CLT
UPDATE
Sunday, May 18, 2003
CLT vs. Sen. Rosenberg:
Battling op-eds
Here’s some straight talk about the state’s budget situation. Or, as Joe Friday on the old "Dragnet" show would say, "the facts, ma’am, just the facts."
We are being stalked by a $3 billion deficit for fiscal 2004, which begins July 1. Because our rainy day fund is practically gone – only about $300 million remains – and because new broad-based taxes like sales and income taxes are being mightily resisted across the state, state government is poised to make up the entire deficit through cuts, cuts and more cuts, and some fee increases....
Raising taxes, even by mere pennies, is never popular. But this year it may be necessary because, above all else, we must fulfill the social contract. It’s our duty. To fail in this is tantamount to declaring moral bankruptcy.
The Springfield Republican
Sunday, May 11, 2003
Tax increase needed to meet state budget
By State Sen. Stanley C. Rosenberg
When the economic downturn arrived, the first cuts made by state government were services to the mentally retarded. Do you know any normal person who, given $22 billion dollars to spend and a few hundred million dollars to cut, would start by eliminating aid to the mentally retarded and mentally ill? This is how Beacon Hill typically attempts to blackmail citizens into support of higher taxes. Some communities follow suit by beginning their cutbacks with public safety.
But the blackmail usually goes too far. After years of billion dollar revenue surpluses and spending increases, there is assuredly some waste in all government departments. The real difference between a fiscal conservative and a liberal is that the former reaches a point where he refuses to submit to blackmail. Fiscal conservatives also understand that, in the long term, ongoing state services depend upon taxpayers having jobs provided by businesses; they refuse to support actions that could do serious damage to the economy....
We must say "no" to new taxes, to changes in Proposition 2½, to being taken advantage of by inconsiderate politicians. In doing this, we will be saying "yes" to more responsive, effective, accountable state and local government. At least it's worth a try.
The Springfield Republican
Sunday, May 18, 2003
Taxpayers being blackmailed
by Barbara Anderson and Chip Ford
We often hear that irresponsible spending increases caused the fiscal crisis. But how much did state spending increase, and how was the money spent?
...
When times were good, the Legislature acted responsibly, responding to public demands for better schools and health care....
There are no easy choices left. In the absence of additional revenue, the public programs and services on which thousands of people rely to stay healthy, educate their children, and keep their streets safe will have to be cut.
The Boston Globe
Sunday, May 18, 2003
What should we cut?
By Sarah Nolan
Chip Ford's CLT
Commentary
Last week members from the Springfield area were
quick to bring Sen. Stanley Rosenberg's Springfield Republican (formerly
the Union-News) column promoting tax increases to our attention.
Barbara and I quickly responded and were invited to submit a
counterpoint op-ed column, which appeared in the same space of today's
edition, one week later.
The contrast speaks for itself.
The Boston Globe published a column today authored by
Sarah Nolan, policy analyst for the Massachusetts Budget and Policy Center,
formerly known as TEAM ("Tax Everything And More"). You'll
note a close similarity between Nolan's and Rosenberg's columns -- and
that Barbara and I cited their report, "The State of Working Massachusetts 2002: As Good as it Gets?"
That TEAM report was issued just last September, when
TEAM was pushing a different agenda, that "During the 1990s, incomes and wages grew more slowly in Massachusetts than in most states and, in some cases, actually declined in real terms."
Today, back to advocating still-higher taxes, TEAM
and its echoing adherents like Rosenberg are arguing "State spending did grow by 2.3 percent a year, when adjusted for inflation, between 1991 and 2002, but during that same time, personal income grew 2.6 percent a year. State government did not
overspend." [Rosenberg]
In its September report, TEAM asserted: "Median household income in Massachusetts was lower, after adjusting for inflation, at the end of the 1990s than it was at the start of the decade. While median household income for the United States rose 9.1 percent, here in Massachusetts it dropped 2.9 percent."
But today, TEAM's policy analyst asserts:
"From the end of the last recession in 1991 until 2002, personal income grew at a rate of 2.6 percent a year, adjusted for
inflation." [Nolan]
So which is it the tax-and-spenders would have us
believe ... what they said last September, or what they're saying today?
I guess it all depends on what their definition of
"is" is on any given day.
There's so much to report today.
Boston Globe conservative columnist Jeff Jacoby today
launched the first in his two-part series, an exposé of the
Massachusetts Teachers Association, "The real message in the MTA's ads."
