The Boston Herald
Saturday, February 15, 2003
Ki$$ off: Hynes honcho walks away with sweet deal
by Scott Van Voorhis
Embattled Hynes Convention Center chief Francis X. Joyce
yesterday walked off with a $500,000-plus Valentine from cash-strapped Bay State taxpayers,
outraging critics of the one-time aide to ex-State House strongman William
Bulger.
In a deal cut with state convention authority officials,
Joyce will pocket an $80,000 bonus and he'll walk away with a retroactive pay hike - boosting his
annual salary to $150,000 from $126,000 and giving his state pension payout
a bump of up to $15,000 a year, information from the state treasurer's
office indicated.
"How many ways can you say outrageous?" fumed Barbara
Anderson, the legendary anti-tax crusader who founded Citizens for Limited Taxation. "That
is the reason people are not taking this fiscal crisis seriously - they know there
is money there and they know the money is being taken away from the needy
so they can give it to the connected in order to make taxpayers feel guilty
enough to give them more.
"If you were going to put a photo next to the word patronage
in the dictionary, Franny Joyce's face would be the photo," Anderson declared.
Joyce will also get two months paid vacataion - at his new
higher pay rate - before officially leaving the active state employee role on May 30.
Other Joyce critics aimed their outrage at the Republican-dominated
Massachusetts Convention Center Authority, which crafted the pact with
Joyce. Sources described the deal as a buyout, designed to grease Joyce's early
departure.
"It seems to be in line with some of the practices on the
corporate side where companies have given large golden parachutes to CEOs who come in and
undermine their companies," said Stephen Adams, head of the Pioneer Institute, a local
think tank, and a frequent critic of Joyce and state convention business subsidies.
"I don't understand public authorities who so easily buy out
these contracts. It just comes back to the fact that it's not their money, it's the people's money,"
Adams said.
With the deal in hand, Joyce, 59, agreed to resign as
director of the Back Bay meeting hall, effective March 31 - seven months before his current contract
ends. The former Bulger Senate aide could reap more than $450,000 in extra
pension payments over the next 30 years because of the retroactive pay raise,
which could push his annual payments to $75,000 from about $60,000 without
the raise.
Joyce's departure would end a years-long battle with state
convention officials who sought to oust the controversial meeting hall chief.
Joyce's tenure at the Hynes has been tarred by repeated
controversies, including occasional junkets to international hot spots - from Mexico to France
- even as the Hynes required ever larger taxpayer subsidies to run.
Joyce in the early-1980s made the leap from Bulger's Senate
office to the Hynes after a much-ridiculed "nationwide search" for the best convention hall
manager. Under his watch, a controversial Boston Common garage project spun
out of control and its costs ballooned.
Republican activist Gloria Larson, the head of the convention center authority,
clashed frequently with Joyce after she was appointed by former Gov. William
Weld. While the two came to an uneasy truce over the past few months, Larson
and her authority allies quietly began to ramp up pressure on Joyce to force
him out.
On the heels of Gov. Mitt Romney's election victory,
authority officials began talks with Joyce aimed at easing the South Boston Democrat out. And they
began slashing his staff, including some long-time allies.
Contacted last night, Joyce took umbrage at charges that his
severance deal is too big. He claimed that even at $150,000 a year he is underpaid compared to
peers nationwide.
But he also left little doubt as to why he's on his way out.
"I understand how things work. I came on the job when I had
some political influence and I am leaving the job because I don't have any any more," Joyce
said. "Human nature hasn't changed - the way politics works hasn't changed."
Joyce's deal may embarrass the authority and the Romney
administration, but not for long, said Lou DiNatale, a political analyst at
UMass-Boston's McCormack Institute.
Despite his pledges to attack patronage, Romney will also
probably hold his nose and not make a major issue out of the deal, DiNatale and other observers
speculated.
A Romney spokeswoman declined comment last night.
"Joyce may end up as a poster boy for public-sector greed,
but it's unlikely he will stick in the public's memory any more than any of the others have,"
DiNatale said. "It is certainly worth something to the state to have him out of
the way."
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The Salem News
Friday, February 14, 2003
Editorial
New tax form encourages perjury
The state Department of Revenue seems determined to make
criminals out of the state's law-abiding citizens.
The DOR has a surprise for taxpayers on its forms this year
-- a line on which filers must declare the amount of "use tax" they owe.
The use tax, for those unfamiliar with this revenue
enhancement measure, was part of the 1967 law that created the state sales tax. It requires that citizens
pay Massachusetts sales taxes on purchases made out of state. The payment is
supposed to equal the difference between the rate in the other state and the
5-percent rate here.
