massachusetts lawmakers receive a $600 monthly stipend for expenses, even though nearly all of their needs, including office supplies, stationery, postage, and telephone service, are paid out of other legislative accounts and most use campaign funds for district expenses.
The stipend adds up to $7,200 over the course of a year for each legislator, or $1.44 million for all 200 representatives and senators. Lawmakers are not required to produce any receipts or account for how they spend the money.
One Republican lawmaker, who asked not to be identified, said his State House expenses, like all other legislators, are covered by the Sergeant at Arms’ office; his travel costs to and from work are covered by so-called per diem payments; and his district office is paid for out of campaign funds. He says the expense money is basically an add-on to his $61,440 base salary.
“It’s just walking-around money,” he says. Asked what he has paid for out of pocket for work-related expenses, he says, “Maybe some nails for picture hangars for my walls.”
Michael Widmer, president of the Massachusetts Taxpayers Foundation, a budget watchdog group, was stunned to learn of the stipend. He says that in his 25 years of analyzing state budgets, this is the first he recalls ever hearing about it.
“That’s pretty good ‘walking around money,’” he says. “Something like this, I think, really, really gets under people’s skin, and I think rightly so. Trust in government on the part of the public is critical. Having a double standard, which these things really are, sends a bad message.”
Other lawmakers disagree, saying they use the stipend to pay for various expenses that aren’t covered by other accounts. State Sen. Steven Baddour of Methuen, the co-chairman of the Legislature’s Transportation Committee (photo at right), admits he doesn’t use the entire $600 each month to cover expenses, but he uses a good chunk of it.
“Do I use $600 month in expenses? Clearly, I don’t,” Baddour says, adding, “There are a lot of expenses going into holding public office. We have hearings all along the Commonwealth. We travel out to those hearings. Those expenses, they’re not covered.”
The stipend, which has been periodically raised through the years from its initial $400 a year in 1953, was doubled to its current level in 2000. While some legislators over the years have refused to take pay raises or donated them to charity, no one has ever refused the monthly stipend.
The stipend is viewed by both the state and federal government as income, but State House officials have regarded it as an expense reimbursement. Up until last year, the stipend money was paid separately to lawmakers and not included with their bimonthly paychecks. The money was reported to the federal government as 1099 income, and Medicare and other withholding taxes were not deducted.
Under an agreement negotiated last year with the Internal Revenue Service, state Treasurer Timothy Cahill acknowledged the stipend money was not being disbursed appropriately and agreed to pay $1.6 million in penalties and Medicare withholding to the federal government. He also agreed to start including the stipend money along with travel per diems in the paychecks mailed to lawmakers, and take out all appropriate taxes.
The change in approach raises the question of whether the stipends and per diem payments, which can run as high as $15,000 a year, are income subject to pension calculation. If they are, lawmakers could see their pension payouts increase.
Officials in Cahill’s office say pension board decisions have held that such payments are not income subject to pension calculation, but Widmer is not so sure in the wake of the state’s agreement with the federal government. “Now it’s closer to compensation because you have taxes and Medicare being taken out,” he says. “It’s being treated similar to salary, so maybe there’s an argument.”
One lawmaker, who asked that he not be identified, says he’ll make that argument when it comes time to calculate his pension. “If I’m having withholding taken out of this and taxes and the IRS says it’s income, I’ll certainly broach the subject when it’s time to retire and point this out to them,” the lawmaker says.
With services being cut at all levels of state government and average households continuing to tighten their belts, Widmer says it’s time for lawmakers to revisit whether the expense stipends are really necessary.
“The entitlements in the private sector have long gone, but the entitlements in the public sector seem to go on forever,” he says.