State House News Service
Tuesday, March 18, 2003
Gas station, convenience store owners
oppose increase in gas tax
By Chris Tangney
With the prospect of war already driving gas prices up,
several interest group leaders on Tuesday urged lawmakers to kill a bill that would increase the state
gas tax by 10 cents.
Members of the Legislature Taxation Committee said they are
aware of the public sentiment against new taxes, and are proceeding "cautiously" on any tax
proposals.
Committee members heard from groups largely representing
businesses along the New Hampshire border, including service station managers concerned
about the price of gas and convenience store owners worried about the residual
effect of customers who buy any number of other products while they fill
their tank.
A 10-cent tax increase in [the] 21-cent-per-gallon state gas
tax would mean Massachusetts imposes the highest gas tax in the country, said Diane
O'Donohue of the New England Convenience Store Association. Customers
would be paying 50 cents in taxes, between federal and state levies, on every
gallon of gas they purchase, she said.
And with gas prices high, supplies low, and the busiest
consumption period approaching, now would be the worst time to hike the tax, said Paul O'Connor
of the New England Service Station and Automotive Repair Association.
Rep. Paul Casey (D-Winchester), the committee co-chairman,
said state budget problems present the committee with unpleasant choices, but that they "walk
with trepidation towards any tax increase." The Winchester Democrat said in
turbulent economic times, "predictability and stability in the economy is what
we strive for."
Casey was direct in his assessment of a bill that would
lower the gas tax by 10 cents. After several individuals testified that they would support the measure,
Casey said only "true supply side economists" could see the value in reducing
the tax.
The committee's Senate chair, Sen. Cynthia Creem (D-Newton)
has not ruled out an increase in the gas tax, but said through her spokesman that making
sure the money raised would be funneled to transportation needs would be
crucial. She has not yet formulated a position on this bill, however.
The bill's sponsor, Rep. Angelo Scaccia (D-Boston), could
not be reached for comment. He did not testify.
Return to
top
The Worcester Telegram & Gazette
Wednesday, March 19, 2003
Progressives say tax cuts fueled state budget crisis
By John J. Monahan
Excessive tax cuts are more to blame than overspending for
the growing state budget crisis, according to a new study by the progressive Massachusetts
Budget and Policy Center.
The study, discussed at a legislative meeting yesterday,
argues that 42 separate revenue cuts put in place from 1991 through 2001 set the state up for
a major financial shortfall, slashing state revenues by $3.7 billion annually once
the economy declined, despite a $1 billion tax hike last year.
Sarah A. Nolan, who explained the findings yesterday at a
House-sponsored meeting of progressive legislators, said the most damaging tax cut was the
2000 voter-approved referendum to roll back the state income tax from 5.85
percent to 5.3 percent, which cut almost $1 billion in annual revenues.
"We have reduced revenues by $3.7 billion, so it is no
surprise that we are in a financial crisis. We really need to look at restoring some of that revenue," Ms.
Nolan said. Even if the economy recovered quickly, she said, it would take
years before the state saw a return to revenue levels of the 1990s unless the
tax structure is changed.
Saying words most elected officials in the state have shrunk
from since November, Ms. Nolan argued, "We are going to have to look at the sales tax
and the income tax or some combination of both," to sustain even reduced state
spending levels.
"We went a little overboard with tax cuts," she said, adding
that the voter-approved rollback of the income tax "was sold to voters with the claim
that you could have this tax cut without any pain" or cutting services.
The group also suggested that extending the sales tax to
include alcoholic beverages would raise $51 million.
Ms. Nolan said many of the budget-balancing measures
proposed by Gov. Mitt Romney exaggerate savings and that even deeper budget cuts would be
needed by July to balance the budget. Moreover, she said, reliance on use of
about $650 million in remaining reserve accounts will leave the state with
an even more difficult problem a year from now.
"Revenue is down here," she said with her left hand at her
hip level. "Spending is up here," she said raising her right hand to her shoulder. "Using one-time
gimmicks just puts off solving the problem to the next year."
Michael J. Widmer of the business-supported Massachusetts
Taxpayers Foundation also painted a bleak outlook for the state's fiscal health, saying a
new study by his group found the situation will be even worse next year.
