CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

CLT UPDATE
Wednesday, September 8, 2004

Searching for the "Unfolding Strategy"
Taxpayers again sandbagged by GOP legislators


Another CLT Blast from the Past

"The Governor is well aware that the tax rollback question will be taken up with the expected roll call vote during the debate on the Fy 2004 Supplemental budget. As you know I am a sponsor of the amendment and will vote for its passage. I wish folks would check with their legislators as to how the strategies unfold vs. following newspapers and radio or other organizations that don't have the courtesy to work with us. Just a frustration from a legislator who has supported and/or helped author every tax cut enacted since 1991."

State Sen. Michael R. Knapik (R-WestField)
May 19, 2004
Response to a constituent/CLT member
after GOP senators axed Gov's rollback in the budget


During spring budget debate, [Sen. Brian Lees, R-East Longmeadow] withdrew an amendment calling for an income tax cut, a priority of many Republicans and Gov. Mitt Romney, saying he hoped to offer it later in the year. Today, Lees told the News Service that it seems certain that a vote on that proposal will have to wait until next year, after this fallís elections.

"Weíll get a vote on that early next year," said Lees.

State House News Service
Tuesday, September 7, 2004
Senate GOP leaders bullish about mini-budget's potential


Democratic legislators said yesterday that they will defy Governor Mitt Romney's call for an income-tax cut and instead use about $725 million in extra revenue to replenish the state's reserves and boost aid to cities and towns, potentially handing Republican legislative candidates a potent campaign issue this fall.

Romney immediately criticized the Democrats' refusal to go along with the proposed income-tax cut and signaled the GOP would use the issue as the Republicans attempt to loosen the Democrats' grip on the Legislature in upcoming elections.

"I think Republican candidates will respect the will of the voters who called for a tax rollback, and I think that will help our races in the fall," Romney said in a Globe interview, referring to the 2000 ballot initiative that legislators have delayed implementing....

Because the Legislature has concluded its formal sessions for the year, there will not be a recorded vote on the tax cut....

"I don't see how we can justify a $700 million surplus and growing revenues and growing state expenses without giving the citizens what they voted for," the governor said. "The Legislature is adding programs and is adding spending. If the money is there, they will spend it." ...

Because the Legislature won't meet in a formal session until January, the plan must be approved on a voice vote, and a single lawmaker's objection could scuttle it....

Michael J. Widmer of the Massachusetts Taxpayers Foundation, a business-funded nonprofit that studies taxes and government spending, said that adding $150 million to the state's recurring spending is unwise. Widmer also opposes a tax cut, saying most of the money should go to state budget reserves....

A leading antitax advocate predicted that Democrats could face a backlash if they fail to enact a tax cut.

"It isn't a great campaign issue as a tax cut, it's a great campaign issue as a respect-for-the-voters issue," said Barbara Anderson of Citizens for Limited Taxation. "The voters are fed up with the lack of respect they get from government at all levels, but particularly the lack of respect they get from state government under Tom Finneran."

The Boston Globe
Wednesday, September 8, 2004
Democrats eye rolling back tax cut, restoring reserves
Romney criticizes $725m proposal


The best way to curb government growth is to curb spending, and the only way to do that is to take money completely off the table by returning it to the taxpayers. (As we've learned, rainy day funds can get spent pretty quickly, too.)

So Romney's plan to reduce the income tax rate to 5 percent starting in January 2005 is exactly the right one at exactly the right time - before the spending orgy begins again on Beacon Hill....

A Boston Herald Editorial
Monday, June 7, 2004
A history lesson on fiscal restraint


In 2004 the latest crisis is over. It is time to continue with the votersí mandate before the Legislature spends us into another "emergency."

CLT Memo to the House Ways & Means Committee
June 15, 2004
Supplemental Budget and income tax rollback


Chip Ford's CLT Commentary

On July 12, the Department of Revenue announced in its annual revenues report: "... preliminary revenue collections for fiscal 2004 were $15.942 billion, an increase of $978 million or 6.5 percent more than fiscal 2003."

On August 2 in its news release on monthly revenue collections it reported: "... preliminary revenue collections for July were $1.127 billion, an increase of $60 million or 5.7 percent more than last July."

In its news release on monthly revenue collections on September 2, the DOR announced: "...  preliminary revenue collections for August were $1.192 billion, an increase of $103 million or 9.4 percent over last August."

Since this time last year state revenue has increased by $1.141 billion -- but still the Beacon Hill pols refuse to keep the promise, respect the voters' 2000 mandate, and finish rolling back the income tax rate.