It means "tax-free" New Hampshire offers no refuge from the
sales tax for Massachusetts residents. If a Bay Stater spends a dollar in New Hampshire, he
is supposed to send a nickel to the DOR. Same thing if he makes a purchase via
the Internet.
This law has been ignored since the day it was passed. But
that doesn't mean the DOR hasn't tried to collect. In the past, DOR agents and state troopers
have prowled parking lots of New Hampshire businesses, seeking cars with
Massachusetts license plates. The DOR has gone so far as to seize the assets of
New Hampshire businesses that failed to charge Massachusetts residents the
tax on large purchases.
There used to be a separate form taxpayers were supposed to
use to declare their use tax obligation. Now the use tax line is right on the primary income tax
form -- which taxpayers sign under penalty of perjury.
That's right -- if you lie on your tax form, even on the use
tax line, you're committing a crime.
DOR spokesman Tim Connolly said the agency merely wants to
help taxpayers by "just giving them a better way" to pay the tax. We wonder if he'd sign off on
that statement under penalty of perjury.
An Eagle-Tribune reporter found recently that few who have
already filed their tax forms are paying the tax. Of 254,000 returns filed through Feb. 3, only 183
declared any use tax. But any money the state collects is money it would not
have had before adding the use tax line item.
Massachusetts citizens ought to be able to shop where they
wish, without the DOR trying to criminalize their buying habits. The use tax should be stricken
from the books.
The Massachusetts sales tax already takes $3.7 billion a
year out of the pockets of citizens and places it in state coffers. That's more than enough.
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The Boston Globe
Friday, February 14, 2003
Senate votes $228m plan for budget
By Rick Klein, Globe Staff
The state Senate yesterday voted to close this year's budget
gap by tapping a range of reserve funds, raising real estate transaction fees, and closing several
corporate tax loopholes, but without enacting the further budget cuts that
Governor Mitt Romney had requested.
When combined with $343 million in spending cuts made
unilaterally by Romney last month, the Senate's action, which would generate $228 million,
closes this year's budget gap in a responsible manner, Senate Ways and Means
Committee chairwoman Therese Murray said. The Romney administration has
pegged the budget deficit at between $500 million and $650 million for the
fiscal year that ends June 30.
"The Senate stepped up to the plate and did its part," said
Murray, a Plymouth Democrat. "We did not shirk our responsibilities."
But questions are already emerging about whether the state
can realistically expect a major portion of that money in time to help with the current fiscal
year's deficit. The Massachusetts Bankers Association is promising to challenge
a provision of the Senate budget plan in court, and while the suit is pending,
judges are likely to let banks hold onto the money in question, said Kevin
Kiley, the association's chief operating officer.
The provision at issue calls for the state to recoup $140
million from banks that set up tax shelters through real estate investment trusts. Business groups call
the move a retroactive tax, since the proposal would reclaim revenues from
banks going back to 1999.
"The focus will now shift to potential litigation over the
constitutionality," Kiley said. "There's real questions as to whether the Commonwealth has the ability
to make this retroactive."
But Senator Cynthia Stone Creem, chairman of the Senate
Taxation Committee, disagreed. She said the state Department of Revenue first
discovered banks taking advantage of the loophole last year, as part of audits of
1999 tax returns. The trusts, she said, are often direct subsidiaries of the
banks, set up only to avoid state taxes, and she said the Legislature has the
power to demand that all money owed is paid.
"They don't even pass the smell test," said Creem, a Newton
Democrat. "We could be doing a lot of things we aren't doing because we don't have the
money."
The Senate's action yesterday virtually assures that the
loophole will be revoked in future years, since the House approved a similar provision last
week, and Romney asked the Legislature to act on the issue in the first place.
Three amendments that sought to strip the budget-balancing bill of the
provision in the Senate failed on voice votes, despite lobbying by the bankers'
group.
The budget proposal, which passed 38-0, will now be
considered by a House-Senate conference committee charged with ironing out the differences
between the Senate bill and the one passed by the House last week. That
measure also leans heavily on reserves and trust funds, but does not include
the real estate fees and draws on a different mix of trust funds. The Senate
plan would generate approximately $150 million more to help with this year's
budget crunch.
The bill that emerges from the conference committee will be
sent to Romney for his signature. While he has said he wanted the Legislature to cut more -
particularly from Medicaid - and keep savings available for the coming fiscal
year, the governor has signaled that he is likely to sign the measure that
reaches his desk, since he is reluctant to order further spending cuts
on his own.
