CLT
UPDATE
Sunday, October 24, 2004
"Override Fatigue" -- MTF's words!
Local property owners are picking up a
good chunk of the tab for a drop in state aid to cities and towns in
recent years, according to a report released yesterday.
Associated Press
Friday, October 22, 2004
Drop in state aid boosts tax burden on property owners
Cities and towns across Massachusetts
are facing a combination of higher property taxes and employee layoffs as a result of cuts in state
aid, according to the Massachusetts Taxpayers Foundation’s 34th
annual analysis of local revenues and spending....
Overrides of Proposition 2½ leapt 60 percent in 2003, to a total of $49
million in 39 communities, the second highest amount approved in a
single year. This was followed by a sharp drop to only $7 million in 14
communities in 2004, no doubt due to a combination of "override
fatigue" among local voters and a willingness to draw down reserves
as an alternative to contentious override campaigns.
Surprisingly, a minority of communities appeared to show considerable
fiscal strength in the face of the substantial cuts in aid.
Approximately one-third of municipalities saw an increase, although
generally small, in free cash between 2002 and 2004, and others were
able to add to their stabilization funds.
It should be cautioned that the aggregate financial data that are available cannot show whether the apparent improvements were achieved at the cost of staffing cuts, reductions in services, or other actions....
(Italics mine!)
According to the report, the 2005 state budget provides some welcome,
albeit modest, relief from the previous cuts.
Massachusetts Taxpayers Foundation
MTF Report: Higher local property taxes,
employee layoffs in wake of state aid cuts
While Romney and others want to roll
back the income tax, the Mass. Tax Foundation [MTF], a business friendly
think tank, has lobbied against the rollback. But they also have
advocated preserving the many corporate loopholes -- while not
acknowledging that it is funded by the same organizations which receive
the tax loopholes. MTF is often touted in the media as a credible source
on tax policy. Yet, some speculate that the group's actions benefit its
corporate backers and are harmful to average citizens who would like a
tax break in the wake of ever increasing property taxes.
The Winchester Star
Thursday, October 21, 2004
Analysis: Special interest, out-of-district cash
funds Winchester candidates
Chip Ford's CLT
Commentary
We almost missed the AP story that was buried in Friday’s Herald. In my daily perusal of the commonwealth’s newspapers, I haven’t found it anywhere else. We wait to see if the
Boston Globe is planning to make it into a major story just before the election –- because I'm pretty sure that was
Massachusetts
Taxpayers Foundation's intent.
Democrat incumbents in the Legislature with challengers are attempting to defend their opposition to our income tax rollback by arguing that state tax cuts
increase property taxes. This is a phony issue, since we know
that; a) local voters control overrides and; b) these same incumbents just let
a bill pass which would make these overrides easier to
win.
But frantically racing to their aid, MTF released its annual report on property taxes showing that
they have indeed increased (as if MTF -- which opposed Prop 2½ in
1980 -- cares about property taxpayers). Its message was diluted, however, by the necessary inclusion of “override fatigue” during 2004.
Maybe this “fatigue” is the reason the media didn’t cover the report. Or maybe, just maybe, CLT is finally
making its point about the anti-taxpayer “Taxpayers
Foundation” and its “nonpartisan” political agenda.
“The 34th edition of Municipal Financial Data was supported by a grant from
First Southwest
Company,” MTF revealed at the very end of its latest expedition into political influence. And what is this charitable entity? Go to its website and learn:
“First Southwest Company is now one of the largest privately held investment banks in the country with equity capital in excess of $50
million.”
However, we would not be surprised to see an op-ed column this coming week from Michael Widmer using MTF’s
report to defend entrenched incumbents’ position on the rollback. Barbara is hoping to counter this with an op-ed piece of her own. Stay tuned.
In the meantime, in the interest of keeping you informed about everything that is going
on tax-wise, here is the link to the MTF
report. And I've included an incisive column that was published in
the Winchester Star about MTF itself. We are eroding away its
credibility, wearing it down one lapping wave at a time.
Barbara wanted me to pass on that she disagrees with the Winchester Star
opposition to the Fidelity tax cut, which we saw as a correction to previous tax policy that was wrong and could have driven Fidelity and its jobs from Massachusetts. In full disclosure, she notes that Fidelity is one of the few elements of the Boston business community that has always supported
CLT -- so unlike Raytheon and other MTF members, it takes its own tax relief while also supporting tax breaks for
all of us.
