CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

CLT UPDATE
Monday, August 29, 2005

"Hamill Commission II" attacks Prop 2


A task force formed by Massachusetts mayors wants the state to consider boosting excise tax rates on cars and city taxes on restaurant meals, and moving thousands of municipal retirees to Medicare, according to the group's draft report....

The report comes as cities and towns across the state struggle with a tax structure that leaves them heavily reliant on property taxes and state aid to cover the rapidly increasing costs of employing teachers, firefighters, and other public employees. Most alarming to local officials has been the meteoric rise of healthcare costs in recent years: A recent Massachusetts Taxpayers Foundation survey of 32 communities found that employee healthcare spending was up 63 percent since 2001....

Task force member Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the report will provide the Legislature with a clear picture of what towns and cities are facing.

"I think this will be a very important blueprint for municipal finance for the next decade," Widmer said....

The task force's draft report urges lawmakers to look at aligning excise tax rates more closely with the actual value of vehicles, thus keeping tax bills higher longer. A change could mean big money: Excise taxes contributed more than $600 million in fiscal 2004, according to the draft report of the Municipal Finance Task Force....

Widmer said excise taxes were far higher until they were reduced as part of tax-cutting efforts in the early 1980s.

"The notion of updating the auto excise tax 25 years later is hardly a radical notion," he said.

The Boston Globe
Sunday, August 28, 2005
State may be asked to raise excise tax


Since we led the fight to cut the auto excise in 1980, let us be among the first to say "No" to increasing it....

The amount collected by all Massachusetts cities and towns from the auto excise was $266 million in 1980. It dropped to $112 million after the rate cut, then rose to $534 million in 2000. Though the rate was lower, the value of automobiles has increased to generate plenty of revenue from what was originally another "temporary" tax....

This year, as we celebrate the 25th anniversary of Proposition 2, we intend to stop this new assault on Prop 2 as well.

CLT NEWS RELEASE
Monday, August 29, 2005
Again to the "Hamill Commission"
Hands off voters' Prop 2!


Chip Ford's CLT Commentary

Can we at CLT call them or what?

In my commentary for the CLT Update of Aug. 24 ("'There is nothing new under the sun' - New 'Hamill Commission' again to assault Prop 2?"), I noted how this is the second time the "Hamill Commission" has been convened. It's signature "recommendation" in 1989 was to gut Proposition 2 and, we suspected, this new incarnation would likely do no less.

I expected that any such commission would, of course, include Michael Widmer and his so-called Massachusetts Taxpayers Foundation -- and again he and it are present to provide cover and "respectability" as usual for another round of proposed tax hikes on the common taxpayer.  M. Robert Rose, executive vice president of Sovereign Bank is a member of MTF's Board of Trustees (an assemblage of Boston's and the state's most powerful corporate elite), commission Chairman John Hamill is the bank's retired president; how far away could Widmer be?

Again the Hamill Commission's signature recommendation is an attack on Proposition 2. Along with capping property tax increases, Prop 2 reduced the annual municipal auto excise from $66/$1,000 assessed value to $25/$1,000 -- a savings of $41 per $1,000 value of a vehicle every year for each owner. (E.g., if your car is valued at $5,000 then you save $205 every year thanks to our Prop 2; at $10,000 you save $410 every year, etc.)

Yesterday's Boston Globe report made no mention of this latest assault on Prop 2 -- Widmer referred only to the excise tax that was "reduced as part of tax-cutting efforts in the early 1980s." He conveniently left out "reduced" by whom (CLT and the voters), "reduced" how (by a ballot question), or "reduced" why (municipalities were taxing residents to death, so taxpayers revolted).

With the skyrocketing cost of gas, the steadily mounting expense of owning and driving a car, can you imagine such a preposterous recommendation?

Attacks on Proposition 2 continue. The last assault on the auto excise was defeated in 2002, just three years ago.

See:
CLT News Release - Apr. 2, 2002 - "Memo to the Legislature: Proposed Proposition 2 tax hikes"
CLT Update - May 15, 2002 - "Excise tax hike killed"

These current recommendations are obviously being leaked piece by piece; trial balloons intended to gauge public reaction. The final report could well include further assaults on Prop 2. We must remain vigilant; this commission must be defeated once again.

We have joined the debate, even though CLT again wasn't invited to participate in a commission on municipal finances. Were any of you taxpayers asked for your opinion?

Our news release addressing this recent revelation was sent out to the media and others statewide this morning.

Chip Ford


The Boston Globe
Sunday, August 28, 2005

State may be asked to raise excise tax
Car rate, state aid listed in report
By Scott Helman, Globe Staff


A task force formed by Massachusetts mayors wants the state to consider boosting excise tax rates on cars and city taxes on restaurant meals, and moving thousands of municipal retirees to Medicare, according to the group's draft report.