Additional unilateral cuts are "one of the last things he
wants to do this far in the fiscal year," said Nicole St. Peter, a Romney spokeswoman. "We need to
take a look at the bill, and he'll review it and make his decisions from there."
The Senate bill would tap $39.6 million from a capital
projects fund controlled by the governor; $12 million from the state's workforce training fund; $35
million from the Renewable Energy Trust Fund; and $2.9 million set aside for
the Clean Elections Law, the public campaign-financing measure. Romney
wanted to keep most of the reserves available for fiscal 2004, when the budget
gap could reach $3 billion.
The Senate bill would also raise $61.2 million by increasing
a range of fees on mortgage refinancing and other filings at the state's Registry of Deeds. Romney
had asked for the fees to be increased to help cut the budget gap.
Senators turned back efforts to preserve the renewable
energy fund, which is financed by a small surcharge on electric bills. Several senators asked
colleagues to keep the cash in the fund to pay for its intended uses: grants for
those seeking to develop alternative energy sources.
"By reaching in and grabbing that money at this time, we are
going back on the promise we made," said Senator Robert O'Leary, a Barnstable Democrat. "I
think it's unconscionable."
But Murray said the fiscal crisis means the state no longer
has the luxury of such grant programs. "Everything has to be looked at, folks," she said. "This is
just the beginning."
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The Boston Globe
Friday, February 14, 2003
Solution to budget crisis: borrow
By Scot Lehigh
It's a boom-or-bust cycle familiar to anyone who watches
state government. In good times, Beacon Hill embraces new causes, meets new needs, and adds new
programs.
Sometimes tax dollars flood into the state coffers so
rapidly that legislators can't spend them quickly enough. That was the case in the late 1990s, when, in
two successive years, lawmakers cobbled together hundreds of millions in
spending on district projects just to sop up the extra cash. Then recession
hits. Revenues plummet. Deficits loom. And decision makers inevitably face the
tough choice of cutting spending or raising taxes. Or doing both.
The first course stunts worthwhile public endeavors and
hurts the less fortunate as programs that serve real human needs are put on the chopping
block.
The second sucks more dollars from the wallets of average
citizens -- some of whom are struggling themselves -- and impedes an already sputtering
economy. That cycle was tamed a bit in the 1990s. Prodded by House Speaker
Thomas M. Finneran, the state built up more than $2 billion in reserves,
reserves that have helped the state weather the current budget mess.
Those reserves, however, are rapidly being depleted.
So what's the solution? Or rather, what's a partial
solution? Borrow.
At first the idea sounds like heresy. Borrow to meet your
operating expenses?
Yet that's exactly what the federal government, unencumbered
by the state's constitutional requirement of a balanced budget, routinely does in bad times.
And on the federal level, that practice is widely acknowledged to be a wise
arrangement in economic slowdowns, since the spending helps sustain those
dependent on government aid while the deficits have a stimulatory effect on
the economy.
Indeed, in an ideal world, President George W. Bush would
scrap his plan to end the taxation of dividends -- which economists say will do little to
jump-start the economy -- in favor of a generous revenue-sharing program for
fiscally strapped states.
Unfortunately, however, it appears that the states are on
their own. For those who still think borrowing is an outlandish idea, it's worth remembering that this
is precisely the approach the state has taken in other fiscal crunches.
In 1975, facing an operating deficit of $672 million on a
budget of about $3.7 billion, the state went to the bond markets to borrow $450 million, or about 12
percent of its spending.
And hiked taxes. By the mid-1980s, the debt had been paid
back, and the economy was doing so well that the so-called "Dukakis surtax," the largest part
of the 1975 tax package, could be repealed. When, after the boom times of the
mid-1980s, we hit the recessionary reef again in 1989 and 1990, we borrowed
again -- and again raised taxes -- to float ourselves off. According to the
Massachusetts Taxpayers Foundation, the state borrowed $466 million in 1989
-- or about 3.6 percent of total spending -- to help plug an operating deficit of
$672 million.
With the recession worsening, we borrowed again (and hiked
taxes yet again) in fiscal year 1990. This time the amount was about $1.4 billion, or 10 percent
of spending.
Once the economic recovery came, the state was able not only
to pay off the deficit bonds but to accumulate the substantial rainy day funds that have
helped this time around. And to offer some tax relief.
Now, let's be clear. All this is not to advocate borrowing
to deal with the entirety of the budget problem we face in the upcoming fiscal year. The
governor and the Legislature need to address an ongoing structural gap
between spending and revenues.
