CITIZENS   FOR  LIMITED  TAXATION  &  GOVERNMENT
and the
Citizens Economic Research Foundation

 

CLT UPDATE
Monday, May 13, 2002

Can't we trust them to one day turn honest?


Many government officials think it's time to alter the law, which prevents municipalities from raising property taxes more than 2 percent in any given year without voters' approval of an override. Proposition 2 also limits the local tax levy to 2 percent of the total assessed value of property in the community.

Some have suggested abolishing it, to the consternation of the law's proponents, who say it promotes fiscal discipline....

The difficulty of changing the law, passed in 1980, may be seen in how quickly state Rep. Deborah Blumer, D-Framingham, backtracked after proposing raising the limit slightly....

"She seems to be doing some serious backpedaling," said Dick Gooding, chairman of the Hopkinton Board of Selectmen. "I think she made an error in judgment and perhaps received a good deal of backlash from her electorate."

Blumer could not be reached for comment....

The MetroWest Daily News
May 13, 2002
In crunch, opposition to Prop 2 grows


So when the Framingham School Committee and the Framingham Board of Selectmen and their bloated armies of bureaucrats tell us that there is no fat in the budget, they are lying to the voters. When they base their calculation of the tax increase on an average house value of $200,000, knowing full well that the mien value is $300,000, they are being dishonest. When they tell the voters that the only alternative to budget override is to cut public safety and schools, threatening to cut the bone and muscle instead of the fat, they are committing extortion and political blackmail.

The MetroWest Daily News
May 13, 2002
Remember who pays the bills
By Rob Meltzer


The glee on Beacon Hill that greeted passage of $1 billion in tax increases by the House shows why Massachusetts needs a real restraint on spending....

To avoid more tax reductions during the boom of the late 1990s, the Legislature resorted to gimmicks like making capital expenditures out of the operating budget and accelerated retirement of the state's unfunded pension liability. Spending grew - and when the recession hit, couldn't be cut enough because of the psychology of the politician. We're in trouble now because spending grew too fast then....

The cynic will ask: What's the use? Legislators surely will evade, ignore or repeal another spending limit a nanosecond after it becomes inconvenient, will they not?

A Boston Herald editorial
May 13, 2002
State spending limit always a good idea


Sens. Steven A. Baddour, D-Methuen, and Bruce E. Tarr, R-Gloucester, want to radically change the way state budgets are assembled and debated, and next week plan to file a bill that will call for zero-based budgeting.

That means departments will have to justify their entire budgets from the ground up -- just as local municipalities must do....

Citizens for Limited Taxation supports the senators' plan and Mass. Inc., a nonpartisan think-tank, said it's intrigued by the idea and supports performance-based budgeting.

The Eagle-Tribune
May 10, 2002
Senators want new approach to budget


Chip Ford's CLT Commentary

Though we halted the most recent attempt to gut Proposition 2 for the moment, killing it is still being considered and quietly talked about. Opponents of fiscal accountability will never give up or go away.

The response to "cynics" of the Legislature in today's Boston Herald editorial is quite naive: "Don't give up. After being hit by the two-by-four often enough, the mule eventually gives you his attention."

Is the Herald comparing the pols as the thick-headed mule, or the voters and activists who do the hard work?

If the editorial writer thinks we're going back out there and collect signatures again to put anything on the ballot (as we've been requested to do with this new proposal if all else fails), I've got news for him: we've been hit too often lately with that legislative two-by-four of arrogance and disrespect for voters' decisions.

That spending-cap law was part of our successful 1986 (Dukakis) surtax repeal ballot question. Been there, done that one as well - 16 years ago.

Would the Beacon Hill Cabal dare tamper with the results of a new spending-cap law, especially if it was passed by the voters?

Answer: Clean Elections Law, Tax Rollback Law, Charitable Donations Tax Deduction Law ...

Would they tamper with a ceiling or automatic "trigger"?

Answer: The "Rainy Day Fund" surplus automatically rolling over into the "Tax Reduction Fund," but always put off by a constantly distancing goalpost whenever the "ceiling" came into sight.

Can't we trust them to wake up one day and turn honest?

Answer: The now-13-year old "temporary" tax increase.

