CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

CLT UPDATE
Friday, April 15, 2005

"We didn't need or want a tax cut -- but it's ours now!"


Argenziano was one of 1,488 taxpayers filing their returns last year who took advantage of the little-known state law, which grew out of a tongue-in-cheek proposal by conservatives five years ago to tweak the state's liberal establishment and tax-cut opponents who said they didn't mind paying higher taxes to fund state services. Calling their bluff, the conservatives proposed legislation to change the tax code to let people voluntarily pay their income taxes at the old rate of 5.85 percent, instead of the post-rollback 5.3 percent....

State officials said 1,929 of the state's 3.2 million taxpayers paid the higher rate when the option first appeared on the 2002 tax form, raising an additional $377,000.

For 2003 taxes, those numbers dropped to 1,488 taxpayers and $209,000, officials said, and returns for 2004 appear to be running at about the same pace.

The idea first came about during the heated debate over the tax-rollback referendum, when rollback supporters were scoffing at the contention by proponents of the higher rate that many state residents would happily pay higher taxes to fund vital state services.

"We thought we were being funny," Barbara Anderson, executive director of Citizens for Limited Taxation, said of the proposal to allow taxpayers to choose the higher rate. Anderson's group led the rollback push. "But it wasn't a joke; we were making a serious point."

Anderson said the numbers support the tax-cutters' argument that most state residents would rather keep their money. Compared with more than a million people who voted against the rollback, the one or two thousand who pay the higher rate is a tiny minority, she said....

Another taxpayer who uses the higher rate said many of his liberal friends don't use the provision because "it sends the wrong message," that support for vital services should be voluntary.

The Boston Globe
Friday, April 15, 2005
A few pay more than their share of taxes


House leaders presented a $23.6 billion state budget yesterday that would raise spending on schools and social services, but would not come close to fully restoring programs Beacon Hill cut by about $3 billion during the fiscal crisis that gripped the state between 2002 and 2004.

Overall, the plan that first-year House Ways and Means Committee chairman Robert A. DeLeo unveiled yesterday hews closely to the $23.2 billion proposal Governor Mitt Romney put forth last January, with the notable exception that it ignores Romney's call for a state income tax cut....

The two plans would raise state spending between 2 and 3 percent above the current year's total....

Catherine Boudreau, president of the Massachusetts Teachers Association, said she was disappointed by the House budget and that the state's largest teachers union would continue to lobby for more money for schools. The MTA recently launched a television ad campaign highlighting the lack of equipment and large class sizes in some schools.

"We're disappointed obviously with the funding levels and believe this is going to be a very, very tough year for public schools and higher education if funds are not increased," Boudreau said. "It barely keeps up with inflation, let alone restoring all the cuts." ...

The House plan also includes a controversial provision that would allow the children of undocumented immigrants to qualify for lower, in-state tuition at Massachusetts state colleges and universities ...

Romney spokeswoman Shawn Feddeman praised the House budget yesterday, but renewed the governor's call for the tax cut.

"Overall, we believe this is a good budget. Clearly, there are some differences between the governor's budget and the House budget. The biggest difference is that we're more optimistic about the future of Massachusetts and the underlying strength of our economy," she said. "We believe a tax cut is affordable."

The Boston Globe
Thursday, April 14, 2005
Schools get slight lift in House plan
Local leaders say hikes in aid are not enough


Councilor John Tobin said the city's reliance on fees and fines, as well as the growing residential property tax burden, concerns him.

"Let's concentrate on real economic strategies rather than fining and taxing our residents to the brink of despair," he said.

The Boston Globe
Thursday, April 14, 2005
City relies on taxes, fines to boost budget


Chip Ford's CLT Commentary

In 2000, Question Four on the ballot, our income tax rollback, was adopted by a margin of 59-41 percent. 1,055,181 voters cast their ballot against "keeping the promise" and in favor of keeping the "temporary" tax hike where it was at 5.85 percent.

Immediately following our victory, CLT filed its bill for a voluntary tax check-off, so the voters on the losing side could still be winners by continuing to pay the 5.85 rate they voted to keep.

So how many of those 1,055,181 voters took advantage of our consideration?