I'll get it out with my commentary when the second part runs on
Thursday.
There's a conflict with how many overrides have
passed so far this year. The Associated Press reported yesterday "About three-quarters of Proposition 2½ override attempts in dozens of communities all suburbs have been approved so far this spring, allowing local leaders to balance budgets and offset state cuts for the new fiscal
year," but the Massachusetts Municipal Association -- an advocate
of overrides -- on May 5 reported on its
website, "Between January and mid-April, almost half of all override and debt exclusion questions were successful."
"Three-quarters" or less than half: what's going on with these
conflicting statistics?
Boston Globe reporter Scott S. Greenberger also did a
story today on overrides, "Poorer towns balk at overrides,"
but after calling Barbara on Friday didn't use dubious statistics that
are presently not available.
I'll attempt to make sense of all this tomorrow ...
assuming the news barrage on the continuing assault on taxpayers
permits!
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Chip
Ford |
The Springfield Republican
Sunday, May 11, 2003
Tax increase needed to meet state budget
By State Sen. Stanley C. Rosenberg
Here’s some straight talk about the state’s budget situation. Or, as Joe Friday on the old "Dragnet" show would say, "the facts, ma’am, just the facts."
We are being stalked by a $3 billion deficit for fiscal 2004, which begins July 1. Because our rainy day fund is practically gone – only about $300 million remains – and because new broad-based taxes like sales and income taxes are being mightily resisted across the state, state government is poised to make up the entire deficit through cuts, cuts and more cuts, and some fee increases.
This would be on top of the $2.5 billion in cuts that occurred from fiscal year 2001-2003.
And here’s another fact: If we go through with that level of cutting, we stand to become the first generation in our nation’s history to break the social contract, the idea that we help those in need, and that we make the sacrifices necessary to afford our children the same, or better, opportunities than we had.
Ten years ago, as we were emerging from our last fiscal crisis, we – our state government and our citizens – made commitments to education, health care, public safety and to building reserves against future recessions. We also made a commitment to reducing the state tax burden on citizens and businesses. Here’s what we’ve accomplished in the last decade:
Reserve and tax cuts
From 1993, overall state spending grew by approximately $10 billion, with 99 percent of that new revenue going to K-12 education, health care and public safety, especially corrections.
Although $10 billion seems like a lot, Massachusetts ranks 45th in the nation in the share of personal income directed to state and local spending.
State spending did grow by 2.3 percent a year, when adjusted for inflation, between 1991 and 2002, but during that same time, personal income grew 2.6 percent a year. State government did not overspend.
What state government did was create one of the largest reserve funds in the nation as a percentage of state spending – more than $2 billion – and cut taxes more than 40 times, totaling $3.5-$4 billion a year.
That’s not including the $1.4 billion tax cut voters gave themselves in 2000.
Health care
We have cut the number of uninsured residents – mostly children and low-income working people – by half, so that now the percentage of the uninsured in our state is well below the national average.
We also implemented a pharmacy program for seniors and disabled citizens that is the model for the nation. That program has been targeted for elimination in the governor’s and House of Representatives’ fiscal 2004 budget proposals.
Education
In 1993, our state government approved the Education Reform Act, which has doubled the state’s investment in K-12 education. In addition to helping improve the education of our youngest children, this infusion of state support helped communities reduce the growth in property taxes. This is helpful to many because it’s the most regressive tax ever invented. If the state goes through with massive cuts to K-12 education aid, teachers will be laid off, class sizes will increase and property taxes will go up. There’s no question about it.
We also continued to build a world-class public higher education system over the last 10 years. Massachusetts is known around the world for its private colleges and universities, but for the most part, the students who attend those institutions are not Massachusetts residents and don’t live, work and pay taxes here after they graduate. But the typical public college/university student is a Massachusetts resident and will stay here to live, work, raise a family and pay taxes.
Our public colleges and universities didn’t cause this fiscal crisis, but they will definitely help lead us out of it. Unless, of course, they are decimated and are forced to raise tuitions beyond the reach of most working families in our state.
Public safety
During the 1990s, citizens wanted to get tough on crime, and state government responded with mandatory sentencing laws and new jail space. Now, Massachusetts has more people incarcerated per capita than any other state in the nation.
Although the amount of money the state spends on public safety and law enforcement is relatively small compared with the amounts spent on education and health care, the state’s investment in this area means police officers, firefighters and EMTs – many of whom will lose their jobs in the fiscal 2004 budget.
