CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

 

CLT UPDATE
Monday, April 21, 2003

Dem's/MTF's solution: Borrow the state out of debt?


Last year, they passed a record tax increase. This year, they've floated reports exploring tax hikes on everything from beer to cars to income. They've gone along with Gov. Mitt Romney's plans to sharply increase fees. And now the Legislature is considering closing a portion of the deficit by using the state credit card. In other words, it's 1990 all over again....

We've been down this road before. In 1989 and 1990, former Gov. Michael Dukakis borrowed almost $2 billion to plug the deficit, on top of imposing huge tax increases. 

And taxpayers were saddled with paying off the Dukakis debt until 1998 - to the tune of $275 million per year - and they're still saddled with the higher income taxes.

What is so complicated about this? The economy boomed in the 1990s and state government spent the money that was pouring over the transom. Now the economy is in recession. The state's "income" has dropped and spending must drop too. Saddling our economy with more debt and higher taxes isn't addressing the fiscal crisis. It's worsening it. Students of history should remember that from 1990 too.

A Boston Herald editorial
Monday, April 21, 2003
History lessons unlearned


As always, the most appalling player continues to be the Democratically controlled Massachusetts Legislature, which is now talking about borrowing money to cover operating expenses for state government.

More than 16 months after it became apparent that state revenues were in the soup, the Legislature has still yet to make any meaningful reforms. It did find time, of course, to raise taxes by $1.2 billion....

Finally, the ever-selfish Massachusetts Teachers Association has been saturating the airwaves with a radio campaign trying to set the stage for another tax increase. The maddening drivel includes rhetoric about "sneaky backdoor cuts that hurt our schools" and calls to "raise the revenues needed to stop the devastation of public higher education." ...

But that's Massachusetts, in all its political glory and taxpayer misery.

The MetroWest Daily News
Sunday, April 20, 2003
A sad state of affairs
By John P. Gregg


Three broad opinions about what to do seem to have developed during Mitt Romney's 14 weeks in office. The governor himself has proposed sweeping reforms in the way state government operates. Many legislative Democrats want to make deeper budget cuts instead of enacting major reform, and before raising taxes. Some liberals want to cut the rhetorical baloney and get on with raising taxes immediately....

Those who demand higher taxes forthwith can be admired for their foolish consistency, but they are wrong. The state raised taxes by $1 billion annually last year - something Wall Street noticed disapprovingly. That means the Massachusetts business climate, which has improved palpably from what it was in the 1970s, went down a notch. Another tax increase this year would tend to assure a weak recovery like the one between 1976 and 1981, after the tax-increase shock of 1975. (Not until 1984-1986, after property tax stabilization and the repeal of the 1975 income tax surcharge, did the state economy really boom.)

The Patriot Ledger
Saturday, April 19, 2003
To achieve reform, Romney must play politics
By David A. Mittell Jr.


Just when we thought our legislators were taking the state's budget crisis seriously, the House of Representatives decided to give Speaker Tom Finneran the power to award pay raises to loyalists whenever he chooses.

Imagine the gall: they haven't come up with a single dime in savings for the 2004 budget, but they're setting up a raid on the state Treasury.

A Lowell Sun editorial
Friday, April 18, 2003
Arrogance over austerity


Chip Ford's CLT Commentary

In his column, "To achieve reform, Romney must play politics," David A. Mittell Jr. observed: "Not until 1984-1986, after property tax stabilization and the repeal of the 1975 income tax surcharge, did the state economy really boom."

Both Proposition 2 and the Dukakis surtax repeal were CLT initiatives; the former opposed by the so-called Massachusetts Taxpayers Foundation, the latter supported by MTF.

CLT's successful efforts in both instances helped lead Massachusetts to economic success.  But thanks to the cover provided by MTF and its president, Michael Widmer (aka, "Mickey W"), borrowing its way out of the current "fiscal crisis" is now gaining currency as a "solution" in the Legislature; an alternative to rolling back profligate overspending during the economic boom years.

That period coincided with repayment of the Dukakis-era borrowing and its accompanying 15 percent "temporary" income tax hike, remnants of which still remain as our tax burden. When the loans were fully paid off in 1998, the Legislature refused to reduce the tax rate as promised and instead poured the surplus into expanding government at the rate of an additional billion dollars a year.

