CLT
UPDATE
Wednesday, April 2,
2003
Schizophrenia: The official state
disease?
According to the state Department of Revenue, the typical family of four with both parents working and making a combined $70,000 a year will pay an additional $162 in state taxes for 2002....
In addition, suspension of the Question 4 tax rollback will add an additional $140 to $145 to the typical taxpayer's bill for 2003, relative to what would have been the case had the income tax rate declined to 5 percent.
Governor Romney's Office
News Release
April 1, 2003
Romney warns taxpayers of consequences of tax hike
Romney said the tax hike - pushed by Democrats over the opposition of Republican Gov. Jane Swift - would reduce and in some cases eliminate refund checks for taxpayers rushing to meet the April 15 filing deadline....
Last year, the Legislature eliminated tax deductions for charitable donations, raised cigarette taxes by 75 cents per pack, reduced personal exemptions by 25 percent, and raised taxes on long-term capital gains. Lawmakers also froze the income tax rate at 5.3 percent, blocking a voter-approved rollback to 5 percent.
Romney has pledged to cut the income tax rate back to 5 percent by 2006, the last year of his term.
Reiterating his campaign pledge, Romney said he remains "firmly committed" to opposing new taxes on individuals or corporations.
State House News Service
Monday, April 1, 2003
Romney criticizes burden of new tax hikes, but says relief not likely
Rising costs for heat, utilities, gasoline, water, and insurance may be leading the nation back into recession, as Americans who have kept the economy pumping with purchases of big-ticket items such as cars and dishwashers shift their spending to basic necessities....
A typical Massachusetts family is paying $714 more in 2003 than last year for heating oil, water bills, medical coverage, and car and home insurance, according to a calculation by the Globe....
Consumers helped prop up the economy through last year's recession, but they can hardly be expected to propel this shaky recovery while burdened with expenses they can't control, economists say.
The Boston Globe
Wednesday, April 2, 2003
Feeling spent
Increasing expenses cut consumers' buying power,
raising fears of recession
The House yesterday canceled plans for a formal session today - temporarily delaying a controversial bill giving Speaker Thomas M. Finneran free rein to boost his loyalists' pay....
Finneran's spokesman Charles Rasmussen said he expects the House to act on the bill in the "near future."
The Boston Herald
Wednesday, April 2, 2003
Bill delayed to up Speaker's $ power
The House was supposed to approve still more pay raises today, but supposedly there's a procedural problem and it's off 'til next week, maybe Monday.
That's the official word, anyway. Or maybe Tommy Taxes, the House Speaker, just concluded the timing was just a bit too close to April Fools Day. Many years ago, a Halloween pay raise backfired on the Legislature,
bigtime. Why set themselves up for another humiliation, although when has that ever stopped the toga-toga-toga Animal House gang before?
The Boston Herald
Wednesday, April 2, 2003
Gen. Tommy Taxes to arm his soldiers with another pay hike
by Howie Carr
But don't expect to hear a peep from Republican legislators, Gov. Mitt Romney or even organizers of the budget demonstrations. They all, in one way or another, are dependent on Finneran's good will. And that's why Finneran can, with complete disdain, dismiss any criticism as "the usual nonsense from the chattering classes," a group which includes, apparently, the taxpayers.
A Boston Herald editorial
Wednesday, April 2, 2003
Pay plan should be shelved
Attorney General Tom Reilly is keeping a wary eye on an Illinois court case that could take a $100 million bite out of Massachusetts' already anemic finances....
But officials with Philip Morris' parent company, Altria Group Inc., say they are considering filing for bankruptcy protection while they appeal a $12 billion verdict against them in a separate Illinois case.
If the company gains court protection, it could stop making the multimillion-dollar payouts to states,
Reilly said.
The Boston Herald
Wednesday, April 2, 2003
Bankruptcy would cut tobacco pay:
State relies on '98 settlement
Chip Ford's CLT
Commentary
Governor Romney came out swinging yesterday, reminding
taxpayers of the cost of last year's "Biggest Tax Increase in State
History," both this year, and next when the "freezing" of our
rollback will have its first visible impact (it was supposed to finally drop to
it's historic 5 percent this tax year). We only wish he'd pointed out that the
tax-them-more Gimme Lobby that's demanding more taxes can take our voluntary tax
check-off option on their income tax return right now and easily pay for what
they claim to desire.
*
* *
Based on its calculation, the Boston Globe today
reported "A typical Massachusetts family is paying $714 more in 2003 than last year for heating oil, water bills, medical coverage, and car and home
insurance." But it left out one major contributing factor. Nowhere
in its "calculation" is last year's huge tax increase
considered.
