August 7, 2018 By Jon Hurst, President

The so-called “Grand Bargain” was signed into law in late June, and with its’ passage, three initiatives were kept off the November ballot.  One question was RAM’s rollback of the sales tax; and the other two were the $15 minimum wage and the paid family and medical leave payroll mandates. 

Make no mistake about it—without the existence of RAM’s sales tax initiative, the political pressure to remove these two costly labor mandates from the ballot would never have occurred.  The sales tax ballot initiative created the environment and the leverage to move closer to middle ground through compromise, rather than facing near certain voter passage of the labor initiatives.  Neither the Legislature nor the advocates pressing the labor mandates wanted to see a sales tax rollback with a $1 Billion price tag. 

Many factors contributed to RAM’s decision to agree to pull our sales tax ballot initiative in exchange for the agreement.  First, two major court decisions in June rendered our sales tax proposal a much tougher sell with voters.  They included a MA SJC decision eliminating the so-called “Millionaires Tax” from the November ballot, and a U.S. Supreme Court decision on internet sales tax in the SD vs. Wayfair case.  While both decisions were arguably good for our industry and the state, they also made the case for a sales tax cut more difficult without funding a multi-million dollar advertising campaign.

The more important factor leading us to the seek agreement was our ability to mitigate the effects of what would have been a near certain passage of the two payroll mandate initiatives through negotiations.  More reasonable and less costly requirements, with longer phase-in periods were vital objectives.  Movement to the public policy center on phasing out the antiquated, only in Massachusetts retail Sunday/holiday premium pay requirement; more affordable restaurant tip wages; no annual inflation increases and a slower phase-in of the minimum wage; a paid leave law which set fairer wage replacement rates and better distributed costs between employers and employees; and establishment of a permanent sales tax holiday as an important incentive for our consumers to invest their discretionary dollars in our local economy, all weighed in favor of striking a deal.     

The reactions directed at RAM on the Grand Bargain ranged from support and appreciation to accusations from the “Left” and “Right” wings of the political spectrum.  Some on the “Left” characterized the threat of our sales tax initiative as “extortion” and accused RAM of holding the Legislature “hostage.”  Yet such political grandstanding ignored the fact that the special interests on the other side of the table had in previous years sponsored ballot initiatives for a $11 minimum wage, and mandated paid sick leave; and in this election cycle were the sponsors of the $15 minimum wage, the paid family and medical leave mandate, and the 4% income tax surcharge for those earning $1 Million or more.  We were hardly unreasonable in any way.  Rather we took a page out of the playbook of the left wing advocates, and simply forced everyone to the table for an important discussion and a more reasonable, negotiated outcome. 

Some reactions from the “Right” end of the political spectrum were also sharp, accusing RAM of being “Machiavellian” when we pulled the sales tax reduction measure from the ballot.  Yet, we weighed the benefits of that tax rollback initiative—along with the decreased possibility of success at the ballot in light of the aforementioned court tax cases—with the reality of facing an economically disastrous one, two punch in the minimum wage and paid leave initiatives that we were destined to lose due to the lack of resources necessary to fight them.

In the end, we did what we thought was best for the future of our members.  But even given the mitigation that we were able to obtain, there is no question there will be wide spread small employer pain and job loss due to dramatic payroll mandate increases.  Many Main Street employers are both angry and fearful about the costs that lie ahead. 

The “Grand Bargain” was a learning process.  RAM and the larger employer community must now look forward.  In August of 2019, the process will start again for ballot initiatives for November of 2020.  Interest groups pushing these labor mandate ballot initiatives generally come from the public and health care union sectors, as well as from those political activist groups looking to move public policy agendas further and further to the left.  These costly agendas would never pass in Congress; nor would they pass in the vast majorities of state legislatures. 

In short, they have found a formula through the ballot initiative process to pass their progressive agenda; with objectives of raising public union contract floors, as well as promoting liberal national political policies and progressive candidate elections.  Ballot initiatives in Massachusetts and other more liberal states are proving to be their path of least resistance to advancing national political agendas.

Will they continue this pattern for the next election cycle?  Some believe they won’t stop until they are stopped.  So who can stop them?  Beacon Hill leaders certainly can.  The same special interests have countless legislative, regulatory and contractual priorities, which could be put at risk if our elected officials, for the good of the Commonwealth, sent the message to these groups that they are simply being too greedy and in turn are putting our economy and small businesses at risk.

Short of that level of leadership from Beacon Hill, it falls to the collective business community to draw a line in the sand and agree to fight the costly agendas.  It can come in the form of adequately funding and opposing the ballot measures—which can easily cost up to $10 million per measure.  Or they can also do what RAM did with the sales tax reduction, and file a measure which those special interests on the left end of the political spectrum won’t like.  Most likely the ballot measures designed to benefit taxpayers, either in the level of taxation, or in the manner of the expenditures of their tax dollars. 

The RAM sales tax cut ballot initiative clearly showed that the existence of employer sponsored measures can help create a more level playing field for bargaining, and an incentive for competing special interests and Beacon Hill leadership to negotiate more affordable and moderate public policy.  The entire business community must be more willing in the future to engage, invest, and lead to ensure common sense prevails, and that the Commonwealth remains attractive to employers of all types and sizes.     

Share this post:


Comments 0-5 of 0

Please login to comment