Wednesday, November 14, 2001
A Boston Herald editorial
Any budget must protect the tax cut
If you can believe the headlines,
leaders of the Massachusetts House and Senate are close to agreement
on a budget for the state getting on toward five months late. This is
not necessarily good news.
It would be bad news indeed if they
achieve an agreement at the cost of postponing, reducing or cancelling
the reduction in the state income tax rate from 5.6 percent to 5.3
percent scheduled for January. That would represent the triumph of
tax-and-spend politics as usual over every other consideration,
including fiscal discipline and the will of the voters who made the
tax cut the law.
The first priority of getting a real
budget should be protecting this tax cut (and the one scheduled for
2003 pushing the rate down to 5 percent). Acting Gov. Jane Swift has
pledged a veto to do so. We trust she will remain firm.
The second priority should be
protecting the state's reserve funds. No one knows how long or how
deep the recession will be. Budgeting next year and the year after
will be every bit as difficult as it has been this year. Politicians
may try to protect favorite programs by taking more money than they
should from the state's $2.3 billion in reserves. The case for tapping
the reserves this year is overwhelming, but this year that should be
limited to a quarter of the total available. The reserves then can
last four years if need be.
The sum to be saved this fiscal year
by cancelling the tax cut is less than $200 million -- less than 1
percent of any plausible budget. The entire $1.3 billion would not
come from spending cuts and should not. The governor is looking for
about $700 million in cuts, with the rest to come from using some
combination of reserves and off-budget income like the tobacco
settlement payments. If the two budget priorities are respected, the
details ought to be achievable, assuming there is a will to do so.
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Wednesday, November 14, 2001
Freeze of tax rollback is now seen
By Rick Klein
The Legislature's budget agreement
will probably not include a freeze of the voter-approved income tax
rollback, a high-ranking legislative source said last night.
House leaders do not believe that
two-thirds of members will support a delay to the tax cut, the source
said. House Speaker Thomas M. Finneran has indicated that he would not
pursue the issue unless he had the two-thirds vote needed to override
Acting Governor Jane Swift's promised veto.
"It's a long way from
two-thirds," the legislative source said. "It seems doubtful
in the timeframe we're operating under."
The source said House support is
also lacking for plans to slow the tax reduction in other ways -- such
as tie any future drops in the tax rate to economic indicators.
Some Senate and House members have
been eyeing a freeze of the rollback as a way to save up to $200
million, and prevent deep cuts in programs. But the idea is
controversial, and many members are fearful of taking a vote that
would force citizens to pay more in income taxes. Voters
overwhelmingly approved the tax cut last year.
Senate members are meeting today to
discuss the issue. A two-thirds vote there is also far from assured,
and a lack of support in the House will probably make yes votes even
harder to find in the Senate, since most lawmakers would rather not
take the vote at all unless they are certain it would prevail in both
Delaying the rollback would cost a
typical family about $150 next year. But Senate President Thomas F.
Birmingham has said it would also save valuable programs, as Beacon
Hill tries to deal with a sudden $1.4 billion budget gap.
Not pursuing the rollback would mean
that the Legislature could end up recommending close to $700 million
in cuts. Lawmakers are reportedly set to cover the rest of the
shortfall with reserve funds.
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Wednesday, November 14, 2001
Senate push to delay income tax cut
by Elisabeth J. Beardsley and David R. Guarino
A Senate push to shelve the
voter-approved income tax cut hit the rocks yesterday, after the House
fell short of the two-thirds vote necessary to override a promised
veto, legislative sources say.
Senate President Thomas Birmingham
has been pushing the plan to delay one or both of the last two years
of the three-year tax cut as a way of drumming up nearly $200 million
this year to avoid deeper spending cuts.
House leaders have been polling
members on the plan, but a legislative source said lawmakers are 32
votes short of the 106 that would be needed to override a veto.
"It's just not going to
happen," one source said.
Legislative leaders are struggling
to close a $1.35 billion hole in the $22.65 billion budget, which is
four-and-a-half months overdue.
Since the House controls which
vetoes are taken up for override, the House's abandonment of the
tax-cut delay effectively kills the Senate push.
The Swift administration applauded
the news. One administration official praised House Speaker Thomas M.
Finneran for "standing up for the will of the voters."
But Senate Ways and Means Chairman
Mark Montigny (D-New Bedford) said if the tax cut is not delayed,
lawmakers will have to find another $200 million in programs to cut.
"It goes from bad to
worse," Montigny said.
House and Senate leaders are still
deadlocked over how much spending to cut and how deep to dip into the
state's $2.3 billion in cash reserves. The House has pushed for more
cuts; the Senate has pushed for more reserves.