"A lot of things consumers have to spend money on have prices that are rising very sharply, and that is taking away from the discretionary
spending," observed economist Allen Sinai. "We are on a heightened recession alert at this moment."
Hey Boston Globe, add the $162 additional family tax burden
this year to your recession "calculation" ... then add the further
additional $140-$145 per family removed from the economy that kicks in this year
with our tax rollback "frozen" at 5.3 percent.
Have you ever seen such journalistic schizophrenia between a
newspaper's reportage and its editorial policy? Don't the dogmatic editorial
board elite read their own newspaper, understand cause and effect?
*
* *
So Emperor Finneran's power grab is again put on hold, for
now. But, as Howie Carr predicted in his column today, he'll be back ... until
he has what he wants as usual. But aren't you enjoying what must be his
frustration over failing now twice?
*
* *
Finally, isn't greed wonderful when it eats its own. In the
1987 Oliver Stone film "Wall Street," dealmaker extraordinaire Gordon Gekko,
declared, "Greed is good!" That seems to be non-operative today as beleaguered
Philip Morris is about to declare bankruptcy over yet another judgment against
the cigarette giant.
Remember that Speaker Finneran has vehemently opposed
"securitizing" the windfall, selling off the state's annual payments over 20 years
for a lesser lump-sum amount of cash-in-hand today. If Philip Morris goes
belly-up, Massachusetts will get far less of its anticipated $8 billion "taxpayer
reimbursement."
It was a healthy gravy train while it lasted, but doesn't
anyone -- especially our own Attorney General Tom Reilly -- comprehend that even
the deepest pockets can eventually be picked empty? I'll bet the
litigation-crazed trial lawyers will pocket their hundreds of millions before
that happens, if they haven't already. Everyone else will eventually lose as the
trial lawyers move on to fatter opportunities.
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Chip
Ford |
The Commonwealth of Massachusetts
Executive Department
News Release
April 1, 2003
Romney warns taxpayers of consequences of tax hike
Cites last year's $1 billion tax increase
and reaffirms commitment to reducing spending
Taxpayers anticipating a refund check from the state this April should remember that the $1 billion tax hike approved by the Legislature last summer will reduce the size of their check and in many cases will wipe out the refund altogether, Governor Mitt Romney said today.
"As citizens around the state get hit with the reality of last year's tax increase, it is imperative in this year's budget debate that we hold the line on raising taxes again," said Romney. "Taxes hurt working people, kill jobs and will make it harder to attract businesses to our state."
According to the state Department of Revenue, the typical family of four with both parents working and making a combined $70,000 a year will pay an additional $162 in state taxes for 2002.
Most of the increase, or $117, is the result of a reduction in the personal exemption for married couples filing jointly from $8,800 to $6,600. The remainder is due to the suspension of the charitable deduction.
In addition, suspension of the Question 4 tax rollback will add an additional $140 to $145 to the typical taxpayer's bill for 2003, relative to what would have been the case had the income tax rate declined to 5 percent.
Last year's tax increase froze the income tax at 5.3 percent, preventing it from its scheduled rollback to 5 percent. The tax hike also eliminated the deduction individuals can take on charitable deductions, raised the cigarette tax from 76 cents to $1.51 per pack, reduced personal exemptions by 25 percent and raised taxes on long-term capital gains.
Romney said that some of the tax increases affect only certain groups - smokers or people with long-term capital gains. But eliminating the charitable deduction "affects about half of all taxpayers and reducing personal exemptions affects everyone who files an income tax return in the Commonwealth," he said.
Romney noted the long-term ramifications of raising taxes to deal with a fiscal crisis. After the 1990s, the 10 states with the highest per capita taxes in the country experienced economic growth at half the rate of the 10 states with the lowest per capita taxes, according to the Cato Institute.
"Unfortunately, Massachusetts was among those states with the highest taxes," said Romney. "We should not make that mistake again."
In the Governor's Fiscal Year 2004 budget, Romney closes a nearly $3 billion budget gap without raising taxes. He has proposed a massive restructuring of state government along with eliminating inefficiency and waste, closing tax loopholes and raising fees.
"Our state is at a crossroads," Romney said. "We should use this opportunity to fundamentally restructure the way state government does business. Otherwise, the people of Massachusetts will have to accept yearly tax increases to pay for the inefficient, wasteful structure now in place."
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State House News Service
Monday, April 1, 2003
Romney criticizes burden of new tax hikes,
but says relief not likely
By Michael C. Levenson
Gov. Mitt Romney on Tuesday criticized a $1.2 billion tax hike passed by lawmakers last year, calling it a burden on average families, but said he could not offer taxpayers relief in the midst of a fiscal crisis.
