Gov's "unfreezing" tax rollback draws usual opponents
The supplemental budget also contains language to make the voter-approved personal income tax cut a reality by reducing the rate from 5.3 percent to 5 percent starting January 1, 2005.
The reduction, originally scheduled to take effect in 2003, was frozen due to the fiscal crisis.
“Now that the worst is behind us and revenue collections are once again robust, we don’t have any excuse not to enact what the citizens of the Commonwealth voted for,” said Romney.
News Release
Thursday, June 3, 2004
Office of the Governor
Romney delivers first dividend of reform
Within his spending bill, Romney also included language reducing the income tax rate from 5.3 percent to 5 percent on Jan. 1, 2005 - the beginning of the tax year. Romney says the state ought to roll back the tax rate based on the 2000 voter-approved tax cutting referendum. The Legislature stalled the tax rollback.
"It's time to do what the voters recommended - not only recommended, but insisted on," he said.
Democratic leaders have resisted such a tax cut, with House Speaker Thomas Finneran this week calling the move "premature."
"We're on the path of stability and it might be a little bit premature to go and have a celebration, a tax-cutting celebration," Finneran said. "I like to cut taxes, probably as much, maybe more, than anybody else in this building. But I like to do it responsibly."
Chief Senate budget writer Therese Murray (D-Plymouth) has also criticized Romney's call for a tax cut, saying the state ought to replenish depleted health and human service accounts, local aid, and education mandates that have suffered since the fiscal crisis began....
The state Democratic Party was quick to respond to Romney's spending plan. The party released a statement urging lawmakers to resist a tax cut and instead spend excess monies to restore programs cut in recent years to balance the state budget.
State House News Service
Thursday, June 3, 2004
Romney recommends local aid boost,
capital spending, income tax cut
Buoyed by more than a half-billion dollars in unexpected revenue, Governor Mitt Romney said yesterday that he wants to spend the windfall immediately on state aid to cities and towns, roads, parks, health care, and education, and reiterated his call for an income tax cut in the next fiscal year....
The state has a surplus because with one month remaining in the fiscal year, it has collected $495 million more in taxes than it anticipated, because the improving economy means the state is receiving more tax revenues from businesses and individuals. In recent weeks, Romney has offered several ideas -- including tax cuts -- for how to spend the extra money, but yesterday was the first time he came forward with a specific proposal for spending the newfound money in the current fiscal year.
In addition, he renewed his call for an income tax cut, which would subtract $225 million from the state budget in the next fiscal year, and $450 million in fiscal 2006, when it would be in effect for the entire year....
Michael J. Widmer of the Massachusetts Taxpayers Foundation, a business-funded nonprofit that studies taxes and government spending, agreed that "we're still a long way from being out of the fiscal woods....
He said Romney's tax-cut plan is especially unwise because under the tax-cut freeze the Legislature put in place in 2002, rising revenue will soon trigger an expansion of personal income tax exemptions, which would cost the state about $30 million next fiscal year.
The Boston Globe
Friday, June 4, 2004
Romney proposes leap in local aid
Expects windfall of about $500m
"Do you think the Legislature should lower the state income tax from 5.3 percent to 5 percent?"
"Yes. Voters approved this reduction and state leaders promised it would be
done."
"No. The state needs to restore services that were cut during the economic downturn before it lowers taxes."
Participants
at 5:30 AM, June 4: 3400-plus
Yes: 61% -- No: 39%
Boston.com/Boston Globe website "survey"
June 3-4, 2004
On Beacon Hill, one man's fiscal orgy is another man's spending restraint.
Gov. Mitt Romney has the better of the arguments over which definition fits his plan to use some of the unexpected revenue growth forecast next year to fulfill the voters' mandate to return the state income tax rate to 5 percent....
House Speaker Tom Finneran is the grinch who keeps stealing the citizens' tax cut. "There are any number of things that probably would have to be addressed in one way or another before you go off on some kind of orgy, a spree, of tax-cutting," Finneran said last week.
Keep in mind, the speaker also was the driving force behind the last $1.2 billion tax hike that stopped the income tax rollback in its tracks.
The list of programs and services the state could spend money on is endless. Unfortunately, taxpayers' resources to fund Finneran's "any number of things" are finite.
