CLT
UPDATE
Monday, May 5, 2003
Legislature plotting "dangerous
strategy"
for looming tax hikes?
Even as House members voted overwhelmingly against raising taxes or borrowing money to balance the state's books last week, legislative leaders began quiet talk of doing both of those things this fall, after the budget ax falls on programs that the public cares about deeply.
No definite strategy has emerged, and tax-increase and borrowing proposals will face long odds in any event, given Governor Mitt Romney's fierce opposition. But interviews with a range of House and Senate members reveal a growing sense among Democratic legislative leaders that tax hikes and deficit borrowing will be considered again before the year is out, and that votes could switch....
The victory could prove short-lived, however. Many lawmakers feel that while the public has no appetite for taxes or borrowing now, that could change by October or November, after police and fire departments issue layoff notices, class sizes balloon at schools, and senior citizens can no longer get subsidized medication under the Prescription Advantage program....
House Speaker Thomas M. Finneran has come out against both higher taxes and deficit borrowing, but several recent moves and statements indicate that he is not wholeheartedly opposed to either. On last week's bid to increase the income tax to 5.95 percent from 5.3 percent (a measure that was defeated 118-to-37) four members of Finneran's leadership team voted in favor of the higher tax rate, meaning that the speaker clearly did not crack the leadership whip on the vote.
Amid the expected votes turning down higher taxes, Finneran comforted at least two disconsolate health and human service advocates at the State House with the same cryptic message: "Don't worry, we're in the second inning of a nine-inning game." ...
One possibility raised early in discussions would have the state issue several hundred million dollars of deficit bonds this fall to restore budget cuts. Since bond-rating agencies want assurances that the state can repay such bonds, they could be tied to a temporary increase in the income tax or another broad-based tax....
Senate leaders have been more open to raising taxes than their House colleagues, but their options are limited by a constitutional provision requiring tax increases to originate in the House. Still, Senate Taxation Committee chairwoman Cynthia Stone Creem said she is putting together a series of potential tax packages for her Senate colleagues to consider either now or in the fall, should they feel that taxes are necessary to preserve important services.
The Boston Globe
Monday, May 5, 2003
Tax-hike bids could resume later in year
Impact of cuts may improve odds of passage
The Senate hasn't weighed in yet, but the House's actions may have taken tax hikes off the table in the Legislature's other chamber.
State Sen. Cynthia Creem, D-Newton, said the Senate's legal counsel has told her the Senate can't vote on tax increases if the House doesn't lead the way.
"Tax raises have to be initiated in the House, so it may not matter how people in the Senate feel," said Creem, who co-chairs the joint Taxation Committee....
Even if tax increases aren't part of the budget that lawmakers deliver to Romney's desk, Creem said she wouldn't be surprised if the debate resumes later this year, once the public begins seeing the impact of $2 billion in cuts.
"For me, everything is on the table before we cut core services," she added. "If we're raising all sorts of fees and not raising taxes, what's the difference?" ...
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said many of the options the House is considering wouldn't pay immediate dividends for communities.
"It will be helpful over the longer term, but it will provide only marginal relief for local governments' overall budgets this year," he said....
Widmer said a Proposition 2 1/2 override is only an option for a handful of wealthier communities.
"In the middle of a recession, it's not likely that town officials are going to present them to voters or that voters are going to approve them," he said. "Cities and towns are going to have to make cuts. The only question is how much and where?"
The MetroWest Daily News
Sunday, May 4, 2003
Analysis: No new taxes mean less help from state
Chip Ford's CLT
Commentary
Just when we thought it was safe to go back in the
water ... a dark new tax hike plot is circling just beneath the surface.
It would appear to be a progeny of last year's
predator, the one we've so far dodged this year.
That one went, "first 'the sky will fall'
because we're pulling it down; but before it does we rush in and save
the day by raising taxes!"