"Borrowing is not going to be the solution to all of our
problems, because there really is a structural issue here," says Cam Huff, senior analyst at the
Massachusetts Taxpayers Foundation. "But it could be part of a multiyear
solution to bring spending and revenues into line."
Such an approach should include a requirement that the state
retire the deficit bonds in five to seven years to ensure that the debt is eliminated before the
next fiscal crisis strikes.
But if properly done, borrowing could help ease the effects
of the current budget crunch while giving the state more time to implement long-term
reforms.
And by making a claim on future government revenues, it
would moderate the spending growth that is sure to occur once the economy has recovered.
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The Patriot Ledger
February 14, 2003
Editorial
Budget problems ram Greenbush line
News that the Romney administration is suspending construction on the
Greenbush rail line is disastrous for the South Shore. It is also a stunning
indicator of how dire the state's fiscal situation is.
The money for Greenbush had already been committed, but no
project is sacrosanct at a time like this.
The Greenbush announcement follows word from the state
Education Department that a moratorium would be placed on future school building
projects. Some local officials professed shock at this news. That is mystifying,
considering the hundreds of millions of dollars in budget cuts that have taken
place over the last few months, especially those initiated by Governor Romney
two weeks ago.
Denial appears to be a growing syndrome, from the State
House to some city and town halls. It's as though advocates for special interests, employee unions
and some local office-holders think the governor is crying wolf. Nothing could
be farther from the truth, but the denial starts in the offices of state senators
and representatives. This week the Senate followed the House in devising a
budget-cutting plan that empties reserve accounts while refusing to alter the
way state government operates. In an appearance before the Greater Boston
Chamber of Commerce, the new Senate president, Robert Travaglini of East
Boston, thundered that the Metropolitan District Commission, targeted by
Romney for elimination, "is special to me." Travaglini was a lifeguard at an
MDC pool.
The longer the Legislature refuses to confront fiscal
reality, the harder it will be to deal with next year's deficit, estimated to reach $3 billion.
States across the country are in the same position Massachusetts is. Their
leaders are making the tough, unpopular decisions because they know the
economy will not rebound significantly anytime soon.
The state of Oregon isn't worried about pool time; it has
laid off a quarter of its state troopers. But our legislative leaders continue to think business-as-usual is
affordable. It is not.
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The Boston Herald
Friday, February 14, 2003
A Boston Herald editorial
Drug tax still a mistake
Consumer anger, legal pressure and competition are three
powerful forces which, when combined, proved impossible for the state's largest pharmacy
chains - Walgreens, CVS, Brooks and Stop & Shop - to withstand. Thus, the
four in rapid succession announced this week that they will stop charging their
customers the $1.30 prescription tax imposed six weeks ago and will provide a
rebate to customers who have already paid it.
Attorney General Tom Reilly pledged to keep the legal
pressure on, investigating whether the pharmacy chains violated the law by passing the tax
on in the first place. This move should help ensure the pharmacies don't
backtrack in the face of continued legislative recalcitrance on the issue of
repealing the tax outright.
House Ways and Means Committee Chairman John Rogers
(D-Norwood) won't countenance repeal of the law in the face of rising Medicaid costs and the
budget gap. His stance is shortsighted. Burdening consumers is only half of the
problem with this tax. The other half, imperiling independent pharmacies
which cannot afford to absorb it, is now even more of a concern.
The independent pharmacies are between a rock and a hard
place. If they continue to impose the tax on their customers, they will surely drive them to
the big chain competition. If they absorb it, they may put themselves out of
business. What more does Rogers need to know?
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The Boston Globe
Saturday, February 15, 2003
Senate vote offers hope for some school building projects
By Franco Ordonez, Globe Staff Correspondent
School officials in several communities that were rushing to
gain approval for construction projects said yesterday that they're encouraged by a state Senate
vote that held out hope for building assistance from the state.
The state Department of Education earlier this week
announced a moratorium on adding school construction projects onto the waiting list for the School
Building Assistance program. But Thursday, the Senate approved an amendment that
would exempt 15 projects in 11 communities across the Commonwealth.
The amendment, attached to the budget bill, was sponsored by
Senator David P. Magnani, a Framingham Democrat. It would exempt the 11 communities, he
said, because they had moved so far along in the planning process.
