CLT UPDATE
Wednesday, March 11, 2009
Income, sales tax hikes eyed as "revenue
enhancements"
Sour budget predictions from leading
local economists, including forecasts of a deficit as high as $4.3
billion next fiscal year, prompted House members Tuesday to discuss
raising the state's largest tax revenue generators, the personal income
tax and the retail sales tax, dangerous political terrain as Beacon Hill
desperately seeks a way out of its fiscal crisis....
A higher income tax would be a further repudiation of a 2000 voter
mandate to roll the income tax rate from 5.75 percent to 5. Lawmakers
froze the reduction in 2002 at 5.3 percent, installing growth-based
thresholds that must be hit to shave the rate further. With the tax
revenue falloff over the past year, those thresholds have gone unmet....
Lawmakers heard from former president of the Federal Reserve Bank of
Boston Cathy Minehan and Mass. Taxpayers Foundation president Michael
Widmer. Several emerged from the meeting saying the session had darkened
their view of the state's fiscal condition....
Widmer said each tenth of a point added to the income tax rate would
generate slightly more than $200 million a year while an added penny on
the sales tax would bring about $750 million a year in new state
revenues....
Widmer, whose business-backed group often provides conservative
estimates of growth, reiterated his position that the fiscal 2010
consensus revenue estimate calculated by lawmakers and the Patrick
administration in January was too optimistic.....
Widmer told lawmakers they faced a dilemma of choosing among further
draining stabilization funds next year, setting up harsh choices in
future years, cutting an additional $1 billion from Patrick's proposed
budget, or raising revenues beyond the $587 million in new money that
MTF says Patrick wants to collect.
State House News Service
Tuesday, March 10, 2009
House discusses income, sales tax hikes
Top state lawmakers are seriously considering a controversial
and politically risky plan to boost the sales tax by one penny to 6 percent,
socking it to Bay State residents already facing possible gas and booze hikes.
Both House Speaker Robert DeLeo (D-Winthrop) and Senate Ways and Means chairman
Steve Panagiotakos (D-Lowell) are eying a sales tax of 6 cents on the dollar
that they say would bring an additional $750 million a year into state
coffers....
“Any tax increase the state undertakes right now will have a negative effect on
the economy because it will drive business to other states,” said Beacon Hill
Institute Executive Director David Tuerck, who urged lawmakers to focus on cuts
instead....
The penny increase would be the first change to the sales tax since 1976, when
it rose from 3 to 5 percent....
Yesterday’s sales tax chatter comes as lawmakers issued more dire warnings,
saying the state faces a $4 billion-plus budget deficit next year. Rep. Ellen
Story (D-Amherst) said House leaders are also discussing raising the personal
income tax to 5.4 percent from 5.3 percent, which she said would bring in an
additional $200 million.
The Boston Herald
Wednesday, March 11, 2009
Politicians look to hike sales tax
Hey, in the words of Rahm Emanuel, “Never allow a crisis to
go to waste”! ...
In fact, House Speaker Robert A. DeLeo yesterday said he will continue to
entertain the possibility of the booze and candy taxes - and then some. A gas
tax vote is coming soon. And one House lawmaker is even trying to build support
for an increase in the income tax.
“We have to be concerned about the next three years and try to use as little of
the stabilization fund as possible,” DeLeo said. Agreed.
“So then the only other option becomes various revenue enhancements.”
Wait - the only option?
Yes, Massachusetts is experiencing a fiscal crisis nearly without rival. But the
choices that this governor and this Legislature have made over the past several
years, a period in which state government has continued to grow, are partly to
blame for the predicament. With due respect to DeLeo, picking the pockets of
taxpayers who are already suffering is not the “only” other option.
A Boston Herald editorial
Wednesday, March 11, 2009
No easy way out
Lawmakers in some parts of the state need assistance from
outside groups in order to back a gas tax increase, one progressive House member
said today.