This year, tax-and-spend Democrats in the Legislature
apparently intend to pull down the sky, then, when the public begins
feeling crushed by the pols' perverted priorities, race back to save the
day by raising taxes.
"Don't worry, we're in the second inning of a nine-inning
game," Finneran coyly advised his tax-and-spend crowd. Before we
reach the seventh-inning stretch they'll have ratcheted up needless pain
to excruciation.
Fire and police -- public safety that we all expect
government to provide in exchange for so much of our hard-earned money
-- are once again the first tossed overboard. Care of the truly
most needy will also be at the top of their man-overboard list, and
keep dodging those potholes in the roads because your
"dedicated" highway taxes and fees will be spent elsewhere.
Everything we have a right to expect from even a minimalist government
will be choice targets for sacrifice on Beacon Hill's sacred altar of
business-as-usual.
If "public opinion" doesn't change in favor
or tax hikes soon enough, they'll just chum the water with more blood.
Watch also for the Senate to attempt using the
House's investment tax credit as a wedge to pry their way into tax
increases. The constitution requires tax increases to originate in the
House, not the Senate. But once a tax hike proposal is offered by the
House, the Senate can then weigh in. There are no tax hikes in the
proposed House budget so far, so the Senate should not be able to
legitimately introduce one into the budget. That's not to say
tax-and-spend senators won't nonetheless try, by any desperate means.
Throughout all this hyperbole just remember, both
the House and the governor have already agreed to expand revenue by an
additional $700 million through fee increases. It's not as though
Beacon Hill is not already picking our pockets again.
As Yogi Berra said, "It ain't over 'til it's
over," and it's not over yet.
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Chip
Ford |
PS. Great news!
State Sen. Stanley Rosenberg's proposed constitutional amendment to
gut the initiative petition process received an unfavorable report from the Election Laws Committee. It can only be brought up for discussion at the
Legislature's constitutional convention if one branch passes, by majority vote, a motion for consideration. This seems unlikely.
The Boston Globe
Monday, May 5, 2003
Tax-hike bids could resume later in year
Impact of cuts may improve odds of passage
By Rick Klein, Globe Staff
Even as House members voted overwhelmingly against raising taxes or borrowing money to balance the state's books last week, legislative leaders began quiet talk of doing both of those things this fall, after the budget ax falls on programs that the public cares about deeply.
No definite strategy has emerged, and tax-increase and borrowing proposals will face long odds in any event, given Governor Mitt Romney's fierce opposition. But interviews with a range of House and Senate members reveal a growing sense among Democratic legislative leaders that tax hikes and deficit borrowing will be considered again before the year is out, and that votes could switch.
"The cuts are real, the cuts are coming, and they'll sink in some time in the fall," said House Ways and Means Chairman John H. Rogers, a Norwood Democrat. "That could change the mood. We're rolling out reality with this budget and the people will inform us whether they can live with this or not."
Such talk may seem inconsistent with last week's votes, when the House flatly rejected a raft of tax-raising and borrowing proposals. The votes handed Romney a major political victory by ensuring that the Legislature will embrace reforms and not feed an ever-growing state government with new revenues.
The victory could prove short-lived, however. Many lawmakers feel that while the public has no appetite for taxes or borrowing now, that could change by October or November, after police and fire departments issue layoff notices, class sizes balloon at schools, and senior citizens can no longer get subsidized medication under the Prescription Advantage program.
Waiting until the fall to restore services is a dangerous strategy, however, since layoffs and service cuts could be difficult to reverse effectively in the middle of a fiscal year, said Jeffrey Berry, a political science professor at Tufts University. Fiscal 2004 begins July 1 and legislative leaders are aiming to complete a budget that will not include new taxes or borrowing before then.
"These cuts are not abstract -- they cut real flesh and bone from a variety of services," Berry said. "The state's most vulnerable people are the real losers in this budget down-cycle."
