Heads up, taxpayers!
In two months we will celebrate the 25th anniversary of Proposition
2½, which was passed by the voters on Nov. 4, 1980
after a tempestuous ballot campaign. And in a week or so, the enemies of
Prop 2½ plan to attack it again.
A preliminary report from the Municipal Finance Task Force, chaired by
former bank CEO John Hamill, is floating an increase in the auto excise
Grateful taxpayers may recall that Prop 2½ not only limited property
taxes by requiring an override vote to increase them beyond the
voter-passed levy limit, but it also cut the annual auto excise from $66
per $1,000 of a car's valuation to $25 per $1,000. To help local
governments live with these limits, it also repealed school committees'
fiscal autonomy and forbade unfunded state mandates.
And yet some ungrateful mayors are today teaming up with the business
community fat cats who have always hated the law passed by us, the
I know this doesn't seem to make sense. Businesses also benefit from
Prop 2½?. And yet, not only did most of the Boston business community
oppose the initiative in the first place through its mouthpiece, the
so-called Massachusetts Taxpayers Foundation, but every now and then it
tries to raise our local taxes again.
In 1989, this same John Hamill, then president of the then Shawmut Bank,
was asked by Gov. Michael Dukakis to chair a Financing Local Government
task force. There was a dramatic photo in some newspapers showing me
sitting at its news conference and Dukakis standing behind me, hands on
hips, scowling and defiant.
That task force recommended changing Prop 2½ to allow property taxes to
rise at the rate of inflation instead of by 2½ percent a year.
Of course that 2½ percent is not the real allowed increase. New
construction is added now, and would have still been added with the
Hamill recommendation, allowing double-digit property tax hikes during
the 1990s in many communities. Plus, Hamill wanted to exclude long-term
capital expenditures from Prop 2½. — think of all the new schools that
could be built without the need for those pesky override elections.
The first Hamill task force also recommended eliminating some sales-tax
exemptions, increasing the sales tax from 5 percent to 6 percent, hiking
the gasoline tax by 10 cents a gallon (Put that in your tank and guzzle
it!), and allowing local excise taxes on meals, events and parking, plus
increased licensing fees for cable companies.
The 1989 bill was dead on arrival. The next year the Legislature raised
the income tax instead, but then voters sensibly elected Republican
governors and Prop 2½ was safe for another 16 years.
Regardless of the enmity of some municipal officials and business
leaders, there have never been enough anti-Prop 2½ votes in the
Legislature to override a veto.
But opponents dream on, and this year John Hamill has returned to tax
The auto excise was once the most hated tax in the commonwealth. People
like me who moved here from other states, only four of which have such a
thing, were shocked when they got that annual tax bill on their
So when Citizens for Limited Taxation drafted Proposition 2½, a cut in
the auto excise was included. We still have to pay an annual bill, but
it's been bearable at $25 per $1,000, especially since the depreciation
formula that determines value favors the taxpayer. This, I hear, is what
the Hamill Commission wants to change.
What are they thinking? Raise the auto excise at a time motorists are
already struggling with gas prices approaching $3 a gallon?
And what other taxpayer-attack abomination will be in the final report
if there is no opposition to this preliminary trial balloon? An income
tax hike, after the voters said to cut the rate to 5 percent? (Which,
incidentally, hasn't been done yet.)
Voters in cities with municipal elections this fall, and who may not
have decided yet for whom to vote, might help themselves make that
decision by asking all the mayoral candidates this question: What do you
think of Municipal Finance Commission's proposal to increase my auto
I asked them myself. Almost everyone I reached wanted to see the final
study, but said that raising the auto excise sounded unappealing at this
time of high gas and automobile prices.
Salem Mayor Usovicz said that everything needs to be on the table,
including the auto depreciation formula, because of the present
over-reliance on the property tax.
Challenger Kim Driscoll noted the fallacy in the argument that the
excise tax hike could help avoid more property tax hikes, since the same
taxpayers get hit either way. She said she'd want to see a direct offset
and doesn't think that will be the proposal. I don't either.
Kevin Harvey, who's also challenging Usovicz in Salem; and John
Slattery, who's taking on Peabody incumbent Michael Bonfanti, also
expressed concern about increasing costs for drivers.
Bonfanti and Beverly Mayor William Scanlon were more interested in
provisions giving communities flexibility in dealing with health care
and state mandates. Patrick Lucci, the challenger in Beverly, says he is
opposed to higher taxes, period.
Once we get the tax hikes out of the proposal, we can all have an
intelligent discussion on municipal finance reform and local aid.
Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem
News, Newburyport Times, Gloucester Times, (Lawrence) Eagle-Tribune, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence
Journal and other newspapers.