1,929 with their 2002 tax returns, the first year our check-off appeared, and only 1,488 with their 2003 tax returns.

Less than 2,000 out of those million-plus "no" voters who supposedly "didn't want or need a tax cut," as we heard over and over again during the ballot campaign.

One of the lamest excuses I've heard was reported in today's Boston Globe:  liberals "don't use the provision because 'it sends the wrong message,' that support for vital services should be voluntary."

So they just let those services which they consider "vital" go underfunded, which proves that liberals simply don't believe in private charity even to help those they call "the most vulnerable among us."

Causing them to actually demonstrate their naked hypocrisy each year was one of our more brilliant strokes.

On Wednesday, meanwhile, the House Ways and Means Committee released its version of the FY2006 state budget, $23.6 billion, a 2-3 percent increase over this year's budget so far. During this fiscal year, as usual, the spending is increasing beyond the initial budget through supplemental budgeting -- as it will again next year.

While the committee couldn't find the money to "unfreeze" the voters' mandate and finally roll back the "temporary" income tax rate -- the House budget whizzes discovered extra revenue kicking around to reward children of illegal ("undocumented," the Boston Globe prefers) aliens with lower in-state college and university educations at taxpayers' expense.

If those million-plus "no" voters had started an "adopt an undocumented student" program with the "unwanted and unneeded" money our tax cut forced into their pockets, the state might have honored the too-long-overdue tax rollback (I know, I'm dreaming). Then those free-spending liberals would have even more of their own money to donate to their favorite "most vulnerable among us" charity and "need" would be eliminated.

Chip Ford


The Boston Globe
Friday, April 15, 2005

A few pay more than their share of taxes
By Ralph Ranalli, Globe Staff


Griping about your taxes today? Meet nonprofit healthcare lawyer Jon Argenziano, who was elbow deep in forms and figures yesterday, cheerfully calculating how to pay more than his share in state income tax.

Argenziano, driven by what he calls the horrific effects of budget cuts on his HIV-positive clients, paid an extra $251.23 in state taxes last year under a provision in the Massachusetts tax code that allows taxpayers to voluntarily pay the old, higher tax rate that was reduced by a 2000 rollback referendum.

"I had the depressing privilege of seeing what the budget cuts did," said Argenziano, 38, of Boston, who helps people who have HIV and AIDS gain access to services and fight discrimination. "The Medicaid cuts alone were horrific. If the tax rate hadn't dropped, we would have had an extra billion dollars."

Argenziano was one of 1,488 taxpayers filing their returns last year who took advantage of the little-known state law, which grew out of a tongue-in-cheek proposal by conservatives five years ago to tweak the state's liberal establishment and tax-cut opponents who said they didn't mind paying higher taxes to fund state services. Calling their bluff, the conservatives proposed legislation to change the tax code to let people voluntarily pay their income taxes at the old rate of 5.85 percent, instead of the post-rollback 5.3 percent.

To widespread surprise, the measure passed the Legislature in 2001. Since then, the provision, which appears in small print at the bottom of the state income tax form, has put an extra $586,000 in the state's coffers, state Department of Revenue officials said.

State officials said 1,929 of the state's 3.2 million taxpayers paid the higher rate when the option first appeared on the 2002 tax form, raising an additional $377,000.

For 2003 taxes, those numbers dropped to 1,488 taxpayers and $209,000, officials said, and returns for 2004 appear to be running at about the same pace.

The idea first came about during the heated debate over the tax-rollback referendum, when rollback supporters were scoffing at the contention by proponents of the higher rate that many state residents would happily pay higher taxes to fund vital state services.

"We thought we were being funny," Barbara Anderson, executive director of Citizens for Limited Taxation, said of the proposal to allow taxpayers to choose the higher rate. Anderson's group led the rollback push. "But it wasn't a joke; we were making a serious point."

Anderson said the numbers support the tax-cutters' argument that most state residents would rather keep their money. Compared with more than a million people who voted against the rollback, the one or two thousand who pay the higher rate is a tiny minority, she said.

But taxpayers who are opting for the voluntary higher rate gave other reasons yesterday for why their numbers were relatively small.

Argenziano said he believes that many who might choose the higher rate aren't doing so because they have their taxes done by professional preparers and so don't notice the provision on the tax form.

