CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

CLT UPDATE
Thursday, May 25, 2006

State Senate unanimously backhands taxpayers, voters
Again dodges income tax rollback as mandated by voters


The Massachusetts Senate unanimously approved a plan Wednesday to cut the state income tax rate to 5 percent over the next three years -- but it comes with a very big "if."

The plan, designed to fulfill a voter mandate and rob Republican Gov. Mitt Romney of a political cudgel, would only take effect if the state meets three thresholds on local aid. The Senate's own budget only crosses two of them.

"This is better than nothing," said Senate Republican leader Brian Lees of East Longmeadow. "It is a step in the right direction."

The plan would gradually reduce the state income tax rate to 5 percent by the 2009 fiscal year based on how much money the state sends back to cities and towns in three key areas: school aid; additional assistance and lottery aid.

Associated Press
Wednesday, May 24, 2006
Senate approves stepped-down cut in state income tax rate


Senate lawmakers voted yesterday to lower the income tax rate from 5.3 percent to 5 percent if state spending on education and local aid is restored to levels last seen before the fiscal crisis of 2002.

The Senate unanimously passed a measure that would trigger a series of income tax rate reductions to 5 percent over three years beginning as soon as 2007. But the reductions would take effect only if state spending on education and other municipal services returns to 2002 levels, adjusted for inflation....

Travaglini, minority leader Brian Lees, and Ways and Means chair Therese Murray said yesterday that because state tax revenues have been soaring, the state can afford the reduction in income tax revenue -- $517 million a year if the rollback is fully phased in.

"We have realized additional revenue that now makes this action defensible and reasonable, " said Travaglini....

Eric Fehrnstrom, a spokesman for Romney, who included a rollback over two years in his most recent budget, praised the Senate for moving "in the right direction," but said lawmakers didn't need to attach strings.

"We will end this year with yet another $1 billion-plus tax revenue surplus," said Fehrnstrom. "We have the resources to both lower the tax rate and spend more on priorities like local aid and education."

Travaglini vowed to lobby the House to approve the measure. "When the [Senate] vote is 39-0," he said, "it sends a powerful message that the body is behind me."

But it was unclear whether the House would approve it.

James Eisenberg, chief of staff to House Ways and Means chairman Robert DeLeo, said House lawmakers are satisfied with the 2002 legislation now in effect that froze the income tax rate at 5.3 percent....

Cam Huff, research director of the Massachusetts Taxpayers Foundation, a business-backed government watchdog group, said any tax cut should be tied to the state's continued economic growth.

"State tax collections have been very strong this fiscal year," he said. "This is good news. But the question is how long is it going to last and whether we're going to commit ourselves to tax cuts that could kick in just as things go sour." ...

During the debate on the Senate floor, Republicans said they approved the measure with mixed feelings, preferring an immediate return to the 5 percent tax rate.

"It's a little bittersweet here," said Lees. "This is in my mind a little bit of a chicken's way out. But it's better than nothing. It's a bittersweet moment, but we'll take any victory we can take."

The Boston Globe
Thursday, May 25, 2006
Mass. Senate endorses tax cut
Rollback hinges on local aid hike


The bipartisan effort included the adoption of: an incremental income tax rollback ...

Senate President Robert Travaglini (D-Boston), Senate Minority Leader Brian Lees (R-East Longmeadow) and Senator Therese Murray (D-Plymouth), Chairwoman of the Senate Committee on Ways and Means, applauded today's actions of the Massachusetts Senate.

Massachusetts Senate
May 24, 2006
News Release
Senate adds tax relief for Massachusetts residents


Reilly's retort was: If not now, when the state has a budget surplus and is seeing strong revenue numbers, when would Gabrieli and Patrick support the rollback?

"The voters made it very clear," Reilly said. "This is about keeping a promise ... This is the time to keep that promise."

The Boston Globe
Thursday, May 25, 2006
In Democrats' debate, Reilly is the target


Beacon Hill doesn’t want gas tax relief but some of the measure’s biggest critics are collecting thousands in taxpayer dollars to stave off their own pump pinch, records show.

"The vast amount of people don’t get compensated to go to and from work," said House Majority Leader Brad Jones (R-North Reading), who sponsored the gas tax relief bill. "It creates a certain distance to relate to what these commuters are going through."

The state Senate yesterday rejected a budget amendment 19-7 that would have rolled back the state’s 21-cent-a-gallon gas tax between Memorial Day and Labor Day, a measure first proposed by Jones and backed by Lt. Gov. Kerry Healey.

The move was hardly unexpected, since leading Democrats put the brakes on the measure as soon as it was announced this month.