Finneran has been around long enough to know how fiscal crises get started, too: Government grows in the good times beyond the taxpayers' ability to sustain it when the inevitable downturn comes.
The best way to curb government growth is to curb spending, and the only way to do that is to take money completely off the table by returning it to the taxpayers. (As we've learned, rainy day funds can get spent pretty quickly, too.)
So Romney's plan to reduce the income tax rate to 5 percent starting in January 2005 is exactly the right one at exactly the right time - before the spending orgy begins again on Beacon Hill....
What's that old saying? He who ignores history is doomed to repeat it.
A Boston Herald Editorial
Monday, June 7, 2004
A history lesson on fiscal restraint
Governor Romney has proposed a $457 million supplemental budget to reflect an unexpected increase in revenues for the 2004 fiscal year, which ends June 30. Before the Legislature deals with that measure, it needs to deal with the urgent needs of the coming year. Extra money can support many essential programs....
Romney favors one-time spending in hopes it will lead to a tax cut, keeping much of the increased revenue away from government in the future. That would be a mistake. The state has too many underfunded responsibilities to reduce its revenues.
A Boston Globe editorial
Monday, June 7, 2004
Romney's rush to spend
Gov. Mitt Romney's background is in venture capitalism, not conservative banking. And like the borrow-and-spend Republicans in Washington, it seems Romney cannot abide a surplus. His natural inclination is to spend money and cut taxes in the short-term and to worry about the long-term somewhere down the road....
These factors, along with economic uncertainty and the fluctuating nature of state revenues, argue against enacting an income tax cut that would put future budgets in the hole by $225 million to $450 million.
A MetroWest Daily News editorial
Monday, June 7, 2004
Be prudent with surplus
If Mr. Romney really wants to look good for the voters, he can restore the money cities and towns lost when the state was deep in the red and take the pressure off the property tax by leaving the income tax alone.
A Berkshire Eagle editorial
Monday, June 7, 2004
'No time to declare victory'
Chip Ford's CLT Commentary
As promised, in his supplemental budget filed last week Governor Romney
proposed defrosting our state income tax rate rollback and returning it to
its historic rate of 5 percent. The voters' gradual reduction was temporarily "frozen"
at 5.3 percent in 2002 by the Legislature as part of its $1.2 billion tax hike.
The usual whining choir of pro-tax voices has responded
predictably, from the so-called Massachusetts Taxpayers
Foundation to tax-and-spend lead cheerleader with its megaphone, the
Boston Globe, followed by the increasingly liberal MetroWest Daily News
and dependably leftwing Berkshire Eagle. Can the misnamed Springfield
Republican be far behind?
The excuses for hanging on to our money are as diversified and
imaginative as ever, for "fiscal stability," for restoring
program cuts, because of economic uncertainty -- the same excuses we heard
from the same crowd throughout the booming 90s when the
"temporary" income tax hike became more and more permanent and
revenue surpluses skyrocketed year after year and were as quickly spent
creating and expanding government programs.
Today the recommendations for the projected half-billion dollar surplus
range from "don't give it back, spend it" to "don't give it
back, save it to spend later." In the boom years, it's "don't
give it back, build up an ever-increasing 'rainy day fund,'" in an
economic downturn it's "we can't afford to give it back, we need to
take more," and in the middle years the excuse is
"uncertainty."
As the Boston Herald recognized in
today's editorial, and as we've insisted for more than a decade: "Government grows in the good times beyond the taxpayers' ability to sustain it when the inevitable downturn comes....
The best way to curb government growth is to curb spending, and the only way to do that is to take money completely off the table by returning it to the taxpayers."
The day the governor released his supplemental budget, a CLT member
alerted me to a poll (termed a "survey") being quickly run on
the Boston Globe's website, Boston.com. The question asked was:
"Do you think the Legislature should lower the state income tax from 5.3 percent to 5 percent?"
When I checked in at 8:00 PM the result from 2408 respondents stood at
60.3 percent who had voted "Yes. Voters approved this reduction and state leaders promised it would be
done," and 39.7 who had voted "No. The state needs to restore services that were cut during the economic downturn before it lowers taxes."
