CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

 

CLT UPDATE
Thursday, February 27, 2003

Romney budget: Good news, bad news


Gov. Mitt Romney unveiled the most radical Beacon Hill reform plan in decades yesterday, a $22.86 billion spending bill that slashes local aid, lays off 2,000 state workers, yanks health care from the poor, raises the specter of casino gambling and reshapes almost every facet of state government.

"This is my chance to be bold," Romney said.

The governor's much-anticipated inaugural budget proposal closes a $3.2 billion deficit with a mix of reform plans, program cuts and fees hikes - but no new taxes, in keeping with his campaign pledge.

The Boston Herald
Feb. 27, 2003
Mitt talks chop: Cuts top 'bold' plan


A worsening fiscal crisis and a public appetite for change will boost Gov. Mitt Romney's ambitious bid to reshape state government - despite entrenched opposition from Democratic lawmakers and special interests.

The GOP governor seemingly faces an uphill fight over the next few months in convincing the Legislature to back the dramatic budget plan he unveiled at the State House yesterday.

But Romney has several potent weapons at his side - including a skillful sales persona and a public that overwhelmingly voted to reject "business as usual" Beacon Hill politics....

Romney plans to aggressively promote his budget plan over the coming weeks, holding town meetings this weekend and going on radio and TV talk shows.

The governor is also getting help from the Republican State Committee, which is sending out daily e-mails to supporters and others urging them to call lawmakers to back the budget plan.

The Boston Herald
Feb. 27, 2003
Timing seems right for Romney's ambitious budget


Gov. Mitt Romney, only in office seven weeks, has already delivered on his core campaign promise by offering a $22.858 billion balanced budget that closes the estimated $3.2 billion deficit next year without raising taxes. But remarkably, he also does so while increasing spending. That's right. Increasing spending by about $124 million.

That's because in the never-never land that is state government, the much talked about budget gap of $3.2 billion is the chasm between what will actually be spent in this fiscal year and what is estimated it will cost to maintain the same level of services next year.

So the cuts that will be decried by one special interest after another, are actually reductions in the increase state government otherwise would have had.

But don't expect Romney to get any plaudits for pulling off this feat. This being Boston, home of the bean, the cod and the entitlement crowd, instead expect lots of predictions from Beacon Hill of blood in the streets.

A Boston Herald editorial
Feb. 27, 2003
Romney delivers on budget promise


The governor would also sharply expand the state's bottle bill, imposing new deposit fees of 5 cents on bottles and cans of juice and bottled water, and 15 cents on hard liquor and wine containers. Romney also proposed nearly 100 fee hikes, including higher charges on everything from motorcycle licenses to bar exams, to raise $60 million.

The Boston Globe
Feb. 27,, 2003
Layoffs, new fees in Romney budget


State residents who pay for their own health insurance would also see their premiums rise if the Legislature approves Romney's $22.8 billion budget. The budget calls for a $90 million "user fee" on health insurers to help pay for Medicaid, a tax that insurers said would eventually be passed on to the public....

Douglas Brown, acting Medicaid commissioner, said the fee on health insurers was modeled on similar fees assessed to pharmacies and nursing homes and grew out of policy discussions about the indirect benefits that insurers get from the Medicaid program.

"Medicaid picks up and insures the neediest, most vulnerable patients, covering the risks these insurers don't cover," he said....

Preston said the state is also discussing a hospital user fee ...

The Boston Globe
Feb. 27, 2003
Medicaid recipients face new fees


Tucked into the back of the fiscal year 2004 budget Romney released yesterday, the provision would allow supermarkets and other retailers to receive waivers from the item-pricing rules if they pay a fee to the state and place scanners in aisles where shoppers could quickly check prices....

The Boston Globe
Feb. 27, 2003
Romney proposes item-pricing alternative


The administration estimates the fee increases, which must be approved by the state Legislature, would bring an additional $60 million in revenue to the cash-strapped state.

Some Romney critics said yesterday that they don't see any difference between raising taxes - as Romney has pledged not to do - and raising fees. But a Romney spokeswoman said the two are separate issues.