"Where do these Republicans think this money comes from?" said Worcester state Rep. John Binienda to the Worcester Telegram & Gazette.

But Binienda’s commute into town won’t be walloping his wallet - he has collected $2,376 so far this year in per diem payments, records show.

The per diems are taxpayer-funded reimbursements for driving to and from work.

State Rep. Joseph Wagner, House chair of the Joint Committee on Transportation, told another publication that he opposed the gas tax relief because, "We’re treating a symptom here, not the disease."

Wagner is tied for being the 10th highest collector of per diems so far this year, taking in $2,760. Wagner, a Chicopee Democrat, collects $60 per diem, which is based on the distance from the State House.

The Boston Herald
Thursday, May 25, 2006
Pump relief for pols as taxpayers get taken for ride


Chip Ford's CLT Commentary

The alleged "Great and General Court" of the Commonwealth of Massachusetts has done it again, backhanded taxpayers, voters, and democracy itself across the face -- again dodging a rollback of its 17-year old "temporary" income tax hike, again brashly flashing the Beacon Hill middle-finger salute at the voters' 2000 mandate.

"This is better than nothing . . .  a step in the right direction," crowed Senate Republican Leader Brian Lees (R-East Longmeadow).  No it's not, senator:  it is precisely nothing -- exactly nothing but another meaningless promise expected to be broken before it ever has a chance to reach fruition.  Senator Lees, this is nothing more than another stall, another dodge to buy time.  Buy the Bacon Hill pols more time to spend us into the next "fiscal" crisis, the next spending crisis:  the next excuse that the tax rollback is "no longer affordable."  Been there, done that, senator; where were you?

Read the Senate debate on the tax rollback

Senate Republicans submitted four amendments into the budget for the tax rollback and promised us rollcall votes.  They folded after their first amendment, #10, was rejected and their second amendment, #11, was subject to an additional amendment by Democrats -- then jumped on the Democrats' bandwagon, the amendment to their original.  The further two promised amendments never saw the light of day -- but CLT got the rollcall vote that will be used in its forthcoming Legislative Rating -- the only tax rollback rollcall vote of the day.  All 39 senators (the president customarily doesn't vote)  voted against the rollback as mandated by the voters, their constituents.

Governor Romney's spokesman, Eric Fehrnstrom, yesterday asserted: "We will end this year with yet another $1 billion-plus tax revenue surplus.  We have the resources to both lower the tax rate and spend more on priorities like local aid and education."

The governor himself has said:  "How we cannot justify a tax cut to the level that was voted by the citizens is something I can't understand."

Even Democrat gubernatorial candidate Tom Reilly yesterday observed: "The voters made it very clear. This is about keeping a promise ... This is the time to keep that promise."

But in the Legislature that revenue surplus belongs to them, and by God they're not going to part with it, not a single cent of it, not it they can avoid it for as long as they can.

Yesterday the state Senate also rejected an amendment which would have suspended the 21.5˘ per-gallon gas tax from Memorial Day through Labor Day.  The state can't afford it, you know.  "Where do these Republicans think this money comes from?" said Worcester state Rep. John Binienda, according to the Worcester Telegram & Gazette.  We know where Rep. Binienda thinks it comes from:  those trees around the State House!

But the Bacon Hill pols can still find enough green growing on those trees to keep padding their own income, alleged expenses under false pretense ("Shocking, simply shocking.") doubled as recently as 2000.  [See:  The Eagle-Tribune, Apr. 12, 2000, "Sows at the public trough; Legislators are seeking to line their own pockets at our expense"]  Must have been another "unmet need."

We thought we had a chance to repeal the despicable nursing home tax, amendment #16, because we had bi-partisan support. So the Senate leadership "consolidated" our amendment into a clump of other amendments it doesn’t support, and none of them will be debated at all, ever see the light of day either.

Legislators file amendments so they can tell their constituents that they filed them, then they sit there like bumps on a log as their amendments are rejected out of hand by leadership staffers. Senator Brown told Chip Faulkner, who was at the State House for the "debate," that Senate rules do not allow members to pull their amendments out of the reject pile.

Keep in mind that these issues are filed as budget amendments because the leadership won’t bring them up for a separate vote during the rest of the session -- when they're idle. The question is, why do we need state legislators at all? Why not just fire them all but the leadership, and save some money?  We taxpayers are paying far too much for bumps on logs.

Chip Ford


Associated Press
Wednesday, May 24, 2006

Senate approves stepped-down cut in state income tax rate
By Steve LeBlanc


The Massachusetts Senate unanimously approved a plan Wednesday to cut the state income tax rate to 5 percent over the next three years -- but it comes with a very big "if."