By 5:30 the next morning the result from then over 3400 respondents
was up to 61 percent who had voted in the affirmative and those who had
voted in the negative had slipped to 39 percent -- a percentage point
greater than even by which we won our 2000 rollback ballot question.
The Boston Globe's "survey" disappeared soon thereafter
-- and I think we all know the reason for its quick demise. Undoubtedly
it's the same reason why we haven't heard a word about its result, and I
expect we never will.
Sixty-one percent want the tax rolled back, and that's the last thing
the Boston Globe wanted to hear or acknowledge. It wasn't supposed to come
out that way! You can imagine the reports had the result turned out the
opposite.
Governor Romney couldn't get enough of his Senate so-called Republican allies to
file his bill to thaw out of the voters' temporarily "frozen"
tax rollback (See CLT Alert! of May 18, "Taxpayers sandbagged by Senate Republicans!"
and CLT's May 19 News Release "CLT calls for new Senate Minority Leader")
so he did it himself last week. Now we'll see if he can get enough Republican legislators
to support it -- or at least demand roll call votes when it comes
up.
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Chip
Ford |
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The
Commonwealth of Massachusetts
Executive
Department
State House Boston, MA 02133
(617) 725-4000
|
mitt
romney
governor
|
kerry
healey
lieutenant governor |
FOR
IMMEDIATE RELEASE:
June 3, 2004 |
CONTACT:
Shawn Feddeman
Nicole St. Peter
(617) 725-4025
|
ROMNEY
DELIVERS FIRST DIVIDEND ON REFORM
Announces $500M Estimated Budget Surplus for FY04,
Files Supplemental Spending Bill
Eighteen months after facing
a $3 billion deficit, Governor Mitt Romney today announced the state
will end the current 2004 fiscal year with an estimated $500 million
budget surplus. He proposed spending the surplus to increase the
quality of life in communities throughout the state.
Among the largest items in a
supplemental budget bill filed today, Romney proposed sending $100
million to cities and towns in the form of additional local aid and
setting aside $254 million for one-time capital improvements throughout
Massachusetts, including road and bridge upgrades and renovations to the
parks system, swimming pools and beaches.
Calling the surplus “the
first dividend on reform,” Romney credited the Legislature for working
cooperatively with the Administration in restoring fiscal balance to the
Commonwealth without raising taxes.
“Being fiscally responsible
isn’t easy – and it’s not always popular – but it has its
rewards. If we continue the hard work of reform, we can do even
more for the people of Massachusetts,” said Romney.
The total supplemental
spending bill is $457 million, which also includes:
-
$19 million for adult
basic education;
-
$11.8 million for
substance abuse treatment;
-
$10 million for MCAS
remediation summer programs in the lowest performing school
districts;
-
$8 million for one-time
grants to dentists and community health centers to increase access
for children under MassHealth;
-
$25 million to create a
virtual gateway within Health and Human Services to facilitate
access to services;
-
$19.5 million for a
nanotechnology center at the University of Massachusetts at Lowell;
and
-
$10 million for state pier
repairs and harbor dredging in New Bedford.
The increase in local aid is
unrestricted and will go out through the existing lottery formula.
However, Romney suggested
that cities and towns prioritize the needs of their local schools.
He noted that $100 million translates into the hiring of 2,000
additional teachers statewide.
“As the municipal liaison
for the Romney Administration, I have had the opportunity to meet with
hundreds of local officials over the past 17 months,” said Lieutenant
Governor Kerry Healey. “I have heard from them first hand
about what they need most, and I can tell you that the package we are
introducing today responds to the concerns of the cities and towns
throughout the Commonwealth.”
The Governor also pointed to
the economic impact created by the one-time infusion of money targeted
for capital projects. “All of this money – money that
goes above and beyond the existing capital budget – will help spark
the creation of new jobs,” said Romney.
The supplemental budget also
contains language to make the voter-approved personal income tax cut a
reality by reducing the rate from 5.3 percent to 5 percent starting
January 1, 2005. The reduction, originally scheduled to take
effect in 2003, was frozen due to the fiscal crisis.
“Now that the worst is
behind us and revenue collections are once again robust, we don’t have
any excuse not to enact what the citizens of the Commonwealth voted
for,” said Romney.