Rep. Matthew Patrick (D-Falmouth) said non-profit groups should launch
letter-writing campaigns in support of lifting the fuel levy. “We’re getting
hammered,” Patrick said during a meeting with Transportation Secretary James
Aloisi. “I don’t know about the city people, but Cape Cod, western Mass., we’re
getting killed. Give us the political cover we need.”
State House News Service
Tuesday, March 10, 2009
Rep pleads for 'political cover' on gas tax
Chip Ford's CLT
Commentary
“So then the only other option becomes
various revenue enhancements.”
– House Speaker Robert A. DeLeo, yesterday
I may not be able to vent
my spleen any more, since the surgeon removed it last week, but I've
still got plenty of bile to throw out when it comes to this state's
government!
It was only two days
ago that I wrote: "Widmer and his big-business fat-cat cohorts
have been pushing for an expansion in the sales tax too for as long as I
can recall-- so watch for that coming to a theater near you soon!" (Mar.
9, 2009 - So-Called Mass. Taxpayers Foundation, Big-Business Fat-Cat Allies,
Stripped Naked!) Even cynical me didn't expect that to raise
its ugly head this soon!
But here he is again,
Michael Widmer, high-rolling president of the deceptively misnamed
Massachusetts Taxpayers Foundation -- a cabal of big-business
fat-cats -- cheerleading and running cover as usual for ever-higher
taxes on average taxpayers. Does he think there is no bottom to
our working-stiff pockets; do our legislators so believe as well?
This situation would be
comical -- you couldn't write credible fiction on its basis -- if it
weren't so damned typical here in Taxachusetts. The pols spend
every cent and borrow even more to spend when the economy is good; jack
up taxes when it goes south. Those higher taxes are forever and
the spending keeps increasing. How many times must we go through
this cycle before they -- and the voters -- finally wake up?
Is waking up even an option any more in this misbegotten state?
We are primarily all that
remains of the resistance -- CLT and its membership. Are we and a
handful of Republican legislators the only ones who recognize the
obvious?
We warned last fall that if
Question 1 was defeated it would send the wrong message to Bacon Hill.
When the majority of voters were cowed and it went down, the message was
transmitted and happily received. That majority will now reap what
they sowed, and for them I have no sympathy. But those of us in
the 30 percent who recognized this likely consequence still cannot
afford to pay more for a self-serving, bloated state government.
Insanity. Washington
is borrowing and spending trillions of future revenue to
"stimulate" the economy during this national economic crisis.
Massachusetts alone expects to receive an estimated $9-$12 billion
in additional federal stimulus money. That is not enough.
More Is Never Enough (MINE).
The Obama administration
and the Democrat-controlled U.S. Congress are providing each taxpayer a
$400 tax refund spread over the year, $10-$15 a week less in our payroll
deduction -- a tacit admission that over-taxation has harmed the
economy. Bacon Hill is proposing to do just the opposite:
Take that meager savings away -- and much more, to feed the
insatiable beast of state government.
Utter insanity.
And they wonder why this
state is so dysfunctional, why it's called Taxachusetts, and how we
citizens ever got this cynical.
Amazing.
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Chip Ford |
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State
income tax repeal ballot question:
Defeated 70-30% in November. |
|
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70% are getting what
they asked for. |
State House News Service
Tuesday, March 10, 2009
House discusses income, sales tax hikes
By Jim O'Sullivan
Sour budget predictions from leading local economists, including
forecasts of a deficit as high as $4.3 billion next fiscal year,
prompted House members Tuesday to discuss raising the state's largest
tax revenue generators, the personal income tax and the retail sales
tax, dangerous political terrain as Beacon Hill desperately seeks a way
out of its fiscal crisis.
During a two-hour caucus in which economists predicted the fiscal crisis
could last until fiscal 2012, Rep. Liz Malia (D-Jamaica Plain) suggested
the income tax as a means to stave off deeper budget cuts, according to
several lawmakers who attended. Lawmakers also discussed elevating the
state's 5 percent sales tax.