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Chip Ford |
Associated Press
Friday, October 22, 2004
Drop in state aid boosts tax burden on property owners
Local property owners are picking up a good chunk of the tab for a drop in state aid to cities and towns in recent years, according to a report released yesterday.
On average for the past three fiscal years, the existing property tax base has grown at 3.1 percent a year. That's nearly double the average
growth of 1.7 percent during the previous eight years, according to the report by the Massachusetts Taxpayers Foundation.
That translates into an extra $330 million out of the pockets of property owners since 2001.
The jump reflects decisions by local communities to offset cuts in state aid by either collecting more
taxes within the limits of Proposition 2½ -- or seeking to go beyond those limits by pushing through voter-approved overrides.
In fiscal 2003, the number of overrides jumped 60 percent compared to the previous year, compared to the previous year, a total of an extra $49 million in 39 communities, the second-highest amount ever in a single year.
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Massachusetts Taxpayers Foundation
October 21, 2004
617-720-1000
MTF Report: Higher local property taxes,
employee layoffs in wake of state aid cuts
Cities and towns across Massachusetts are facing a combination of higher property taxes and employee layoffs as a result of cuts in state aid, according to the Massachusetts Taxpayers Foundation’s 34th annual analysis of local revenues and spending.
The MTF study, Municipal Financial Data, reports that per capita taxes on the existing property tax base (excluding new construction) rose almost twice as rapidly between 2001 and 2004 as in the previous eight years. This differential translates into an extra $330 million burden on property taxpayers across the state.
Despite higher property taxes and healthy additions to local tax rolls from new construction, municipalities are contending with a real decline in overall revenues because of the cuts in state aid: Adjusted for inflation, total local receipts fell in both 2003 and 2004, in sharp contrast to the strong growth for most of the preceding decade.
To cope with the resulting stress on local budgets, cities and towns have reduced their workforces -- via layoffs, early retirements, and attrition -- to a degree that is unique among the 50 states. Local government employment in Massachusetts dropped 3.3 percent in 2003, the largest decline in the nation. According to the Foundation’s analysis of federal employment data, the state’s municipal job losses have continued in 2004, declining 14,200, or 5.2 percent, from the peak in February 2002 through August 2004. The total local workforce in Massachusetts now stands below its level at the beginning of 2001.
"Cities and towns face an extended period of tight finances and difficult tradeoffs between higher property taxes or reductions in programs and services, or both," said MTF President Michael J.
Widmer.
The MTF report documents broad and deep reductions in municipal aid since the beginning of the state’s fiscal crisis. By the end of fiscal 2004, 311 of the state’s 351 communities had sustained cuts of more than $450 million, or 10 percent overall, from their peak funding levels in 2001-2002. In more than half of those communities, 163 in all, state aid fell by 15 percent or more. While about 1 in 10 localities saw modest aid increases as a result of the funding requirements of the education reform law, even they sustained significant cuts in non-school aid.
The per capita burden of local taxes on the existing property tax base has grown 3.1 percent a year on average over the last three years, compared to average growth of 1.7 percent during the previous eight years. These apparently small differentials in annual rates of growth translate into a $330 million increase in the property tax burden since 2001. This rise reflects communities’ choices -- in the face of state aid cuts -- to collect more taxes within the limits imposed by Proposition 2½ and to extend those limits through voter-approved overrides and debt exclusions.
Other indicators confirm the general picture of continued local financial stress. After adjusting for unusual circumstances in three localities, total "free cash" -- local operating surpluses minus uncollected taxes and other deficits -- in 225 communities fell by $206 million, or 47 percent, between 2002 and 2004. At the same time, one-third of the state’s communities drew heavily on their local rainy day funds, reducing balances by $53 million or 29 percent. Overrides of Proposition 2½ leapt 60 percent in 2003, to a total of $49 million in 39 communities, the second highest amount approved in a single year. This was followed by a sharp drop to only $7 million in 14 communities in 2004, no doubt due to a combination of "override fatigue" among local voters and a willingness to draw down reserves as an alternative to contentious override campaigns.
Surprisingly, a minority of communities appeared to show considerable fiscal strength in the face of the substantial cuts in aid. Approximately one-third of municipalities saw an increase, although generally small, in free cash between 2002 and 2004, and others were able to add to their stabilization funds. It should be cautioned that the aggregate financial data that are available cannot show whether the apparent improvements were achieved at the cost of staffing cuts, reductions in services, or other actions.