"Fees go for a direct service," spokeswoman Nicole St. Peter said. "Taxes are something that is assessed, that everyone has to pay."

The Boston Globe
Feb. 27, 2003
Plan would raise fees on certain services


Chip Ford's CLT Commentary

Gov. Romney's bold and innovative budget proposal certainly has rocked the Beacon Hill establishment like nothing in memory has. Once the shock wears off, prepare for the coming kneejerk overreaction from those wanting more, more, ever more.

Barbara and I are still puzzling over the numbers, the language, and the rationale -- though today's Boston Herald editorial is pretty clear.

Gov. Romney proposes spending over a hundred million dollars more than this fiscal year's budget ... but he had to cut $3.2 billion from what the state intended to spend, wanted to add to this year's bottom line. The spenders planned for a $26 billion budget, but have to settle for one that's only a $124 million more than this year's.

That's a $3.2 billion cut in the anticipated increase in spending for next year's budget.

Yesterday I reported that Barbara and I were invited to stand with Gov. Romney at a noon State House news conference today. That changed this morning after we read of the governor's proposed "user fees."

We'd hoped that our longstanding opposition to taxes on prescription drugs and nursing home beds disguised as fees, and the public outrage, would encourage the governor to eliminate those unconscionable assaults on responsible citizens trying to provide for themselves. We were stunned this morning to learn that, not only do they survive -- but Gov. Romney is expanding the ploy into other areas, disguising taxes as more "user fees."

We may never see another tax if this ploy is perpetuated. Income tax hike? Why bother? Just "assess" a five percent "user fee" on jobs!

Barbers pay a fee for a state barber's license. How far off can it be before we start paying an additional buck a haircut "user fee"?

The opportunities for the state to rake in ever more "user fees" are endless.

Barbara called the governor's office and asked for someone to justify the tax as truly a fee, to provide the basis for it. Nobody was available who could, so we regretfully were forced to decline his invitation.

Romney spokeswoman Nicole St. Peter defined the difference, as the administration sees it: "Fees go for a direct service; Taxes are something that is assessed, that everyone has to pay."

That's not quite how the state Supreme Judicial Court defined the difference in Emerson College vs. City of Boston (1984):

Fees imposed by a governmental entity tend to fall into one of two principal categories: user fees, based on the rights of the entity as proprietor of the instrumentalities used, or regulatory fees (including licensing and inspection fees), founded in the police power to regulate particular businesses or activities.

Such fees share common traits that distinguish them from taxes:

they are charged in exchange for a particular governmental service which benefits the party paying the fee in a manner "not shared by other members of society";

they are paid by choice, in that the party paying the fee has the option of not utilizing the governmental service and thereby avoiding the charge;

and the charges are collected not to raise revenues but to compensate the governmental entity providing the services for its expenses.

Fees are legitimate to the extent that the services for which they are imposed are sufficiently particularized as to justify distribution of the costs among a limited group (the "users," or beneficiaries, of the services), rather than the general public....

Fees generally are charged for services voluntarily requested....

That revenue obtained from a particular charge is not used exclusively to meet expenses incurred in providing the service but is destined instead for a broader range of services or for a general fund, "while not decisive, is of weight in indicating that the charge is a tax."

Thus CLT stands by its long-held position that the prescription drug "user fee," the nursing home bed "user fee," and the newly-proposed health insurance and hospital "user fees" are in fact taxes.

We're also concerned that these tax hikes will be easily accepted by the Legislature while the governor's reforms won't, leading to even greater tax increases before the debate ends.

Nobody's going to agree with everything that's in any proposed budget. We recognize this and otherwise still strongly support Gov. Romney's innovation, courage, and leadership. CLT will do all we can to help him get it past the vocal special interests and through a business-as-usual Legislature.

It's the best, most revolutionary proposal we've seen and may ever see; long overdue and in these times critical.