Senate Ways and Means chair Steven Panagiotakos (D-Lowell) rejected an
income tax boost, telling the News Service, "As far as the income tax, I
think the voters have preempted that issue. I personally would not be in
favor of increasing it."
"If [the sales tax] is looked at instead of a gas tax and meals tax,
then I think it is something that should be considered. Certainly, the
question is at what level," Panagiotakos said, adding, "People that have
heard of the sales tax would much rather do a cent on the sales tax than
19 cents on the gas tax, or the meals tax."
Asked about the income tax after the caucus, Speaker Robert DeLeo said
the House was considering all options.
DeLeo told reporters, "In these types of situations, I don't think
anything can be considered off the table."
DeLeo said he was unsure whether the House would go along with the
income tax hike, and said he would likely have a better sense "within a
month or two" of House sentiment on budget decisions.
In a statement released later, "In talking to members, I have found
little or no support for an increase in the income tax. I myself have
serious reservations about doing something that would put such a burden
on the families of Massachusetts. Given the strain the state's families
are under, I am committed to serious reform and profound cuts before
considering any new revenue items."
A higher income tax would be a further repudiation of a 2000 voter
mandate to roll the income tax rate from 5.75 percent to 5. Lawmakers
froze the reduction in 2002 at 5.3 percent, installing growth-based
thresholds that must be hit to shave the rate further. With the tax
revenue falloff over the past year, those thresholds have gone unmet.
Rep. Ellen Story (D-Amherst), one of DeLeo's four division chairs, said
members sounded broader support for bumping the 5-percent sales tax,
which Gov. Deval Patrick has already targeted by proposing to repeal
exemptions on candy, sugared drinks, and alcohol.
"I think everybody is more or less OK" with increasing the sales tax by
a penny, Story told the News Service.
The Amherst Democrat said she was the only one on DeLeo's eight-member
leadership team who supports a thorough exploration of the income tax
hike.
Lawmakers heard from former president of the Federal Reserve Bank of
Boston Cathy Minehan and Mass. Taxpayers Foundation president Michael
Widmer. Several emerged from the meeting saying the session had darkened
their view of the state's fiscal condition.
"It could possibly get worse is what we heard today," DeLeo said,
adding, "Within the next year or so, hopefully, it's going to level off,
shall we say."
"They laid out a very dire situation around the globe," added House
budget chief Rep. Charles Murphy.
Story called the notion of boosting the 5.3 percent income tax rate
unpopular among House leaders. "Certainly in the leadership meetings
that I have now been going to, that idea has no traction," the Amherst
Democrat said.
Asked about reaction in the caucus, Story said, "Nobody screamed."
"People are still meeting with the new chairman of Ways and Means,
Charley Murphy, and asking for millions of dollars of additional
spending in the budget," Story said.
Widmer said each tenth of a point added to the income tax rate would
generate slightly more than $200 million a year while an added penny on
the sales tax would bring about $750 million a year in new state
revenues.
Minehan distributed materials calling the U.S economy in "free fall,"
with a forecast of positive growth no sooner than the end of calendar
2009. Employment recovery would lag, and the "downside risks are high,"
she said.
Widmer, whose business-backed group often provides conservative
estimates of growth, reiterated his position that the fiscal 2010
consensus revenue estimate calculated by lawmakers and the Patrick
administration in January was too optimistic. The consensus pegged tax
revenues at $19.53 billion next year, $930 million higher than MTF's
December estimate of $18.6 billion.
Panagiotakos, a Lowell Democrat, said the state would downgrade its
consensus projection if February's revenue trend, down 16.4 percent or
$188 million from Feb. 2008 and $86 million off the monthly benchmark,
continued.
"The picture certainly has changed since we set it. February has
certainly caused us a great deal of concern. If March and April trend
like February, then I would say we would say that we would have to
seriously consider adjusting our estimate."
Subtracting onetime revenues, corporate tax settlements, and a potential
revenue shortfall, the fiscal 2010 structural deficit could hit $4.268
billion, Widmer said.
