Thursday, November 15, 2001
Budget crisis is a looking-glass war
by David G. Tuerck
Massachusetts is in the throes of
what is generally but wrongly perceived to be a fiscal crisis. The
symptoms of a crisis are all around us. After months of dithering, the
state is only now pulling together a budget for fiscal year 2002. Dire
warnings about multiyear, multibillion-dollar deficits abound.
Citizens, conditioned to expect deep budget cuts, call their
legislators and plead for cherished programs.
The problem stems from the weakening
economy and the resulting slowdown in tax revenues. For the last
several years the state has increased spending at an annual rate of
about 5 percent. This trend, continued into fiscal 2002, would put the
state budget at $23.25 billion, approximately equal to preliminary
budgets already forged by the Legislature. Because the state is
already well into the fiscal year -- which began July 1 -- any budget
finally adopted by the Legislature that falls short of this amount
will be perceived as requiring a cut in spending.
Aside from the need to adjust
perceptions to reality, however, there is no fiscal crisis. Given
current revenue expectations, the state will run a deficit of about
$1.36 billion if it sticks with this budget. Thanks to the huge
surpluses the state ran up over the past several years, it has about
$2.3 billion in its rainy-day fund and other reserves. Given these
reserves and expected revenue collections, it can easily accommodate a
$23.25 billion budget for the current year. If it is then willing to
freeze spending at this level for fiscal 2003 and 2004, it can get
through the current slowdown without depleting its reserves or risking
So what is the problem? The answer,
as suggested, lies in the public's perceptions, as shaped by political
leaders and the media. In the curious lexicon of these opinion makers,
a fiscal 2002 budget that comes in at, say, $22.5 billion would be
said to require a cut -- even though that amount would be $400 million
more than last year.
This Alice-in-Wonderland language,
according to which a failure to increase spending becomes a cut in
spending breeds confusion and hysteria.
Once we abandon fiscal Jabberwocky
and return to standard English, however, the hysteria quickly
disappears. If the state were to freeze spending at $23.25 billion
this year and for the next two, it would weather the
"crisis" fiscally intact. With the economy recovering by
sometime in fiscal 2003, the state would be able, under this plan, to
increase spending by 4 percent annually beginning in fiscal 2005.
Only the Mad Hatter could see a
crisis in these numbers. There are, however, political advantages to
creating the perception of a crisis. Last year Massachusetts voters
overwhelmingly approved a ballot measure under which state income tax
rates are scheduled to fall from 5.6 percent to 5.3 percent next year
and then to 5 percent in 2003. Those who opposed the tax cut from the
start would use the perceived crisis as an excuse to postpone its
Besides leaving the democratic
process in shambles, postponing the tax cut would come at the worst
possible time. At the Beacon Hill Institute, we figure that it would
cost about 33,000 jobs. That's a heavy cost, considering the extra tax
revenue would come to less than 2 percent of expenditures. Happily,
despite their best efforts to panic the Legislature into canceling the
tax cut, proponents of this ill-conceived measure seem to be in
In fact there is no need to postpone
the tax cut, no need to impose new taxes, no need to use up tobacco
settlement money and no need to back off spending plans. One-third of
this fiscal year is already history. The realistic and responsible
action is to accept the current budget and start planning to live the
next couple of years without the customary increases in spending.
Unfortunately for the commonwealth
and for her political future, acting Governor Jane Swift has allowed
herself to engage in the very Jabberwocky that her opponent can be
expected to use against her next year. Her response to the budget
impasse has been to threaten huge budget and job cuts. Her reward in
the next election will be the accusation that she had to cut the
budget as a result of a tax cut championed by her against the better
judgment of her political opponents.
Memo to the governor: Tell the
Legislature you're ready to sign their budget without any cuts. And
tell them that you're preparing a budget for next year that
level-funds existing programs. Finally, give yourself credit for
cutting taxes while avoiding budget cuts, right through the state's
first economic slump in 10 years. Take heed, lest you send your
campaign down the rabbit hole even before it gets under way.