"Cities and towns, in good faith, did everything that was
expected of them to meet the criteria for reimbursement and they would have been retroactively
denied reimbursement, having obeyed the rules," Magnani said. "It sends a
very bad message. It undercuts the will of all the voters who voted for [these
projects] at the ballot box. It's fundamentally unfair and it wastes a lot of
taxpayer money already spent on projects like this."
The amendment still needs approval from the House and
Governor Mitt Romney, but Magnani said he believes the House will back the Senate action.
Education Department officials said they would go along with
the lawmakers' decisions, but cautioned that the waiting list is already at 350 projects.
"There is a reason that the commissioner made the decision
that he did, and that is the existing SBA waiting list is extremely long and represents a
tremendous debt that, as it currently stands, won't be paid off for decades,"
said Heidi Perlman, a department spokeswoman.
"I'm holding my breath," said Teresa Cardoso, a Somerville
School Committee member.
Somerville, she said, has invested about $750,000 toward
rebuilding the Lincoln Park Community School.
"I think it's a great thing," she said, "but until I have it
in writing and the governor passes it, I'm not going to be jumping up and down."
About 63 communities statewide were working with the
Education Department in hopes of getting on the School Building Assistance program waiting list,
Magnani said. Projects on the list eventually are reimbursed at rates ranging
from 55 to 90 percent. Some communities had already spent millions on architectural designs and preparation work for the projects
when they heard about the moratorium.
"The original reaction was just a head-slapping because
we've invested a substantial amount of time and money into this, and we were trying to break
ground almost immediately after school ended this year," said Scott F. Burson,
chairman of the Lexington School Committee, which wants to build two elementary schools.
To be on the list of exemptions, the school projects needed
to have received community approval and confirmation from the state that they would be added
to the waiting list, Magnani said. The list includes projects in Easton, Reading,
Swampscott, and Woburn.
Ashland, for example, has gone through several votes for a
building project, and the high school has faced losing accreditation over needed renovations. After
failing to get on the waiting list last year, the community spent almost $3
million toward design work on a 202,000-square-foot building, which officials
expect to open in September 2005.
"We are on the absolute threshold as far as I'm concerned,"
said John Nealon, chairman of the town's school building expansion committee. "Speaking for
Ashland, we're at a crisis stage, growth-wise. This is a big deal."
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The Springfield Union-News
Saturday, February 15, 2003
Homeless: Advocates suggest taxes
By Angela Carbone
Staff writer
Taxes aren't as high as the "Taxachusetts" label indicates,
Rep. Ellen Story told the audience.
Advocates for the poor and homeless urged legislators
yesterday not to cut funds for programs that prevent homelessness and provide health care for
low-income people.
In turn, legislators encouraged human service workers to get
the word out that the state needs more money to continue to provide those services.
About 100 people attended the legislative breakfast put on
yesterday by the Massachusetts Coalition for the Homeless in the First Churches of
Northampton, Main Street.
"Some of our representatives have already given their
attention to the issues we raise," said Susan G. Leech, community services program director at
Hampshire Community Action Commission. "We're also aware of the state budget. The
advocates for housing and homelessness have identified some of our priorities. In the days and weeks ahead, we hope that
you'll take our causes as your own."
Rep. Stephen Kulik, D-Worthington, said the idea that the
state can erase the budget deficit and still fund services for the needy is not realistic. "It ain't
gonna happen," he said. "We need to have people, at the grassroots level, make
a case for additional revenues ... We need to talk and build a coalition to build
awareness as to where (the taxpayers') revenues go."
Rep. Peter V. Kocot, D-Northampton, said the first task is
to talk about the issues to rally support for funding services for those who need them. "The
homeless are not bad people. They're not less than us. The homeless are us,"
he said.
Jeff McLynch of the state Budget and Policy Center [formerly
known as TEAM] provided a bridge between the advocates and their legislators.
McLynch pointed out major shortcomings in the tax system.
"The corporate income tax has all but disappeared over the
past decade," McLynch said. He noted that corporate taxes in 2002 accounted for 4 percent
of the state revenue, while 10 years ago, corporate taxes were 16 percent of
the state revenue. Even accounting for the bad economy, the drop is appalling,
he said.
McLynch urged legislators to support a bill that will close
at least one of the corporate tax loopholes.
Rep. Ellen Story, D-Amherst, thanked McLynch and his
organization for getting out this information.
People talk about cuts to essential services as necessary,
but that's untrue, Story said.
"We are making a choice whether to make the cuts," she said.
"If we raise taxes, we won't make the cuts." Story said that only six states in the United
States bring in less than Massachusetts does in state taxes, yet Massachusetts
is the third highest in per capita income in the country.