Fortunately, thanks to another CLT initiative, that burden has been reduced from 5.95 percent to 5.3 percent, where it was "frozen" last year by the Legislature despite the voters' mandate that it be finally returned to 5 percent.

Thirteen years after the Legislature "solved" the last fiscal crisis on the backs of taxpayers, we're still paying the cost as it has spent us into another one. And now, an increasingly growing "solution" is to make the same mistake all over again, at the suggestion and with the blessing of the alleged "fiscally conservative" Massachusetts Taxpayers Foundation.

"The bondholders don't care how much you borrow, as long as you identify a revenue source to show that you can support it," state Rep. Marie Parente, chairwoman of the House Committee on Long-Term Debt, cavalierly observed a few days ago.

As we learned in 1989, that requires new revenue ... and new revenue comes from only one source: you and me and other taxpayers.

When you try to borrow yourself out of debt there is only one winner: the lender who collects the interest, so long as he can collect it. When the state takes out the loan, the lender is assured of repayment, because government can simply "identify a revenue source," just raise taxes on its citizens.

Which explains a recommendation from the reputed "nonpartisan" MTF. Just look at who makes up its membership, and note the number of Fat Cat banking institutions. According to Cam Huff, a senior research associate at MTF, the state could probably obtain bonds at a "low" 5 percent interest rate, with a seven-year repayment schedule. How'd you like to be raking in 5 percent interest on a one billion dollar loan for the next seven years -- or 5 percent on even your savings account?

If you were over your head in debt and managed to dig yourself out -- by getting your neighbor to co-sign for your loan and unconscionably sticking him with its repayment as the Legislature does -- the first thing you'd need to do is change your spending habits to avoid falling right back in that financial and moral quagmire. The Legislature never cared to learn that lesson. In 1989, the state budget was only $14 billion and the state was in debt. Today, the Beacon Hill pols are dealing with a $23 billion budget and, incredibly, some are actually considering putting the state into even greater debt, all over again.

Without reforming its spending habits and revisiting past profligacy, Democrats in the Legislature are again looking for their neighbors to pick up its new debt (while we're still making over-payments on that old one long ago paid off). If the majority party in the Legislature succeeds, it will only extend the "fiscal crisis" for another year, the first step in a perpetual fiscal crisis and annual tax increases. Again, the Fat Cat big bankers will be the only winners ... which would no doubt please "Mickey W" and his "highly-respected" MTF.

Chip Ford


The Boston Herald
Monday, April 21, 2003

A Boston Herald editorial
History lessons unlearned


Here we go again. It appears that even people who know history are bound to repeat it, at least if they serve in the Legislature. So even as the next critical phase of the budget debate begins this week with House leaders unveiling their fiscal plan, legislators are still scrambling to find ways to avoid spending cuts.

Last year, they passed a record tax increase. This year, they've floated reports exploring tax hikes on everything from beer to cars to income. They've gone along with Gov. Mitt Romney's plans to sharply increase fees. And now the Legislature is considering closing a portion of the deficit by using the state credit card. In other words, it's 1990 all over again.

It is routine and fiscally prudent to borrow funds to pay for capital projects, the benefits of which last long after a given fiscal year. But borrowing money to pay for operating expenses is akin to taking a cash advance from your personal credit card to pay your monthly bills.

We've been down this road before. In 1989 and 1990, former Gov. Michael Dukakis borrowed almost $2 billion to plug the deficit, on top of imposing huge tax increases. 

And taxpayers were saddled with paying off the Dukakis debt until 1998 - to the tune of $275 million per year - and they're still saddled with the higher income taxes.

What is so complicated about this? The economy boomed in the 1990s and state government spent the money that was pouring over the transom. Now the economy is in recession. The state's "income" has dropped and spending must drop too. Saddling our economy with more debt and higher taxes isn't addressing the fiscal crisis. It's worsening it. Students of history should remember that from 1990 too.

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The MetroWest Daily News
Sunday, April 20, 2003

A sad state of affairs
By John P. Gregg


As an English major, I learned about the concept of "schadenfreude," the German word for taking joy in the misery of others.

It was one of those hoity-toity words that I forgot as soon as I left college, only to learn it again -- indelibly -- after it popped out of the mouth of cartoon character Bart Simpson.

I don't take any delight in the misfortune of Massachusetts residents, but in watching entrenched special interests block real reforms suffice it to say I am extremely happy to live out-of-state and out of the reaches of Beacon Hill.