David G. Tuerck is executive
director of the Beacon Hill Institute and chairman of the Department
of Economics at Suffolk University.
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Thursday, November 15, 2001
Will they kill the tax cut?
By Jeff Jacoby
ONE OF THE PUB regulars launches
into a joke. "Say," he says to the fellow on the next stool,
"did you hear the one about the dumb state legislator who tried
to kill a tax cut?"
"Before you say another
word," the man tells him coldly, "I think you ought to know:
I'm a state legislator."
"That's OK," the barfly
assures him. "I'll tell it very slo-o-o-wly."
In 1989 and 1990, as Mike Dukakis's
"Massachusetts miracle" dissolved in a sea of red ink, Bay
State lawmakers jacked up the state income tax. From 5 percent they
hiked it to 5.75 percent, then hiked it again to 6.25 percent. It was
the worst possible thing they could have done - raising marginal
income tax rates suppresses economic growth -- but they did get one
thing right: They promised to keep the tax increase temporary.
In legislative debate and news
accounts, the point was repeatedly driven home. When Dukakis wanted a
permanent increase, Richard Voke, the House Ways and Means chairman,
refused to go along. "Governor," he said bluntly, "you
are not getting permanent new taxes out of the House. Do you get
Dozens of Democratic legislators
stressed that the tax hike would not last long. Senator Walter
Boverini of Lynn, for example, pronounced it "a very distasteful
thing" to raise taxes. "We all have to share the blame and
vote in some temporary taxes," he said. "But we have to make
sure it is temporary." One day after the tax hike became law, The
Boston Globe described it on Page 1 as "the 15 percent temporary
income tax increase signed by Governor Dukakis yesterday."
What the Legislature should have
done, of course, was cut the budget. Yet spending kept climbing, even
as Massachusetts turned into a fiscal Beirut. Total outlays in
Dukakis's last three years rose from $12.8 billion to $13.6 billion.
Not until a new governor took office was the budget finally subdued.
When Bill Weld's first full fiscal year cycle came to an end, total
spending had decreased from the year before. It was down only by 1.7
percent (about $200 million), but it was enough. The crisis ended.
The temporary tax increases,
unfortunately, didn't. The Democrats who dominated the Legislature
conveniently forgot and later denied their promise to roll the income
tax back to 5 percent. As the early-'90s recession gave way to the
mid- and late-'90s boom, tax revenues soared. So much money came
gushing into the state treasury that the politicians couldn't spend it
Not that they didn't try. Budgets
grew at warp speed, expanding by as much as $1 billion a year.
Legislators spent with drunken abandon. There was money for
everything, from white-elephant convention centers to the bottomless
pit of education "reform," from fat raises for themselves to
mammoth severance packages for ousted bureaucrats, from subsidies for
millionaire sports-team owners to an endless parade of pork.
Even at their most gluttonous,
though, they couldn't consume all the revenue being extracted from
taxpayers, who were still paying the "temporary" tax hike.
As excess dollars pooled in huge surpluses, they were stashed away in
assorted reserve accounts and "rainy day" caches and
"transitional escrow funds." Anything, it seemed, was
preferable to giving the money -- any money -- back to the taxpayers.
On Election Day 2000, the taxpayers
finally took matters into their own hands and voted overwhelmingly for
the tax rollback they had been promised 11 years earlier. Not being
greedy, they stretched the reduction to 5 percent over three years.
The first cut, to 5.6 percent, kicked in last January. The second cut,
to 5.3 percent, is to take effect in January 2002.
But if the Democrats -- which is to
say, Senate President Tom Birmingham and House Speaker Tom Finneran --
have their way, there will be no second cut. Their campaign to
"freeze" (read: kill) the tax rollback is in full swing.
Members are being lobbied to support a freeze; special interest
groups, the ones usually found with their snouts in the state trough,
are endorsing the idea. "This is something we are doing with the
greatest reluctance," Birmingham said in his smarmy way a few
days ago. "But there are times in public life when we have to
make difficult decisions."