Mr. Widmer said the group two years ago issued a worst-case
scenario unfolding for the state budget in a report called "The Perfect Storm" and
yesterday released a follow-up document called "The Perfect Storm Unleashed." The analysis documents "a
gigantic gap" between state revenues and spending, and it predicts that the state's economic recovery will lag behind
much of the rest of the country, causing the state budget crisis to worsen in
2005, when reserve funds will have been depleted.
Medicaid cost increases of up to 17 percent annually, he
said, have driven the state's fiscal problem, and even with austerity measures the state is still "losing
ground."
With no more reserves next year, Mr. Widmer said, the full
weight of another multibillion-dollar budget gap would be borne by even deeper state service
cuts, coming on top of the massive cuts adopted last year and planned for the
coming year.
Even with strong economic growth to produce $750 million in
revenue growth each year, he said, it would take three years for revenues to approach current
reduced spending levels, not including new increases in Medicaid costs during
the next three years.
"A few years ago, I couldn't imagine that I would be
recommending borrowing, but that is a reflection of how dire the situation is," Mr. Widmer said.
"Given the size of this problem and the consequences of
another $1 billion cut in services, after we already had $2 billion in cuts, it is going to be tough," he
said. "Some borrowing as part of a multiyear plan may make some sense."
He said the current budget crisis is much worse than the one
in the late 1980s, when the Massachusetts Miracle economy collapsed into deep recession.
"The only reason we haven't seen it that way is because we
have used $2.3 billion in reserves" to fill the gap, he said.
Underlying the state's higher spending levels, besides
increased funding for education reform, is the Medicaid budget which has been growing at more than
15 percent annually, resulting from breakthroughs in new drugs and diagnostic
techniques, he said.
"Everyone wants to take advantage of them, but that is what
is causing the problem," he said.
"The commonwealth faces a multiyear problem which requires a
multiyear strategy to address its worst fiscal crisis in more than 50 years," Mr. Widmer
said.
Return to
top
The Boston Herald
Wednesday, March 19, 2003
Embattled Pike wheels out plan to save money, agency
by Doug Hanchett
Flying in the face of Gov. Mitt Romney's downsizing frenzy,
the head of the Turnpike Authority said he envisions a broader scope for the Pike as part of
the Bay State's belt-tightening efforts.
While the Pike is on the chopping block in Romney's plan for
radical restructuring of state government, Chairman Matthew Amorello suggested the
agency could play a key role in containing costs by taking over maintenance of
Pike feeder roads.
"We think there are some avenues we can take at the
authority that may be helpful to the bottom line on the state budget, such as taking on some of the
operations of other roadways that feed into the Turnpike," Amorello said at a
meeting with the Herald editorial board, citing Interstate 84 and Interstate 91
as examples.
Romney wants to merge the Pike and MassHighway, adding the
Metropolitan District Commission's roadway responsibilities to the fold for good measure. By
doing so, the state would save anywhere from $20 million to $55 million a year
in highway costs, according to the governor's office.
While saying the governor has a "great deal of respect" for
Amorello, Romney spokesman Eric Fehrnstrom said the savings are too enticing. "We think the
roads will be better managed and better maintained for less money," Fehrnstrom said.
In addition to the annual savings, the state would also
commandeer the Pike's $167 million debt service fund - described by Fehrnstrom as a "one-time cash
gain."
The move wouldn't provide any relief to motorists, however,
as the Pike's tolls would remain in place.
Amorello, a former state senator, questioned whether Pike
drivers would want their money going into the state's coffers, considering that they've long
complained about bankrolling the $14.6 billion Big Dig.
"I can't imagine they're going to be pleased to know that
now they're paying tolls to go into (the state budget)," said Amorello. "If you put tolls into the
general fund, that toll is a tax."
But Fehrnstrom said the savings for Bay State taxpayers "are
too big to ignore."
Fehrnstrom said the legislation to eliminate the Pike
Authority will be filed in the next few weeks.
The Legislature, which needs to sign off on the dismantling
of the Pike, has raised red flags about the plan because of the independent agency's outstanding
bonds.
Fehrnstrom said the complicated maneuver of having the state
absorb the Pike's bonds "is not an insurmountable problem."
Return to
top