The public safety situation is further compounded by the Sept. 11 terrorist attacks. No one ever anticipated these attacks, and certainly no one anticipated the high cost – psychological, emotional and financial – those attacks would exact.
Public safety is expensive and the federal government, so far anyway, has turned its back on the states. We not only have to guard against crime on our streets, we have to guard against the threat of international terrorism. All with a shrinking state budget and no help from the federal government.
And Massachusetts is far from being alone in this mess. Right now, 46 states, with a combined projected deficit approaching $100 billion, are contemplating the same kind of devastating budget cuts that we are.
But the federal government has so far been silent. Instead of addressing the irreversible impact these cuts will have on our nation, Washington is trying to decide whether to cut an additional $350 billion or more than $500 billion in taxes.
This is the height of irresponsibility. But it reflects the kind of thinking that has been pervasive in America in recent years.
Americans have been told, and apparently have believed, that taxes can be cut at the state and federal levels by billions of dollars without affecting the services people demand of their government. It’s one thing to cut taxes when times are good. It’s quite another when there’s red ink as far as the eye can see.
So what do we do? Everything we’ve reasonably and responsibly built in Massachusetts during the last decade is at risk of being eliminated or crippled if we attack the deficit with cuts and fees alone. Gov. Romney has claimed, with great fanfare, that his government reorganization plan saves the state $2 billion in waste. Yet independent analyses of the governor’s plan indicate that the state would only save between $100 and $200 million if it were adopted, plus it eliminates the senior pharmacy program, demolishes higher education, relies on a variety of one-time revenues, some of which might never materialize, and dramatically increases a host of fees that will raise several hundred million dollars from a relatively small number of citizens. The House of Representatives budget, because it shuns broad-based taxes and rejects the notion that $2 billion can be painlessly reorganized out of state government, also raises fees, but cuts even deeper into education, local aid, health care, public safety, and other essential state services. I wish I could say that the Senate’s budget will be a lot better, but at this point I can’t.
So what do we do?
I think we have to find a balanced approach to erasing the deficit. Cutting another $3 billion on top of the $2.5 billion cut in the last two years is far too drastic. Increasing taxes alone is also far too drastic. We must cut, but we cannot amputate. Enough muscle and bone must remain so that we can continue to hobble until we are able to walk.
The necessary cuts must be cushioned by real reforms that produce real savings, and by new revenues. We must, at the very least, close tax loopholes and enforce existing tax laws so that businesses and private citizens pay what they legitimately owe. We must consider borrowing, never a desirable option, but one that is mitigated to some extent by relatively low interest rates. And, as a last resort, we must consider income and sales tax increases.
Raising taxes, even by mere pennies, is never popular. But this year it may be necessary because, above all else, we must fulfill the social contract. It’s our duty. To fail in this is tantamount to declaring moral bankruptcy.
Editor’s note: State Sen. Stanley C. Rosenberg, D-Amherst, is the president pro tem of the Massachusetts Senate.
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The Springfield Republican
Sunday, May 18, 2003
Taxpayers being blackmailed
by Barbara Anderson and Chip Ford
When we first heard that the state has a $3 billion deficit for the coming fiscal year, we thought this meant that Massachusetts will have three billion dollars less to spend next year than it is spending this year. Wow!
Given the commonwealth's proclivity for "politics as usual" with its patronage, pay raises, high pensions, waste and inefficiency, a cut of this size would be problematic. We recognize that spending on basic services is a lower priority on Beacon Hill than spending on the basic perquisites of power, so services would have to be severely cut.
Then we found the real numbers, taken from the House budget charts. Last year's state budget was $22.783 billion. The budget for the fiscal year ending in June is expected to be $22.779 billion. The budget for next year just passed the House at $22.5 billion; that would be almost a $300 million -- not $3 billion -- cut. The Senate has yet to act, and the Romney administration initially proposed a budget of $22.8 billion.
As you can see, there was initially a small actual reduction of $4 million from last year's budget, but "the great shortfall" is only a cut in what the Legislature
wanted to do, had it been able to increase spending by its accustomed billion dollars a year.
Common sense tells us that the dramatic annual spending increases of the '90s are not sustainable during a cyclical economic downturn, and taxes cannot be hiked a billion dollars every year into the future without permanently harming the state economy and bankrupting taxpayers.
We taxpayers are doing our part. Massachusetts' per capita tax burden -- the amount paid by every man, woman and child in the commonwealth -- is 5th highest in the nation; state spending is, correspondingly, 6th highest. Per-pupil spending, K-12, is also 5th highest in the country, 24 percent above the national average.