Birmingham and Finneran can't agree
on a state budget, which is now five months overdue. To close the
current revenue shortfall, they need only resurrect the $21.5 billion
budget that was passed in 2000, but they can't even manage that.
Needless to say, it hasn't occurred to them to give back the 8 percent
pay raise every legislator received in January. Some "difficult
decisions" are too difficult even for these legislative titans.
But prevent you and me from keeping
an additional three-10ths of 1 percent of our own money next year?
Tear up a law that the voters approved in a landslide? Reinforce every
stereotype about the greed, arrogance, and contemptibility of state
Hey, just leave it to them.
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Thursday, November 15, 2001
Lawmakers rule out tax hike
More cuts eyed to close deficit
By Rick Klein
Anguishing over how to close a $1.4
billion budget gap, legislative leaders yesterday called off any
efforts to raise taxes, deciding that the potential political backlash
outweighed the benefit of saving programs.
The decision will put more pressure
on state leaders to cut spending. Lawmakers will now need to make cuts
on the order of $650 million from an earlier budget plan -- which
could affect aid to cities and towns, human services, and health care.
"Things that had been off the
table will now be on the table," said Senate Ways and Means
Chairman Mark C. Montigny.
Top House and Senate leaders met
into the evening yesterday to try to agree on a spending plan, which
is now 138 days late. Besides cutting about $650 million in programs,
lawmakers are likely to tap $700 million in reserve funds for use in
this year's budget and spend about $50 million more than planned from
the state's settlement with tobacco companies, legislative sources
Legislative leaders still haven't
agreed on most of the specific cuts, but House Speaker Thomas M.
Finneran and Senate President Thomas F. Birmingham could announce the
outline of their budget agreement as soon as today.
Aides would then work through the
weekend to finalize the budget by Tuesday so the full House and Senate
could vote on the spending plan Wednesday - the last day of the
legislative session. The Legislature would also schedule a day in
December to take up what are expected to be numerous vetoes of line
items in the legislative plan by Acting Governor Jane Swift.
Some lawmakers earlier proposed
freezing a voter-approved income tax cut to put $200 million extra in
state coffers this fiscal year. But Swift had vowed to veto any such
move, and Finneran yesterday sent word to Birmingham that the House
does not have the votes needed to override her veto.
Yesterday, during a closed-door
caucus, senators discussed raising other taxes, but leaders nixed any
And so, more cuts will be necessary.
Legislative leaders say about $200 million can be trimmed without deep
pain, mostly with across-the-board decreases of 5 percent from
virtually all accounts. The Legislature is also expected to come up
with about $90 million in savings by limiting contributions to the
public employees' pension fund, and by forcing state workers to pay a
greater share of their health insurance.
Beyond that, current state programs
-- covering everything from public health to services for the elderly
-- will be affected, and some could be eliminated.
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Thursday, November 15, 2001
Health groups criticize Swift
Say budget cuts will undo gains
By Ralph Ranalli
The American Cancer Society, the
AIDS Action Committee, Planned Parenthood, and 26 other groups plan to
hold a rally on Beacon Hill today to protest proposed Swift
administration budget cuts, which they say will undo decades of
progress against AIDS, cancer, smoking, and teen pregnancy.
AIDS deaths, for example, dropped 71
percent in Massachusetts between 1996 and 1999, thanks in large part
to state-funded education, screening, and treatment programs, said Dr.
Stephen Boswell, executive director of the Fenway Community Health
Now, a whole range of nursing,
counseling, and testing services, which help the center's HIV-positive
clients maintain their complex regimen of anti-AIDS drugs, face
elimination as part of $66 million in proposed cuts in the 2002 state
Department of Public Health Budget, Boswell said.
"We can't do this in the name
of fiscal prudence, it's insanity," Boswell said. "Some of
these people are going to end up in the hospital getting much more
Boswell said the cuts threaten more
than the health of the center's 1,200 HIV-positive clients. Because
patients who fail to properly take their medications can develop
drug-resistant strains of HIV, the cutbacks could speed the
introduction of those strains into a larger population.