Of a total $4.852 in reserves and federal matching funds known to be
available for what Widmer predicted would be a four-year crisis, $2.157
billion had already been marked for current-year estimate, according to
documents he distributed.
Widmer told lawmakers they faced a dilemma of choosing among further
draining stabilization funds next year, setting up harsh choices in
future years, cutting an additional $1 billion from Patrick's proposed
budget, or raising revenues beyond the $587 million in new money that
MTF says Patrick wants to collect.
DeLeo said House members were having difficulty predicting how much the
federal stimulus would pour into state coffers, beyond federal Medicaid
assistance. He said all of the Medicaid assistance would be used, but
acknowledged concerns that other federal revenue streams could create
dangerous reliance on the non-recurring revenues.
Some lawmakers are leery of turning to broad-based taxes to replenish
state coffers. A battle is unfolding over the state's gas tax, with some
lawmakers ripping Patrick's proposed 19-cent boost and others embracing
it as a way to aid the state's ailing transportation system.
"Hopefully, taxpayers and constituents will appreciate the candor of the
discussions we have around the decisions we're going to have to make,"
said Rep. Michael Moran (D-Brighton).
Some lawmakers have already filed bills to raise income taxes through
various methods. Rep. Mark Falzone (D-Saugus) has filed legislation
imposing graduated income taxes on people earning over $1 million. Other
lawmakers are looking to give the state a share of the sizable
endowments enjoyed by non-profits like local universities, which have
also suffered from plummeting stock market profits.
The Boston Herald
Wednesday, March 11, 2009
Politicians look to hike sales tax
By Hillary Chabot
Top state lawmakers are seriously considering a controversial and
politically risky plan to boost the sales tax by one penny to 6 percent,
socking it to Bay State residents already facing possible gas and booze
hikes.
Both House Speaker Robert DeLeo (D-Winthrop) and Senate Ways and Means
chairman Steve Panagiotakos (D-Lowell) are eying a sales tax of 6 cents
on the dollar that they say would bring an additional $750 million a
year into state coffers.
“I don’t think anything can be considered as off the table,” DeLeo said
yesterday, later adding he plans to pass reforms before any additional
taxes are considered.
A conservative think tank blasted any talk of a sales tax hike in a
tough economy, saying that even a one penny increase could mean a loss
of 10,000 private sector jobs along with a $40 million drop in
investment revenue.
“Any tax increase the state undertakes right now will have a negative
effect on the economy because it will drive business to other states,”
said Beacon Hill Institute Executive Director David Tuerck, who urged
lawmakers to focus on cuts instead.
Tax hikes can be hazardous to a political figure’s health - especially
during a recession - as evidenced by a recent dip in Gov. Deval
Patrick’s job approval ratings. Many speculated Patrick’s plans to boost
taxes on gas, booze and candy were partially to blame.
Among members of his leadership team, DeLeo has floated the idea of a
sales tax increase to go along with Patrick’s proposed 19-cent gas hike
and a meals tax increase. But Sen. Panagiotakos thinks a higher sales
tax would render other increased levies unnecessary.
“I think that’s where it has an attractiveness, if it’s instead of (the
gas and meals taxes), not along with,” Panagiotakos said. “In my
district they’d prefer that.”
The penny increase would be the first change to the sales tax since
1976, when it rose from 3 to 5 percent.
Yesterday’s sales tax chatter comes as lawmakers issued more dire
warnings, saying the state faces a $4 billion-plus budget deficit next
year. Rep. Ellen Story (D-Amherst) said House leaders are also
discussing raising the personal income tax to 5.4 percent from 5.3
percent, which she said would bring in an additional $200 million.
“We’re going to have to look at new revenues,” Story said. “The rainy
day fund will absolutely not last that long.”
But Panagiotakos said an income tax hike is off the table, and DeLeo
later released this statement.