As always, the most appalling player continues to be the Democratically controlled Massachusetts Legislature, which is now talking about borrowing money to cover operating expenses for state government.

More than 16 months after it became apparent that state revenues were in the soup, the Legislature has still yet to make any meaningful reforms. It did find time, of course, to raise taxes by $1.2 billion.

With Gov. Mitt Romney politely beating the drum for reform -- and the mandate of voters behind him -- a spark of promise emerged this past week when House Ways and Means Chairman John Rogers said state employees might indeed be asked to pay more than their paltry 15 percent in premiums for health insurance.

Romney wants most state workers to pay 25 percent -- about the private-sector norm -- and it's been a money-saving reform advocated for years by the non-partisan Massachusetts Taxpayers Foundation. But even with the hint of movement from the House, there is also the classic "poke in the eye" twist.

The House plan would keep premium levels at 15 percent for state workers making less than $25,000 (fair enough, perhaps), but then add a sliding scale that at the top end would require state officials earning more than $110,000 to pay 35 percent.

Few, if any, members of the Legislature, or their aides, make that amount. Most of them would pay 25 percent under the House plan. The highest premium would affect, among others, top Romney appointees and judges, neither of whom are much in favor with rank-and-file Democrats.

The House has also indicated that it might go along with Romney's desire to abolish the redundant, wasteful Metropolitan District Commission, but its fate still remains uncertain.

After all, Senate President Robert Travaglini, the East Boston Democrat, feels a special bond to the MDC.

How rotten to the core is the political culture in Boston? After mewling for months about needing more money from local aid, Mayor Thomas Menino essentially lies about playing for free on a taxpayer-funded golf course.

And while Romney tries to rid the University of Massachusetts system of a patronage-laden president's office with 60 staff members, the political establishment stands behind former Senate President William Bulger.

Let's see -- Whitey Bulger is on the FBI's most wanted list and is linked to murder and mayhem; Jackie Bulger, who was a top court official (!), pleads guilty to perjury; and we're supposed to believe nothing is wrong when the president of a major college system invokes the Fifth Amendment right not to incriminate himself?

Meanwhile, over at the Massachusetts Turnpike Authority, Chairman Matthew Amorello has focused on Big Dig openings, fanfare and cozying up to Travaglini and others who would protect the Pike from major reforms.

Amorello's most recent move is to press ahead with the sale of railyards and other land to Harvard, even as other top state officials object to the move. Amorello's spin is that it will help fund a toll-discount program for MetroWest commuters. Why is that toll break less certain than the ridiculously huge and permanent tunnel discount for residents of South Boston, the North End and East Boston (hey, Travaglini again)?

And, more broadly speaking, instead of talking about raising the automobile excise tax just for new cars, legislators should be talking about Romney's proposal to tax SUVs and gas-guzzlers more heavily to promote energy efficiency and to fight pollution.

Finally, the ever-selfish Massachusetts Teachers Association has been saturating the airwaves with a radio campaign trying to set the stage for another tax increase. The maddening drivel includes rhetoric about "sneaky backdoor cuts that hurt our schools" and calls to "raise the revenues needed to stop the devastation of public higher education."

You want to see devastation, go to Baghdad. I don't think you'll see any on a state college campus.

In fact, Salem State College still offers an "intensive English language program" for foreign students in its Center for International Education. I fully support ESL programs for immigrants, but why a state college needs to be spending your money to teach English to foreign students is beyond me.

But that's Massachusetts, in all its political glory and taxpayer misery.

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The Patriot Ledger
Saturday, April 19, 2003

To achieve reform, Romney must play politics
By David A. Mittell Jr.


These are high-stakes weeks for Massachusetts. Decisions made between now and the end of June will do much to determine the economic and social health of the commonwealth five years from now.

The state is in a crisis the seriousness of which largely goes unnoticed because the economy is not as poor as it was during the same weeks of 1975 and 1991, when previous legislatures were trying to close large budget deficits during recessions. Even adjusting for inflation, the $2 to $3 billion gap confronting fiscal 2004 is the largest in living memory.

Three broad opinions about what to do seem to have developed during Mitt Romney's 14 weeks in office. The governor himself has proposed sweeping reforms in the way state government operates. Many legislative Democrats want to make deeper budget cuts instead of enacting major reform, and before raising taxes. Some liberals want to cut the rhetorical baloney and get on with raising taxes immediately.