Chip Ford


The Boston Herald
Thursday, February 27, 2003

Mitt talks chop: Cuts top 'bold' plan
by Elisabeth J. Beardsley

Gov. Mitt Romney unveiled the most radical Beacon Hill reform plan in decades yesterday, a $22.86 billion spending bill that slashes local aid, lays off 2,000 state workers, yanks health care from the poor, raises the specter of casino gambling and reshapes almost every facet of state government.

"This is my chance to be bold," Romney said.

The governor's much-anticipated inaugural budget proposal closes a $3.2 billion deficit with a mix of reform plans, program cuts and fees hikes - but no new taxes, in keeping with his campaign pledge.

The deficit-busting plan relies heavily on $2.2 billion he estimates can be saved through sweeping - and controversial - proposals to restructure the bureaucracies that oversee human services, the judiciary, higher education and transportation.

The all-encompassing nature of the reform proposals left political observers stunned, sparking kudos along with protests.

House Speaker Thomas M. Finneran dashed cold water on Romney's budget, bristling at the suggestion that past leaders have larded the government with "waste and inefficiency."

Finneran noted that most budgetary growth in the last decade has been in education and health care.

"Nobody other than the governor has suggested that there's $2 billion in inefficiencies and waste," Finneran said.

Senate President Robert Travaglini, D-Boston, said the Senate will hold Romney's proposal to a "litmus test."

"Will the changes and consolidation and numerous fees the governor is now offering to implement cause more harm than good?" Travaglini said.

Most attention yesterday was riveted on Romney's $621 million in program cuts - particularly the $232 million he nicked from the $5.3 billion local aid account.

When piled on top of recent rounds of emergency cuts, cities and towns next fiscal year would receive $350 million less than this year under Romney's budget plan - an average reduction of 5 percent.

Boston was by far the biggest loser, suffering a $46 million whack that amounts to a 10.5 percent reduction in state aid.

Boston Mayor Thomas M. Menino fumed that it's "unfair" to cut so deeply into the state's "economic engine," accusing Romney of breaking his pledge to protect core services.

Menino said the local aid cut would force him to make layoffs and eviscerate programs that provide for the "basic quality of life."

"This gets beyond the core of government," Menino said. "This gets into the marrow."

But beyond Boston, many cities and towns took less of a local aid hit than they had anticipated - and some communities even saw a slight increase aimed at boosting their school funding.

Romney protected the $4.1 billion education account, offering a $25 million increase - meager by comparison to huge increases of recent years but a far cry from the drastic cuts some had predicted.

Despite the cuts and consolidations, overall state spending would grow by $124 million, or half a percent, next year - an increase driven by skyrocketing costs in Medicaid, the $6.5 billion health care program for nearly 1 million poor, elderly and disabled.

The budget-busting program saw 8.9 percent in inflationary growth, requiring Romney to pour $534 million in new money despite measures to force an unknown number of people off health care.

Romney proposed tightening eligibility requirements, counting assets like cars, houses and savings accounts in a way that would boost incomes and allow fewer people into the program.

And Romney would yank Medicaid benefits from anyone who can get health insurance through their work, impose new co-payments and premiums, and steer recipients toward cheaper generic drugs.

The Medicaid squeeze comes as thousands of people are still reeling from cuts that took away prosthetics, eyeglasses and dental care - and as 50,000 more are kicked off MassHealth Basic April 1.

Lowell resident Donna Tornberg lost her coverage in January and now can't replace the $15,000 prosthetic leg that helps her navigate three flights of stairs after losing her leg to a drunk driver.

Tornberg, 44, said Romney ought to get out of the State House and talk to some of the people whose health care he's taking away.

"He doesn't know anybody who's handicapped or anybody who's low income," she said. "He's got money. He doesn't have to worry about it."

Advocates for the elderly were also scrambling after Romney proposed wiping out the $98 million Prescription Advantage program, which provides cheap drugs to about 80,000 seniors.

Romney also slashed $2.4 million from the home care program, a favorite of many elders, said Mass. Home Care Director Al Norman.

"I'm sure that older people are going to be furious when they hear that all of these commitments have been dropped," Norman said.

Affordable housing advocates were angry, after Romney slashed $29 million, or 24 percent, from the housing budget - including all $20 million from a special trust fund that's helped create 2,000 new affordable housing units in the last two years.

