The Winchester Star
Wednesday, February 12, 2003
Editorial
Voluntary tax check-off
During the next few weeks, the subject of filing taxes will
be on the mind of just about everyone. By law, employers have already sent residents their W-2 and
1099 earnings forms.
Until April 15, many of us will be tinkering with our
calculators - or spending money on accountants - in attempt to figure out the best way to get most of our
money back.
But the difference between filing this year and last year is
that taxpayers will have the opportunity to choose to give the state more money, through a
voluntary tax check-off.
The voluntary tax check-off is the brainchild of the
Citizens for Limited Taxation [CLT]. The taxpayer watchdog organization is the same group that
has passed many initiative petitions such as Proposition 2½ legislation, and
worked hard to fight waste, fraud, and abuse in government.
In 1998, while promoting the Income Tax Rollback to 5
percent, CLT also put forth a clever solution for those people who did not support cutting taxes - a
voluntary tax check-off.
The logic and beauty of the check-off is simple: If you want
to pay more for state services, feel free. Check it off and part of your refund will divert back to
the state. It is the same for those people who want to make a donation to the
Clean Elections Fund or other programs offered on the state income tax forms.
The option allows advocates who support increased state spending to put their
money where their mouths are, in an effort to avert the "budget crisis."
Not surprisingly, few taxpayers have voluntarily given more
money to the state.
According to published reports only 20 out of the 234,000
tax filers have taken advantage of the check-off. This number is shockingly low when you consider
that millions of people voted against the income tax rollback as well as the
2000 initiative petition to eliminate the income tax altogether.
But it also shows the hypocrisy of most taxpayers who would
gladly take your money to pay for their pet projects and programs, but refuse to open their own
checkbooks.
In the end, the choice is yours: If you want the state to
have more money to spend, use the voluntary tax check-off. If you don't, back efforts to find
accountability on Beacon Hill with the $21 billion they already take from us.
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The Boston Globe
Thursday, February 13, 2003
Travaglini cites doubts on streamlining
By Rick Klein, Globe Staff
Speaking in deeply personal terms, and stressing his
working-class roots, Senate President Robert E. Travaglini yesterday expressed skepticism about
major aspects of Governor Mitt Romney's restructuring proposals, especially
plans to eliminate the Massachusetts Turnpike Authority and the Metropolitian District Commission.
In his first appearance before the Greater Boston Chamber of
Commerce, Travaglini, an East Boston native raised by a single mother, described the
MDC's significance to his boyhood. Saying he and his neighbors depended on
the agency, he told more than 400 business leaders of his summer work as a
lifeguard at Constitution Beach and as a supervisor at the Porrazzo Skating
Rink.
"The MDC is special to me," Travaglini said. "I'm fully
aware of the fact that presently, the MDC is the only entity that offers recreation at a cost that is
affordable to much of the population, with its skating rinks, with its swimming
pools, with its recreation areas and walking trails."
The remarks underscored a dynamic that is taking shape on
Beacon Hill. While Romney criticizes waste and patronage and stresses the efficiencies to be
gained by consolidating government functions, Travaglini is emerging as a
defender of state programs, stressing the need for compassion even as Massachusetts struggles with paralyzing budget deficits. An
unabashed provider of government jobs to his neighborhood, Travaglini is the only major
state leader to say publicly that he may support another tax increase to save
programs.
"I was raised in East Boston, one of five sons in a family
where hard work and sacrifice were values we lived every day," Travaglini said in his speech. "I
believe in and respect public service, and I believe strongly that government
has an essential role to play in our lives."
Travaglini said he had no interest in governmental changes
that are designed primarily to "gain popularity in the media" or "target and punish unpopular
constituencies." The Senate president also said that Romney's proposal to
merge the Turnpike Authority with the Highway Department raises a host of
legal concerns that he's not sure can be addressed without sacrificing federal
reimbursements and the state's standing with bondholders.
"I'm just not comfortable with that one at all," Travaglini
said. "There are so many legalities and problems."
Asked about Travaglini's comments, Romney refrained from
criticizing the Senate president directly, but sought to portray their differences as a battle
over big bureaucracy. The budget proposal he is due to file Feb. 26 will seek to
eliminate duplicative state functions, reducing administrators while maintaining
a similar number of front-line workers.
"I say let's have one highway department, with just as many
people actually plowing the streets and managing our roads, and not as many bureaucrats in
the Commonwealth," Romney said. "We only need to have one person responsible for all the parks,
urban and non-urban, in the Commonwealth."
Travaglini's comments on the MDC facilities echoed those of
House Speaker Thomas M. Finneran earlier this week. Both suggested that wealthier people
don't understand the importance of the MDC, which for more than a century
has maintained the Boston-area park system.
