damaging.”

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CT Voices for Children outlines plan to raise taxes on Connecticut’s wealthy

Taxes , , , , , , , , 2 Comments

Connecticut Voices for Children, a New Haven-based think tank, outlined their plan to achieve economic justice through increasing taxes on Connecticut’s top earners in a report published this month and in an online presentation that included Senate President Martin Looney, D-New Haven, and Yale political science professor and author Jacob Hacker, Ph.D.

According to CT Voices’ report, Connecticut currently has a regressive tax structure in which the top 1 percent of Connecticut residents are less affected by taxes than the average household, contributing to income inequality, a racial wealth gap and lower economic growth.

The study notes that Connecticut’s top 1 percent have an average pre-tax income of roughly $3 million compared to the median household income of $76,106.

“Adding to that high level of inequality, the median household had an effective state and local tax rate of 13.66 percent, leaving a post-tax income of $65,710. In contrast, the top one percent of tax filers had an average effective tax rate of only 6.5 percent, leaving a post-tax income of $2.891,384, which is 44 times greater than the post-tax income for the median household,” report authors Patrick R. O’Brien, Ph.D and Daniel Curtis wrote. “This means that Connecticut’s tax system increases the post-tax inequality level by 3.4 times.”

CT Voices outlines four responses increase state revenue and lower the wealth inequality gap, including raising the state income tax on individuals making over $500,000 per year and couples making over $1 million; expanding the state’s estate and gift tax; establishing a surcharge on investment income and establishing a statewide property tax on mansions.

Combined, CT Voices estimates those proposals would generate between $1.1 billion and $2.8 billion per year combined.

The report also proposes expanding the earned income tax credit, the property tax credit and creating a Connecticut child tax credit, which is estimated to cost between $760 million and $1.6 billion per year.

CT Voices, the Progressive Caucus in Connecticut’s House of Representatives and government unions have been pushing for years for Connecticut to raise taxes on top earners. Connecticut’s top income tax bracket has been raised three times since the state implemented the state income tax in 1991.

Although Gov. Dannel Malloy raised top income tax rates twice in 2011 and 2015, he resisted further calls in his last years. 

An effort to establish a surcharge on financial services in 2017 was met with resistance from Connecticut’s Hedge Fund Association who told state lawmakers in no uncertain terms during a public hearing that hedge funds and investors would just leave the state.

Sen. Looney — who received an award from CT Voices for his work in the legislature — indicated Connecticut’s tax code should be more progressive as he outlined the first rate increase to the top tax bracket it 2009 in a budget that Gov. M. Jodi Rell refused to sign.

“Of course, then we had a Democratic governor with Gov. Malloy we were able to build in some more progressivity into the income tax in 2011 and again in 2015. And, of course, that struggle continues,” Looney said. “Obviously, having a Democratic governor aligned with the legislature makes all the difference in trying to enact progressive policy.”

There are significant ways we can make our tax structure more progressive still by having a separate tax on very high level income from capital gains and dividends at a separate rate from regular income and also from increasing the top rate.

Senate President Martin Looney, D-New Haven, in reference to CT Voices for Children report

“There are significant ways we can make our tax structure more progressive still by having a separate tax on very high level income from capital gains and dividends at a separate rate from regular income and also from increasing the top rate,” Looney said referencing CT Voices’ report.

Gov. Ned Lamont has thus far resisted calls for raising taxes on the wealthy, saying it would be more appropriately done at the federal level to avoid Connecticut losing a competitive edge to other states.

Data from the Internal Revenue Service has shown that wealthy individuals leaving the state results in a net loss of adjusted gross income that, in 2015, amounted to $2.6 billion. In 2018, that figure was $1.1 billion as those moving out earned more than those moving into the state.

Connecticut never recovered from the 2008 recession – either economically or according to job numbers. Before 2020, Connecticut had only recovered 88 percent of the jobs lost during the 2008 recession and the 2020 pandemic and ensuing business closures resulted in massive layoffs.

Despite the tax increases, Connecticut’s revenue and economic output has decreased over the last decade, with revenue decreasing by 17 percent since 2013 and the state’s gross domestic product decreasing by 18 percent since 2010.