"This is a significant setback for working people," said Rev. David Olson, president of the Greater Boston Interfaith Alliance. "We think it is a terrific political miscalculation."

In a move that could blow open the debate over legalized gaming, Romney seeks to wring $75 million from casino operators in neighboring states - promising to allow video slot machines at as many as six sites statewide if they don't pay up.

Romney also uses $657 million in one-time revenues, such as giving the pension system $180 million in surplus land instead of cash.

Elizabeth W. Crowley contributed to this report.

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The Boston Herald
Thursday, February 27, 2003

Timing seems right for Romney's ambitious budget
Analysis/by Joe Battenfeld and David R. Guarino

A worsening fiscal crisis and a public appetite for change will boost Gov. Mitt Romney's ambitious bid to reshape state government - despite entrenched opposition from Democratic lawmakers and special interests.

The GOP governor seemingly faces an uphill fight over the next few months in convincing the Legislature to back the dramatic budget plan he unveiled at the State House yesterday.

But Romney has several potent weapons at his side - including a skillful sales persona and a public that overwhelmingly voted to reject "business as usual" Beacon Hill politics.

With a budget deficit pegged at more than $3 billion, Romney has already succeeded in at least setting up a stark choice - reform, deeper cuts or tax hikes.

"This is clearly the moment to undertake this sort of reform agenda, not only as a new governor but in the midst of a fiscal crisis," said Michael Widmer, president of the Massachusetts Taxpayers Foundation.

Legislators are likely to go along with some parts of Romney's plan, largely because they will face pressure to either accept Romney's reforms or take the unpopular route of raising taxes for the second year in a row.

But getting some of his proposals through the Legislature seems daunting at best, even improbable.

The budget outlined by Romney goes after a number of politically powerful symbols long protected by Democrats - including UMass President William M. Bulger and employee labor unions.

Romney proposed vaporizing Bulger's office and changing seniority rules that have protected state employees. Romney's proposals to restructure higher education, raise tuition and separate the University of Massachusetts at Amherst campus from the state system also will be fiercely opposed by education advocates.

Romney's moves will likely add to his public image as a reformer, leading some critics to charge he is simply playing politics by targeting Bulger.

But while Bulger's popularity has waned since he refused to testify before a congressional panel probing FBI corruption and the Mob, he still enjoys strong support from House Speaker Thomas M. Finneran and others.

There are also some 200,000 alumni from the University of Massachusetts living in the state, another powerful constituency.

"This (proposal) has no chance and he knows it," Democratic Party Chairman Phil Johnston said. "If he were serious about this he would have done the groundwork in advance."

Romney and his aides insisted he was not targeting Bulger for political reasons. And aides said Romney will not back down from a fight with Bulger just to appease lawmakers.

"This is my opportunity to be bold," Romney said.

Romney plans to aggressively promote his budget plan over the coming weeks, holding town meetings this weekend and going on radio and TV talk shows.

The governor is also getting help from the Republican State Committee, which is sending out daily e-mails to supporters and others urging them to call lawmakers to back the budget plan.

"This is going to be won in the field, in rallying the citizenry and reminding them what last year's election was about," Republican Party Executive Director Dominick Ianno said. "The Legislature will be reminded that Gov. Romney ran on a platform to fix Beacon Hill, and his budget reflects that."

Romney still faces a tough task in selling the most important claim in his budget plan - that the restructuring proposals will save $2 billion.

Finneran yesterday echoed past doubts about the reform savings raised by Senate President Robert E. Travaglini.

"Nobody other than the governor has suggested that there's $2 billion in inefficiency and waste," Finneran said. "I hope that we can find it. I hope that we can identify it."

Since the bare-bones budgets of the early 1990s, Finneran said, most budget growth has been in education and health care - not exactly pork. "It seems, therefore, to suggest that at least some people in the Romney administration think that education and health care programs and advances might also be synonymous with inefficiency and waste," the Democratic speaker said.

But Finneran stressed, "all the governor's proposals are on the table" and "everything has to be given a fresh and vigorous look."