"It's really the only recreational outlet for lots of
people, probably over a million people, and they don't have the Cape," the speaker said.
Still, sharp differences exist between the priorities of
House and Senate leaders, and those were underscored yesterday. Travaglini said the Senate
would seek to preserve K-12 education funding, even as House leaders and the
Romney administration warn of deep cuts to local aid in the fiscal year that
begins July 1.
At the same time, the Senate president said he is exploring
the possibility of limiting Lottery prize payouts - a move that many city and town officials
fiercely oppose because they fear it will drive players away, and result in a
decline in Lottery revenues, on which they depend. Finneran has previously
opposed efforts to tinker with the Lottery.
Travaglini said he would be willing to discuss Romney's
proposal to eliminate the MDC and hand its functions to other agencies only if the governor could
offer a guarantee that hours at MDC facilities wouldn't be scaled back. When he
announced a round of budget cuts two weeks ago, Romney warned that hours
would have to be limited at some state facilities through June 30, but a
spokeswoman for the governor said he hopes his restructuring will allow hours
to be expanded again in the new fiscal year beginning July 1.
"Our thought is it will be less bureaucrats, but the same
amount of service," said Nicole St. Peter, a Romney spokeswoman. "We will maintain the same
level of service at our rinks and parks."
Romney said that while a merger of the Highway Department
and the Turnpike Authority would be complicated, he is confident it can be
accomplished. People seeking to streamline government have long urged the
consolidation. The Turnpike Authority was established to oversee the construction and
operation of the Massachusetts Turnpike as part of the road expansions that followed World War II. It now oversees the
harbor tunnels and construction of the Big Dig in addition to the turnpike. The state Highway
Department predates the authority's existence.
Romney said the savings to the state would easily exceed the
$50 million he estimated would come from the move as a candidate last fall.
At least one of Romney's restructuring proposals is meeting
with Travaglini's approval. The Senate president said he is willing to pursue the governor's
suggestion that higher-income Medicaid recipients be required to contribute
more to their own health care, through a sliding scale of copayments.
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The Boston Herald
Thursday, February 13, 2003
A Boston Herald editorial
Fix budget mess, don't make it worse
The state Senate has a lot of little messes to clean up as
it considers a fiscal 2003 budget balancing plan. Some of the messes were created by the governor,
others by the House of Representatives, still others by the Senate Ways and
Means Committee. But senators face a simple choice today: they can make the
fiscal crisis better, or make it worse.
The first, and most odious, mess is a range of fee hikes on
homeowners, including an average $150 fee, up from $36, for recording a mortgage at the
Registry of Deeds. This bad idea started in the corner office, but offering fee
increases to the Legislature is like lighting up in front of a die-hard smoker
who is trying to quit - they're simply irresistible. According to the governor's office,
with the exception of a $5 technology fee, the additional revenue will go into the
general fund, instead of being retained by the registry to support service
levels. These fee hikes, then, are nothing more than a revenue grab out of
homeowners' pockets and should be rejected.
Second, the Senate, like the House, taps a capital projects
sluice fund for almost $40 million. But $26 million from the fund was already spent by acting Gov.
Jane Swift. As much as they'd like to, the legislators can't spend the same
money twice, creating an additional $26 million budget hole.
Third, the Senate bill goes along with the House and
governor in closing some tax loopholes, including one involving transactions of banks and real estate
investment trusts. But by imposing the change retroactively to 1999, they are
not only imposing an onerous burden on smaller banks but also harkening
back to Massachusetts' well-earned anti-business image by changing the rules in
midstream. The banks should pay the tax prospectively, but they shouldn't be
penalized because the law until now was unclear.
Finally, the Senate, like the House, relies too much on
one-time fixes that exacerbate the budget problem in fiscal 2004 and avoid addressing necessary
changes in Medicaid and state employee health care costs.
The Senate bill is valued at $254 million, about $110
million more than the governor asked for. We'd like to pat the Senate on the back for going above and
beyond the call of duty but these extra dollars come from additional fees and
trust fund grabs, not spending cuts, and therefore fail to address the underlying
budget issue - overspending.
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The Boston Herald
Wednesday, February 12, 2003
State halts funding for new schools construction
by Kevin Rothstein
The Massachusetts Board of Education said yesterday it will
not consider new requests from communities seeking state money to help build new schools.
The decision means cities and towns not already on the
waiting list will for now have no help from the state aid program that pays for up to 90 percent of
school building projects.
"We're not going to look at any new applications," said
Heidi Perlman, spokeswoman for the state Department of Education. "It's just irresponsible to
incur any new costs to the state when the state's economy is in such crisis."
Current construction projects as well as those approved for
funding will not be affected by the decision. But to the 62 communities who have told the state of
their intentions to seek help, the move means they will be on their own.