Democratic senators will huddle in a
private caucus this morning to discuss the income tax cut and other
Earlier in the day, Birmingham
insisted that the tax cut delay should remain "in the mix."
While noting that more than half of state senators would vote to
override the veto and put off the tax cut, Birmingham expressed doubt
that he could roust up two-thirds.
"It's idle talk unless we have
two-thirds of the members, which we don't have right now,"
The tax cut was also a hot topic of
discussion at a meeting of the Local Government Advisory Council,
where municipal officials pleaded with acting Gov. Jane Swift to
support a one- or two-year delay.
"Local aid, if it's cut, will
be devastating," said Watertown Town Councilor Marilyn Petitto
But Swift categorically refused when
the locals pleaded with her to back down from the voter-approved
income tax cut.
"Make no mistake -- the tax cut
isn't causing our deficit," Swift said.
On the local aid front, Swift is
reconsidering a $100 million cut, after municipal officials offered to
severely tighten their belts next year in exchange for fiscal amnesty
"The cities and towns weren't
just saying don't cut," said Administration and Finance Secretary
Stephen Crosby. "That was of interest to (Swift)."
The Swift administration yesterday
also faced new pressure to fund the voter-approved plan for public
financing of elections after Democratic gubernatorial candidate Warren
Tolman said he qualified for $811,000 in matching funds.
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Wednesday, November 14, 2001
Most state lawmakers shut out of
By Rick Klein
Every day, state Representative
Frank I. Smizik gets phone calls from his constituents, pleading with
him over the state budget: Don't cut school nurses. Save state
workers' jobs. Keep special education classes.
Smizik listens sympathetically, but
then he levels with them: There is little he can do to help.
"You try to influence the
people who make the decisions as best you can, but there's not much of
a vehicle for that," said Smizik, a Brookline Democrat.
This is what it's like under
Massachusetts' strong-fisted legislative leadership. House Speaker
Thomas M. Finneran, Senate President Thomas F. Birmingham, and a few
trusted lieutenants are now meeting behind closed doors to make $1.4
billion worth of changes in the state budget.
The vast majority of the 200-member
Legislature will have virtually no say in shaping the final numbers.
When the House and Senate finally agree on this year's spending plan,
which is expected to slash $500 million from their earlier budget
proposals, members will get to vote only yes or no on the full
package, with no opportunity to offer amendments or alternatives.
"This is not a democratic
process," said Eric Weltman, organizing director of Citizens for
Participation in Political Action. "The average voter, the
average citizen, is not being represented in the Legislature."
The same thing happens every year
with the state budget. House members debate line items and approve a
spending plan, and then the senators do the same. Leaders from each
chamber then huddle privately to come to an agreement that's sent to
When times are flush, negotiators
generally choose between which new programs to pursue rather than
which programs to ax.
But now, the decisions that will
come out of the conference committee will be far more significant:
Dozens of programs may be sacrificed, state aid to cities and towns
could be slashed, and jobs eliminated.
The economy has taken a startling
nosedive since last spring, when the House and Senate approved their
versions of the plan and nobody was talking about program cuts. Some
lawmakers believe, given the dramatically different fiscal outlook,
that the Legislature should debate future spending more openly.
This year, power has been
concentrated more than usual. A six-member budget conference committee
has stopped meeting. Decisions are being made by just four men:
Finneran, Birmingham, and their Ways and Means chairmen,
Representative John H. Rogers and Senator Mark C. Montigny.
Despite the small size of their
group, the four have struggled to reach an agreement. The Legislature
is 137 days late in sending a budget to Acting Governor Jane Swift --
the longest delay in more than 30 years -- and Massachusetts is the
only state operating without a final budget.
"If you need to see what is
wrong with this institution, this is a perfect case in point,"
said House Republican Leader Francis L. Marini of Hanson. "This
is Tom Finneran versus Tom Birmingham. It's not the institutions,
because we could compromise and vote."
Legislative leaders defend the
process as the only practical way to make major decisions. The leaders
have kept members updated about significant developments at caucuses
and have asked for some feedback on big questions -- such as whether
to freeze the tax rollback.
Birmingham acknowledged that the
closed-door negotiations have failed to produce efficient results this
year. But he said that the private talks are crucial because they
encourage candor. He stressed that the decisions of a few top
lawmakers are made with the consultation of the members who empower
them, even though the formal talks are private.
Finneran declined to comment.
State Representative Byron Rushing
said the Legislature's rules don't allow most members to have
influence on legislation after the House and Senate vote on their
versions of a bill.
"This is what happens when you
don't have democracy," he said.
Rank-and-file members will have a
chance, probably next week, to weigh in on the final version of the
budget -- with their votes, yea or nay.