Another taxpayer who uses the higher rate said many of his liberal friends don't use the provision because "it sends the wrong message," that support for vital services should be voluntary.

"It's just a silly way to run a tax system," said the man, who asked that his name be withheld because he pays the higher rate as an act of conscience, not to make a political point. "The things the state provides are so important. You can't send a message that funding for public education should be subject to whether or not people voluntarily want to donate their taxes."

Harris Gruman, state director of the nonprofit group Neighbor to Neighbor, said he and his wife both paid the extra taxes on their 2002 and 2003 returns.

This year, however, they sent a letter to the state Department of Revenue saying that they were taking the $415.38 they would have paid and donating it to groups such as the Massachusetts Budget and Policy Center, the Coalition for Social Justice, and Neighbor to Neighbor, which are all fighting to restore the tax rate to pre-2000 levels.

"Now it's time to change the tax rate," said Gruman, whose group attempts to build political organizations in poor neighborhoods.

True believers such as Argenziano, who keeps the amount he paid last year on a Post-it note on his computer in case anyone asks, said they are proud to continue paying the higher rate. He even tries to sell others on it.

Along with his own forms, the state returns of his two brothers were strewn across Argenziano's desk yesterday, as he scribbled furiously to make today's filing deadline.

He is submitting their taxes at the higher rate, too, he said.

"As a matter of fact, I'd better remind them, because they probably don't remember," he said. "It's what they get for not doing their own taxes."

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The Boston Globe
Thursday, April 14, 2005

Schools get slight lift in House plan
Local leaders say hikes in aid are not enough
By Scott S. Greenberger, Globe Staff

House leaders presented a $23.6 billion state budget yesterday that would raise spending on schools and social services, but would not come close to fully restoring programs Beacon Hill cut by about $3 billion during the fiscal crisis that gripped the state between 2002 and 2004.

Overall, the plan that first-year House Ways and Means Committee chairman Robert A. DeLeo unveiled yesterday hews closely to the $23.2 billion proposal Governor Mitt Romney put forth last January, with the notable exception that it ignores Romney's call for a state income tax cut. The House plan does not call for a tax increase, either.

The two plans would raise state spending between 2 and 3 percent above the current year's total. The Senate will propose its own budget in the coming weeks. After the House and Senate versions are approved, the two chambers will iron out the differences and send a single plan to Romney, who may veto all or parts of it.

Like Romney's budget, the House plan would expand Chapter 70, the state's main school-spending pool, from about $3.18 billion to $3.26 billion, or 2.5 percent. It also would add $100 million, or 15 percent, to the $661 million in lottery money the state gave cities and towns in the original fiscal 2005 budget. The governor and Legislature later added $75 million to that total, but the money wasn't supposed to be available again in fiscal 2006.

If the $75 million is included, the increase in so-called local aid in both plans is 4.2 percent more than this year's total and the largest boost since Massachusetts plunged into fiscal crisis four years ago.

But Geoff Beckwith of the Massachusetts Municipal Association, which lobbies for cities and towns on Beacon Hill, said that new money is not enough to reverse the deep cuts in personnel and programs that some local officials have been forced to make over the last several years. Beckwith also noted that most school districts would not see any increase at all, since under the state's funding formula most of the new money will be sent to the poorest schools.

"These are grim times facing cities and towns," he said. "The budget woes will continue."

Catherine Boudreau, president of the Massachusetts Teachers Association, said she was disappointed by the House budget and that the state's largest teachers union would continue to lobby for more money for schools. The MTA recently launched a television ad campaign highlighting the lack of equipment and large class sizes in some schools.

"We're disappointed obviously with the funding levels and believe this is going to be a very, very tough year for public schools and higher education if funds are not increased," Boudreau said. "It barely keeps up with inflation, let alone restoring all the cuts."

Educators in the field also gave the House budget bad reviews.

Charlie Lyons, superintendent of the Shawsheen Valley Technical Regional School District in Billerica, said the House budget is still too low to make up for the cuts of the last several years. The school district's state aid is 23 percent lower than in fiscal 2003, he said, even as enrollment is climbing.

"I think someone's got to be playing an April fool's joke on cities and towns and school districts," said Lyons. "This is not good news."