Study author Patrick O’Brien argued during the presentation that Connecticut’s wealth inequality and tax structure is the cause of Connecticut’s slow economy.

Connecticut faces a budget crunch in the next biennium due to the economic downturn from the COVID-19 pandemic. 

Although Connecticut has a $3 billion Rainy Day Fund, estimates from the Office of Fiscal Analysis show the reserve fund will be gone within two years, leaving budget deficits of roughly $2 billion in fiscal years 2023 and 2024.

Lamont has told Connecticut agencies to prepare for cuts, but CT Voices argues that the state should maintain government spending in response to the pandemic and economic downturn.

“Put simply, maintaining government spending during a recession and its aftermath will provide the greatest boost in support of Connecticut’s economy in general, which will benefit all of the state’s families,” the report states.

O’Brien argued that CT Voices’ proposals are not a tax increase but rather tax reform because it shifts the tax burden from the working class to the wealthy.

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Over 200,000 people have moved out of Connecticut since 2010, as state economy declined

Economy , , , , 3 Comments

Connecticut continued its nearly eight-year streak of losing more residents to other states in 2019, as the state saw a net loss of more than 22,000 residents, the fifth highest number of outmigrants in the country.

Although 2019’s loss was smaller than in other years, it is only part of the picture, which can be complicated at times with a lot of data coming from the Census Bureau.

According to U.S. Census figures, 200,291 Connecticut residents have decamped for other states since 2010, a time during which Connecticut’s economy has struggled to keep up with the rest of the country.

However, the state’s total population has only changed slightly, decreasing by a mere 8,860, according to the same data table.

The primary reason is Connecticut is bolstered by international immigration, which brought in 136,392 people, and a natural increase of 54,839 with more babies being born than residents passing away. 

Connecticut’s population peaked in 2013 at 3,562,959, according to Census figures, so measured from that peak, Connecticut has lost a net 30,973 residents to other states in the last six years, or .8 percent of its peak population.

Connecticut generally gains residents from out of the country and New York but tends to lose more residents to Massachusetts and southern states, particularly Florida.

The largest loss of residents is among young people leaving for college and retirement-aged individuals decamping for lower-cost and often warmer states, but recent years have seen an uptick in the number of working-age resident seeking employment in other states. 

While the loss of .8 percent of the population may not seem like much of a loss it is indicative of one fact: the state’s population stagnated for most of the past decade, coupled with some of the lowest job growth and personal income growth in the country.

According to a study produced by the Commission for Economic Growth and Fiscal Stability, Connecticut has been losing higher-earning individuals to other states, who are being replaced by those earning roughly $30,000 less. 

According to Internal Revenue Service data, Connecticut’s net loss of residents has resulted in a big loss of taxable income – most notably in 2015 when the state saw a massive outflow of high income earners with a net loss of $2.6 billion in adjusted gross revenue.

Connecticut also faced significant tax increases in 2009, 2011 and 2015 as the state saw large budget deficits.

In 2013, Connecticut’s peak population for the past ten years, the state took in $21.3 billion in revenue. By 2019, the state took in $19.6 billion, a 17.3 percent decrease when adjusted for inflation.

In 2013, Connecticut’s peak population for the past ten years, the state took in $21.3 billion in revenue. By 2019, the state took in $19.6 billion, a 17.3 percent decrease when adjusted for inflation.

Connecticut gross domestic product, likewise, has declined. Connecticut’s economy peaked in 2007, before the 2008 recession, and has struggled to recover since that time.

In 2010, Connecticut’s GDP was $247.4 billion. By 2019, Connecticut’s GDP was $248.8 billion. When adjusted for inflation, that means an 18.8 percent drop in gross domestic product. 

However, as widely reported, Connecticut’s loss of residents may be reversing due to the COVID-19 pandemic, which has seen New Yorkers leaving the state for Connecticut to avoid the New York City virus hotspot and civil unrest that sparked up over the summer of 2020.

