MMA asks Judiciary Committee to oppose bill requiring public employers to indemnify employees up to $1M and support bill reducing interest paid by local governments

The Honorable James B. Eldridge, Senate Chair
The Honorable Claire D. Cronin, House Chair
Joint Committee on the Judiciary
State House, Boston

Dear Chair Eldridge, Chair Cronin, and Members of the Committee,

On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association submits the following comments and testimony on several bills that were heard by the Committee on September 17. We appreciate the Committee’s consideration of the local government position regarding the indemnification of public employees, and interest payments in civil awards and contract actions.

The MMA opposes H. 1374, An Act providing for equitable rights to indemnity for public employees. This bill amends Chapter 258, Section 9 to require public employers to indemnify public employees up to one million dollars. Under the current law, public employers may indemnify public employees. The bill also changes the standard for exclusion from indemnification from grossly negligent to “wanton, willful and malicious manner.” Not only would this bill create additional liabilities for cities and towns without appropriating money to pay for them, but it would remove the ability of cities and towns to govern their own affairs with respect to liabilities and make financial decisions that are in the best interest of individual municipalities. Moreover, increasing the standard for exclusion from gross negligence to wanton, willful and malicious manner raises the bar significantly and would place additional financial strain on already tight local budgets because fewer employees would be exempt from indemnification. We ask the Committee to not report out this bill.

The MMA opposes H. 3318, An Act relative to interest required to be paid by municipalities. The bill amends Chapter 231, Section 6C governing interest added to pecuniary damages in contract actions by extending the statute’s coverage to all political subdivisions of the Commonwealth. The bill would add interest at the contract rate, or if none is established, at a rate of 12% per annum from the date of the commencement of the action. This bill would add significant costs to local government budgets and divert funds that could be used for local services. It would also add to already-existing liabilities, like pension and other post-employment benefits. We ask the Committee to not report out this bill.

The MMA supports H. 3269, An Act reducing interest paid by local governments, which would amend Chapter 231, Section 61 governing interest paid by the Commonwealth to include cities and towns. The bill would also cap the interest municipalities pay on legal damages at 10%. Whereas this bill would bring municipalities in alignment with the Commonwealth with respect to interest on damages and allow municipalities to reserve the funds saved through this legislation for local services to taxpayers and municipal employees, we ask the Committee to report this bill out favorably.

If you have any questions, please do not hesitate to have your office contact MMA Senior Legislative Analyst Lisa Adams at ladams@mma.org at any time.

Sincerely,

Geoffrey C. Beckwith
Executive Director & CEO