The plan, designed to fulfill a voter mandate and rob Republican Gov. Mitt Romney of a political cudgel, would only take effect if the state meets three thresholds on local aid. The Senate's own budget only crosses two of them.

"This is better than nothing," said Senate Republican leader Brian Lees of East Longmeadow. "It is a step in the right direction."

The plan would gradually reduce the state income tax rate to 5 percent by the 2009 fiscal year based on how much money the state sends back to cities and towns in three key areas: school aid; additional assistance and lottery aid. The tax rate is currently 5.3 percent.

The Senate's own budget fall short on the "additional assistance" category. That means the cut would not take effect under the Senate's own spending plan for the new year.

Sen. Steven C. Panagiotakos, D-Lowell, said the amendment balances the desire to cut taxes for individuals while also ensuring communities have enough money to take care of local needs.

Some Senate Republicans who have pushed for an immediate tax cut voted for the amendment grudgingly.

But Democrats said the amendment shows that the Senate is serious about reducing the tax rate.

"We will get to 5 percent," said Sen. Mark Montigny, D-New Bedford.

The income tax is a perennial political football in Massachusetts with Romney and his Republican predecessors in the governor's office regularly chastising the Democrat-controlled House and Senate for balking at reducing the income tax rate.

In 2000, former Republican Gov. Paul Cellucci backed a ballot question overwhelming approved by voters to reduce the tax rate from 5.95 percent to 5 percent, but Democratic lawmakers froze that at 5.3 percent when the state's economy tumbled.

Romney called Senate leaders on the carpet as recently as last week for not including an immediate income tax rate cut in their budget plan.

"How we cannot justify a tax cut to the level that was voted by the citizens is something I can't understand," Romney said.

Romney spokesman Eric Fehrnstrom said the state will end the year with a $1 billion surplus.

"We can afford to honor the vote of the people and lower the tax rate without new caveats and restrictions," he said Wednesday.

For the cut to go through each year under the Senate plan, the state must reach 2002 spending levels in school aid, additional assistance and lottery aid.

The tax cut would cost the state about $88 million in lost revenue in the first year, $323 million in the second and $517 million in the third.

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The Boston Globe
Thursday, May 25, 2006

Mass. Senate endorses tax cut
Rollback hinges on local aid hike
By Andrea Estes, Globe Staff


Senate lawmakers voted yesterday to lower the income tax rate from 5.3 percent to 5 percent if state spending on education and local aid is restored to levels last seen before the fiscal crisis of 2002.

The Senate unanimously passed a measure that would trigger a series of income tax rate reductions to 5 percent over three years beginning as soon as 2007. But the reductions would take effect only if state spending on education and other municipal services returns to 2002 levels, adjusted for inflation.

The Senate also approved a sales tax holiday for Aug. 12 and 13, a measure allowing cities and towns to reduce seniors' property taxes, another giving communities the power to increase the property tax exemption for veterans, a proposal allowing taxpayers to deduct commuter expenses from their income tax, and a tax credit for businesses that hire welfare recipients. The tax measures were all contained in amendments to the proposed budget for next year.

"This action dispels the notion the Democrats are averse to tax cuts," Senate President Robert E. Travaglini told the Globe. "Senior taxes, the income tax rollback, veterans tax, sales tax holiday -- all in the first hour and a half."

Travaglini, minority leader Brian Lees, and Ways and Means chair Therese Murray said yesterday that because state tax revenues have been soaring, the state can afford the reduction in income tax revenue -- $517 million a year if the rollback is fully phased in.

"We have realized additional revenue that now makes this action defensible and reasonable, " said Travaglini.

Senate leaders also said they believe the state can restore local aid to sufficient levels for the tax cuts to kick in.

"We're not playing pretend, " said Travaglini. "This is not an exercise that is disingenuous. I think the thresholds that we've set are achievable. We're getting close and potentially can get it."

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. Last year, after repeated calls for tax relief by Governor Romney, the Senate passed a rollback measure, but the House balked.

Travaglini acknowledged that yesterday's action was "in response to the administration's continued call for a tax cut," but denied lawmakers were seeking to exploit a politically popular issue in an election year, eliminating it as a Republican campaign weapon. Lieutenant Governor Kerry Healey and two of the three Democrats running for governor support lowering the income tax rate.

"Our actions are not driven by a political agenda," Travaglini said.

Eric Fehrnstrom, a spokesman for Romney, who included a rollback over two years in his most recent budget, praised the Senate for moving "in the right direction," but said lawmakers didn't need to attach strings.

"We will end this year with yet another $1 billion-plus tax revenue surplus," said Fehrnstrom. "We have the resources to both lower the tax rate and spend more on priorities like local aid and education."