Romney said the tax hike - pushed by Democrats over the opposition of Republican Gov. Jane Swift - would reduce and in some cases eliminate refund checks for taxpayers rushing to meet the April 15 filing deadline.
An average family of four making $70,000 will pay an additional $162 in state taxes for 2002, because of the tax hike, Romney said. "It underscores something that I think we want to remind ourselves of on a frequent basis: raising taxes hurts working families," he said.
Democrats accused Romney of grandstanding. The fiscal crunch, which has triggered cuts in services and layoffs, with deficits still projected, would be worse had taxes not been raised, they said.
Romney's spending plan for the next fiscal year makes use of the tax hike to fund education, health care, and other programs, said Rep. Paul Casey (D-Winchester), House chairman of the Taxation Committee.
"If the governor is truly concerned about the tax increase, then why is he incorporating it into his budget?" Casey said.
Romney said he would have cut spending and streamlined agencies had he been governor a year ago, but now, with the state forecasting a $3 billion budget shortfall, he sees no way to reduce taxes.
"I have found a way to bridge a gap in our budget of some $3 billion," Romney said. "Had I found a way to bridge $4 billion in revenue, I might have come to you with an idea of rolling back the taxes, but that I have not found."
Last year, the Legislature eliminated tax deductions for charitable donations, raised cigarette taxes by 75 cents per pack, reduced personal exemptions by 25 percent, and raised taxes on long-term capital gains. Lawmakers also froze the income tax rate at 5.3 percent, blocking a voter-approved rollback to 5 percent.
Romney has pledged to cut the income tax rate back to 5 percent by 2006, the last year of his term.
Reiterating his campaign pledge, Romney said he remains "firmly committed" to opposing new taxes on individuals or corporations.
"There is no wavering on that whatsoever," he said. "Even on April Fool's Day, I won't pull a fast one."
He said he had not heard of much support for new taxes from House or Senate leaders. Casey, a top deputy of House Speaker Thomas Finneran, agreed.
"From extreme groups? Yes. But from reps and senators? No." Casey said.
House lawmakers are expected to unveil their spending plan April 23.
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The Boston Globe
Wednesday, April 2, 2003
Feeling spent
Increasing expenses cut consumers' buying power,
raising fears of recession
By Beth Healy, Globe Staff
Rising costs for heat, utilities, gasoline, water, and insurance may be leading the nation back into recession, as Americans who have kept the economy pumping with purchases of big-ticket items such as cars and dishwashers shift their spending to basic necessities.
"The consumer is caving in," said Allen Sinai, chief economist at Primark Decision Economics in Boston. "We are on a heightened recession alert at this moment."
Two straight months of declining US consumption have raised red flags, economists say, after anemic spending in the fourth quarter. The war is holding back the recovery, to be sure, but so is the stack of everyday expenses facing consumers. A typical Massachusetts family is paying $714 more in 2003 than last year for heating oil, water bills, medical coverage, and car and home insurance, according to a calculation by the Globe. Add another $1,000 for families paying college tuition, all at a time when most paychecks are not growing.
"A lot of things consumers have to spend money on have prices that are rising very sharply, and that is taking away from the discretionary spending. Inflation looks low, but it's not low," Sinai said. Purchases of home furnishings, stereos, and new clothes can be put off in times of uncertainty, he said. But, "You can't postpone spending on health care, on gasoline, or on college education."
Consumers helped prop up the economy through last year's recession, but they can hardly be expected to propel this shaky recovery while burdened with expenses they can't control, economists say. The monthly consumer price index, compiled by the US Department of Labor, in February indicated that the goods and services a typical consumer purchases has risen by 3 percent in 12 months. But that figure belies some troubling trends beneath it. Energy costs shot up 22 percent in the year, medical costs jumped 4.5 percent, and transportation expenses increased 7.1 percent, due mainly to higher gas prices. In these cases, consumers are coughing up more cash but not getting anything more for their dollar.
Some prices fell, like the cost of clothes. Nationally, grocery bills have risen modestly, at 1.4 percent, and housing costs have increased 2.6 percent. Take the volatile food and energy costs out of the equation, and inflation was up a total of just 1.7 percent in the past year. But economists are admitting lately that to exclude these fluctuating sectors is to miss the full picture of how consumers are faring.
"That's a little like saying that, seasonally adjusted, the Charles River never freezes," said Wayne Ayers, chief economist at FleetBoston Financial Corp.