But given this year's delay, most
senators and representatives will probably just be glad to get some
budget on the books and end the embarrassment, Marini said.
"Assuming it's even half-way
palatable, most people will vote yes and be done with it," he
said. "What are you going to do, send these two guys back to the
drawing board? Where does that get you?"
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Wednesday, November 14, 2001
Legislators, beware of a fiscal
By Scot Lehigh
LIVE FROM the State House: The
tax-cut tug-of-war. With bad times hard upon us, budget-makers are
pondering freezing the income-tax reduction that voters approved last
year at the ballot.
The political pros and cons: On the
one hand, a steadily worsening fiscal situation seems to justify that
action to avoid deeper budget cuts. But on the other, by approving
Question 4 last November, the state's citizens made it crystal clear
they wanted the tax rate reduced from 5.85 percent back to 5 percent,
where it stood before the last fiscal crisis.
Do they still, however? Last year,
sponsors and supporters, including then Governor Paul Cellucci, said
Question 4 wouldn't necessitate large cuts in important state
services. But an economic downturn worsened by Sept. 11 has left
lawmakers struggling with a $1.4 billion shortfall between their
previous spending plans and projected revenues.
Bringing this year's budget into
balance clearly means large reductions over the state's earlier plans.
Now, that won't be catastrophic; the state budget, after all, has
grown by $9.5 billion, or about 71 percent, since fiscal year 1990,
according to the Massachusetts Taxpayers Foundation.
Still, balancing the books while
cutting taxes would require real dollar reductions in dozens of
accounts. And, since each step of the three-stage tax reduction costs
the state between $400 million and $500 million in revenue, proceeding
apace with the current schedule will clearly exacerbate the budgetary
woes over the next few years.
How would voters have reacted if
they knew that would be the case? Well, look at 1990. Despite the
ammonia-based atmosphere of that recessionary year -- and the weight
on the wallet of tax increases in both 1989 and 1990 -- they rejected
a rollback that would have blown a $2 billion hole in the budget.
And now? Opinion Dynamics, a
Cambridge survey-research firm, asked that question when it polled 500
Massachusetts adults (margin of error: plus or minus 4 percentage
points) from Oct. 19 to 22. Told that some people want to freeze the
rollback to avoid a fiscal crisis, while others favor moving forward
with it as a way to stimulate the economy, 51 percent opted for delay,
while 36 percent wanted to press forward with the tax cuts.
Now, a poll is only a poll. Yet
those results suggest that by hewing resolutely to the ballot-question
results, legislators may misread current public sentiment. Thus their
dilemma: Whether to assume that voters still stand where they stood
last November or to posit that they have shifted their priorities to
take into account recessionary times.
Next year's statewide election
offers a path through that minefield, one that would allow the
Legislature to keep faith with voters' intent.
First, they could let next year's
reduction, from 5.6 percent to 5.3 percent, go forward. But they could
then put an advisory question on next November's statewide ballot
asking whether voters would countenance a delay in the last stage, a
drop from 5.3 to 5 percent scheduled for January 2003. The question
would include either a concrete timeline for restarting the rollback
or an airtight plan for resuming it as soon as the economy meets
certain benchmarks of improvement.
Although she would still favor the
current tax-cutting schedule, even Barbara Anderson, executive
director of Citizens for Limited Taxation, could live with that
process. "I don't think it's a good idea, but if the only
alternative would be an immediate repeal, at least it gives voters a
fighting chance," says Anderson. (And while they're at it,
legislators could resolve their crocodile doubts over clean elections
by asking whether the public really wants to spend $40 million or more
per election cycle to finance political campaigns.)
The gubernatorial candidates would
then be forced to take a stand on the tax rollback. Voters, meanwhile,
could watch the debate and choose the position -- and the candidate --
that made the most sense. No one could claim the election lacked
And if voters approved, the way
would be clear for the Legislature to postpone the last step of the
tax cut -- and without sacrificing the public's trust.
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State House News
Tuesday, November 13, 2001
Negotiators talking concepts
nearly 5 months after budget law due
By Michael P. Norton, Rick Collins and Michael Levenson
STATE HOUSE, BOSTON, NOV. 13, 2001
... The state budget is usually wrapped up in time for Fourth of July
barbecues. These days about the best lawmakers can hope for is to trim
the budget by Thanksgiving and present it in time to start wrapping
As Bay Staters dig out their winter
gear and make plans for Thanksgiving, Beacon Hill leaders are locked
in one of the most prolonged budget struggles in state history. The
most optimistic thing out of the lips of anyone with an inside track
on budget talks today came from Senate Ways and Means Chairman Mark
Montigny (D-New Bedford), who said there may be a budget
"framework" within 48 hours.