Chip Ford


The MetroWest Daily News
Monday, May 13, 2002

In crunch, opposition to Prop 2 grows
By Jon Brodkin

In the state formerly known as "Taxachusetts," debate on the merits of Proposition 2 are as heated as a Pedro Martinez fastball.

Many government officials think it's time to alter the law, which prevents municipalities from raising property taxes more than 2 percent in any given year without voters' approval of an override. Proposition 2 also limits the local tax levy to 2 percent of the total assessed value of property in the community.

Some have suggested abolishing it, to the consternation of the law's proponents, who say it promotes fiscal discipline.

The difficulty of changing the law, passed in 1980, may be seen in how quickly state Rep. Deborah Blumer, D-Framingham, backtracked after proposing raising the limit slightly. Her plan would have tied the limit to the price index for state and local government services, which she said is less than 1 percent greater than 2.5.

Instead, she now proposes forming a commission to study the law.

"Proposition 2 has been baked into the government and political landscape for 20 years now," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. "It's highly unlikely that there would be any consideration of radical change, or elimination of Proposition 2. That's just not something that I think would have any critical mass of consensus."

One proponent of the law guesses that Blumer was bombarded with complaints from constituents after making her proposal.

"She seems to be doing some serious backpedaling," said Dick Gooding, chairman of the Hopkinton Board of Selectmen. "I think she made an error in judgment and perhaps received a good deal of backlash from her electorate."

Blumer could not be reached for comment.

Hopkinton is asking voters to approve two debt-exclusion overrides to build a new senior center and police station. A debt-exclusion override is one which raises taxes for a limited time, until a specific project is paid for. Potential overrides such as those are a sign that the law is working, Gooding indicated.

"It's serving our interests quite well," he said. "Communities have mechanisms for dealing with it and overriding it." The law forces officials into careful consideration of any spending, he said.

While Prop. 2 has forced communities to spend more carefully, said one 2 detractor, town meetings would prevent unreasonable tax increases even if the law was abolished. With power over the budget, town meeting voters have virtual control over the tax rate, said Paul McKinley, Natick's selectmen chairman.

"I definitely think it needs to be changed," he said of Prop. 2. McKinley supports either abolishing the law or tying the limit to an economic indicator such as the Consumer Price Index. Even with a higher limit, he said, there would still be overrides because some costs, such as health insurance, rise faster than inflation.

Southborough Town Administrator Janice Conlin isn't convinced that town meetings provide a sufficient roadblock to excess government spending. Before Prop. 2, if officials wanted something they only had to convince 150 people or so of its necessity, she said. Now residents have more input.

"I think we have to communicate better our needs to the electorate in order to get something approved," she said. Conlin said she doesn't think the law will be changed and "I don't know that it should."

Massachusetts is fortunate that Prop. 2 hasn't had a disastrous effect on city and town finances, but the luck could run out, said Beckwith. In the 1980s, declining school enrollments prevented educational costs going up as much as usual. And low inflation rates in the 1990s meant that while living under the constraints of Prop. 2 was difficult, it was not a fiscal disaster, he said.

But if inflation begins to accelerate and school enrollments increase, "there will be a 'perfect storm' that would put major changes to Proposition 2 on the front burner," he said.

If inflation rises, Blumer's original idea will get more attention, he said.

Some officials, when discussing Prop. 2, are torn between what they see as two realities: One, that the law places a necessary limit on property taxes, and two, that the limit is unrealistically low.

Finance committees scrutinize budgets more thoroughly than they would if there were no cap on taxes, said Frank Foss, chairman of Natick's Finance Committee.

"But realistically, under what we've just lived through," he said, "Proposition 2 is extremely problematic." Unlike several other local communities, Natick did not bring an override to a vote this year to meet growing expenses, but did institute a trash fee.

Foss supports tying the limit to an economic indicator.

"Why not use the same indicators that businesses are using? What makes government different?" he said.

State Sen. David Magnani, D-Framingham, also supports changing the limit. But he says it should be done in tandem with the state giving money to those who would have trouble paying higher tax bills.

"Without sufficient state aid you can end up driving senior citizens right out of their homes," he said.

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The MetroWest Daily News
Monday, May 13, 2002

Remember who pays the bills
By Rob Meltzer

What is the role of town government? The answer is pretty clear - to provide for public safety and to provide a certain level of mandated public education.