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The Boston Herald
Thursday, February 27, 2003

A Boston Herald editorial
Romney delivers on budget promise

Gov. Mitt Romney, only in office seven weeks, has already delivered on his core campaign promise by offering a $22.858 billion balanced budget that closes the estimated $3.2 billion deficit next year without raising taxes. But remarkably, he also does so while increasing spending. That's right. Increasing spending by about $124 million.

That's because in the never-never land that is state government, the much talked about budget gap of $3.2 billion is the chasm between what will actually be spent in this fiscal year and what is estimated it will cost to maintain the same level of services next year.

So the cuts that will be decried by one special interest after another, are actually reductions in the increase state government otherwise would have had.

But don't expect Romney to get any plaudits for pulling off this feat. This being Boston, home of the bean, the cod and the entitlement crowd, instead expect lots of predictions from Beacon Hill of blood in the streets.

For today, though, let's give credit to Romney where credit is due. He delivered a budget that:

Does not raise taxes.

Does not rely on one-time savings or gimmicks.

Goes after almost every sacred cow on Beacon Hill from University of Massachusetts President William Bulger to state employee benefits and union prerogatives.

Trims the state government bureaucracy by 1,000 employees.

Closes outdated and costly facilities like Worcester State Hospital and the Fernald School.

Funds education reform.

Romney also deserves points for creativity. For the first time, the budget is only available online, saving $50,000 in printing costs and allowing broader access.

The governor also blows up the hundreds of budget line items associated with government programs - and subject to legislative micromanagement - in favor of 72 master accounts allowing flexibility to move resources where needed.

And Romney proposes raising $75 million per year from gambling enterprises in neighboring states, or authorizing video lottery machines at up to a half-dozen locations if those so-called "blocking payments" are not forthcoming.

Round one goes to Romney. But this was the easy part. Now comes the legislative battle. Let's hope the governor - and his budget reforms - are still standing by Round 15.

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The Boston Globe
Thursday, February 27, 2003

Layoffs, new fees in Romney budget
Says $2.17b would be saved in restructuring
By Rick Klein, Globe Staff

Governor Mitt Romney yesterday unveiled a $22.86 billion spending plan for next year, proposing stiff new Medicaid fees on health insurers and recipients and a revamping of the state's higher education system as part of a sweeping government reorganization.

Under the budget for fiscal 2004, which begins July 1, state spending would remain essentially flat at this year's level. The plan would result in layoffs of about 2,000 state employees, about 3 percent of the work force.

Romney proposed restructuring the state's local aid formula, which would help some of the state's poorer communities but cut deeply into aid to Boston and other older urban centers. With the exception of K-12 education and Medicaid, most areas of state government would be cut by nearly 5 percent on average under Romney's plan.

The governor would also sharply expand the state's bottle bill, imposing new deposit fees of 5 cents on bottles and cans of juice and bottled water, and 15 cents on hard liquor and wine containers. Romney also proposed nearly 100 fee hikes, including higher charges on everything from motorcycle licenses to bar exams, to raise $60 million.

"The budget is balanced, it doesn't raise taxes, it preserves our commitment to care for those who can't care for themselves," Romney said at a news conference to introduce his proposals. He called his budget proposal "the most significant restructuring of state government in half a century."

But budget analysts and legislative leaders met Romney's assertions with skepticism, saying the amount the governor says the state would save via his streamlining plans is vastly inflated. Romney's restructuring plan, which he said will save $2.17 billion, includes more than $600 million in hiked fees and other new revenue, and $500 million in one-time changes, such as selling off state land and refinancing bonds, that do not address long-term spending problems.

"Nobody other than the governor has suggested that there is $2 billion in inefficiency and waste," House Speaker Thomas M. Finneran said.

Senate Ways and Means Committee chairwoman Therese Murray said that Romney's combination of complicated restructuring proposals with measures that would balance the budget is confusing both endeavors. She said she doesn't believe the state could reap anywhere near the savings Romney sees from restructuring, even if it immediately adopted all of the Republican governor's recommendations.

