The Lawrence Eagle
Wednesday, January 6, 1999
Remember, it's our money
Leaders of the Massachusetts Legislature
are worried about how to spend
all the money gushing into state coffers.
Give it back to taxpayers, who could use it.
Only on Beacon Hill would a massive surplus of cash from the taxpayers be deemed a crisis.
But that's the case. Tax collections
since last July have soared way above projections. Income is more than double what it was
for the same period last year, when the state rolled up a $900 million budget surplus.
The powerful politicians who control the
Legislature are deeply worried about finding ways to spend that money and expand
government quickly enough so that the cash will not have to revert to the taxpayers.
They are laughing at Gov. A Paul
Cellucci's proposal to roll back the state income tax from 5.95 percent to 5 percent.
Their mantra is: We need to spend on government now, because good times won't last
Here are a few points they -- and we
voters -- should remember:
The hike in income taxes from 5 percent
to 5.95 percent was supposed to be a temporary measure to get Massachusetts government
through its self-induced fiscal crisis of the late 1980s. Lawmakers promised the
"temporary" hike would be rolled back as soon as the crunch was over. They are
now hoping we forget.
Massachusetts got in trouble the last
time because it spent madly as the economy boomed and tax revenues flowed into the
Treasury. If the government expands beyond its means again, it will face another budget
crunch when the economy cools.
We live under a government founded on
principles of freedom, guaranteeing us maximum opportunity to shape and enjoy our lives
with minimum intrusion from government. As government fattens up, growing more powerful
and intrusive, freedom shrinks.
This surplus is on the backs of working
families, who do not have it as easy as politicians seem to think. Because of a record
burden of taxation, people find it desperately hard to save and many families need two
incomes just to get by.
That has some serious consequences:
Children are starved for attention from parents, family life is more strained than ever
and the standard of living holds steady or declines as people work harder and harder.
It is human nature for politicians to
want to absorb as much money from the taxpayers as possible. It means clout for them,
patronage jobs to hand out, opportunities to take personal credit for being compassionate
while using other people's money.
That is why the citizenry has to step in
and remind them: The money comes from somewhere. If families must live within their means,
so must government.
The surplus must be returned to the
State House News Service
January 5, 1999
MANAGING $20B BUDGET,
EXPECTATIONS, BIG DIG, Y2K
JAN. 5, 1999 ... As Massachusetts pushes
the historical boundaries of economic expansion, the Cellucci administration will push for
a $1 billion income tax cut and propose the state's first $20 billion state budget.
But Cellucci's top budget official
maintains the biggest challenge of the year ahead won't have to do with budget numbers it
will be the numbers "00" in state computers, causing a Year 2000 compliance
problem so large it's slowing down the Commonwealth's efforts to improve technology in
[ . . . ]
"It's a difficult task to sit here
and convince people that revenues are going to slow down and that this boom is not
going to continue forever at a time when money is coming in hand over fist," said
state Administration and Finance Secretary Frederick Laskey.
"It's very difficult to tell people
'no' when you have 11 percent (revenue) growth and everyone is lining up at the door and
saying, 'If I only had this or I only had that.' The single most important challenge we
face in the next fiscal year is to maintain fiscal discipline and to temper
Laskey, who is writing Acting Gov. Paul
Cellucci's first budget, wants to keep spending growth below the rate of inflation. But he
does not think it will happen, because of the pressure to hike education spending and the
likelihood of higher health care costs.
"But that doesn't mean we shouldn't
keep that as a goal and try to stay as close as we can," said Laskey, who will become
state Department of Revenue commissioner in March. Longtime Cellucci friend and former
state Rep. Andrew Natsios will take over as A&F secretary, a job that is sometimes
referred as deputy governor.
A 3.4 percent increase in the current
$19.5 billion state budget would put spending in the $20.1 billion to $20.3 billion range
in fiscal 2000. At $20.2 billion, the state would spend an average of $55 million a day.
Cellucci, Laskey and Natsios face the
challenge of trying to convince the Democrat-controlled Legislature that less than a year
after enacting a $1 billion tax cut, the largest in state history, the state should cut
taxes by more than $1 billion again by slashing the income tax to 5 percent from 5.95
Tax cut skeptics will point to claims of
an inevitable economic slowdown and the pressure of being able to invest millions of
dollars in education while also funding the most expensive public works project in US
history, the Big Dig.
And the Cellucci administration is also
planning a major expansion in health insurance coverage for the working poor. The
expansion will be funded in part by the state share of a national public health settlement
with tobacco companies $7.6 billion over 25 years.
"The question is how does that
expansion, which is one of the most progressive plans in the country, tie to this increase
in smoking money," Laskey said. "That's something that we're going to look long
and hard at."
As with any A&F chief, Laskey has
his eye on several balls at once:
Taxes. Laskey foresees no single area
where the administration will open the spending floodgates. The biggest drain on the
revenue side comes in the form of Cellucci's plan to reduce the income tax from 5.95
percent to 5 percent. That plan would remove more than $1 billion from the state tax base.
After cutting taxes by more than a billion last year, Democrats, uncertain about
continuing economy strength, are likely to be skeptical.
The administration will respond to
skeptics by pointing out that the state has more than $1 billion in both its unemployment
and rainy day funds.
Historically, Laskey said, recessions
cause drops in tax receipts that can last from 12 - 18 months. "If we do face an
economic downturn or a recession, we are well positioned to ride it out," Laskey
While Laskey will fend off spending
requests by arguing a downturn is inevitable, the administration will make the opposite
argument in fighting for tax cuts. "The economy is really booming," Laskey said.
"We took pause in the summer when the market went south and there was all the
uncertainty in Asia and it seemed like it was spreading. Exports were hurting but we just
continue to plow ahead. And it shows that the economy is very sound and very diverse. We
don't have all our eggs in one basket. We feel pretty good about where we are."