These items are the muscle and bone of government. The rest of what the town pays for, whether we're talking libraries, parks and recreation, maintenance of surplus lands, parades, town-owned vehicles, new doors for Nevins Hall, so-called school enrichment programs and the army of managers, assistant managers, deputy assistant managers and executive assistants to the deputy assistant managers that haunt the Memorial Building are, quite simply, fat.

So when the Framingham School Committee and the Framingham Board of Selectmen and their bloated armies of bureaucrats tell us that there is no fat in the budget, they are lying to the voters. When they base their calculation of the tax increase on an average house value of $200,000, knowing full well that the mien value is $300,000, they are being dishonest. When they tell the voters that the only alternative to budget override is to cut public safety and schools, threatening to cut the bone and muscle instead of the fat, they are committing extortion and political blackmail.

It shouldn't surprise us that our elected politicians treat the voters with disdain and contempt. After all, it is logical to assume that the same people who buy the lies of the candidate before the election will buy the lies of the professional politician after the election.

Even if we can't trust the selectmen and the School Committee to tell the truth, we should be able to trust our supposedly-representative Town Meeting members to call our elected boards onto the carpet. Alas, as we know from the current Town Meeting sessions, there is no sight as despicable as the vision of 184 lemmings, bleeding from self-inflicted wounds, as they fight among themselves to be the first to fling themselves off the override cliff at the request of our politicians.

The root of the fiscal crisis is that we assume that current levels of spending are necessary, and then try to match revenues to those levels. Is that how we should budget, by looking at what we've become accustomed to paying for?

We can invert the process. We can start by asking, what are our needs? Are certain services truly essential, or are they merely services that we've become accustomed to spending money on during a good economy? Do we really need as many elementary schools as we have? Do we really need to keep town-owned buildings that are not being utilized for town purposes? Do we really need so many town employees, or can we eliminate some middle management? These are the questions we should be asking before we look at raising more money.

This, of course, is how families budget. Yes, perhaps the family has grown used to exotic family vacations while dad was earning big bonuses, but those vacations are not necessities of life. The same kind of decisions can easily be made in examining the town budget and looking at a huge array of useless jobs in our town government. As anyone who has ever worked at a downsized company can attest, the remaining employees quickly realize that two people were performing the job of one person, and that streamlined efficiency in tasks can easily compensate for the missing warm bodies.

I realize that there are people in this town who have more money than they need. That doesn't give them the right to assume that all town residents sit around in the evenings tossing shredded greenbacks into the toilet. If you want to waste your money, fine, but don't assume that we all share your mania for waste. Don't assume that we don't have better uses for our money.

At a time when we are looking at increased revenues from prior revenues, increased revenues from new state taxes and a decrease in tax credits and deductions, it is imperative that our town government consider the notion of fiscal responsibility, remembering who pays the bills. My sense is that we have a town surplus, not a deficit, and we should be making this analysis before we talk about overrides.

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The Boston Herald
Monday, May 13, 2002

A Boston Herald editorial
State spending limit always a good idea

The glee on Beacon Hill that greeted passage of $1 billion in tax increases by the House shows why Massachusetts needs a real restraint on spending. Politicians will never do it on their own, even when revenues fall - their self-esteem depends on satisfying the demands of interest groups.

Actually the commonwealth does have a spending restraint - which never did its job. In 1986 voters approved a law to limit the amount of tax revenue that may be spent, and to limit the annual growth in that amount to the average growth in wages and salaries in the state over the preceding three years. Through a quirk in the formula, it applied only in 1987. This year's tax collections would have to be 16 percent larger than they are for the limit to apply.

To avoid more tax reductions during the boom of the late 1990s, the Legislature resorted to gimmicks like making capital expenditures out of the operating budget and accelerated retirement of the state's unfunded pension liability. Spending grew - and when the recession hit, couldn't be cut enough because of the psychology of the politician. We're in trouble now because spending grew too fast then.

A simple correction of the 1986 flaw sponsored by Rep. Joseph Sullivan (D-Braintree), House chairman of the Transportation Committee, could do the job. Acting Gov. Jane Swift made the same proposal last year, to no avail. The Massachusetts High Technology Council has asked lawmakers to support Sullivan's amendment. A group of Republicans has sponsored a very similar measure.