"I don't see how we get that in 2004, even if we said tomorrow that we'd do it all," said Murray, a Plymouth Democrat. "This deluge of filings is distracting us from the problem."

Independent analysts and state lawmakers predicted that Romney's proposals would result in deep service reductions, a possibility that the administration sought to downplay yesterday. Romney aides were unable to describe the specific impact of many of his service cuts, saying the details need to be worked out.

"With some exceptions, the services are either unchanged or will be better," said Eric Kriss, Romney's secretary for administration and finance. "It encompasses a tremendous amount of change in a short period of time to take us out of our financial difficulties."

Romney's budget would actually increase state spending slightly next year, by about one-half of 1 percent, about as much as the budget grew this year. But because of mandated cost increases in debt service and the state's Medicaid program, and because state revenue growth is expected to be flat in fiscal 2004, most programs funded by the state would receive less money under Romney's plan than they are currently receiving.

The billions in savings touted by the administration are based not on a comparison of year-to-year spending, but measure his recommended appropriations for next year against a hypothetical benchmark: the total that state agency heads say they'd need to spend to maintain the current level of services.

Budget analysts who were poring over the plan yesterday said they believe Romney's emphasis on "reorganization" masks significant cuts to services.

"It will definitely mean service reductions," Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said of Romney's budget proposal. "I give him an A-plus on the boldness, but a somewhat lower grade on the fiscal document."

To generate revenues, Romney proposes that the state collect $75 million from Connecticut and Rhode Island casino operators, whom Romney wants to pay the state on an annual basis to stop it from expanding legalized gambling. In part to spur negotiations with gambling facilities, the governor said yesterday that he is prepared to allow slot machines at several sites in Massachusetts, possibly including the state's four racetracks.

"If they refuse to provide at least $75 million to us - and there's some logic for saying yes, and some for saying no - then we will engage in video lottery terminals of our own," Romney said.

The governor would also seek to raise $128 million in revenue by closing corporate tax loopholes, $50 million from increased tuition at state colleges and universities, $230 million from recent fee hikes at the state's registry of deeds, and $10 million in sales tax revenue by assigning slightly higher values to used vehicles.

The budget proposal will now move on to the House and Senate, which are slated to approve their own budget plans late this spring, before the July 1 start of fiscal 2004. In previous years, Republican governors have seen most of their major budget proposals ignored by the Democrat-led Legislature, but Romney is looking to tap into the same voter sentiment that sent him to the corner office to achieve more success.

In other proposals, Romney would:

Eliminate the Pacheco Law, which makes privatization of state services nearly impossible, and to abolish some civil service protections for state workers and reduce the number of employees in unions. The governor believes his package of reforms would save the state $263 million per year.

End the Prescription Advantage program, which provides senior citizens with low-cost drugs, unless the federal government agrees to pick up half of the costs. That cut would save the state $98 million next year.

Transfer $180 million worth of surplus land to the state pension fund, to cut the state's cash commitment to the fund next year. Kriss said the pension fund managers could then decide how to manage the land.

Force healthy parents of children ages 2 to 5 to work in exchange for welfare. The governor said he would expand child care options for welfare recipients to make that possible.

Cut the $10 million state subsidy for the Hynes Convention Center. James E. Rooney, director of development for the convention center, said his staff would try to make cuts and increase revenues, but he said it would affect the Hynes Auditorium, Springfield Civic Center, and regional tourism offices.

Through a budget rider, institute a legal change that would make drunken-driving convictions easier to obtain. Under the change, drivers would be considered legally impaired automatically if they register a blood alcohol content at or above the legal limit, which is.08 percent. Massachusetts is the only state without such a law, a situation that lost the Bay State an estimated $29 million in federal highway funds over the past five years.

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The Boston Globe
Thursday, February 27, 2003

Medicaid recipients face new fees
State hospital, Fernald school closings planned
By Alice Dembner, Globe Staff

About 150,000 Medicaid recipients earning less than $13,300 a year would face new fees for health care, and the state would close Worcester State Hospital for the mentally ill and the Fernald Developmental Center for the mentally retarded, under the state budget proposed yesterday by Governor Mitt Romney.

