and the
Citizens Economic Research Foundation


Barbara's Column
March 2002 #2

Legislators just have to tighten state's belt
and their own and little more

by Barbara Anderson

The Salem Evening News
Monday, March 11, 2002

Sixteen tax hikes, and whaddya get
Another day older and deeper in debt
St. Peter don'cha call me cause I can't go
I've gotta work harder to give the state mo'.

-- With apologies to Tennessee Ernie Ford

So the Massachusetts House leadership has a list of 16 new or higher taxes. House Ways & Means chairman John Rogers wrote a letter to all our representatives, telling them that "there is a gaping $3 billion hole in the  side of the (state fiscal year 2003) ship ... gargantuan and ghastly losses only further exacerbate an already ugly picture for FY03."

Public hearings are being held beginning Tuesday to determine which taxes we choose "to fill the budget gap."

I choose none. It's their budget gap, not mine. If they raise my taxes, I'll have my own budget gap.

Will my legislators come to my home and tell me where to cut? Didn't think so. Yet when we taxpayers say we don't want higher taxes, they demand we tell them where we would cut the state budget instead.

Like we get paid to do their job for them? In fact, we pay them to live within available revenues, which we taxpayers already provide. When do they do their share of the work?

Having said that, I have an idea for budget savings.

One of the House proposals is to raise the capital gains tax, which has been phased out for gains that are held at least six years. Legislators passed this phase-out in return for a 55 percent pay raise a few years ago. Governor Bill Weld had the pay raise on his desk, so House Speaker Charlie Flaherty gaveled through the governor's desired capital gains tax cut as a "tax cut for low-income people."

Liberal legislators were very upset when they found out what they had voted for, but Weld signed both the pay hike and the capital gains tax cut. If legislators raise the capital gains tax, they should keep their part of the deal and give up their 55 percent pay raise, not just take an unpaid furlough as Speaker Tom Finneran has disingenuously suggested.

Be aware that in 1998 the Legislature won a constitutional amendment that put their base pay into the state Constitution, with automatic adjustments every two years. Finneran, who complains that the title of Clean Elections was deceitful, oversaw the constitutional amendment that was sold as a measure "to prohibit state legislators from voting to increase their own base salaries." In fact, it guaranteed that voters can never reduce legislative pay -- and legislators can't either, unless they accept the amount mandated by the constitution, pay taxes on it, and donate it back.

This plan may also discourage them from raising the state income tax rate, since they'd have to pay it on money they wouldn't get to keep. They should also give up the additional expense accounts they voted themselves to help them live with that Clean Elections law they are now trying to kill.

They should make these sacrifices even if they don't raise the capital gains tax, just to show they are doing their personal best to plug that "gaping hole" they created.

Despite constant warnings that they should restrain from excess spending during the strong economy, they spent as if there were no possibility of economic downturn. They did this because they figured when the time for reckoning arrived, they could just raise our taxes to pay to save the sinking ship.

Not with my consent, they won't. Let them adopt my starter suggestion, then get back to me and I'll give them another. Here's a hint: It will have something to do with taxpayer-funded pensions that give bureaucrats in their 40's more annual retirement pay than the average working-person's annual earned income.

You have an idea where to cut the budget? Send it to your legislators. But send only one suggestion at a time. Someone I know sent his legislator a list of proposed cuts, and one tax to raise. You do that, you'll get the new tax and never see the cuts.

Make them do all our suggested cuts before we begin to discuss higher revenues.

Do you fear that there isn't time for this game? Sure there is. The small FY02 budget gap can be dealt with by using the rainy day funds. There is no budget gap for future years because there are as yet no budgets for future years, so how can there be a gap?

If they take our suggestions, one by one, there won't be any need for 16 tax hikes, or any tax hikes at all.

Revenue cuts threaten essential services
provided by Bay State's cities and towns

By Geoffrey Beckwith

The current fiscal crisis that has gripped Massachusetts and its communities must be resolved in a fiscally responsible manner that protects the ability of local and state government to deliver necessary services to the people.

State tax receipts continue to slump, and the deficit for fiscal 2002 could reach $700-$800 million. The state is facing a projected $2.1 billion deficit for fiscal 2003. The Massachusetts Taxpayers Foundation reports that the governor's proposed budget for next year is at least $1 billion out of balance. The legislative leadership in the House of Representatives has warned local officials that local aid reductions of up to 10 percent may be included in their final budget proposal.

Local aid cuts of that magnitude would be devastating.

The untold story is that communities in Massachusetts are currently facing huge budget gaps similar to the state's fiscal problems, even with no reductions in local aid. The property tax burden is rapidly increasing. Observers predict a record number of Proposition 2 override attempts this year.

Total statewide property taxes will reach record levels in fiscal 2003. If the state reduces local aid beyond the $120 million in mid-year cuts already in place, the property tax burden will increase even more, and the state will force deep cuts in services that people need and demand.

State and local leaders have a common interest: To protect the public services that are vital to Massachusetts' economic and social progress.

No one suggests that too much is being spent on public safety, public education, public roads, or basic local services. Most people agree that too few resources are available for these programs.

The fiscal challenge the commonwealth faces is mainly a revenue crisis. Over the past several years Massachusetts taxpayers have benefited from billions of dollars in tax cuts. Now is the time to forgo further tax reductions and examine how to adequately and fairly fund all of the services that are in place now, with new revenues as needed.

What about the argument that local government must take its share of cuts as 
the state looks to balance its budget? The answer is simple: Local government 
is not merely a line item in the state budget.

The cities and towns of Massachusetts serve as economic engines of our state and provide the basic services that people depend on for their safety, happiness and family security. Communities are responsible for making sure that people are:

Safe from crime, fires, accidents and emergencies.

Protected during terrorist attacks and natural disasters.

Educated and trained with the skills to compete in a global economy and provided with the proper foundation to pursue a college education.

Transported through a safe and reliable system of roads, bridges and public transportation necessary for social and economic connection.

Environmentally secure and able to access drinking water, sewage treatment, trash removal and recycling programs.

Housed in safe, healthy and affordable apartments and homes.

Able to recreate on parks, beaches and public lands.

Free to build a lasting future for their families.

Taxes have been described as the necessary price we pay for living in a civilized society. None of us wants to pay too much. But poll after poll shows that the public is willing to pay enough to ensure stable, full-functioning governments.

In Massachusetts that means that the public is willing to pay for local aid for public safety and basic community services, education aid for all schoolchildren, frontline support for homeland security (so important in this post-Sept. 11 world), transportation aid for safe local roads and bridges, investments in affordable housing, building schools and environmental facilities, and much more.

The MMA board has already voted to support a freeze in the implementation of the income tax rollback, keeping the rate at 5.6 percent, a move that would raise at least $450 million In fiscal 2003. Next month, the board will examine further tax options, and will be communicating closely with legislative leaders In anticipation of the Legislature's debate on the state budget and revenues later this spring.

The stakes are high. There will be many disagreements on the path to a final solution to the state and local fiscal crisis. But we urge all parties to remember that the role of cities and towns is unmatched in today's modern American society. That is why local and state officials, and business and civic leaders can and should rally around the difficult but necessary choices thatwill guarantee healthy and thriving communities.

Geoffrey Beckwith is executive director of the Massachusetts Municipal Association, representing mayors and selectmen from throughout the commonwealth.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem Evening News and the Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in other newspapers.

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