"If we cut out this
infrastructure, there is no doubt in my mind that we will see more
resistent strains of HIV," he said.
American Cancer Society officials,
meanwhile, say similar progress against various forms of cancer are
Mark Boutin, the society's director
of government relations, said that between 1994 and 1998, after the
introduction of state-funded early detection and treatment programs,
deaths from breast cancer in Massachusetts fell 20 percent, while
prostate cancer deaths fell 17 percent here.
Virtually all of the funding for
those programs would be cut under the Swift proposal, which Boutin
said caught officials off guard.
"Overall, the total state
budget cuts are about 2 percent, but these proposals would cover
almost 100 percent of cancer control," Boutin said. "It came
as a total shock that these programs would be cut at this level."
The Swift administration has
proposed cutting the Department of Public Health's budget by $66
million as part of a plan to close an estimated $1.4 billion 2002
Administration officials could not
be reached for comment yesterday, but have said that Department of
Public Health's $500 million annual budget is too big not to absorb
some cuts, given the state's dire fiscal situation.
Legislative leaders are meeting to
come up with their own plan.
Organizers are hoping to attract
hundreds of supporters to a noon rally in front of the State House,
after which they will meet with legislators to lobby against the
proposed cuts. The groups involved include the Massachusetts Breast
Cancer coalition, the state chapter of the American Academy of
Pediatrics, and the Massachusetts Nurses Association.
"The aim is to pull together as
many organizations and associations to send a unified message to the
Legislature that we need a budget that supports public health,"
said Laurie Stillman, executive director of the Massachusetts Public
Stillman and Boutin both said the
state should be considering other measures for closing the budget
deficit, such as spending more money from the state's rainy day fund.
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Thursday, November 15, 2001
A Boston Herald editorial
Health budget can take cuts too
The state of Massachusetts has a
substantial Public Health Department, supported by many outspoken
advocates. Outspoken, but afflicted by tunnel vision.
The state faces a financial crunch.
But that doesn't seem to matter. The advocates want to protect their
programs down to the last penny. And never mind whether the program is
essential, useful or something that we can do without in a pinch.
Say the words "public
health" and these days there springs to mind a moon-suited worker
taking what may be anthrax-laced powder from a post office somewhere.
Yes, that's essential.
But "public health" in
Massachusetts, according to the governor's budget request 10 months
ago, includes a mind-boggling expenditure of about $680 million in 147
"Public health" includes
$790,453 to go with a federal grant for a "Demonstration program
to conduct toxic waste site health impact assessments." Never
mind that nobody in the country has been able to find any proof of
such impacts despite 20 years of looking.
"Public health" includes
$12.7 million for "Expansion of smoking prevention and cessation
programs." That's in addition to $50.4 million for "Smoking
prevention and cessation programs." That's in addition to $1.7
million to go with a federal grant for "Tobacco use prevention
and control." That's in addition to $6.2 million for
"Community health center services, including smoking cessation
programs." Just how many smoking cessation programs do we need,
Acting Gov. Jane Swift has advanced
possible cuts totalling $66 million, less than 10 percent of the
department's budget. Her ideas are subject to change, but what is so
terrible about dropping $2.8 million for prostate cancer research? The
state has no particular expertise in running medical research.
And yes, breast cancer is a terrible
thing, but the outreach from private foundations and organizations is
already enormous. The $5 million state allocation for screening and
awareness programs is surely expendable.
When the state is forced to cut
spending this year by $1.35 billion, money that just goes to reinforce
the "Get healthy, darn it!" messages that flood in on every
side with each day's newspaper and news program seems to us money
eminently suitable for more important uses. Public health advocates
should realize that.
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The Boston Herald
Thursday, November 15, 2001
Gov may cut pay and KO interns
by Elisabeth J. Beardsley
Acting Gov. Jane Swift, moving to
pressure lawmakers and her Democratic foes to make tough budget cuts,
wants to slash $30 million in spending - ranging from State House
interns to possibly her own $135,000 salary.