State residents who pay for their own health insurance would also see their premiums rise if the Legislature approves Romney's $22.8 billion budget. The budget calls for a $90 million "user fee" on health insurers to help pay for Medicaid, a tax that insurers said would eventually be passed on to the public.

The fees and closures are among the far-reaching changes Romney proposed to help pay for $10.9 billion in spending on health care and human services in fiscal 2004. Spending would rise $417 million over this year's budget for health and human services, but because Medicaid spending will grow by an even larger amount, the administration is proposing cuts in other areas - including ending the prescription drug plan for seniors, restricting prescription drug use among Medicaid recipients, reducing payments to hospitals and nursing homes, and making it tougher for seniors to qualify for nursing home care paid by the state.

Health and Human Sevices Secretary Ronald Preston said that, without the cuts, spending would grow more than $1 billion a year just to provide the same services. "That rate of increase is not sustainable," he said, even with half of Medicaid paid by the federal government. Preston also said the administration believes that "able-bodied people ought to pay a little something" toward their care.

Preston noted that the budget is not all doom and gloom. It restores coverage for leg braces and other prosthetic devices for nearly half a million state residents on Medicaid. And it adds nearly $33 million in community services for the mentally retarded, much of it mandated by a court settlement. It also adds $26 million for troubled children served through the Department of Social Services.

Health insurers, hospital officials, and advocates all criticized the budget yesterday, saying the changes would unfairly burden the poor and unduly stress the health care system.

"We don't think the answer to the budget is to make the poorest people pay more," said Marcia Hams, deputy director of Health Care for All, a Boston-based group that advocates for affordable health care.

Senator Therese Murray, chairwoman of the Ways and Means Committee, which will review the budget, said the premiums and co-payments proposed for the Medicaid program would backfire on the state, costing more money.

"You can't get money out of people who have no money," said Murray, a Plymouth Democrat. "They're not going to bother going to doctors or buying drugs. Instead, you're going to see them in the emergency rooms."

The budget proposes charging a premium of up to $19 per month for 150,000 low-income people whom the state covers under part of the Medicaid program that is not required by the federal government. Many of these people are disabled or elderly.

In addition, nearly all 1 million Medicaid recipients would be required to pay copayments of up to $3 per visit for any health care that costs more than $50. And thousands of low-income people who participate in the Children's Medical Security Program, established to help provide health insurance to all of the state's children, would pay premiums of up to $32 per month, as well as copayments for each doctor's visit. Together, these fees would raise $18.5 million in revenue, according to the administration.

The state also plans to save $76 million on prescription drug spending in the Medicaid program, by requiring more use of generic drugs and prior authorization from the state for Medicaid members who are taking multiple medications. In addition, all new applicants for Medicaid benefits would face a detailed review of their assets as well as their income to qualify, which is expected to exclude thousands from the program. And the state would restrict nursing home admissions to sicker patients.

Preston called this an effort to cut out "people who don't need care as much as others."

The closing of Worcester State Hospital and the Fernald school is part of the governor's reorganization plan. The hundreds of people who live at these facilities would be moved into community programs or other hospitals.

A new "user fee" of $150,000 would be imposed on each of the 600 health insurers in the state to help fund Medicaid. The state plans to use the extra $90 million a year to leverage additional federal matching aid.

Douglas Brown, acting Medicaid commissioner, said the fee on health insurers was modeled on similar fees assessed to pharmacies and nursing homes and grew out of policy discussions about the indirect benefits that insurers get from the Medicaid program.

"Medicaid picks up and insures the neediest, most vulnerable patients, covering the risks these insurers don't cover," he said.

But Dr. Marylou Buyse, president of the Massachusetts Association of Health Plans, said the new fees, on top of other government mandates, "add up to a significant financial burden on health care in Massachusetts." Since most health insurers get all their income from premiums, she said the fees - if they become an annual assessment - would probably be passed on to the public.

