and the
Citizens Economic Research Foundation

Barbara's Column
April #1

Tough times may force tough decisions on Beacon Hill
by Barbara Anderson

The Salem News
Friday, April 4, 2008

-- Part 1 of 2 parts --

Though aware that I'm composing this on April Fool's Day, I am nevertheless going to leap onto this election year's popular "hope" bandwagon and offer some springtime encouragement to Massachusetts taxpayers.

Please keep in mind that, while my optimism works with life in general, it is usually misplaced when dealing with government. Yet I've seen good results from the "fiscal crisis response" phenomenon in the past. When the commonwealth is in financial distress, our elected officials have focused, and begun doing what needs to be done.

In 1980, the passage by voters of Proposition 2 precipitated a crisis, as all communities immediately lost auto excise revenue, and many of them had to cut property taxes for the next fiscal year. The state was urged to cut its budget and give more local aid; after a few months of political chaos, it did.

The fiscal crisis that followed the 1988 Dukakis presidential campaign led to various changes, from the dismissal of Statehouse doorkeepers (there were more keepers than doors) to major welfare reform. Of course, we also had the biggest tax increases in state history; but in 1990 voters threw out some pro-tax legislators and started electing "no new taxes" Republican governors.

Right now we face a $1.3 billion budget deficit, and huge unfunded liabilities for infrastructure, pensions and health insurance far into the future. The cost of public employee raises and benefits, along with higher fuel prices, are impacting city and town budgets. We've already got the second highest per-capita debt in the country. A national recession looms.

Yet all three top Beacon Hill leaders Gov. Deval Patrick, Senate President Therese Murray, and House Speaker Sal DiMasi have stated their opposition to broad-based state tax increases. The legislative leaders have even said no, so far, to the meals tax increase requested by the governor, and refused to play "let's pretend that casinos will fix the deficit."

Instead, they took on the private-sector unions who were demanding casinos, which seems to have given them the courage to take on some of the public employee unions as well. The same three leaders are now addressing citizen outrage about the police details by proposing to end that "only in Massachusetts" practice at least on secondary roads, alleys, and dead-end streets.

Last year they began to address local pension and health insurance issues by encouraging communities to move into the more cost-efficient state system, though they allowed local unions to block these savings. Now, finally, they seem open to getting the unions out of the way of better management decisions at the local level.

Having given intransigent union leaders a chance to cooperate, legislators now have the public on their side if they take them on. It will be interesting to see if the police unions have sense enough to give in on the minor detail changes, or if their union leaders try to muscle their opposition through thereby giving the Legislature an excuse to abolish details altogether.

If only someone would explain the facts of the marketplace to public safety union members, who sometimes seem hurt by public resistance to overtime scams. What limits their base pay is not lack of public support or appreciation, but simply the fact that lots of people are waiting in line to take these jobs. In the nonunionized sector of the economy, employers pay only enough to get someone competent to take the job there is no collective bargaining, while almost everyone is "working without a contract," or not working at all because their employer is facing a recession.

The government won't go out of business, but it, too, operates to some extent in the marketplace, where recession affects revenues and every tax increase is a pay cut for many taxpayers.

Proposition 2 at least limits property taxes, and while the House has tried to make overrides easier by exempting senior citizens from paying them, the Senate is balking at forcing younger people and families to pay the seniors' share. Proponents are therefore urging the Senate to expand the exemption to these groups as well, basically creating a graduated property tax.

This would not only be unfair "representation without taxation," it reminds us of Alexis De Tocqueville's warning that "the government of the democracy is the only one under which the power that votes the taxes escapes the payment of them." And to my broader point, local voters can help force essential reforms by saying no to overrides; and the Senate should help Newton taxpayers say no to Mayor Cohen's $200 million high school by refusing to make overrides easier to pass.

Meanwhile Speaker DiMasi is responding to local officials' pleas for more local aid by proposing a Municipal Audit Bureau to watch how local aid is spent. I'd like to see auditors make recommendations for state assistance in negotiating municipal contracts and an overhaul of state mandates, especially those governing special education.

I hope the state won't simply pass a few minor reforms as a prelude to major tax increases; I hope that the time has come for a major spring cleaning. Hope along with me.

-- Part 2 --

Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and Eagle Tribune, and often in the Newburyport Times, Gloucester Times, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence (RI) Journal and other newspapers.