The Boston Globe
Wednesday, May 21, 2003
What's truly at stake in budget 'cuts'
By Barbara Anderson
When citizens are told that the state has a $3 billion deficit for the coming fiscal year, many believe this means that Massachusetts will have $3 billion less to spend next year than it is spending this year. In fact, the state budget hasn't been cut at all. According to a recent report from the business-backed Massachusetts Taxpayers Foundation, it has gone up every year since 1993, and the proposed budgets by Governor Romney and the House for the coming fiscal year increase it again. The Senate may level-fund or cut slightly, but overall, the "great budget 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's economy and taxpayers.
We working people have been doing our part. Massachusetts's per capita tax burden -- the amount paid by every man, woman, and child in the commonwealth -- is the fifth highest in the nation; state spending is, correspondingly, sixth highest. Per-pupil spending, K-12, is also fifth 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.
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 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 spending increases, and live within a limited budget while the economy tries to recover.
After years of billion dollar revenue surpluses and spending increases, there is assuredly some waste in all government departments. But in its zeal to make taxpayers accept tax hikes, the government often begins its downsizing with threats to essential services. 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 in Massachusetts was later than in 48 other states; we worked longer than taxpayers elsewhere to pay our government's way. Now it's our turn to provide for ourselves, our families, our retirement, and our favorite charities.
As we say "no" to new taxes we are saying "yes" to more responsive, effective, accountable state and local government. At least it's worth a try.
Barbara Anderson is executive director of Citizens for Limited Taxation.
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