Preston said the state is also discussing a hospital user fee, a proposal that the president of the Massachusetts Hospital Association, Ronald Hollander, said would shift "an unsustainable burden onto the hospitals." He also criticized the governor's plan to reduce by $45 million the state's payment for free care provided by the hospitals.

"That's going to force our hospitals to cut core services throughout the Commonwealth," Hollander said.

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The Boston Globe
Thursday, February 27, 2003

Romney proposes item-pricing alternative
By Andrew Caffrey, Globe Staff

Governor Mitt Romney is proposing to allow retailers to use electronic pricing machines, such as in-aisle scanners, as a substitute for placing individual price tags on most products in their stores, as they're currently required to do in Massachusetts.

The governor's proposal, if adopted by the Legislature, would deliver a huge victory to retailers, who have long complained the Massachusetts requirement is costly and can introduce pricing errors. Several chain stores were hit with class-action suits in recent months alleging they've failed to follow the Massachusetts item-price rule after Home Depot settled a similar suit in November for $3.8 million.

Tucked into the back of the fiscal year 2004 budget Romney released yesterday, the provision would allow supermarkets and other retailers to receive waivers from the item-pricing rules if they pay a fee to the state and place scanners in aisles where shoppers could quickly check prices. Stores could elect to install so-called electronic pricing labels on shelves below the products that digitally display prices, or keep the paper strips displaying prices that are pasted to shelves now....

The waiver fee would be based on the number of registers per store - $2,000 for stores with seven registers or more, for example and less for stores with fewer registers. Romney administration officials estimate the waivers could generate $3 million or more in revenues.

As a protection for consumers, Lindstrom said retailers that use the electronic system could not raise prices on items more than once within a 72-hour period. Fines for price errors would be doubled, to $200 per item....

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The Boston Globe
Thursday, February 27, 2003

Plan would raise fees on certain services
By Cynthia Roy, Globe Correspondent

Nearly 100 state fees, including those on bottled beverages, public health testing, and driver's licenses, would rise next year under Governor Mitt Romney's 2004 proposed budget, which was released yesterday.

The administration estimates the fee increases, which must be approved by the state Legislature, would bring an additional $60 million in revenue to the cash-strapped state.

Some Romney critics said yesterday that they don't see any difference between raising taxes - as Romney has pledged not to do - and raising fees. But a Romney spokeswoman said the two are separate issues.

"Fees go for a direct service," spokeswoman Nicole St. Peter said. "Taxes are something that is assessed, that everyone has to pay."

Bottles of water and uncarbonated beverages, which have not previously come under the state's bottle law, would cost 5 cents more; and a 15-cent charge would be added to bottles of wine and liquor under the proposal. Romney's move would make Massachusetts one of only 11 states with a bottle deposit fee on noncarbonated drinks and only the fifth - along with Vermont and Maine - to charge for wine and liquor.

The state has not changed or expanded the 5-cent deposit fee on beer and soda since 1982.

"It is time to bring bottle charges up to date," Ellen Roy Herzfelder, secretary of Environmental Affairs, said yesterday.

Romney also said he would like to raise 12 motor-vehicle-related fees to generate $8.6 million. Motorcyclists would pay $40 for a new license instead of $34; while new - and often younger - drivers would see the price of a learner's permit double to $30.

David Shaw, spokesman for the Registry of Motor Vehicles, said the permit fees should have been increased five years ago, when drivers were allowed to use them for two years instead of one.

The biggest fee increases at the Registry will be shouldered by those who are looking to reinstate revoked licenses, he said.

"A big bulk of the money will come from drivers who have had their licenses suspended because they did something wrong," Shaw said. "So it's only going to affect those people who choose to act illegally."

Fee increases at the Department of Public Health would generate the most new money for the state, $9.1 million. The fee changes include $6 million in hikes at state labs and hospitals, as well as a new $50 charge for tuberculosis tests and a $400 fee for those who test positive.

Stephen E. Collins, executive director of the Massachusetts Human Services Coalition, a health-care advocacy group, called the TB screening fee "ludicrous."

"There's going to be a real problem if people start declining the screening and the disease starts to spread," he said.

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