Last June the Boston Herald warned: "Romney's plan to reduce the income tax rate to 5 percent starting in January 2005 is exactly the right one at exactly the right time - before the spending orgy begins again on Beacon Hill."

Last June CLT warned: "It is time to continue with the votersí mandate before the Legislature spends us into another 'emergency.'"

The spending orgy has begun.

And no little thanks belongs to Senate Republicans and their smoke-and-mirrors gamesmanship.

When Governor Romney attempted to include the voters' mandate in the budget, Sen. Brian Lees, R-East Longmeadow,  yanked it out at the eleventh hour. It was "a strategy" senate Republicans assured us; it would be put back in for the supplemental budget, was their promise.

Sen. Michael Knapik, in his response to a constituent and member of CLT, promised that it would be included in the supplemental budget, by god he was in fact leading the charge. Then he couldn't resist a not-so-subtle shot: " I wish folks would check with their legislators as to how the strategies unfold [my italics] vs. following newspapers and radio or other organizations that don't have the courtesy to work with us."

This morning Barbara had "the courtesy" to call the offices of Sens. Lees, Knapik, Tarr and Hedlund seeking out any "unfolding strategies" they might be brewing up. She also called House Minority Leader Brad Jones's office. So far, nobody knows of any "unfolding strategies." Chip Faulkner just heard back from Sen. Tisei. The good senator's response was, "We're not in for the rest of the year. Nothing will happen right now." It would appear that the supplemental budget will go through in an informal session without the objection of even one member or a forced roll call vote on the voters' tax rollback.

More broken promises, a self-serving betrayal, or another 'brilliantly executed' incumbent Republican "strategy unfolding"? You decide.

"... other organizations that don't have the courtesy to work with us," Sen. Knapik whined about CLT.

Another wounded pol who wonders how we ever got this cynical.

This fall we'll be working with the governor to defeat incumbent Democrats. But come the election of 2006 it'll be time to consider defeating these RINOs -- for they too remain a part of the problem on Beacon Hill.

Chip Ford


See also:

CLT Update -- May 18, 2004
Taxpayers sandbagged by Senate Republicans!

CLT News Release -- May 19, 2004
Senate Republicans withdraw amendment
for Governorís income tax rollback;
CLT calls for new Senate Minority Leader

CLT Update -- May 20. 2004
Agreed: time for treacherous RINOs to "move on"


State House News Service
Tuesday, September 7, 2004

Senate GOP leaders bullish about mini-budget's potential


A mini-budget to shore up underfunded accounts in a fiscal year that ended more than two months ago will include new investments as well and total "a few hundred million dollars," according to the Senate minority leader.

"Itís a very positive supp," Sen. Brian Lees (R-East Longmeadow) said Monday, using the Beacon Hill abbreviation for supplemental budget. "I think weíll be very pleased. Itís mostly items that Republicans and Democrats believe are important and need to be done."

During spring budget debate, Lees withdrew an amendment calling for an income tax cut, a priority of many Republicans and Gov. Mitt Romney, saying he hoped to offer it later in the year. Today, Lees told the News Service that it seems certain that a vote on that proposal will have to wait until next year, after this fallís elections.

"Weíll get a vote on that early next year," said Lees.

He declined to say which spending items would be popular across party lines, but increased local aid, following a series of cuts, might be one possibility. Romney has proposed a special $100 million local aid distribution to cities and towns.

The state posted a $700 million surplus in fiscal 2004, but House leaders especially have downplayed the significance of that figure, pointing out that the stateís budget is still structurally imbalanced by hundreds of millions of dollars due to the extensive use in recent years of reserve funds.

Lees said he expects Senate action on a supplemental budget on Thursday, after additional details emerge on Tuesday or Wednesday. He said House and Senate budget writers, all Democrats, have been trying to nail down areas of agreement.

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The Boston Globe
Wednesday, September 8, 2004

Democrats eye rolling back tax cut, restoring reserves
Romney criticizes $725m proposal
By Scott S. Greenberger, Globe Staff


Democratic legislators said yesterday that they will defy Governor Mitt Romney's call for an income-tax cut and instead use about $725 million in extra revenue to replenish the state's reserves and boost aid to cities and towns, potentially handing Republican legislative candidates a potent campaign issue this fall.

Romney immediately criticized the Democrats' refusal to go along with the proposed income-tax cut and signaled the GOP would use the issue as the Republicans attempt to loosen the Democrats' grip on the Legislature in upcoming elections.