The House plan also follows Romney by proposing a roughly 3.5 percent increase for both mental health and mental retardation services. Both the governor and the House would raise spending on housing programs, the Department of Public Health, and court administration. But those increases are so slight -- less than 1 percent -- that agencies will have to find savings to deal with inflation and other rising costs.

Under Romney's plan, all active state employees and all non-disabled retired employees who are younger than 65 would have to cover 25 percent of their healthcare premiums, instead of 20 percent, a change that would generate $59 million. The House plan would not increase the premium share, so to make up the difference lawmakers are proposing less spending than Romney in some areas.

According to an analysis by the Massachusetts Taxpayers Foundation, a nonprofit group that monitors taxes and government spending, the House would spend about $16 million, or 7 percent less, than Romney on transportation and $15.6 million, or 1 percent less, than the governor on criminal justice and law enforcement.

There are other differences between the two plans. Once again, lawmakers ignored Romney's call to merge the Massachusetts Turnpike Authority and the state's Highway Department, and rejected his proposal to scrap the inspector general as an independent office. Unlike the Romney proposal, the House plan includes $9 million to restore health benefits to about 3,000 legal immigrants who are elderly or disabled. Beacon Hill cut 10,000 legal immigrants from the Medicaid rolls in 2003 as a cost-saving move.

The House plan also includes a controversial provision that would allow the children of undocumented immigrants to qualify for lower, in-state tuition at Massachusetts state colleges and universities, as long as they have lived here for at least three years, graduated from a Bay State high school, and are in the process of becoming citizens. Romney vetoed the proposal last year.

The House budget relies on about $380 million from the state's reserves. Romney's budget avoids that strategy, by using an accounting maneuver that would delay some of the state's Medicaid spending until fiscal 2007. As a result, the House budget proposal is slightly larger than Romney's.

One reason Romney and lawmakers are able to increase spending is a drastic slowdown in the growth of Medicaid, the healthcare program for the poor. Between 2001 and the current year, Medicaid spending grew by an average of roughly 10 percent a year. But the administration is predicting a 5 percent rate of growth for next year, which would give the state about $175 million more to spend next year. The House budget relies on an even rosier prediction of 4.4 percent.

Senator Therese Murray, the Plymouth Democrat who chairs the Senate Ways and Means Committee, has criticized the governor's prediction as overly optimistic, but an aide said she was not available to comment on the House plan yesterday.

For nearly a year, Romney has been urging the Legislature to reduce the state income tax to 5 percent. 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 recovering, Romney says, it's time to follow through with the full tax cut.

Romney spokeswoman Shawn Feddeman praised the House budget yesterday, but renewed the governor's call for the tax cut.

"Overall, we believe this is a good budget. Clearly, there are some differences between the governor's budget and the House budget. The biggest difference is that we're more optimistic about the future of Massachusetts and the underlying strength of our economy," she said. "We believe a tax cut is affordable."

Earlier this month, a state commission urged Massachusetts to set aside $40 million to raise the pay of court-appointed lawyers who represent poor clients, saying the lawyers' relatively low wages have discouraged the defense of the indigent. The House did not include the extra money in its budget plan, but a spokesman for the lawyers said they are hopeful that legislators will add some money through an amendment.

Maria Sacchetti of the Globe staff contributed to this report.

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The Boston Globe
Thursday, April 14, 2005

City relies on taxes, fines to boost budget
By Andrea Estes, Globe Staff


The City of Boston is counting on increased collection of parking fines, motor vehicle excise taxes, and room occupancy taxes to help finance a record budget that will exceed $2 billion.

The spending proposal for fiscal 2006, which begins July 1, is 6 percent higher than the current budget, the largest increase in seven years. But with huge increases in health insurance and pension costs, and union pay raises, officials are looking to augment a modest increase in revenue from property taxes and level-funded state aid.

In an election year, with Mayor Thomas M. Menino wary of significantly raising property taxes, city officials are relying on large projected increases in such revenue as building permit fees and hotel taxes, both of which are expected to increase as the economy improves. City officials are also tapping reserves and money from the sale of city-owned property to cover costs.