Allen Hebert, a North Reading property manager, said the rents he can charge his tenants have fallen in the past year, yet his costs keep rising. In particular, medical coverage for his family is skyrocketing. His insurer, Tufts Health Plan, recently alerted him that his monthly premium was going up 23 percent. He's now paying $958 per month, or $178 more than last year.
"It's just unbelievable," Hebert, 51, said. "Our two biggest expenses are healthcare and housing costs. Water keeps going up; property taxes are up. I'm just trying to take care of my family. But it's getting more difficult every six months."
Health care is taking a bigger and bigger bite out of the average American's budget. Even people who work for large companies that pay a portion of their medical premiums are shelling out $193 more per year this year than in 2002, according to a study by Fidelity Investments. That's a 16 percent jump - five times the official inflation rate, and one-third of the money the average homeowner saved by refinancing a mortgage, according to 1999 Federal Reserve data (the latest available). Prescription costs for people with insurance have risen to $18 per order from $15 in a year; the spike is worse for retirees, many of whom do not have drug coverage.
"High inflation for things like healthcare, insurance, and fuel," said Sinai, the economist, "usually has negative ripple effects on the economy."
As if the economy needed any more negativity. The nation's output grew by a feeble 0.75 percent in the fourth quarter, and businesses reported slow activity in the first three months of this year, with war jitters putting the brakes on spending and decision-making by consumers and corporate customers.
Companies continue to shed jobs in large numbers, and consumer confidence is at its lowest level in a decade. Home sales in the Bay State slumped 13 percent in February from a year earlier in a sign that the economy's last bastion of strength could be slipping.
The Boston area has endured the highest cost increases in the nation this winter, due both to heating expenses in a frigid season and the normal tab for urban living, according the Department of Labor.
City Councilor Chuck Turner of Roxbury said the people in his district are working harder than ever to make ends meet.
"There's been a quantum leap in the cost of housing. The utility rates are going up; food costs and other costs are also significantly higher," Turner said. "There's a sense that the cost of living has risen at rates high above what the government [has said]."
Policy makers used the Consumer Price index throughout the 1990s as proof the nation could enjoy a boom without provoking inflation.
Similarly, amid the economy's doldrums and the stomach-churning decline of stocks, investment strategists and economists have touted inflation of 3 percent or less as good news in an otherwise difficult environment.
The apparent lack of inflation could spur the Federal Reserve to lower interest rates in the coming months, in an effort to give the economy a boost. Ironically, the Fed is more concerned about deflation, or the inability of companies to raise prices on goods and services, than about inflation at the moment, despite evidence that consumers are having to dig deeper into their pockets to pay bills.
With interest rates already at historic lows, the Fed has little room to move however.
And if the war drags on, Sinai said, "The consumer may take us down into the next recession."
"The war is depressing consumer sentiment and confidence," Sinai said. "It's depressing the stock market, and it has stopped consumers from spending."
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The Boston Herald
Wednesday, April 2, 2003
Bill delayed to up Speaker's $ power
Local briefs
The House yesterday canceled plans for a formal session today - temporarily delaying a controversial bill giving Speaker Thomas M. Finneran free rein to boost his loyalists' pay.
House officials said they couldn't act because the Senate failed to formally admit the bill to the legislative arena during its session on Monday.
Senate officials blamed the inaction on a "procedural oversight" and said the bill would be admitted tomorrow.
Finneran's spokesman Charles Rasmussen said he expects the House to act on the bill in the "near future."
The bill, which would give House and Senate leaders unilateral power to offer bonuses to their lieutenants, has sparked criticism that Finneran uses money to reward friends and punish enemies.
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The Boston Herald
Wednesday, April 2, 2003
Gen. Tommy Taxes to arm his soldiers with another pay hike
by Howie Carr
The House was supposed to approve still more pay raises today, but supposedly there's a procedural problem and it's off 'til next week, maybe Monday.
That's the official word, anyway. Or maybe Tommy Taxes, the House Speaker, just concluded the timing was just a bit too close to April Fools Day. Many years ago, a Halloween pay raise backfired on the Legislature,
bigtime. Why set themselves up for another humiliation, although when has that ever stopped the toga-toga-toga Animal House gang before?
Besides, it's not as if Tommy Taxes' minions don't deserve the extra dough. I mean, it's been three months now since their most recent, $3,258 pay hike. The solons "only" make $53,380 as their base pay, which is not bad considering they average 10 hours work per week, tops.
Actually, the House leadership exercised an amazing amount of restraint in waiting almost two weeks after the outbreak of war to put the once-postponed pay raise back on the calendar.