Travaglini vowed to lobby the House to approve the measure. "When the [Senate] vote is 39-0," he said, "it sends a powerful message that the body is behind me."

But it was unclear whether the House would approve it.

James Eisenberg, chief of staff to House Ways and Means chairman Robert DeLeo, said House lawmakers are satisfied with the 2002 legislation now in effect that froze the income tax rate at 5.3 percent.

That legislation includes provisions to gradually ease the income tax burden on taxpayers starting in 2010, when the tax rate would begin to decline by .05 percent each year for six years until it was back to 5 percent. Those rollbacks would be triggered only if certain economic conditions are met.

"There are references to tax cuts in the House budget; most have to do with studying the issue," Eisenberg said. "A lot of that was in recognition of the fact we have a tax-cut trigger in place on the books, and it is working the way it is supposed to work."

Cam Huff, research director of the Massachusetts Taxpayers Foundation, a business-backed government watchdog group, said any tax cut should be tied to the state's continued economic growth.

"State tax collections have been very strong this fiscal year," he said. "This is good news. But the question is how long is it going to last and whether we're going to commit ourselves to tax cuts that could kick in just as things go sour."

Much of the current revenue growth is due to increases in capital gains taxes and other "volatile" revenue sources, which could drop off again, Huff said.

Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, which represents cities and towns, said the Senate amendment was acceptable because it kicks in only when local aid is restored.

"Restoring local aid first before consideration of a tax cut is in the right order," he said, adding that the state should devise a revenue-sharing plan to give communities a piece of state tax receipts, to reduce their reliance on property taxes.

"If the state just cut taxes now without restoring local aid, the fiscal mess at the local level would just continue," he said.

During the debate on the Senate floor, Republicans said they approved the measure with mixed feelings, preferring an immediate return to the 5 percent tax rate.

"It's a little bittersweet here," said Lees. "This is in my mind a little bit of a chicken's way out. But it's better than nothing. It's a bittersweet moment, but we'll take any victory we can take."

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The Commonwealth of Massachusetts
Massachusetts Senate

May 24, 2006

News Release
Senate adds tax relief for Massachusetts residents


(BOSTON, MA) - In the first hour and a half of debate, the Massachusetts Senate overwhelmingly approved several tax relief measures to include in the Senate's budget for fiscal year 2007. The bipartisan effort included the adoption of: an incremental income tax rollback, property tax relief for seniors and veterans, and a sales tax holiday weekend. By including these amendments, the Senate stays true to its goal to focus on communities, residents, and the future of the Commonwealth.

Senate President Robert Travaglini (D-Boston), Senate Minority Leader Brian Lees (R-East Longmeadow) and Senator Therese Murray (D-Plymouth), Chairwoman of the Senate Committee on Ways and Means, applauded today's actions of the Massachusetts Senate.

"Today's actions are the most recent in a series of tax cuts that the Senate has passed over the last three years. We have initiated and enacted 16 different types of tax relief to benefit the individuals and businesses of this state," said Senate President Travaglini. "These initiatives show that the Senate is willing to come together for the good of the residents of the Commonwealth."

"These tax relief efforts are a real positive step for the taxpayers of the Commonwealth," said Senate Minority Leader Lees. "Today, the Senate has once again shown that we are serious about passing measures that will benefit the taxpayers."

"By approving these measure we continue to craft a careful and responsible approach to bring tax relief to the residents of the Commonwealth," said Murray, the Senate's budget chief. "While our economy has not fully recovered, the Senate understands the need for tax relief and has taken the steps within this budget and throughout the last several years to answer that call in a financially responsible
manner."

During the Senate's debate several tax measures were approved that will directly effect the Commonwealth's residents. These measures include:

* State Income Tax Rollback: The amendment would trigger an incremental income tax roll back to five percent if each of the local aid accounts (Chapter 70, lottery aid, and additional assistance) reaches 2002 levels, adjusted for inflation. If the funding levels are met in fiscal year 2008, the income tax would be reduced 5.2% for calendar year 2007, to 5.1% for 2008, and to 5% beginning in 2009 and
thereafter.

* Senior Property Tax Relief: This amendment gives municipalities the option, by a town or citywide referendum, to exempt their low-income senior citizens who are at least 70 years old from property tax amounting to 5% of the average assessed value of all residential parcels in the community. Once adopted, it also gives municipalities the option to increase the exemption amount to as much as 20% of the average assessed value and to reduce eligibility age to 65 years.

* Veterans Property Tax Relief: This amendment would allow town or city councils to increase the allowable property tax exemption amount for veterans from $250 to up to $1,000.