House Speaker Thomas M. Finneran has come out against both higher taxes and deficit borrowing, but several recent moves and statements indicate that he is not wholeheartedly opposed to either. On last week's bid to increase the income tax to 5.95 percent from 5.3 percent (a measure that was defeated 118-to-37) four members of Finneran's leadership team voted in favor of the higher tax rate, meaning that the speaker clearly did not crack the leadership whip on the vote.
Amid the expected votes turning down higher taxes, Finneran comforted at least two disconsolate health and human service advocates at the State House with the same cryptic message: "Don't worry, we're in the second inning of a nine-inning game." And House majority leader Salvatore F. DiMasi told several colleagues in recent conversations that the House may take up borrowing measures this fall as part of a fiscal recovery package.
"I can't say it's anything more than smoke signals from leadership," said Stephen E. Collins, executive director of the Massachusetts Human Services Coalition, which is lobbying for higher taxes as a way to preserve services. "But the battle certainly isn't over, even if we see the budget finished without taxes."
One possibility raised early in discussions would have the state issue several hundred million dollars of deficit bonds this fall to restore budget cuts. Since bond-rating agencies want assurances that the state can repay such bonds, they could be tied to a temporary increase in the income tax or another broad-based tax. Some House and Senate members feel that short-term borrowing would be more palatable to the public by this fall if the economy begins showing signs of recovery.
Romney opposes borrowing to pay operating expenses, just as he opposes taxes. Gubernatorial vetoes must be overridden with two-thirds votes in the House and Senate. Also, Romney's threats to campaign against those who stand in the way of his agenda could scare votes away from taxes; many lawmakers remember that the Republican gains in the Legislature in 1990 were largely a result of two successive major tax increases.
Shawn Feddeman, Romney's press secretary, pointed out that House lawmakers are ignoring many of the reform proposals the governor has offered, meaning that budget cuts will be more severe than necessary. "If we are serious about reform and want to get our economy moving again, we need to slam the door shut on raising taxes once and for all," she said.
House Taxation Committee chairman Paul C. Casey said public support for taxes will surely grow in the months to come, as cities and towns, in particular, enact their first serious service cuts in more than a decade. But he said public opinion may not break quickly enough for taxes to be seriously considered this year, and said a tax increase next year, when all 200 members of the House and Senate are up for reelection, is highly unlikely, given the political peril.
"Can the crystallization for new taxes come by December of this year?" asked Casey, a Winchester Democrat. "Because we're not going to do what we did last year, raising taxes in an election year."
Senate leaders have been more open to raising taxes than their House colleagues, but their options are limited by a constitutional provision requiring tax increases to originate in the House. Still, Senate Taxation Committee chairwoman Cynthia Stone Creem said she is putting together a series of potential tax packages for her Senate colleagues to consider either now or in the fall, should they feel that taxes are necessary to preserve important services.
"I'm seeing that the public opinion is just starting to shift," said Creem, a Newton Democrat. "I am going forward with a whole bunch of ideas that I'm going to try to put out to people. I'm not being a tax-and-spend liberal -- I'm being realistic."
A Boston Globe/WBZ-TV poll last month showed that Massachusetts residents oppose a range of different tax increases but also don't want the state to slash health and human service programs and aid to cities and towns. Several lawmakers have noted that despite two years of tight fiscal times, most residents have not yet felt a decline in state and municipal services, as a result of $2 billion in reserves that have been tapped and last year's $1.2 billion tax increase.
Now, with reserves virtually depleted and a $3 billion budget gap still facing the state in the fiscal year that begins July 1, severe budget cuts can no longer be avoided. While Romney's election demanded that reforms and restructuring happen before taxes could be raised, the public could begin clamoring for new revenues if and when they realize what budget cuts mean.
"To have the same level of services, we need to have additional revenues," said Senate majority leader Frederick E. Berry, a Peabody Democrat. "I do think the budget process will educate the public. We're going to have to look at ourselves in the mirror, and say, 'What kind of state do we want to live in? Will it be Mississippi or Massachusetts?'"