OK, so it's only a handful of reps who'll immediately benefit from this latest round of pay hikes. Two pay hikes for the Democrats and one for the Republicans, whose silence can apparently be bought for a mere $7,500. But this is about principle - the principle of the Speaker being able to give out pay raises, whenever, and to whomever, he damn well chooses.
Whenever the bill is finally approved, this will be no ordinary pay raise, by the way. It's an "emergency" pay raise, as the preamble to the bill puts it, "necessary for the immediate preservation of the public convenience."
Public convenience? Would you feel yourself terribly inconvenienced if three more solons did not get a pay raise? Incidentally, the dreaded p-word - pay raise - appears nowhere in the actual legislation, which is described as "an act relative to the compensation of certain members of the General Court."
Has there ever been an act relative to reducing the compensation of certain members of the General Court?
But if not today, then soon Tommy Taxes will ram this thing through. You see, like Gen. Tommy Franks, Gen. Tommy Taxes needs more soldiers - or at least he thinks he does, although his opposition, the House Republicans, have been as degraded as the Republican Guards. Here's the
BDA, the Battlefield Damage Assessment, on the House Republicans - 41 members in 1991, 23 now. That's a degradation rate close to that of the Iraqis' Medina Division.
One thing about Tommy Taxes - he fancies himself a Deep Thinker. You may think he's obsessed with getting his daughter on the State Banking Commission payroll, but he's into geopolitics.
Here is an excerpt from his March 31 letter to the sheeple, I mean, House members, regarding the pay raise:
"In the last two years, our global economy has weakened significantly and we have been faced with an unprecedented threat to our national security, which has necessitated significant spending to protect the public's safety."
And what better way to protect the public than by giving a few more hacks a pay raise, or, as they prefer to describe it, a "stipend," which is $7,500, or a "double stipend," which is 15 large.
During Tommy Taxes' regime, the number of chiefs has increased exponentially. Already, you have one chief for every two Indians, and this is only the start.
So when will the House finally rubber-stamp this latest round of pay raises? They say Monday, but I believe the question can be answered with another question: When does the Battle of Baghdad start?
Howie Carr's radio show can be heard every weekday afternoon on WRKO AM 680, WHYN AM 560, WGAN AM 560, WEIM AM 1280, WXTK 95.1 FM or online at
howiecarr.org.
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The Boston Herald
Wednesday, April 2, 2003
A Boston Herald editorial
Pay plan should be shelved
House Speaker Tom Finneran (D-Mattapan) is poised to push through a plan to reward his leadership team with pay raises, whenever and however he wants to. While his timing couldn't be worse - all those demonstrators on Finneran's doorstep are there because of looming budget cuts - his attempt to insulate such raises from public scrutiny is what really enrages the public about how business is done on Beacon Hill.
But don't expect to hear a peep from Republican legislators, Gov. Mitt Romney or even organizers of the budget demonstrations. They all, in one way or another, are dependent on Finneran's good will. And that's why Finneran can, with complete disdain, dismiss any criticism as "the usual nonsense from the chattering classes," a group which includes, apparently, the taxpayers.
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The Boston Herald
Wednesday, April 2, 2003
Bankruptcy would cut tobacco pay:
State relies on '98 settlement
by Elizabeth W. Crowley
Attorney General Tom Reilly is keeping a wary eye on an Illinois court case that could take a $100 million bite out of Massachusetts' already anemic finances.
Tobacco giant Philip Morris is due to make a $100 million payment to Massachusetts on April 15 as part of the 1998 tobacco industry settlement with 46 states.
But officials with Philip Morris' parent company, Altria Group Inc., say they are considering filing for bankruptcy protection while they appeal a $12 billion verdict against them in a separate Illinois case.
If the company gains court protection, it could stop making the multimillion-dollar payouts to states, Reilly said.
"Right now, we expect the payment to be made on April 15," Reilly said. "But this is a very fluid situation and it is something we need to watch."
Massachusetts is due to receive about $200 million this year in tobacco settlement money, about half of it from Philip Morris. Altogether, Massachusetts is due to receive $7.6 billion over 25 years from tobacco companies.
Reilly broke the potentially devastating budget news to legislative leaders this week as Philip Morris officials went public with their bankruptcy musings.
"It's certainly disconcerting," Senate Ways and Means Chairman Therese Murray (D-Plymouth) said. "We're looking at a $3 billion problem (in the fiscal year that begins July 1). This would make it $3 billion plus $100 million."
Murray said that state officials have long considered the possibility that the tobacco settlement payments would evaporate as tobacco companies crumbled under the weight of costly lawsuits.
"We always thought this could happen," Murray said. "Right now, we just don't know if it is going to happen."
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