Limited Taxation
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Barbara's Column
April 2001 #5

What will lawmakers do with OUR money?
by Barbara Anderson

The Salem Evening News
Monday, April 30, 2001

The Massachusetts House is finally getting around to doing its version of the state budget for the fiscal year that begins in July. This year House members have vowed to stop debate by ten p.m. each day in order to avoid making decisions while sleeping or inebriated. We can only hope.

The Administration version was submitted by Cellucci/Swift in January, and the Senate will be doing its own version eventually. Then a House/Senate conference committee will discuss the differences until the very last minute. The reason for the delays since January is to maximize leadership control by creating a sense of urgency.

There is, of course, no real urgency. State agencies have often been funded month-to-month into the fall while leaders dithered and dickered. And even when the annual budget is finalized, it's not final: the Legislature passes supplemental budgets throughout the year.

So no matter how "fiscally restrained" the fiscal year 2002 budget appears, keep in mind that it is only the beginning of the year's increased spending.

For some people, however, the increase will never be enough. The Tax Equity Alliance of Massachusetts (TEAM, or "Tax Everything and More") wants to tax capital gains at the same rate as wage and investment incomes which, despite TEAM's best efforts during the ballot campaign last fall, will soon be rolled down to 5 percent.

Funny, they were never interested in "tax equity" when the capital gains rate was higher than the wage tax rate.

For years, business lobbyists argued that there was no reason to penalize investors for creating jobs by taxing the proceeds of their long-term investments at 6 percent. Governor Weld agreed with them but didn't have legislative support until December of 1994, when the Legislature passed itself a 55 percent pay raise.

The controversial measure sat on Governor Weld's desk, awaiting either his signature or a veto. In the meantime, a minor, non-controversial tax cut for low-income people came to the House floor. Then-Speaker Charlie Flaherty, long a proponent of even higher capital gains taxes, quietly substituted a complete repeal of the capital gains rate. By the time legislators noticed the substitution, the tax cut had passed and Governor Weld had signed both it and the pay raise into law.

I asked the Governor on WRKO's Jerry Williams Show if the rest of us citizens could get our favorite legislation passed by giving each legislator $16,410.00 a year for the rest of their tenure. He agreed we would probably be indicted.

Repeal of the capital gains cut should not have been traded for a pay hike, but a deal is a deal: if the present Legislature, which is still taking the bribe, wants to raise the capital gains rate again, it should cut its pay by 55 percent at the same time.

Speaking of deals, the Attorney General of Massachusetts negotiated a settlement with tobacco companies to reimburse taxpayers for the money spent on smoking-related illnesses. To me, "reimburse taxpayers" means "tax cut" for the taxpayers who paid those Medicaid costs in the first place. To Beacon Hill, it means "fight over how to spend the windfall."

The settlement will be paid over many years. Some of it has been spent on anti-smoking programs but some is in an account waiting to be appropriated.

The House budget spends part of what is available this year on school nurses and school-based health centers. The Governor's original budget uses some of it to assist ailing hospitals.

Once I get over the fact that I'm not getting reimbursed for my share of allegedly tobacco-caused state health expenditures, I don't see what's wrong with spending the money on health expenditures in general. It's not as if the tobacco settlement is being used for non-health items like this year's legislative pay raise or to fund the Clean Elections Law.

Both the most recent raise and the campaign finance law were supported by the voters on the 1998 ballot. The House budget funds the former, but not the latter. Some legislators have suggested that the voters (who made such an intelligent decision on the pay raise) didn't know what they were doing when they voted for public funding of campaigns.

The Governor's budget funded the first phase of the Clean Elections Law with $2.8 million from the General Fund and $7.2 million from the Tax Reduction Fund. This latter fund is money that overflows from the state Stabilization Fund until there is enough for a one-year increase in the personal exemption. Recent administrations and legislatures have made sure that there is as little overflow as possible by increasing the cap on the rainy day fund whenever the creek starts to rise.

Again, my money, that I'm not going to see in my pocket no matter what. So voters might as well get it to fund the campaign finance reform they wanted.

Hey, legislators: voters paid you off for the capital gains rate cut and for clean elections. During the budget debate, you should keep your side of the deal. Try to stay awake and sober, and get the job done right.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem Evening News and the Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in other newspapers.

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