It is time to say that the governor is the one with the angels. I have recently faulted him for his tactics in handling UMass President William Bulger and for rolling over to gambling interests on the slot machine question. But while obviously important, these matters are marginal to the budget crisis and the system of patronage that is a fundamental cause of budget crises decade after decade.

Secretary of Administration and Finance Eric Kriss is a thoroughbred who does his homework well. No one is going to agree with everything he proposes - and, as Yogi Berra would say, no one is going to be right. The reforms envisioned are vast, and the small-minded, self-serving critics are bound to find the blinkered item they are looking for. But what is remarkable is how thoroughly the governor and Kriss have grasped the many aspects of the problem, and how quickly they have produced detailed remedies.

Those who demand higher taxes forthwith can be admired for their foolish consistency, but they are wrong. The state raised taxes by $1 billion annually last year - something Wall Street noticed disapprovingly. That means the Massachusetts business climate, which has improved palpably from what it was in the 1970s, went down a notch. Another tax increase this year would tend to assure a weak recovery like the one between 1976 and 1981, after the tax-increase shock of 1975. (Not until 1984-1986, after property tax stabilization and the repeal of the 1975 income tax surcharge, did the state economy really boom.)

Legislators who want deeper budget cuts than the governor does believe his proposed reforms stand little chance of balancing the 2004 budget. They may be correct; the well-respected Massachusetts Taxpayers Foundation agrees. But that's no reason to oppose reform, which the Foundation strongly favors, unless they are against reform per se. The other game budget-cut hawks may be playing is to allow unpopular cuts to cause demand for a tax increase to build to the point that they can vote for one with political impunity.

That's politics, and if Mitt Romney had wanted his every wish to be someone else's command, he should have undertaken to rescue Enron or the Tampa Bay Devil Rays, not the home state of legislative dynasties, such as the Creedons, the McGees, the Reinsteins, the Timiltys, the Tolmans and the Travaglinis!

On the other hand, if Romney understands that his reforms, which broadly speaking must be judged to be excellent and forward-looking, can only be accomplished in a political environment, he may need to reassess his obvious belief that reasonable people acting well are bound to come to agreement. Such harmony hasn't occurred yet, and many legislators seem to be losing their fear of this governor. He is so nice, so reasonable, so uninclined to carry a grudge ...

Maybe they still think they can have it both ways: to keep their own share of a bankrupt status quo while blaming the failure to reform the status quo on the governor. In that case, he will need to make it clear that his commitment to reform will entail more than one election-day mandate. He will need to go to the people in 2004 and demand a Legislature that is serious about reform.

The last governor to do that was Foster Furcolo, in 1958. Furcolo, a Democrat, had been elected in 1956 on a platform proposing a 3 percent limited sales tax to support education. It went nowhere in the Legislature, and in 1958 the governor asked for a new mandate. He was re-elected, the Republicans lost their last Senate majority, and the tax (later raised to five percent) became law.

In the 45 years since, voters - perhaps sensing the danger of giving one party too much power - have elected Republican governors eight times, Democrats five times. But in the Legislature, Democrats have had less to fear with each passing decade. One would hope both parties in the Legislature would follow the governor's lead in responding to the emergency we are in. If the party that controls the Legislature won't do that, Mitt Romney will need to become more of a political animal.

David A. Mittell Jr.'s column appears regularly in Weekend editions of The Patriot Ledger.

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The Lowell Sun
Friday, April 18, 2003

Editorial
Arrogance over austerity


Just when we thought our legislators were taking the state's budget crisis seriously, the House of Representatives decided to give Speaker Tom Finneran the power to award pay raises to loyalists whenever he chooses.

Imagine the gall: they haven't come up with a single dime in savings for the 2004 budget, but they're setting up a raid on the state Treasury.

The House-approved bill would give Finneran the power to reorganize committees and hand out bonus pay to anyone at anytime without the governor's approval. It's your basic legislative end run, so that taxpayers can pick up the tab without any checks-and-balances.

People are losing jobs every day and Finneran is warning of 20 percent cutbacks in local aid to cities and towns, but the No. 1 priority in the House is increased pay.

Is this serious business on Beacon Hill or just business as usual? We'll let you decide.

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