Daring other constitutional officers
to follow her lead, Swift is levying a 3 percent cut on her $6 million
office account, which funds, among other things, the salaries for
Swift's 78 direct employees.
The governor's salary is fixed in
statute, but Swift spokesman James Borghesani didn't rule out the
possibility that Swift would voluntarily take one for the team as a
"Everything is on the
table," Borghesani said. "We will make our 3 percent
A three percent pay cut would shave
$4,050 off Swift's $135,000 salary, which was jacked up by $45,000
less than two years ago as part of a package of giant pay raises for
all six constitutional officers.
If all five sitting constitutional
officers and the state's 11 district attorneys agreed to a similar
cut, the administration estimates the state could save as much as $4
million at a time of economic free-fall when every penny counts.
Treasurer Shannon O'Brien has, in
fact, already taken the 3 percent plunge. Last week, O'Brien announced
she could squeeze $240,000 out of her office's $8 million
administrative account by leaving vacant positions unfilled and
eliminating merit-based pay raises.
Swift is also dropping a hot potato
into lawmakers' laps, "encouraging" them to shave 3 percent
out of their "non-member" accounts, which would save $1
million without touching their salaries.
And lest they take comfort in salary
immunity, Swift is planning to whack legislative office expense
accounts in half, paddling them over their attempts to derail the
clean elections law.
Last year, legislative leaders sold
the campaign finance law to members by sweetening the monthly
allowance for district office expenses from $300 to $600.
By returning that stipend to its
original $300, the administration figures it can save $360,000 over
the rest of this fiscal year, and $720,000 a year after that.
The moves are likely to inflame
lawmakers, who have been on the defensive as Swift -- fighting off
public relations disasters of her own -- hammers them for extreme
tardiness in passing a state budget.
Swift has also ordered the
elimination of paid interns, and will file an outside section with
next year's budget asking lawmakers to ban them, too.
This year, the administration
budgeted $4.2 million for interns, but officials were unable to say
exactly how many are on the payroll. Paid interns make between $7 and
$13 per hour, depending on their education. By cutting off their
paychecks immediately, the state can save $1.5 million over the rest
of the fiscal year, the source said.
In a bizarre bit of bipartisanship,
Republican Swift is pointing to liberal Democratic Sen. Cheryl Jacques
(D-Needham) as a role model. Jacques runs the biggest volunteer intern
program in all of state government, with 32 on board over the summer,
and nine on duty now.
"Cheryl Jacques is a good
example of how aware we are that we can attract unpaid interns to
government," said the administration source.
The administration plans to slice
out another $6.6 million by canceling all its newspaper and magazine
subscriptions -- some offices receive as many as six -- and dropping
memberships in organizations like the National Governors Association,
the source said.
Swift will also ask lawmakers --
like her predecessors have -- to get rid of State House physician
Raymond Gibbs, dubbed "Dr. Do-Little" after a Herald story
revealed he performed mostly minor procedures -- like handing out
Band-Aids and giving flu shots.
Gibbs earns more than $90,000 a year
and his office budget -- including nurses -- totals $260,000.
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Thursday, November 15, 2001
Budget irks ex-pols
by Eric Convey
Beacon Hill leaders who've left
Massachusetts the only state in the country without a budget for the
current fiscal year drew sweeping, if polite, criticism from
Too much deal-making behind closed
doors and tough spending decisions too-long delayed are hurting,
former leaders said of the budget stalemate.
"It's beyond my wildest
comprehension how you can be in the fifth or sixth month of the fiscal
year without a budget," said former House Ways and Means
Committee chief Richard Voke.
"When you're slipping into a
recession, often it goes a lot quicker and a lot deeper than your
estimates called for," warned former revenue commissioner Stephen
Also on the panel were former Senate
Ways and Means head Patricia McGovern and Frank Keefe, formerly
Dukakis' administration and finance chief.
The four, who presided when the
state plunged into a budget crisis in the late 1980s, came together
yesterday for a Massachusetts Institute for a New Commonwealth forum.
Earlier this month, they met to advise current legislative leaders.