An influx of individuals with the ability to purchase homes over asking price could bode well for state coffers in the future, but how it may affect Connecticut’s job market and economic growth as a whole remains to be seen.

The closure of businesses during the pandemic combined with the loss of employment for hundreds of thousands of residents for the better part of a year may continue to haunt the state’s economy in the future.

Connecticut’s larger challenge in the future may be retaining those who moved here in response to the pandemic – a group who is likely highly-mobile — and capitalizing on what could be a year of population growth.

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Connecticut Retirement Security Authority poised to move forward with pilot plan in 2021

Regulation , , , 1 Comment

According to several news reports, some Connecticut residents were unaware they would be paying .5 percent of their paycheck toward Connecticut’s new paid family and medical leave program beginning in January, but there is another paycheck deduction that could appear at some point in 2021.

It’s a public retirement plan run by the quasi-public Connecticut Retirement Security Authority which would levy a 3 percent payroll deduction for employees whose employers do not have a retirement plan. The money will be placed in an individual Roth IRA account, which will be managed by a third party vendor.

Although Connecticut’s retirement-for-all plan has been delayed several years it has not been forgotten, and the CRSA overseeing the plan indicates they expect to launch a pilot program in mid-2021.

Like the FMLA deduction, employers would not be required to contribute to the plan but must enroll their employees if they do not have a qualifying retirement plan and have five or more employees.

Unlike the FMLA deduction, however, this plan is optional. Employees who do not wish to participate in the plan must affirmatively opt out every year.

According to Jessica Muirhead of the Office of the State Comptroller, the CRSA is currently in  negotiations with an account manager, which it expects to complete by “early 2021.”

“At this time, the CRSA intends to launch a pilot in 2021, with subsequent waves of outreach to follow,” Muirhead wrote in an email. “The program will be launched with a small group of eligible employers in a pilot phase, designed to test the program prior to the full-scale launch.”

State Comptroller Kevin Lembo is the chairman of the CRSA board, which includes State Treasurer Shawn Wooden and Office of Policy and Management Secretary Melissa McCaw, among others.

The CRSA estimates this program will apply to 600,000 Connecticut workers.

The legislation creating the program narrowly passed in 2016 with a tie-breaking vote in the Senate by then Lieutenant Gov. Nancy Wyman. Supporters – including Gov. Dannel Malloy, Comptroller Lembo and labor unions – pressed for the program to address the number of residents not participating in a retirement plan.

“There is an entire generation of employees, many of them lifelong hard-working middle class people, who are headed to retirement financially unequipped,” Lembo wrote in his 2016 testimony. “This is a problem, not only for those individuals and families who are financially forced to delay retirement indefinitely, but for our entire state and economy.”

The program was opposed by the Connecticut Business and Industry Association who sees it as another attempt by the state to undercut one of its primary industries – financial and investment services.

“There is absolutely no reason for the state to incur the financial risks associated with this plan,” wrote CBIA’s Eric Gjede in public hearing testimony. “We can all walk into our hometown bank and be enrolled in an IRA in a matter of minutes – with automatic deductions right from our bank account. Further, the federal government also has a voluntary IRA plan available to anyone that prefers a public sector plan.” 

Although the program was set to launch in 2018 it has faced a number of set-backs including an on-going legal battle over a similar program in California and the CRSA running out of money in 2019 and dismissing its executive director, Mary Fay.

Added into the mix was a 2019 legislative change that removed the requirement the Authority provide several investment vendors for workers to choose from. Instead, the Authority selects one investment firm to handle the money, something Gov. Dannel Malloy fought against leading up to passage of the legislation.

Even with a successful start-up, the program could face difficulty in the future because of the 3 percent deduction.

The 2016 feasibility study conducted by several consultants including the Center for Retirement Research at Boston College and Mercer Investment Consulting recommended a default 6 percent deduction from paychecks in order to achieve a $1 billion breakeven point for the program to become self-sustaining and to pay back initial start-up costs.

“At a 3% default contribution rate the Program’s financial viability becomes less certain and the payback period is longer,” the authors wrote.