According to the report, the 2005 state budget provides some welcome, albeit modest, relief from the previous cuts. Even so, state assistance to cities and towns in 2005 remains $312 million, or 9 percent, below pre-crisis levels in 273 communities. Because of the structural deficit in the state budget -- expected to grow to almost $1 billion in 2006 -- the Commonwealth has limited ability to restore significant amounts of those cuts. Over the next several years, communities should count on little in the way of additional state assistance as they contend with rising health care and other costs and the likelihood of reduced revenues from new construction as interest rates rise.
The 34th edition of Municipal Financial Data was supported by a grant from
First Southwest
Company. In addition to the analysis of overall trends in local finances, the report provides a series of statistical tables that detail basic financial information--expenditures, revenues, tax rates and debt characteristics--for each of the state’s 351 cities and towns.
The Massachusetts Taxpayers Foundation is an independent, nonprofit organization that conducts research on state and local taxes, government spending, and the economy. Founded in 1932, MTF ranks among the largest and most effective organizations of its kind in the country. The quality and impact of the Foundation’s work is reflected in eight prestigious national awards recently earned for research on business costs, capital spending, state finances, governmental reform, and health care.
The full version of the report, including community-by-community statistical tables, is available online at
www.masstaxpayers.org.
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The Winchester Star
Thursday, October 21, 2004
Analysis: Special interest, out-of-district cash
funds Winchester candidates
By Anthony Schinella, Staff Writer
While Romney and others want to roll back the income tax, the Mass. Tax Foundation
[MTF], a business friendly think tank, has lobbied against the rollback. But they also have advocated preserving the many corporate loopholes -- while not acknowledging that it is funded by the same organizations which receive the tax loopholes. MTF is often touted in the media as a credible source on tax policy. Yet, some speculate that the group's actions benefit its corporate backers and are harmful to average citizens who would like a tax break in the wake of ever increasing property taxes.
During previous fiscal scrapes, Democrats in the Legislature have stated that "everything is on the table" but somehow the corporate tax loopholes never get touched.
One of these loopholes is the single-sales tax law, a tax credit created to benefit defense contractors like Raytheon.
According to the Mass. Coalition for Healthy Communities, a non-partisan, non-profit advocating fairer taxes, the single-sales tax break has allowed Raytheon to pay only $456 in state taxes annually while the average taxpayer pays thousands more. The tax cut was passed in 1995 after Raytheon promised to maintain 90 percent of its payroll and not move jobs from the state.
Since that time, Raytheon has laid-off thousands of workers despite strong sales in its arms business. Many other jobs have been moved to other states where the standard of living is lower. Two years ago, Raytheon posted almost $17 billion in sales. Last year, they were granted a multi-billion dollar contract to replace weapons systems used in the invasion of Iraq.
Yet according to the coalition, the tax loophole has helped Raytheon and Fidelity alone escape paying more than $221 million in taxes to the state, money that could be used for local aid or school reconstruction. Local aid and school reconstruction are just two programs that have been cut by the Legislature which has put towns like Winchester and Stoneham in a financial pickle.
The Mass. Dept. of Revenue confirms that corporate tax loopholes have allowed other companies like FleetBoston [now Bank of America], Staples, Teradyne, Yankee Candle, and a host of others, to pay as little as $456 a year in taxes -- despite hundreds of millions of dollars in posted sales and profits. This, while the average taxpayers in Winchester and Stoneham pay much higher income taxes on average salaries of $156,125 and $73,757, respectively, according to state data.
In previous interviews, Casey admitted that special interest donations were "hard to avoid," noting that many in the business community were his friends. He said lobbyists and other interests had no influence on his decision-making. Shannon has also denied that any of these lobbyists have any influence over how he legislates and also noted long friendships with lobbyists.
On the corporate tax breaks, both Shannon and Prindiville have previously stated that the Legislature should get more aggressive with the issue. In an interview last year, Casey said he believed more revenue should come from payroll taxes instead of corporate profit taxes, suggesting that companies like Fidelity and Raytheon already paid property taxes to local communities. At the time, Casey said the single-sales tax break would be discussed but later, no action was taken on the measure. The loophole remains.
More recently, Casey has come out against the rollback of the income tax despite the unfairness of the current tax structure, stating that the tinkering of other taxes was more important than keeping the Legislature's promise to roll back income taxes on individuals.
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NOTE: In accordance with Title 17
U.S.C. section 107, this material is distributed without profit or
payment to those who have expressed a prior interest in receiving this
information for non-profit research and educational purposes only. For
more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
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