Romney noted that none of the
surplus dollars from the 2004 fiscal year will be used to pay for the
tax cut. Instead, it will be paid for out of the 2005 fiscal
year.
###
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State House News Service
Thursday, June 3, 2004
Romney recommends local aid boost,
capital spending, income tax cut
By Amy Lambiaso
With one month remaining in the fiscal year and a surplus developing, Gov. Mitt Romney on Thursday proposed spending $457 million on education, health and human services programs, local aid, capital projects, and a tax cut that would kick in Jan. 1, 2005.
Romney said he expects the state to end the fiscal year with a $700 million revenue surplus, including $500 million in unanticipated tax revenues. In addition to his spending bill, Romney said he is statutorily obligated to pour $130 million into the stabilization fund, which has been drawn down in recent years.
Specifically, the governor's spending bill would:
Deliver $100 million in one-time local aid to cities and towns to be used at their own discretion;
"Believe me when I say - this package meets the needs of communities across the state," said Lt. Gov. Kerry Healey, the administration's local government liaison.
In a statement, Senate President Robert Travaglini (D-East Boston) said Romney was acting prematurely.
"This is not the time to act rashly and declare the Commonwealth's fiscal crisis over in the face of short-term revenue gains," Travaglini said. "Massachusetts fell further and harder during the recession than most other states and we continue to lag behind the nation in recovering jobs and business.
"Despite the optimism over revenues, there is still a structural deficit in the FY05 budget, our communities and service programs have just endured three years of severe cuts and we still don't know what the final price tag is going to be on court-mandated appropriations for our schools. To go on a spending spree with our reserves and impose a tax cut that may further strain the FY05 budget seems more political driven than evidence of sound fiscal policy."
Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, which lobbies for cities and towns, applauded the $100 million one-time grant to cities and towns, saying it will ease the pain felt by municipalities whose budgets have been cut by more than $500 million since 2002.
"Returning Lottery monies is a vital first step toward fiscal recovery at the local level," Beckwith said. "There's a lot more to invest in still, but this would certainly make a difference. Lottery monies are desperately needed to restore cuts during the last several years."
At an afternoon press conference, Romney said he is recommending the spending of a large portion of the surplus on one-time projects because the projects "will make a difference for the Commonwealth, but don't lock us into ongoing obligations." He also touted the job-creation potential of government spending.
The capital funds include $54 million in spending to create "world class parks."
Among the local capital improvement projects, the state will advance construction of a $13.5 million new Department of Youth Services facility for females in Westborough; $77 million for construction and repair of roads, bridges, and transit parking stations, and $20 million for projects at UMass and other state and community colleges.
Within his spending bill, Romney also included language reducing the income tax rate from 5.3 percent to 5 percent on Jan. 1, 2005 - the beginning of the tax year. Romney says the state ought to roll back the tax rate based on the 2000 voter-approved tax cutting referendum. The Legislature stalled the tax rollback.
"It's time to do what the voters recommended - not only recommended, but insisted on," he said.
Democratic leaders have resisted such a tax cut, with House Speaker Thomas Finneran this week calling the move "premature."
"We're on the path of stability and it might be a little bit premature to go and have a celebration, a tax-cutting celebration," Finneran said. "I like to cut taxes, probably as much, maybe more, than anybody else in this building. But I like to do it responsibly."
Chief Senate budget writer Therese Murray (D-Plymouth) has also criticized Romney's call for a tax cut, saying the state ought to replenish depleted health and human service accounts, local aid, and education mandates that have suffered since the fiscal crisis began. Murray also says an automatic increase in income tax exemptions will kick in next year if the state's economy keeps improving.
While some believe the surplus is the result of pessimistic revenue projections, Romney attributed a large part of it to consolidations and savings associated with his administration's push for government reform. Billing it as the "first dividend on reform," Romney said "these are the dividends that come from sound fiscal management."
The state Democratic Party was quick to respond to Romney's spending plan. The party released a statement urging lawmakers to resist a tax cut and instead spend excess monies to restore programs cut in recent years to balance the state budget.
"Programs servicing our children, the poor, the elderly and the handicapped have been pared to the bone in the past two budgets, while our cities and towns remain in tatters," the statement said. "The Legislature must proceed cautiously as it begins to restore some of the damage inflicted upon government's essential services, while keeping a watchful eye on an uncertain economy."