You will sometimes hear the statistic that Massachusetts ranks 45th in the nation in the share of personal income directed to state and local spending. This is because our commonwealth has a lot of wealthy people who can afford higher taxes. The statistic has nothing to do with the rest of us who cannot.
A recent report from the Massachusetts Budget and Policy Center described "the economic insecurity that plagues Massachusetts working families ... Median household income in Massachusetts was lower, after adjusting for inflation, at the end of the 1990s than it was at the start of the decade."
Although Proposition 2½ provides some protection, local property taxes usually increase every year. The Legislature passed the largest tax increase in state history last year, halting the income tax rate rollback while cutting the personal exemption. For most citizens, utilities and most other costs of living are increasing. Others are out of work or taking pay cuts; unlike the public sector, in the private sector there is no assumption of annual pay raises.
One former legislator, after twenty years of state service, just retired in his '40s with a pension of $35,000 a year. Most working people can only dream of such a lifelong benefit. The new House budget sets aside money to seed promising new companies. What about the entrepreneur who doesn't have the connections to get subsidized? He is paying taxes to help
his competition make it in Massachusetts.
Other corporate welfare programs build convention centers for the private sector. Teachers unions demand pay raises on top of step increases year after year despite the state of the economy. Local overtime budgets are still being abused. The state auditor reported on careless oversight of human service vendors. Some legislators have even proposed subsidizing college education for illegal aliens! You find yourself wondering, what fiscal crisis?
It's unfortunate that local aid must be cut; part of the motivation behind Prop
2½ was to encourage the state to share more of the income and sales taxes with our communities. But over the past decade, cities and towns, like the state, saw revenue expand dramatically and spent it as if the cyclical economic boom would never end. Now they too must be reasonable in their expectations, prioritize some of their recent spending increases, and live within a limited budget while the economy tries to recover.
When the economic downturn arrived, the first cuts made by state government were services to the mentally retarded. Do you know any normal person who, given $22 billion dollars to spend and a few hundred million dollars to cut, would start by eliminating aid to the mentally retarded and mentally ill? This is how Beacon Hill typically attempts to blackmail citizens into support of higher taxes. Some communities follow suit by beginning their cutbacks with public safety.
But the blackmail usually goes too far. After years of billion dollar revenue surpluses and spending increases, there is assuredly some waste in all government departments. The real difference between a fiscal conservative and a liberal is that the former reaches a point where he refuses to submit to blackmail. Fiscal conservatives also understand that, in the long term, ongoing state services depend upon taxpayers having jobs provided by businesses; they refuse to support actions that could do serious damage to the economy.
There is an even bigger problem looming, the cost of medical care as the baby boom generation ages. The Medicaid budget, expanded in the high-rolling years, is now out of control and reforms are necessary. But medical expenses are going to rise and society cannot afford to deal with them while also funding big government's "business as usual."
A "fiscal crisis" is the only place to begin necessary prioritization and reforms. As long as citizens resist the "easy" short-term solution of perennial tax hikes, government must make an effort to do a better job with the revenues it has from us. Tax Freedom Day -- the day we begin working for ourselves after paying off our yearly tax burden -- in Massachusetts was May 2, later than in 48 other states. We worked longer into the year to pay our government's way. Now it's our turn to provide for ourselves, our families, our own retirement, and our favorite charities.
We must say "no" to new taxes, to changes in Proposition 2½, to being taken advantage of by inconsiderate politicians. In doing this, we will be saying "yes" to more responsive, effective, accountable state and local government. At least it's worth a try.
Editor’s note: Barbara Anderson and Chip Ford are directors of Citizens for Limited Taxation. For more
information, visit CLT's website at www.cltg.org.
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The Boston Globe
Sunday, May 18, 2003
What should we cut?
By Sarah Nolan
Massachusetts faces a severe fiscal crisis, with a budget deficit that the governor has estimated at $3 billion. States across the country are feeling similar pain. Nineteen states have reported budget deficits of more than 10 percent of their total budgets. When the national economy is in recession, tax revenues decline, and demands on safety net programs generally increase. States are forced to try to do more with less. Of course, national recessions are nothing new. During the good times, states can prepare for periods of fiscal austerity, or they can fail to do so. By some measures Massachusetts was better prepared for the recession that started in 2001 than were many other states. During the 1990s, as tax revenue grew at a healthy pace, the state built one of the largest rainy day funds in the nation. By the summer of 2001 funds totaled $2.3 billion. Having depleted nearly all of those savings over the past two years, the state must now choose between cutting services and raising taxes.