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Attorney General Tong helps beat back Medicaid rule change in win for labor unions

Labor , , , , , 1 Comment

A rule change to how Medicaid payments are issued to home healthcare providers implemented by the Donald Trump administration was overturned by a California court in a lawsuit that was backed by Connecticut Attorney General William Tong.

In 2019, the Center for Medicare and Medicaid Services reversed an Obama-era rule that allowed third party deductions – like union dues payments – to be automatically deducted from Medicaid payments, often knows as the “Medicaid dues skim.”

According to law, Medicaid payments can only go to those either receiving services or providing services.

Allowing deductions to third parties not only allowed for union dues to be deducted from home healthcare workers being paid through Medicaid, but also for other benefits.

The rule change from the Trump administration was estimated to affect over 800,000 home healthcare workers across 8 states, including Connecticut.

It is estimated that 350,000 of those home healthcare workers were part of a union and, if allowed to stand, the change would force unions to collect from members individually through checks.

Dues payments for Connecticut home health workers were not affected by the change because, like several other states, Connecticut uses a third-party administrator to issue payments and were given a pass by the Department of Health.

Nevertheless, Connecticut’s Office of the Attorney General signed on to the lawsuit along with California, Massachusetts, Oregon, Illinois and Washington. 

In a press release by California Attorney General Xavier Bacerra said “This ruling is a victory for our state and for the collective bargaining rights of homecare workers who play a vital role in our healthcare system. Together, we’ll continue to stand up for workers every step of the way.”

According to a statement provided by the Connecticut Office of the Attorney General, “The federal rule could have interfered with Connecticut’s ability to deduct payments for worker benefits obtained through collective bargaining, like healthcare coverage or voluntary union dues, from homecare workers’ paychecks. This would have disrupted well-established collective bargaining relationships authorized for decades by state labor laws and put at risk the care of seniors and people with disabilities who receive assistance from the Medicaid program.”

“Connecticut joined California and several other states in successfully challenging this rule,” the Attorney General’s Office wrote. 

United States District Judge Vince Chhabria wrote in his decision that CMS interpreted the law too broadly and that it violated the Administrative Procedure Act. 

“It is unclear how barring the payroll practices would serve the purposes of the Medicaid program,” Chhabria wrote. 

According to a study by the Washington-based Freedom Foundation, who helped push for the rule change to eliminate union dues deductions from Medicaid payments, there were more than 358,000 unionized home health care workers across 8 states in 2017.

The total union dues deducted from Medicaid payments in that year totaled $146.6 million, according to their estimates.

Connecticut was listed as having 4,152 home health care workers, contributing $1.3 million to SEIU 1199, which represents the home health care workers in Connecticut.

Gov. Dannel Malloy paved the way for Connecticut home healthcare workers, known as personal care attendants or PCAs, to unionize in 2011 when he created the PCA Workforce Council via executive order after his initial attempt at passing legislation failed. 

Although PCAs in Connecticut are not required to be part of the union, the Freedom Foundation found that a little less than half of those PCAs were part of the union in 2017.

Although the Medicaid rule change did not affect PCAs or the union in Connecticut, contract language shows SEIU 1199 was prepared if the legal challenge failed.

According to the PCA Workforce Council contract passed by the legislature in 2018, if payroll dues deductions were no longer permitted, the fiscal intermediary would transfer to the union all their members’ banking information so SEIU could automatically deduct dues from members’ bank accounts. 

Connecticut Attorney General William Tong signed onto the multi-state lawsuit and continued to pursue it, saying the federal rule change “directly undermines states’ rights to allow our home care workforce to unionize, to the detriment of our homebound seniors, individuals with disabilities.”

Whether or not CMS will appeal the decision remains to be seen as a new administration under President-elect Joe Biden transitions to power in January.

In a Facebook post, SEIU celebrated the lawsuit win saying, “SEIU members, Fight for $15 Home Care workers and six state AGs fought this racists [sic] and sexist attack against a workforce of mostly women and women of color. The rule would’ve denied us the choice to contribute to our union, our healthcare coverage and put training in jeopardy. When we fight, we win!”

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