The Boston Globe
Friday, June 4, 2004
Romney proposes leap in local aid
Expects windfall of about $500m
By Scott S. Greenberger, Globe Staff
Buoyed by more than a half-billion dollars in unexpected revenue, Governor Mitt Romney said yesterday that he wants to spend the windfall immediately on state aid to cities and towns, roads, parks, health care, and education, and reiterated his call for an income tax cut in the next fiscal year.
Romney's $457 million "supplemental budget" for the current fiscal year, which ends June 30, includes $254 million for construction projects across Massachusetts, $100 million for cities and towns and $83 million for a half-dozen health care and education programs, including $19 million for adult basic education, $11.8 million for substance abuse treatment and $10 million for MCAS tutoring in struggling school districts.
Local officials and advocates welcomed the additional dollars, but Democratic lawmakers who run the state Legislature criticized the governor for what they described as profligate -- and premature -- spending.
"This is not the time to act rashly and declare the Commonwealth's fiscal crisis over in the face of short-term revenue gains," Senate President Robert E. Travaglini said. The Legislature will have to approve the final supplemental budget. "Massachusetts fell further and harder during the recession than most other states, we continue to lag behind the nation in recovering jobs and business," Travaglini added.
The state has a surplus because with one month remaining in the fiscal year, it has collected $495 million more in taxes than it anticipated, because the improving economy means the state is receiving more tax revenues from businesses and individuals. In recent weeks, Romney has offered several ideas -- including tax cuts -- for how to spend the extra money, but yesterday was the first time he came forward with a specific proposal for spending the newfound money in the current fiscal year.
In addition, he renewed his call for an income tax cut, which would subtract $225 million from the state budget in the next fiscal year, and $450 million in fiscal 2006, when it would be in effect for the entire year.
In unveiling his proposal at the State House yesterday, Romney argued that the extra money is the result of fiscal discipline on Beacon Hill -- especially a refusal to raise taxes -- and changes he has made in state government. Last year the Legislature approved his proposals to combine the Metropolitan District Commission and the Department of Environmental Management and to streamline health and human services agencies.
"The first dividend along the road to reform is being realized," Romney said yesterday. "These are the dividends that come from sound fiscal management."
Romney asserted that "had we substantially increased taxes in Massachusetts during the tough times, we would have scared away jobs and scared away employers." He acknowledged, however, that the state's fiscal condition is "highly dependent on what's happening in the nation and the world," and the resurgent US economy is largely responsible for filling the Bay State's coffers.
As he did earlier this week, Romney pointed to recent monthly revenue figures as evidence that the fiscal crisis of the last several years is over. But Democratic lawmakers, and leading budget analysts, are less confident that the economy has turned around and they have greeted the governor's income-tax proposal with skepticism. Several days ago, House Speaker Thomas M. Finneran chided Romney for proposing an "orgy" of tax cuts and said that despite encouraging economic signs "it might be a little premature to go off and have a celebration."
Representative John H. Rogers, a key Finneran lieutenant and the chair of the House Ways and Means Committee, said it's not yet clear how much extra money, if any, the state will have at the end of the fiscal year.
"The governor is creating a number artificially to serve a political need: to spend more and to cut taxes," said Rogers, a Norwood Democrat. "If the governor is so confident that the money is going to be there, why doesn't he just wait? What's the rush?"
Rogers said the state has drained about $800 million from its reserve funds this year to cover its so-called "structural deficit," or the roughly $1 billion gap between its annual, reliable revenue and its recurring expenses. He said the state should replenish all of that money before boosting spending or cutting taxes.
Michael J. Widmer of the Massachusetts Taxpayers Foundation, a business-funded nonprofit that studies taxes and government spending, agreed that "we're still a long way from being out of the fiscal woods.... Certainly it's positive to give some relief to municipalities, but we haven't eliminated the structural deficit, and this will add to the structural deficit," Widmer said.
The Taxpayers Foundation has noted that the state's increasing revenue isn't enough to keep up with fast-rising expenses. On average, the state can count on annual revenue growth of 4 to 5 percent, with each percentage point representing about $150 million. But the cost of Medicaid and other health care programs has increased by a total of at least $2 billion, or 40 percent, since 2001 and the cost of the state's debt has increased by $400 million, or 25 percent, since 2001. Rapid growth in those and other areas is expected to continue.