The task force of municipal officials and other specialists on local government also recommends that Massachusetts set state aid to communities at a fixed percentage of state tax receipts every year, so the payments do not drop disproportionately during budget cutbacks, according to a draft copy of the report obtained by the Globe.

The report comes as cities and towns across the state struggle with a tax structure that leaves them heavily reliant on property taxes and state aid to cover the rapidly increasing costs of employing teachers, firefighters, and other public employees. Most alarming to local officials has been the meteoric rise of healthcare costs in recent years: A recent Massachusetts Taxpayers Foundation survey of 32 communities found that employee healthcare spending was up 63 percent since 2001.

"Healthcare is huge," said Catherine Gover, a task force member and a city councilor in Everett. "It's a challenge every year."

Gover, like other task force members interviewed, said she would not address specific recommendations until the report was finalized and released.

Andrea Hurwitz, a spokeswoman for the chairman of the Municipal Finance Task Force, John Hamill, said the final recommendations might differ from the draft report. The final version is expected to be released early next month. The task force began its work in December.

The draft report asserts that the combination of stagnant state aid levels, rising costs, and a lack of financial flexibility has resulted in layoffs, significant reductions in services such as library hours and police patrols, and property tax increases across the Commonwealth.

"This situation has created a serious strain on municipal budgets that, without changes to state and local policies, will evolve to crisis proportions," the draft said.

Task force member Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the report will provide the Legislature with a clear picture of what towns and cities are facing.

"I think this will be a very important blueprint for municipal finance for the next decade," Widmer said.

But some recommendations may stir opposition.

The proposal to raise automobile excise tax rates, for example, would mean car owners in Massachusetts would face significantly higher bills.

Currently, if you buy a 2006 minivan for $25,000 in 2005, your excise tax bill for 2005 would be around $300, because it is calculated as if your car were worth only half the purchase price. The tax bill would nearly double in the next year before dropping precipitously in subsequent years.

The task force's draft report urges lawmakers to look at aligning excise tax rates more closely with the actual value of vehicles, thus keeping tax bills higher longer. A change could mean big money: Excise taxes contributed more than $600 million in fiscal 2004, according to the draft report of the Municipal Finance Task Force.

Representative Bradley H. Jones Jr. of North Reading, the House Republican leader, said now is the wrong time to burden car owners. With gas prices near record levels, he said, some lawmakers would be reluctant to support raising the excise tax. (The Legislature would have to approve most of the task force's proposals.)

"My guess is that will be met with the third rail," Jones said. "I think legislators will be asking, 'Is this the time to be doing that?' "

Widmer said excise taxes were far higher until they were reduced as part of tax-cutting efforts in the early 1980s.

"The notion of updating the auto excise tax 25 years later is hardly a radical notion," he said.

Jones also said the idea of allowing communities to raise money through a local meals tax could have trouble winning support on Beacon Hill. He said he was open, though, to hearing the task force's recommendations.

"We are hopeful the Legislature will take them seriously," said Revere's mayor, Thomas Ambrosino, a member of the task force.

The draft report mentions but does not advocate a position on several of the more contentious topics under consideration by state and local policy makers -- including the state income tax rate and whether to repeal a tax break to telecommunications companies, estimated to be worth as much as $140 million.

Senator Steven A. Tolman, who sits on the task force, said the group had to tread carefully given the political sensitivity of those issues.

"Clearly, the task force doesn't want to make stringent recommendations, because they know that the solutions lie within getting the majority in both branches, and we don't know what there is support for and what there isn't," said Tolman, a Brighton Democrat.

Some communities have already sought new ways of generating revenue locally. Boston, for example, began charging boaters who dock in the city and aggressively pursued residents who circumvented Boston taxes by registering cars out of state. And Mayor Thomas M. Menino of Boston has campaigned for a local meals-tax option and for the repeal of the tax break for telecommunications companies.

Other recommendations of the task force include:

Overhauling the formulas the state uses to calculate how much aid to send to communities.

Lifting the cap on state Lottery proceeds that can be sent to cities and towns.

Considering whether to give cities and towns the flexibility to bargain individually with unions on healthcare and making it easier for communities to jointly purchase health plans.

The draft report cites the importance of listening to public employee unions.

Catherine A. Boudreau, president of the Massachusetts Teachers Association, said her union will look carefully at the details of the Medicare proposal and other aspects of the task force's recommendations.

"We understand how important this debate is, and we are willing to working with municipalities to help reduce costs," she said. "But not on the backs of employees."

Hamill, the chairman of Sovereign Bank New England, led a similar panel in the late 1980s.

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