“In talking to members, I have found little or no support for an
increase in the income tax,” the statement read. “Given the strain the
state’s families are under, I am committed to serious reform and
profound cuts before considering any new revenue items.”
The Boston Herald
Wednesday, March 11, 2009
A Boston Herald editorial
No easy way out
Gov. Deval Patrick’s plan to raise taxes on candy, sugary drinks and
alcohol was never really just about plugging the hole in the state
budget - after all, the measures would raise all of $25 million this
year ($121 million next year) in the face of a multi-billion dollar gap.
No, this particular menu of tax hikes - or in administration-speak,
“removing tax exemptions” - was allegedly about legislating better
health.
Hey, in the words of Rahm Emanuel, “Never allow a crisis to go to
waste”!
So yes, House lawmakers were right to strip the tax hikes out of a
mid-year emergency recovery bill that Patrick filed in January. The
House is scheduled to vote on the bill tomorrow.
The proposed tax hikes, along with new motor vehicle fees, may be
virtually dead for the current fiscal year - which ends June 30 - but
not so for the next full budget cycle.
And that’s bad news for taxpayers.
In fact, House Speaker Robert A. DeLeo yesterday said he will continue
to entertain the possibility of the booze and candy taxes - and then
some. A gas tax vote is coming soon. And one House lawmaker is even
trying to build support for an increase in the income tax.
“We have to be concerned about the next three years and try to use as
little of the stabilization fund as possible,” DeLeo said. Agreed.
“So then the only other option becomes various revenue enhancements.”
Wait - the only option?
Yes, Massachusetts is experiencing a fiscal crisis nearly without rival.
But the choices that this governor and this Legislature have made over
the past several years, a period in which state government has continued
to grow, are partly to blame for the predicament. With due respect to
DeLeo, picking the pockets of taxpayers who are already suffering is not
the “only” other option.
State House News Service
Tuesday, March 10, 2009
Rep pleads for 'political cover' on gas tax
Lawmakers in some parts of the state need assistance from outside groups
in order to back a gas tax increase, one progressive House member said
today.
Rep. Matthew Patrick (D-Falmouth) said non-profit groups should launch
letter-writing campaigns in support of lifting the fuel levy. “We’re
getting hammered,” Patrick said during a meeting with Transportation
Secretary James Aloisi. “I don’t know about the city people, but Cape
Cod, western Mass., we’re getting killed. Give us the political cover we
need.”
Aloisi struck a more conciliatory tone today than he has with lawmakers
in recent weeks, at one point telling Rep. Alice Wolf during a meeting
with lawmakers and aides, “You are a state rep. You can make as many
points as you want.”
Aloisi has irked lawmakers since taking office, notably miffing the
Senate last week with his dismissal of its “reform before revenue”
mantra as a “meaningless slogan.”
Asked about her relationship with the secretary, Senate President
Therese Murray today smiled, “Who?” Then, she added, “I told you Sen.
Baddour deals with the secretary. I work with the governor.”
Aloisi, who has been attending meetings across the state trying to sell
Patrick's transportation policy, said he wanted Massport to pay a larger
share for facilities it uses, including Silver Line facilities and the
Blue Line station accessing Logan Airport. Calling Patrick's proposal
"forward-looking" and "historic," he said the bureaucracy-streamlining
elements of the bill, consolidating transportation agencies under four
divisions, was the administration's bid at "busting up the Boston
bureaucracy." The state, he said, needed to end the "miasma of
independent authorities who don't respond to elected officials."
Aloisi said he was passionate about assisting regional transit
authorities that provide busing in different regions of the state. He
said the administration should get more credit for one of the provisions
in the legislation that promises at least 75 percent of the gas tax
generated by an individual region would be plowed back into road and
bridge projects in that region.
Patrick, the Falmouth Democrat, said he and other lawmakers would look
to alter the bill in the House by adding incentives, potentially tax
credits, for low-income drivers to buy more fuel-efficient vehicles, a
measure to which Aloisi said he was open.
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