Widmer said the state should spend about $160 million of the extra money to boost Medicaid reimbursements to hospitals, but should hold the rest in reserve. He said Romney's tax-cut plan is especially unwise because under the tax-cut freeze the Legislature put in place in 2002, rising revenue will soon trigger an expansion of personal income tax exemptions, which would cost the state about $30 million next fiscal year. Furthermore, Widmer noted, the state may have to pay $1 billion or more as a result of a final ruling in the Hancock school-aid lawsuit, which asserts that Massachusetts is still shortchanging children in its poorest school districts.
Local officials and advocates reacted warmly to yesterday's news, especially after the roughly $3 billion in cuts that cities and social services have had to deal with over the past three years. Boston would get $8.1 million in extra money according to a city-by-city analysis distributed by Romney's office. Mayor Thomas M. Menino said he'd use it to pay for after-school programs, summer jobs, and sidewalk and street repairs.
Stephen Smith of the Globe staff contributed to this report.
The Boston Herald
Monday, June 7, 2004
A Boston Herald Editorial
A history lesson on fiscal restraint
On Beacon Hill, one man's fiscal orgy is another man's spending restraint.
Gov. Mitt Romney has the better of the arguments over which definition fits his plan to use some of the unexpected revenue growth forecast next year to fulfill the voters' mandate to return the state income tax rate to 5 percent.
It would be even better if the governor planned to give taxpayers some fee or tax relief using this year's $500 million surplus, too, instead of spending it all, but we'll get to that.
House Speaker Tom Finneran is the grinch who keeps stealing the citizens' tax cut. "There are any number of things that probably would have to be addressed in one way or another before you go off on some kind of orgy, a spree, of tax-cutting," Finneran said last week.
Keep in mind, the speaker also was the driving force behind the last $1.2 billion tax hike that stopped the income tax rollback in its tracks.
The list of programs and services the state could spend money on is endless. Unfortunately, taxpayers' resources to fund Finneran's "any number of things" are finite.
Finneran has been around long enough to know how fiscal crises get started, too: Government grows in the good times beyond the taxpayers' ability to sustain it when the inevitable downturn comes.
The best way to curb government growth is to curb spending, and the only way to do that is to take money completely off the table by returning it to the taxpayers. (As we've learned, rainy day funds can get spent pretty quickly, too.)
So Romney's plan to reduce the income tax rate to 5 percent starting in January 2005 is exactly the right one at exactly the right time - before the spending orgy begins again on Beacon Hill.
It's inconsistent, though, to file a supplemental budget for this fiscal year, as Romney did Thursday, that spends every blessed penny of the fiscal 2004 surplus left after replenishing reserves.
And it's not any wiser to use operating dollars to pay for capital projects than it is to use capital dollars to pay for operating expenses.
Those other alleged one-time expenditures made by Romney on local aid and MCAS remediation are anything but a one-shot deal. Experience tells us that this new spending will get baked into the budget base, exacerbating the state's structural deficit.
What's that old saying? He who ignores history is doomed to repeat it.
The Boston Globe
Monday, June 7, 2004
A Boston Globe editorial
Romney's rush to spend
Governor Romney has proposed a $457 million supplemental budget to reflect an unexpected increase in revenues for the 2004 fiscal year, which ends June 30. Before the Legislature deals with that measure, it needs to deal with the urgent needs of the coming year. Extra money can support many essential programs.
Among them is the Department of Public Health's immunization campaign. The state provides vaccines for children, but it cut off money to inoculate adults against hepatitis A and B, pneumonia, and meningitis last year. The House would maintain that omission. The Senate would provide $25 million for comprehensive coverage, a better choice.
The Senate would be more generous to the Children's Medical Security Plan, which provides health insurance for the young. Low funding has forced 14,900 children onto a waiting list. The $21.37 million proposed by the Senate would cover them.
The House would better compensate cities and towns for their costs when students enroll in charter schools. Some school aid is diverted to the charter school as a result of each enrollment. The $37.7 million in the House budget -- compared with the Senate's $13 million -- recognizes that fixed school costs remain even when students leave. On local aid and other items, the two budgets are similar. Both budgets offer the beginnings of a commitment to early childhood education, which will become a major expense if adequately funded.