"Those districts will be told we're freezing the program
indefinitely," Perlman said.
The decision threatens to wreak havoc in communities that
have sometimes spent considerable resources preparing renovation plans. In some cases, local
voters were to decide Proposition 2½ overrides based on assumptions about
state aid.
"What happens to those projects?" said Mike Gilbert, field
director for the Mass. Association of School Committees. "There are probably a number of
projects that have been submitted to the department where communities are
going out on overrides this spring."
In a memo to local officials, state Education Commissioner
David Driscoll said yesterday the moratorium would last at least until the end of the fiscal year
that ends June 30.
Through its School Building Assistance Program, the state
has already promised more than $5 billion in long-term assistance. Another 350 projects
have been approved for funding.
The state generally pays for 60 to 70 percent of school
building costs. In communities with school desegregation plans in place, state aid can reach 90
percent.
Without the state assistance, local communities would either
have to cancel their projects or see their costs skyrocket, said Chris Martes, executive
director of the Mass. Association of School Superintendents.
"No one wants to be on the hook for the whole amount," he
said.
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The Boston Globe
Thursday, February 13, 2003
State, banks wrangle on bid to recoup taxes
Business leaders see plan as unfair retroactive levy
created to help budget ills
By Jeffrey Krasner, Globe Staff
The looming budget gap on Beacon Hill has pushed a simmering
dispute between the state's banks and the Department of Revenue into the spotlight,
with tax collectors seeking to grab $140 million and business leaders claiming
the state is trying to tax them retroactively.
The Senate budget proposal set to be debated today includes
about $140 million the state says it will reclaim from banks which set up tax shelters as far
back as 1999.
Critics of the Romney administration's proposal charge that
making the change retroactively will alienate companies that might locate and expand in the state,
and revive its dubious distinction as "Taxachusetts."
"The notion of changing the statute after the fact to go
back four years changes the rules in midstream and sends a very negative message to businesses we
might attract and which might expand here," said Michael Widmer, president
of the Massachusetts Taxpayers Foundation, an advocacy group. "This goes
well beyond the question of banks all the way to the setting of tax policy in the
state."
In response to a 1995 change in state tax law, banks sought
to set up tax shelters using real estate investment trusts, or REITs. Banks established
REITs as subsidiaries, and used them to hold mortgages and other real estate
assets. When the REITs paid income in the form of dividends to the parent
bank, they were able to take advantage of a deduction that lowered the
amount of tax the banks owed to the states.
The Department of Revenue discovered the tax shelters last
year and audited dozens of banks. It ultimately ordered about 60 banks to pay additional
assessments. The banks are fighting those new assessments. But now, the
Romney administration is counting on banks paying the disputed taxes to help
balance the state budget.
A bank trade group said it's fine if the state wants to
change the law going forward, but it should let the wrangling over the disputed years continue in the
courts.
"If they make a determination this is no longer permissible,
that's one thing," said Kevin F. Kiley, executive vice president and chief operating officer of the
Massachusetts Bankers Association. "With respect to '99 through '02, that's
part and parcel of the potential litigation brought by the Department of
Revenue. Let it play out."
Steve Remsberg, associate general counsel for the
DOR, said the state's argument hinges on two points. The loophole should
be disallowed, he said, because REITs are governed by federal tax code, and therefore shouldn't be
able to take advantage of a provision in the state code. Moreover, he said, the
change should go back to 1999 because the Legislature didn't intend the 1995
law to create a way to move income between the REITs and the banks without
paying taxes.
That kind of thinking has riled some legislators who will
try to change the provision in today's debate.
"Just by this maneuver, the Department of Revenue is saying
these things are legal," said Bill Rivers, legislative director for state Senator Robert L.
Hedlund, Republican of Weymouth. "The banks are winning in court. DOR wasn't going
to get the money from the courts, so now they're looking for the Legislature to
make something that was legal at the time illegal. The senator opposes this
change to the tax law being retroactive."
Romney and the Legislature are desperately trying to fill a
shortfall to the current state budget estimated at $500 million and potentially reaching $650
million. Since taking office in January, the governor has instituted $343 million
in immediate budget cuts. He is seeking additional spending cuts, and is
looking at new fees and changes like the one affecting banks to make up the remaining
shortfall. The House already approved a budget proposal similar to the one
pending in the Senate.
Still, critics contend that even if the Senate approves
changes closing the banking loophole, it will have no impact on the budget gap. "There's not going
to be any immediate revenue collected because if the law is changed, the banks
are going to challenge the changes," said Kiley.
Said Rivers, "We're mandated to balance the budget by the
end of the fiscal year, but we'll have to find another way, because this won't generate the
money they're expecting."