We often hear that irresponsible spending increases caused the fiscal crisis. But how much did state spending increase, and how was the money spent?
From the end of the last recession in 1991 until 2002, personal income grew at a rate of 2.6 percent a year, adjusted for inflation. The real growth in government spending during this time was only 2.3 percent a year. Thus, over time the government spent a smaller and smaller percentage of the money people earned. By the end of the decade, state spending had dropped from 9.4 percent of personal income to 9.1 percent. During the same period, however, more than $3 billion worth of tax reductions occurred. The strong economy and the spike in tax revenue from investments in the stock market made it appear that we could enjoy these tax cuts without corresponding reductions in spending. But when the boom ended and the revenue bubble burst, it became clear that the tax cuts had created a structural budget gap.
When times were good, the Legislature acted responsibly, responding to public demands for better schools and health care. After the fiscal crisis of the early 1990s, when funding for schools was slashed, teachers laid-off, and class sizes grew, the Legislature implemented an education reform initiative, increasing funding until every district had the resources necessary to provide an adequate education. Other spending increases have expanded full-day kindergarten programs, reduced class sizes, and helped students pass the MCAS tests. Steady gains in student achievement demonstrate the effectiveness of these investments.
Massachusetts also expanded health care coverage, reducing the ranks of the uninsured. In particular, the state began providing health care for all children (with those from families over 200 percent of poverty paying sliding scale fees) and established a $100 million subsidized insurance program that helps senior citizens pay for prescription drugs. Some argue that rapidly growing health care costs mean that the state will need to cut back on this commitment in order to balance the budget. Yet people who are poor and sick will still need health care. Without insurance, they will likely show up in hospital emergency rooms and caring for them will impose significant costs on both hospitals and the state program that contributes to the costs of free care provided by hospitals.
Since the fiscal crisis began in the summer of 2001, there have been about $2 billion in cuts from projected spending, and $1.2 billion in tax increases (including a freeze in implementation of the income tax rate reduction passed in 2000). The last two budgets have included cuts to public higher education, preschool and K-12 programs, the court system, and housing programs. Ever more painful cuts to human services have eliminated health coverage for 42,000 low-income adults and food stamps for legal immigrants. Yet despite these measures, the fiscal crisis persists.
There is no doubt that this budget crisis has created new opportunities for reforms in the way state government operates. But it is also important to recognize that state policymakers already implemented significant cost-saving measures during the 1990s. Health care reimbursement regulations were tightened, the delivery of special education services was significantly reformed, nearly all county government functions were transferred to the state, and the legislature mandated cost-saving reforms in the way prescription drugs are purchased.
Moreover, administrative costs account for only a very small portion of total government spending in the state. According to US Census statistics, administrative costs account for 4.5 percent of state and local government spending, ranking us 43d in the nation. While it is certainly desirable to make government more efficient, and while proposals to streamline the delivery of human service programs and merge the Metropolitan District Commission and the Department of Environmental Management may achieve this goal, there is no evidence that such restructuring will make much of a dent in the budget deficit.
There are no easy choices left. In the absence of additional revenue, the public programs and services on which thousands of people rely to stay healthy, educate their children, and keep their streets safe will have to be cut.
On the next page, readers are invited to try to make the same tough choices that now confront our elected officials. We hope that this exercise will provide a better sense of what it is that our government does, how our tax dollars are spent, and what options are available for responding to our fiscal crisis.
Sarah Nolan is a policy analyst at the Massachusetts Budget and Policy Center [Formerly known as TEAM, aka, "Tax Everything and
More" - Chip].
Sarah Nolan's bio from
the Massachusetts Budget and Policy Center website:
"Sarah Nolan is a Policy Analyst at the Massachusetts Budget and Policy Center (formerly the TEAM Education Fund). She works primarily on state budget issues, monitoring the ongoing budget process, analyzing trends in state spending and other state fiscal issues, and writing TEAM's Budget Monitor. Before coming to TEAM in 1998, Nolan served as Legislative Director to Senator Warren Tolman in the Massachusetts Senate. She has also worked on a number of state and local political campaigns in Massachusetts, including TEAM's 1994 Graduated Income Tax campaign. She has an
A.B. from Smith College and a Ph.D from Harvard University."
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