McGovern warned that lawmakers need
to avoid "gimmicks." "Don't play games. Games don't
work," she said.
If the state maintains current
spending rates, it will face a $1.1 billion to $1.4 billion budget gap
in a $23 billion spending plan, analysts have said.
Keefe said Swift needs to get tough
with budget-savvy agency heads: "Swift really ought to be able to
discipline them and get them to play ball."
Coming up with a final spending plan
is the job of acting Gov. Jane Swift, Senate President Thomas
Birmingham (D-Chelsea) and House Speaker Thomas Finneran (D-Mattapan).
Panelists pinned part of the problem
on the clashing political ambitions of Swift, who is running for
election to a full term, and Birmingham, who is widely expected to
seek the governor's office next year.
Swift aides said yesterday that the
governor will advance her own budget at 5 p.m. tomorrow if legislative
leaders haven't reached an agreement.
Birmingham's spokeswoman, Alison
Franklin, said, that budget-writers had waited to see if recent
revenue drops were more than temporary.
The group of former leaders also
agreed that a two-year budget cycle would be more efficient than the
traditional process of writing a new spending plan ever year. About 20
states produce biennial budgets.
Finneran said it's an idea worth
exploring. He also indicated that budget negotiators drew nearer to a
deal this week.
"My sense is that over the past
72 hours we've come much, much closer to closing this (process),"
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Wednesday, November 14, 2001
The price of Legislature's late budget
For years, the two men who run the
Massachusetts Legislature have scoffed at deadlines.
As the fiscal year ended July 1,
House Speaker Tom Finneran and Senate President Tom Birmingham would
mouth platitudes about working hard to resolve serious differences
over state spending policies, then they'd send their members off to
Two years ago, Finneran and
Birmingham let the state go well into October without a budget. The
two sat for weeks on Birmingham's balcony at an obvious impasse they
refused to explain. They took a scolding on the editorial pages for
their mismanagement of the legislative process, but took no heat from
their sheep-like members. The surpluses that continued to pile up
while the budget was overdue just made it easier to satisfy everyone
in the end.
Finneran and Birmingham promised to
be more prompt in carrying out the Legislature's most important duty,
and they did better the next year. But that was an election year, and
the Legislature is bound by its rules to adjourn earlier. This year,
it was back to the stall. With the budget overdue, the lawmakers hit
the beaches. Birmingham spent much of August bicycling across the
state to promote his campaign for governor. Now, halfway through
November, there's still no budget in sight.
This year, the budget's tardiness
holds consequences that weren't present two years ago. A series of
continuing resolutions has allowed the state government to keep
functioning, but those resolutions are based on last year's spending
levels. State revenue has plummeted, especially since Sept. 11. The
state is spending at levels it cannot afford, and with every month
that passes without a budget, Massachusetts goes deeper in the red.
Cuts later in the fiscal year will have to be that much deeper to make
up for overspending now.
The damage from the late budget goes
far beyond state government. Every city and town had a budget in place
July 1, as required by law. Without a state budget to guide them,
municipal leaders based their spending plans on assumptions about
state aid that seemed reasonable last spring. They have hired
teachers, initiated programs and launched projects with the
expectation that eventually Beacon Hill would get around to sending
them the money.
Now, they hear that some of that
money may never arrive. Acting Gov. Jane Swift has called for a $100
million cut in local aid. Finneran and Birmingham won't tell us what
they have in mind -- the secrecy of their budget process is as
maddening as its slowness -- but town administrators and school
superintendents are nervous, and with good reason. The Legislature has
a long history of cutting local aid in order to protect state
The flagging economy makes this the
most difficult budget in many years, but that's no excuse for
mismanaging the legislative decision-making process. Until we hear
otherwise, both Toms must be held responsible for this failure. The
House should hold Finneran accountable when the House selects its next
speaker. Voters should hold Birmingham accountable when he runs for
Out of 50 states, only Massachusetts
is still functioning without a budget. That's an embarrassment to the
Commonwealth, and it's one for which Tom Finneran and Tom Birmingham
should be made to pay.
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