Had the Sullivan formula been in effect from 1986 on, the budget gap for next year would be about $300 million instead of $2 billion.

The council estimates that the revised limit would not be effective until 2005, by which time the economy should have recovered. Other things being equal, by 2009 the new formula should hold spending to $1 billion less than available tax revenues. Current law requires the excess to be returned to taxpayers via income tax credits.

This is a good formula, but others are possible. Amazingly, House Speaker Tom Finneran, who engineered the tax increase bill, appears to agree with the concept of a limit: He has sponsored an amendment to the budget to hold growth in annual spending to 4 percent after 1 percent of available revenue has been put in the rainy-day fund.

How realistic is this? Well, it would have worked in the late 1990s. From 1996 to 2000, tax revenues increased by 6.8 percent per year despite various rate cuts.

There is no conflict with the income tax rate phase-down in the House tax package (a laughably slow process that will take six years at best to reach the 5 percent rate the voters approved in 1998 [sic - 2000]).

The cynic will ask: What's the use? Legislators surely will evade, ignore or repeal another spending limit a nanosecond after it becomes inconvenient, will they not?

To which the reply is: Don't give up. After being hit by the two-by-four often enough, the mule eventually gives you his attention.

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The Eagle-Tribune
Lawrence, Mass.
Friday, May 10, 2002

Senators want new approach to budget 
By Jennifer D. Jordan 
Eagle-Tribune Writer

While the House this week debated casinos and how to spend the $1 billion members hope to raise in new taxes, their Senate counterparts quietly talked among themselves about their budget proposal due by month's end.

There was chatter about freezing the income tax rollback at 5.6 percent in order to raise more money and upping the sales tax from 5 percent to 6 percent.

Merrimack Valley lawmakers universally oppose the latter. In fact, two local state senators think they have a better idea.

Sens. Steven A. Baddour, D-Methuen, and Bruce E. Tarr, R-Gloucester, want to radically change the way state budgets are assembled and debated, and next week plan to file a bill that will call for zero-based budgeting.

That means departments will have to justify their entire budgets from the ground up -- just as local municipalities must do.

Currently, budget discussions begin with looking at what a department received the previous year, then making adjustments, usually increases, such as fixed costs, raises and benefits.

The senators said they're frustrated by the budget process and the deep cuts proposed this year to balance the budget for fiscal year 2003.

"This budget will be under more scrutiny than any other budget in the past 10 years," Tarr said. "It gives us the opportunity to examine everything we do and the way we do it."

Baddour said the plan would also get more lawmakers involved in the budget process.

"We need to start the budget early and get more people involved," Baddour said. "It will give the committees more work and take some of the pressure off Ways and Means."

Their plan calls for a zero-based review of all departments every four years and committees to analyze related departments. For example, the Education Committee would review education budgets, and Health Care would review public and mental health budgets, before referring them to Ways and Means, with whom the ultimate power would remain, Baddour and Tarr said.

"Doing this every four years is a good increment of time and it's concurrent with governors' terms," Tarr said. "There hasn't been this kind of check to make sure spending doesn't get out of control, before (a fiscal crisis) necessitates drastic action that ends up hurting people."

Thirteen states now use some form of zero-based budgeting. Another 37 use some form of zero-based budgeting or performance budgeting, including New Hampshire, said Pete Sepp of the National Taxpayers Union in Washington, D.C., a nonpartisan taxpayer watchdog group.

Performance-based budgeting sets standards by which programs and departments are judged during the budget process.

"We think a combination of zero-based and performance budgeting is helpful, but not necessarily a cure-all," Sepp said.

Citizens for Limited Taxation supports the senators' plan and Mass. Inc., a nonpartisan think-tank, said it's intrigued by the idea and supports performance-based budgeting.

It remains to be seen if House and Senate leaders will support it, too. Critics of zero-based budgeting say it's overkill and excessive micro-managing to justify every line item in every department.

Even if the bill is accepted as a late-file petition next week, it faces a long road through legislative bureaucracy, Tarr and Baddour said.

Still, they hope their bipartisan effort will translate into success.

"It won't affect this year's budget, but it's a starting point for discussion," Baddour said. "Our hope is that this will evolve and something will be in place for the next administration. This isn't just about money; it's also about vision and thinking about what kind of programs we want."

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