"I think Republican candidates will respect the will of the voters who called for a tax rollback, and I think that will help our races in the fall," Romney said in a Globe interview, referring to the 2000 ballot initiative that legislators have delayed implementing.

But House Speaker Thomas M. Finneran described Romney's call for a tax cut as "rash and reckless," and said he isn't worried that the issue will hurt Democratic candidates.

"Some might use it as a political weapon, but others have been fully informed and can answer that in a very skillful and accurate fashion," he said. Because the Legislature has concluded its formal sessions for the year, there will not be a recorded vote on the tax cut.

The proposed tax cut, a key difference between Romney and the Democrats who control the Legislature, would reduce the state income-tax rate from 5.3 percent to 5 percent, a decrease of less than $100 for the average taxpayer. In 2000, voters approved a gradual lowering of the income-tax rate, which was 5.85 percent at the time, to 5 percent. But in the depths of the state's fiscal crisis in 2002, the Legislature froze the rate at 5.3 percent. Now that the state's economy is showing signs of recovery, Romney says, it's time to follow through with the full tax cut.

"I don't see how we can justify a $700 million surplus and growing revenues and growing state expenses without giving the citizens what they voted for," the governor said. "The Legislature is adding programs and is adding spending. If the money is there, they will spend it."

For months, Finneran and his lieutenants have been more pessimistic about the Bay State's economic fortunes than Romney or the Senate. They have repeatedly questioned the wisdom of spending the unexpected revenue from the last fiscal year, which ended June 30.

As recently as two months ago, Representative John H. Rogers, a Norwood Democrat who is chairman of the House Ways and Means Committee, cautioned that the state still has a "structural deficit," or a gap between steady revenue and recurring expenses, of about $800 million. The fiscal 2005 budget totals about $24.5 billion.

But Finneran emphasized yesterday that legislators plan to put half of the $725 million into the state's reserve fund. With the money, the reserves will total about $800 million. At its peak in June 2001, the fund contained $2.3 billion, but lawmakers drew on it heavily during the downturn.

An additional $200 million in the latest spending plan will go toward launching a new school building program ($150 million) and bailing out financially troubled Springfield (about $50 million). Both of those are one-time expenditures, meaning they will not be on the state's books in the future.

With the remaining $150 million, lawmakers want to send $75 million to cities and towns, give raises to court-appointed defense lawyers, boost spending on substance-abuse programs, and alter the charter-school funding formula so that charter schools drain less money from traditional districts. The so-called supplemental budget also includes money for charter schools to help them cover their operating and capital costs.

Because the Legislature won't meet in a formal session until January, the plan must be approved on a voice vote, and a single lawmaker's objection could scuttle it. But Finneran, who wields considerable clout in the House, was predicting its passage yesterday because the proposal addresses some "fairly urgent issues."

The budget plan was worked out with Senate Democrats. In addition, Senate Republican leader Brian Lees told State House News he supported the supplemental budget.

Michael J. Widmer of the Massachusetts Taxpayers Foundation, a business-funded nonprofit that studies taxes and government spending, said that adding $150 million to the state's recurring spending is unwise. Widmer also opposes a tax cut, saying most of the money should go to state budget reserves.

"Whether it's reducing taxes or adding to the spending base, either widens the structural deficit and creates a greater dilemma down the road," Widmer said.

Romney acknowledged that he supports much of the bill, and he declined an opportunity to threaten a veto yesterday if the final product doesn't include his tax cut. He promised, however, to continue fighting for the rollback.

A leading antitax advocate predicted that Democrats could face a backlash if they fail to enact a tax cut.

"It isn't a great campaign issue as a tax cut, it's a great campaign issue as a respect-for-the-voters issue," said Barbara Anderson of Citizens for Limited Taxation. "The voters are fed up with the lack of respect they get from government at all levels, but particularly the lack of respect they get from state government under Tom Finneran."

Lowering the tax rate to 5 percent would cost the state between $200 million and $225 million in fiscal year 2005. But it would reduce revenue by twice that amount in fiscal year 2006, when it would be in effect for the entire year.

Romney's $225 million tax cut would be in addition to his own supplemental spending plan, which he proposed last June. That $437 million proposal includes $254 million for construction projects across Massachusetts, $100 million for cities and towns, and $83 million for half a dozen health care and education programs, including $19 million for adult basic education, $11.8 million for substance-abuse treatment, and $10 million for MCAS tutoring in struggling school districts.

"I recognize that it's important to put money away, but it's also important to maintain our critical infrastructure," Romney said yesterday.

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