"This [budget] is increasing at twice the cost of living at a time when we're seeing residential tax bills increase," Samuel Tyler, president of the Boston Municipal Research Bureau, said. "There has to be a real careful review of how we can control spending, and we have to look at ways to reduce costs even further."

Menino said the budget proposal reflects efforts to keep costs down and the level of services up.

"We're spending more cautiously than we have in the past because of reductions in local aid over the last three years," he said. "The budget will still give us the opportunity to continue services to the neighborhoods of Boston."

Next year, fees, fines, and other revenue will make up a larger portion of the city budget than in recent years -- 20 percent. The city does not plan to raise tax rates or fee amounts but is depending on increased business activity and heightened enforcement for additional revenue.

Under Menino's spending plan, revenue in those categories would increase from $345 million to $394 million, or 14 percent, in fiscal 2006.

According to budget documents released yesterday, the city is expecting revenue from parking fines to increase from $58.5 million to $62 million, or 6 percent. Officials said parking ticket revenue is expected to increase in part because the city is filling vacancies in its parking enforcement workforce. Revenues from parking meters are expected to remain the same at $10 million, according to Menino's budget, but officials are projecting an increase in money collected from city-owned parking lots: an additional $200,000, or 13.7 percent.

Counting on an improving economy and more tourism, the city is also expecting a big boost in motor vehicle excise taxes -- an additional $5.5 million, or 17 percent, than assumed in the current budget, and an increase of $2.1 million in hotel and motel taxes, or 10 percent.

Karen A. Connor, acting director of the city's Office of Budget Management, said fading worries over traveling since the 2001 terrorist attacks have helped drive up occupancy at hotels.

"Room rates are up," she said. "We hit a low around 9/11, and it slowly came back."

Councilor John Tobin said the city's reliance on fees and fines, as well as the growing residential property tax burden, concerns him.

"Let's concentrate on real economic strategies rather than fining and taxing our residents to the brink of despair," he said.

The $2.04 billion budget, which was turned over to the City Council yesterday, contains a revenue increase of $116 million -- including $50.7 million in increased property taxes. Included in the budget is the school department's spending package, which will also hit a new high in fiscal 2006, $712.4 million, up $32 million, or 4.7 percent.

Along with increases in revenue, the city's obligations have also risen dramatically, according to the mayor's budget proposal. Last summer, union workers won pay raises that will cost the city $40 million next year -- including $14.5 million in raises handed out by an arbitrator to the city's police and fire unions. With union officials threatening to picket outside the city's first National Democratic Convention, an arbitrator stepped in to settle the contracts before the convention began. As a result, Tyler said, the city "paid a premium" to the unions, which got 14 percent increases over 4 years.

"The city was working hard to make sure the contract would be negotiated before the DNC, and the unions were using the DNC as leverage," Tyler said. "In the end, the city ended up paying a premium on these contracts. That's one of the reasons we're seeing such a large increase in '06."

Councilor at Large Maura Hennigan, who is campaigning against Menino, accused the mayor of passing the buck by letting an arbitrator settle employee contracts on the eve of the convention in July.

"You have an administration that historically has not had a good track record of negotiating contracts in a timely manner," she said. "When it goes to an arbitrator, the taxpayers are always losers.

Menino said city officials pushed hard for less generous union contracts, including for police. But he said they were rebuffed by the arbitrator, who gave police raises that were halfway between what the city and the Boston Police Patrolmen's Association's were seeking.

"I thought the arbitrator would have had some sense of what the city could afford," Menino said. At the time the contract was settled, Menino only said that he would "live with" the arbitrator's deal.

Also increasing significantly next year are the city's pension costs. Because of poor investment returns on pension funds and an increase in the number of city employees who have taken early-retirement incentives, the costs are projected to rise by $40 million.

Healthcare costs will also increase dramatically, officials said, to $220 million, up 10 percent from this year.

A few new initiatives are also in the budget proposal. The city will pay to phase in kindergarten for all 4-year-olds. Menino had been under fire from Hennigan and other councilors after the program was cut back in 2000.

The city will also spend $7.5 million on Leading the Way II, an affordable-housing program. The money will come from the sale of surplus city property.

The city also increased the number of summer jobs for teenagers and will fund 3,300 at private nonprofit corporations around the city, up from 2,556 last summer.

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