and the
Citizens Economic Research Foundation

Barbara's Column

Hold onto your wallets,
it's going to be an expensive ride
by Barbara Anderson

The Salem News
Thursday, May 21 2009

Governor Deval Patrick, in an effort to let us know how serious the budget crisis is, says that "if we fired every single state employee, we'd still have a billion-dollar hole."

Of course we would. Many of those employees would go out on instant pensions. Others would collect unemployment, have state-subsidized health insurance, or get a job at one of the independent authorities where they would start to accrue bigger pensions like those available at the MBTA after 23 years.

Would we still have a $28-billion state budget to go with the billion-dollar budget hole? Who would be running it and spending the money? Governor, what's your point? That payroll costs aren't much of the problem?

Can we stop being silly now?

At least Patrick's sticking to his demand for "reform before revenues." Unfortunately, the Legislature is sticking to its resistance to reform.

As various Democrats have said: "We can't reform our way out of this crisis."

Translation: "Let's go directly to the revenues."

So the Senate opened its budget debate by passing a 25-percent sales tax hike and local option taxes. Maybe it will get to reforms after my column deadline. Darn, it's hard to write while holding my breath.

Of course, what they talk about is "a blended approach," which means: Some cuts, especially to the most vulnerable recipients of state services, so they can be used to make taxpayers feel guilty about resisting higher taxes; some new money from the federal government's stimulus package, money that's being charged to future generations in an enhanced national debt; and lots of new taxes and fees, as far into the future as we can see.

Let me offer a different "blended approach": Massachusetts taxpayers will continue to pay existing taxes already among the highest per capita in the nation as they have for decades; and legislators will set priorities that put services to seriously handicapped citizens ahead of their and the other public employees' benefits.

Pretend you have $28 billion to spend, roughly the same amount you had last year. To keep up with minimal inflation and the extraordinary cost of state-subsidized health insurance, which would you choose:

a.) cutting services to the mentally ill, mentally retarded, and physically handicapped; or

b.) cutting benefits to public employee unions and legislators that exceed the average benefits of their employers, the taxpayers?

If you get a speeding ticket, you must also pay a $50 surcharge that the ticket says is applied to the "Head Injury Treatment Services Trust Fund." But WBZ-TV reported last week that the Legislature voted a few years ago to put half that money into the General Fund where it's spent on whatever the Legislature considers more important than helping people with head injuries.

Here's another recurring budget debate phrase: "It's not our fault, this is a national economic problem."

Translation: the federal government has been spending beyond its sustainable means, too.

One of the items driving everyone's budget crisis is the cost of health insurance. A few years ago, Massachusetts passed a health insurance reform law that was sold as an affordable way to provide basic health insurance to everyone. Unable to leave well enough alone, legislators recently increased the cost with a mandated provision for prescription drugs. Now the new law is far less affordable.

Meanwhile, the federal government, already trillions of dollars in debt, is planning to emulate the failing Massachusetts experiment.

Moving right along: "It's not just a state and a national crisis, it's worldwide!"

Ask yourself: Is the answer to a scary worldwide crisis a tax assault on the private sector that will have to somehow recover to provide the jobs that provide all the revenue for all government services?

Senate Republicans have offered a package of reforms that includes a statewide wage and hiring freeze for government employees not critical to public safety, repealing corporate welfare and eliminating that prescription-drug mandate.

The Pioneer Institute and Beacon Hill Institute have been proposing savings from various reforms for years. Newspaper editorials list some, investigative reporters find more; pension scams are all the rage this year.

But instead of addressing these, the Senate has joined the House in voting to increase the sales tax; both votes are presently veto-proof. Without reforms, this is only the beginning of tax increases, and the beginning of what Paul Nicolai, former chairman of Citizens for Limited Taxation, calls the Commonwealth Death Watch. He cites economists who warn that Massachusetts has several years of recession ahead of it, and predicts that a gas-tax increase, supported by many elements of the business community to address infrastructure needs, will have to be used for operating budgets instead, leaving the infrastructure to deteriorate.

We can't hold our breath hoping for state government to become responsible. All we taxpayers can do is make major purchases before July 1, when the sales-tax increase goes into effect, and wait for the November 2010 election. If we fire every tax-hiking state legislator we'll still have a budget hole, but maybe a better chance to keep the entire commonwealth from falling into it.

The comments made and opinions expressed in her columns are those of Barbara Anderson
and do not necessarily reflect those of Citizens for Limited Taxation.

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