* Sales Tax Holiday: This amendment would, for a third year, create a sales tax holiday. This year's sales tax holiday would be the weekend of August 12 and 13. Similar to last year, exceptions to the exemption include: vehicles, motorized boats, tobacco, meals and utilities.

Along with the amendments approved during the debate, two tax relief initiatives were included in the Committee's budget recommendations. The first will enable commuters to deduct at least $150 and no more than $750 from their income taxes as a portion of the expense associated with FastLane tolls and MBTA and commuter rail passes.

The second would help facilitate the transition from welfare to work, through a Work Opportunity Tax Credit of up to $2,400 for employers who employ welfare recipients for at least 400 hours. It would also provide bonuses to employers who create long-term positions. The credit supplements the federal Welfare-to-Work Tax Credit and is designed as an incentive for businesses to provide these residents with a steady job.

These tax relief initiatives mark the most recent efforts by the Massachusetts Senate, working in a bipartisan manner to provide targeted relief for businesses and individuals through: heating energy assistance, senior tax relief, increasing the personal tax exemption, expanding research and development tax credit, extending the Brownfields tax credit, and new tax credits and incentives for the movie industry.

###

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The Boston Globe
Thursday, May 25, 2006

In Democrats' debate, Reilly is the target
By Scott Helman, Globe Staff
[Excerpt]


The second question in the debate, which was taped at the WB56 studios and which will air at 10:30 tonight, was about taxes. Gabrieli, a former venture capitalist and the party's 2002 candidate for lieutenant governor, said that although he believes the income tax rate should eventually be lowered from 5.3 to 5 percent, it was pure politics to say, as Reilly has, that it should drop now.

"I think it's a mistake that just because it's an election year people are stepping up and suddenly saying, `Let's cut taxes today to that,' " Gabrieli said.

Patrick, a former civil rights prosecutor and corporate executive, does not support the rollback because, he says, it would send property taxes higher. He went after Reilly, too, saying Reilly last year opposed a rollback.

"You were right then, and you were courageous about it then," Patrick said. "I just think you're paying more attention today to the poll numbers than the revenue numbers, and I think that's not leadership."

Reilly's retort was: If not now, when the state has a budget surplus and is seeing strong revenue numbers, when would Gabrieli and Patrick support the rollback?

"The voters made it very clear," Reilly said. "This is about keeping a promise ... This is the time to keep that promise."

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The Boston Herald
Thursday, May 25, 2006

Pump relief for pols as taxpayers get taken for ride
By Kevin Rothstein


Beacon Hill doesn’t want gas tax relief but some of the measure’s biggest critics are collecting thousands in taxpayer dollars to stave off their own pump pinch, records show.

"The vast amount of people don’t get compensated to go to and from work," said House Majority Leader Brad Jones (R-North Reading), who sponsored the gas tax relief bill. "It creates a certain distance to relate to what these commuters are going through."

The state Senate yesterday rejected a budget amendment 19-7 that would have rolled back the state’s 21-cent-a-gallon gas tax between Memorial Day and Labor Day, a measure first proposed by Jones and backed by Lt. Gov. Kerry Healey.

The move was hardly unexpected, since leading Democrats put the brakes on the measure as soon as it was announced this month.

"Where do these Republicans think this money comes from?" said Worcester state Rep. John Binienda to the Worcester Telegram & Gazette.

But Binienda’s commute into town won’t be walloping his wallet - he has collected $2,376 so far this year in per diem payments, records show.

The per diems are taxpayer-funded reimbursements for driving to and from work.

State Rep. Joseph Wagner, House chair of the Joint Committee on Transportation, told another publication that he opposed the gas tax relief because, "We’re treating a symptom here, not the disease."

Wagner is tied for being the 10th highest collector of per diems so far this year, taking in $2,760. Wagner, a Chicopee Democrat, collects $60 per diem, which is based on the distance from the State House.

Western Massachusetts lawmakers collected the most, but even Boston state senators Dianne Wilkerson and Marian Walsh collected $10 per day as did state representatives Marty Walsh, Jack Hart, Marie St. Fleur, Brian Wallace and Kevin Honan.

State Rep. Daniel Bosley (D-North Adams) defended his $6,030 per diem payout even as he opposes gas tax relief, which would cost an estimated $200 million. He said the tax holiday would defer needed road repairs.

"It’s not hypocritical," he said. "In my side of the state we have a lot of roads and bridges that need to be done."

Amy Lambiaso, a spokeswoman for Healey’s gubernatorial campaign, said, "The Beacon Hill crowd needs to stop taking taxpayers for a ride and give working families the relief they need at the pump."

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