The state is benefiting from the national economic recovery, but the Legislature is still drawing down reserves to balance next year's budget. In his supplemental request, Romney proposes one-time spending on parks and highways, which is urgently needed. But these projects have to be balanced with spending on continuing programs.
Romney favors one-time spending in hopes it will lead to a tax cut, keeping much of the increased revenue away from government in the future. That would be a mistake. The state has too many underfunded responsibilities to reduce its revenues.
The MetroWest Daily News
Monday, June 7, 2004
A MetroWest Daily News editorial
Be prudent with surplus
There was a time, not so long ago, when Republicans thought like Main Street bankers: Other people's money was a trust, budgets should be kept in balance and responsible officials should balance short-term desires with long-term prudence.
Gov. Mitt Romney's background is in venture capitalism, not conservative banking. And like the borrow-and-spend Republicans in Washington, it seems Romney cannot abide a surplus. His natural inclination is to spend money and cut taxes in the short-term and to worry about the long-term somewhere down the road.
The turnaround in revenues that now promises a $500 million surplus for the year ending June 30 is a relief and a temptation. State and local officials have scrimped and trimmed and done without for three years marked by staggering deficits. Had the Legislature not budgeted conservatively, we'd be looking at more cuts to square the books at the end of the fiscal year instead of having change jangling around in our pockets.
That loose change is burning a hole in Romney's pockets. Last week he gave into the temptation, unveiling a supplemental budget that not only spends the surplus but endorses an income tax cut that is anything but prudent.
To be fair, there's plenty to like in Romney's spending plan. He would send $100 million to cities and towns in the form of increased Lottery aid. After last year's dramatic cut in local aid, most municipalities sorely need that infusion to regain lost ground.
Romney also dedicates some $250 million of the surplus to capital expenses, including road and bridge repairs and improvements to parks, pools and bridges. Such one-time investments are the best way to respond to a surplus that is unanticipated, rather than adding recurring spending on new programs.
There are exceptions to that rule, however. Romney is right to earmark $10 million for remedial help for students in danger of failing the MCAS tests. He's also right to budget $19 million for adult basic education and $11.8 million for substance abuse services, two areas that were cut too deeply in balancing the current budget.
The Legislature should consider putting some of the surplus into raising the Medicaid reimbursements to the state's struggling hospitals. Massachusetts cannot afford to lose more community hospitals because government intentionally pays less than the cost of the services the hospitals provide.
As Romney and the leaders of the Legislature know well, state government is still facing a structural deficit, one that this year required $800 million from the state's reserves to close. Left unaddressed, that deficit will grow, fueled by rising health care costs and scheduled increases in debt service.
These factors, along with economic uncertainty and the fluctuating nature of state revenues, argue against enacting an income tax cut that would put future budgets in the hole by $225 million to $450 million. The still-undetermined cost of a legal challenge to the state's school financing system is another reason not to foreclose revenue options.
As for the surplus, the prudent course would be to spend some -- beginning with the local aid, please -- while banking some of it for a rainy day. That's the kind of approach Republicans used to call conservative.
The Berkshire Eagle
Monday, June 7, 2004
A Berkshire Eagle editorial
'No time to declare victory'
Two years ago, Massachusetts had a $3 billion deficit, and Governor Mitt Romney and the Legislature slashed aid to cities and towns to make it up. Teachers and firefighters lost their jobs and property taxes went up to compensate for the losses. Now, state revenues have recovered modestly, and the governor wants to cut the income tax and, it appears as an afterthought, throw the cities and towns $100 million. That's chump change compared to the money Bay Staters are forking over in property taxes. Pittsfield Representative Peter J. Larkin, to whom the quote in the headline is attributed, has the governor's number on this one when he says "the only thing missing from this is the campaign glossy." If Mr. Romney really wants to look good for the voters, he can restore the money cities and towns lost when the state was deep in the red and take the pressure off the property tax by leaving the income tax alone.
NOTE: In accordance with Title 17
U.S.C. section 107, this material is distributed without profit or
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more information go to: http://www.law.cornell.edu/uscode/17/107.shtml