"It's one of those things where
there's no way to predict the final outcome until it's done,"
said Montigny. "But I think both the House and Senate leadership
and members clearly want to have this done by next Wednesday. It's
very difficult because it's painful to make the kind of cuts we're
going to have to make."
Next Wednesday, Nov. 21, is the day
before Thanksgiving and the last day, according to the joint rules,
that the House and Senate may hold formal sessions this year. The
budget was due July 1. Massachusetts is the only state without an
approved budget. State managers have enough money on hand to pay bills
through Monday. And Acting Gov. Jane Swift is ranting about
"irresponsible" legislative leaders and threatening to enact
sweeping budget cuts administratively if lawmakers don't act this
week. And Swift, who has repeatedly filed two-week interim budgets, is
considering filing a seven-month plan soon.
The spending framework, Montigny
said, would merely outline what percentage of the $1.35 budget gap
would be addressed with budget cuts and state reserve funds. Montigny
also dismissed Swift's pledge to cut the budget herself if lawmakers
don't reach an accord by Friday at 5 pm.
"The idle public relations
threats coming from across the hall are non-productive and also are
not influencing the way we do business," he said. "We're
pretty determined to get it done soon. I can't guarantee it but I'm
hopeful." Montigy said the House and Senate continue to exchange
On his way to meet with Swift and
House Speaker Thomas Finneran, Senate President Thomas Birmingham said
he "would certainly hope to have a conceptual agreement by
Friday." Swift, Birmingham and Finneran went their own ways after
the hour-long meeting. A Finneran aide said he had no comment.
The talk of a budget framework and
conceptual agreements underscores the problem facing lawmakers and
their own difficulties confronting it. The budget gap is large and
growing and there's so much disagreement about priorities that
legislative leaders are simply trying to agree first on how much to
cut and how much to draw from reserves. From there, they hope to agree
on which areas will be spared and which ones will be cut, and by how
much. In many ways, it's like starting over nearly five months late.
Swift on Tuesday morning criticized
a plan reportedly favored by the Legislature's Democratic leadership
to cut spending by $500 million and tap $700 million in reserves.
"The split doesn't sound right to me," said Swift, who
prefers paring spending by $700 million, tapping $300 million in
reserve funds and spending all $300 million of the state's annual
tobacco settlement share.
The acting governor said the state
can't spend its reserves too quickly. "Along with fiscal and
economic crises, our nation is at war," Swift said. "That's
why we shouldn't dip in the rainy day fund to a degree that would
leave us with no reserves for the next several years," she said.
"We don't know what's going to happen, or what we're going to
have to do."
Freezing the income tax cut, another
idea gaining favor in the Legislature, was again rejected flatly by
Swift who said it is good policy "to return economic power to the
people." Legislative leaders are counting votes to determine
support for freezing the tax rollback and/or increasing the cigarette
Speaking to a women's business
breakfast at the Westin Hotel in Copley Square, Swift plugged her plan
to suspend the state sales tax for one weekend in December to boost
the economy. "Nobody can better stimulate an economy than a
mother with a shopping list," she quipped. Her bill was shipped
to the Taxation Committee today and a public hearing will likely be
State government is running on
interim budgets that last two weeks. Thanks to the economy's swoon,
the Swift administration is now spending $1.6 million more a day than
the taxpayers can afford.
Swift also met with municipal
government managers today. They advised her to put off any cuts in
local aid until next year, because cities and towns are almost half
way through their fiscal years and won't be able to easily absorb cuts
now. Local budgets drawn up months ago were based on minimum levels of
state funding, said Carl Valente of Weston, president of the
Massachusetts Municipal Association.
The impact of mid-year budget cuts
would vary, depending on the amount of surplus revenues and rainy day
reserves that cities and towns have socked away. "It would have a
substantial impact," Valente said.
Throughout the 1990s, cities and
towns were among the major beneficiaries of increased state tax
collections. In recent years, some Beacon Hill leaders have warned
that municipalities will need to share the burden of cutbacks.
Municipal leaders have stressed the need for funding, saying cities
and towns deliver the public safety, education and recreation services
that most directly affect the citizenry.
Municipal leaders also told Swift
today that they support a delay in the scheduled income tax reduction
and full use of the annual tobacco settlement monies if that would buy
the towns until next year to deal with a possible cut in local aid.
"The more planning time you
give localities, the better ability we are going to have to deal with
it," said MMA board member Charles Lyons, an Arlington selectman.
The MMA also said it is working on a
list of recommended changes to state laws and regulations that could
allow towns to save money, in order to help offset a cut in local aid,
such as the state sub-bid laws.
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