Report says heating costs will rise

A new report predicts that more than 100,000 Massachusetts households could have “severe difficulty” paying their oil heat bills next winter.

The report released Monday by the Donahue Institute at the University of Massachusetts says home heating costs will continue to rise next year and the average household oil bill could top $3,000.

The report says total household spending on home heating oil or natural gas in the state is expected to increase by about $927 million in 2008, with an additional increase of nearly $470 million in 2009.

Nearly two-thirds of those residents expected to face the most difficulty paying their heating bills are over the age of 60, and nearly 25,000 are over the age of 80.

The report’s lead author, Robin Sherman, calls the numbers “staggering.”

IRS ready to settle

The Internal Revenue Service said yesterday that it is prepared to offer settlements to some 45 corporations if they agree to end questionable tax-shelter practices.

IRS Commissioner Doug Shulman said the agency aims to end transactions that have allowed corporations, including many of the nation’s top banks, to gain billions in tax deferrals. He did not name the corporations.

Letters were sent out yesterday giving the corporations 30 days to make a decision on accepting the terms of the offer, which include best efforts to terminate the transactions by the end of this year.

Shulman said the transactions, called lease-in/lease-out (LILO), and sale-in/lease-out (SILO), involve complex arrangements where large corporations lease or purchase large assets such as foreign rail systems or sewer systems and then lease them back to the original owner.

“As a basic matter of fairness to all taxpayers, the IRS cannot allow LILO and SILO deals to stand,” he said.

The 45 companies are engaged in more than 1,000 of these LILO and SILO transactions. The tax agency said it has won three cases against corporations involved in the transactions, giving others an incentive to agree to the settlement offer.

It said that cases will proceed against corporations that decide not to participate in the settlement.

Conn. closings at 8-year high

Business closings in Connecticut have hit an eight-year high, while new company startups have dropped to an eight-year low, the secretary of the state’s office reported Tuesday.

Nearly 3,000 businesses in the state closed during the second quarter of this year, the highest number of shutdowns of any first or second quarter since at least 2000.

The new data also show that about 7,200 new businesses began operating in the state in the three months ending June 30. That’s 766 fewer startups than in the first quarter. Officials said such a month-to-month decline hasn’t been seen since at least 2000.

“Businesses throughout the nation are struggling to cope with escalating energy prices, health care costs and the national credit crisis,” Secretary of the State Susan Bysiewicz said, “and Connecticut’s businesses are no exception.”

But Peter Gioia, an economist for the Connecticut Business and Industry Association, said the state’s economy appears to be in much better shape than the national economy. For example, the state has been adding jobs over the past couple months, after three months of job losses in February, March and April.

The U.S. economy has seen seven straight months of job losses.

“The economy is still in a challenging state in Connecticut, likely not in recession,” Gioia said. “The U.S. economy is in a much more challenging state and most likely in recession.”

Connecticut has experienced job growth across many different sectors, including manufacturing, educational services and exports. That’s a good sign, Gioia said. Also, the state’s housing market and consumer base are not as bad as in other parts of the U.S.

But he said Bysiewicz’s report shows that Connecticut’s business climate should be watched closely.

“There are going to be some companies that are going to be struggling,” Gioia said. “I think it shows we don’t want to do anything locally to damage the economy.”

Don Klepper-Smith, chief economist at DataCore Partners, a New Haven-based professional services firm, and a member of Gov. M. Jodi Rell’s Council of Economic Advisers, said there are signs that credit is tightening for Connecticut businesses.

“As a result, it’s not too surprising that business starts would be tapering off and that business failures would be on the rise,” he said. “It’s consistent with the picture we’re seeing nationally and across Connecticut.”

N.H. health insurers post profits

Two major health insurers in New Hampshire posted healthy profits from 2004 to 2007, according to a national report on the insurance industry released Tuesday by a coalition that promotes affordable health care for all.

Anthem Health Plans of New Hampshire (a Blue Cross Blue Shield licensee and WellPoint subsidiary) and Harvard Pilgrim Health Care of New England were the featured insurers for New Hampshire in the report released by Health Care for America Now, a group of labor unions, grassroots community organizations, women’s groups, doctors, nurses and small businesses.

According to its data for New Hampshire, net income growth for Anthem increased from 2004 to 2007 by 348.5 percent, far outpacing Harvard Pilgrim, which saw its profits rise by 60.1 percent for the same period.

Anthem’s membership grew by 18.6 percent from 2004 to 2007, while Harvard Pilgrim’s grew by 83.8 percent. In 2007, Anthem posted profits of $98 million, while Harvard Pilgrim posted $5.2 million in net income.

Mass. pension FUND recordS loss

Massachusetts’ $50 billion employee pension fund recorded a 1.8 percent loss in the fiscal year that ended June 30, but still outperformed similar funds.

State Treasurer Tim Cahill, who chairs the Pension Reserves Investment Trust Fund, says the fund registered negative returns for the first time since 2002.

But similar funds in other states had a median 4.36 percent decline. Cahill said he was proud that the state fund did so well in difficult financial times.

The fund’s performance was hurt by poor returns in two of its 10 asset classes — domestic and international stocks — which were down 15 percent and 9 percent, respectively.

But the trust made up for those losses by solid returns in other areas, including hedge funds, high yield bonds, timber and commodities.

MBTA predicts fare hikes

The head of the MBTA says riders face “hefty” fare hikes as soon as 2010 unless the legislature steps in to bail out the debt-ridden agency.

T general manager Daniel Grabauskas did not define what “hefty” means, nor did he say a specific fare hike proposal is on the table.

But he says the agency has raised fares every three years since 2001, and the last three fare increases have been in the 25-percent to 27-percent range.

Grabauskas tells The Boston Globe that the alternatives are cuts in service or state assistance with the agency’s $8.2 billion in debt and interest payments.

Grabasuskas has already publicly ruled out fare hikes next year.

An official with the T Riders Union says fare increases would hit low-income customers particularly hard.