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The MetroWest Daily News
Sunday, May 4, 2003
Analysis: No new taxes mean less help from state
By Michael Kunzelman
The House has spoken -- and the message it sent is one that cities and towns didn't want to hear.
Last week, despite loud pleas from municipal leaders, House lawmakers roundly rejected tax increases and short-term borrowing as options for closing the state's $3 billion budget shortfall.
Although the House's budget debate is far from over, last week's tax votes make it increasingly likely that some communities will have to absorb up to a 20 percent cut in state aid.
"This is a bad-news budget, and I don't know of anybody who disagrees," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. "A proposal that raids local aid doesn't solve the state's fiscal problems. It just transfers it over to cities and towns."
The Senate hasn't weighed in yet, but the House's actions may have taken tax hikes off the table in the Legislature's other chamber.
State Sen. Cynthia Creem, D-Newton, said the Senate's legal counsel has told her the Senate can't vote on tax increases if the House doesn't lead the way.
"Tax raises have to be initiated in the House, so it may not matter how people in the Senate feel," said Creem, who co-chairs the joint Taxation Committee.
The House's budget calls for about $700 million in fee increases, approximately the same amount that Gov. Mitt Romney -- a staunch tax-hike opponent -- has proposed.
Even if tax increases aren't part of the budget that lawmakers deliver to Romney's desk, Creem said she wouldn't be surprised if the debate resumes later this year, once the public begins seeing the impact of $2 billion in cuts.
"For me, everything is on the table before we cut core services," she added. "If we're raising all sorts of fees and not raising taxes, what's the difference?"
In the absence of tax hikes, House and Senate leaders are eyeing ways to soften the blow of local aid cuts. The House is expected to unveil its municipal relief legislation later this month.
Rep. Patricia Walrath, D-Acton, chaired a House task force that studied a wide range of options for helping cities and towns cope. Shorter school weeks, a local-options meals tax and construction reforms are just a few of the ideas they outlined in a report.
"We covered everything from soup to nuts," Walrath said. "A lot of these they can do right away."
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said many of the options the House is considering wouldn't pay immediate dividends for communities.
"It will be helpful over the longer term, but it will provide only marginal relief for local governments' overall budgets this year," he said.
Romney has said that the House's budget plan virtually mirrors his own budget in regard to total spending and overall allocations for local aid.
Some lawmakers, however, have said the House's budget calls for deeper cuts to Chapter 70 aid to suburban schools than Romney has proposed.
Others are perplexed by the fact that some communities, including Sudbury and Medfield, would receive increased Chapter 70 funding while most communities would suffer deep cuts under the House's plan.
State Rep. David Linsky, D-Natick, said he hasn't heard a rational explanation for that disparity.
"The Chapter 70 formula is in dire need of reform," he said. "A lot has changed since (the formula was created in) 1993. The economic realities have dramatically changed since then, particularly in MetroWest communities."
During last week's tax debate in the House, some lawmakers warned that communities would be forced to pick up the slack if the Legislature fails to generate any new state tax revenue.
"People are going to be paying increased taxes. The question is whether it's a broad-based tax or a property tax," said Rep. James Eldridge, an Acton Democrat who filed and later withdrew a plan to raise the sales tax from 5 percent to 6 percent.
Widmer said a Proposition 2 1/2 override is only an option for a handful of wealthier communities.
"In the middle of a recession, it's not likely that town officials are going to present them to voters or that voters are going to approve them," he said. "Cities and towns are going to have to make cuts. The only question is how much and where?"
The timing of the Legislature's budget debate couldn't be worse for cities and towns, most of which are in the thick of their own budget debates.
Without reliable local aid figures to base their budgets on, many communities are postponing their financial decisions until the summer.
In an effort to make it easier for cities and towns to plan future budgets, House Speaker Thomas Finneran and other legislators have expressed support for distributing local aid over two-year increments.
"I would wholeheartedly support that," Walrath said. "It would make everybody's lives a whole lot easier."
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