CLT
UPDATE
Tuesday, May 17, 2005
Bay State taxpayer's life: "poor,
nasty, brutish, and short"
House Speaker Salvatore DiMasi thinks Gov. Mitt
Romney's campaign to let workers keep more of their hard-earned money is
based on accounting "gimmicks." But the real gimmick is the Democrats'
never-ending cry of poormouth, in which crisis follows crisis and the
only real solution is to continue to soak taxpayers.
DiMasi knocked Romney's plans at the Metro South Chamber of Commerce in
Brockton last week and said he won't support any income tax cut. He
admitted that the economic situation in Massachusetts has improved — he
had no choice, considering the record revenues pouring into the treasury
— but he warned that "we're not out of the woods yet."
No, of course we're not — not as long as the budget keeps growing and
spending increases year after year. Taxpayers will never be able to fork
over enough cash to satisfy the hungry beast of state government.
Romney's proposal to cut taxes is simple and fair; DiMasi has no
proposals to help taxpayers, just more spending plans....
DiMasi is a Democrat in the mold of Thomas Hobbes, who said that
allowing people to have control over their destinies was intolerable and
would lead to life being "solitary, poor, nasty, brutish, and short" —
which sort of describes the fate of taxpayers in this commonwealth.
A Brockton Enterprise editorial
Monday, May 16, 2005
Taxpayer's life: 'Poor, nasty, brutish, short'
A single month of higher-than-projected revenue was enough to
provoke another round of the tiresome debate over lowering the state income tax
rate. But while no change in state policy is likely to emerge from this familiar
dance, out in Massachusetts' cities and towns, property taxes keep going higher
while services suffer....
It has become a familiar pattern on Beacon Hill. The Republican governor calls
for a tax cut, leaning heavily on emotional arguments about how the people
deserve more of their money, how state officials promised a higher rate would be
temporary when they enacted it in 1989, how the views expressed by voters in
2002 must be respected. The Democrats who run the Legislature must be more
responsible about balancing the budget, so they resist cutting revenue the state
can't afford to lose.
In the end, the tax rate stays the same, and the Beacon Hill dancers
congratulate themselves with the fiction that they kept a lid on taxes....
State officials need to stop the charade. They aren't controlling taxes, they
are just passing them down the food chain. We need more than a balanced budget
from them; we need an honest debate about a state and local tax structure that
is neither fair nor sufficient for the challenges governments face.
A MetroWest Daily News editorial
Sunday, May 8, 2005
Beacon Hill tax charade
Senate leaders will unveil a budget this week that boosts
education spending by more than $200 million, exceeding the increases proposed
by Governor Mitt Romney and the House by tens of millions of dollars....
The Senate plan would increase public school spending by about 5 percent in
Chapter 70 funds, the state's main school-spending pool. By contrast, Romney
would increase Chapter 70 funds by 2˝ percent....
In the last two weeks, advocates for more school spending have rallied twice at
the State House to demand more money. Last month, the state's largest teachers'
union launched a $1.3 million radio and television ad campaign dramatizing the
financial plight of Bay State schools. The ads feature vignettes of teachers and
students hindered by a lack of supplies and overcrowded classrooms....
The Senate plan also would increase spending on higher education by more than
$40 million, or about 4.6 percent. An additional $23 million would be for state
and community colleges and $18 million for University of Massachusetts campuses.
Romney and the House want to raise higher-education spending by $20 million, or
2.3 percent.
The Boston Globe
Sunday, May 15, 2005
$200m increase expected in Senate education budget
A number of governors around the nation are taking aim at the
benefits paid to public employees -- which, in many cases, are far richer than
those offered to workers in private industry.
Warning that his state is heading for a pension crisis, Rhode Island Governor
Donald L. Carcieri wants to boost the age at which teachers and state workers
can draw pensions and trim the cost-of-living adjustment retirees get annually.
"Our benefits are extraordinarily generous," Carcieri said in an interview....
Last year Rhode Island contributed $184 million to its pension fund. This year
it will be $278 million ... In Massachusetts, state government will spend $1.2
billion on pensions for the year beginning in July -- more than it will spend on
higher education....
"We are asking taxpayers to pay for benefits that are far in excess of what the
average Rhode Islander is getting," Carcieri said.
Compensation has not changed much in government. Workers get the same benefits
they have always had. In private industry, benefits have grown stingier. In the
private sector, traditional pensions, with guaranteed benefits for a given
length of service, have largely been replaced by 401(k) plans, which come with
no promise of future payouts. Each year more companies stop paying the bill for
retiree health.
The result: The benefits gap between the two worlds has widened dramatically....
According to the Employee Benefit Research Institute, a nonprofit that tracks
compensation, 90 percent of state and local employees have access to a
traditional pension plan, compared with 24 percent of private-sector workers.
Forty-five percent of those government pensions come with annual cost-of-living
adjustments -- a rarity in private industry.
About 77 percent of state and local government workers receive healthcare
benefits when they retire. Only 36 percent of private workers at large firms get
similar help, according to the Kaiser Family Foundation, a Washington, D.C.,
research group....
When he was first elected, Romney floated the idea of putting new employees in a
401(k) plan. "The reaction was so negative, the idea never went anywhere," said
Michael Widmer, president of the Massachusetts Taxpayers Foundation....
"We can't sweep this thing under the rug," said Carcieri. "If we don't do
something now, the pain later will only be worse."
The Boston Globe
Monday, May 16, 2005
Governors target employee benefits
Cite fairness, cost in seeking change
Chip Ford's CLT Commentary
As the state's newspapers battle it out editorially
over whether a promise by the Legislature should be kept and the 16-year
old "temporary" tax hike terminated at last, our money's still pouring
into the state's coffers and plans are already underway to spend it. If
it's spent, the Legislature of course can't afford to give it back.
We saw the billion-dollar annual surpluses throughout
the late-'90s spent, finally doubling the state budget since the
"temporary 18-month" promise was made. The Bacon Hill pols could never
"afford" to keep their promise -- because they were spending our tax
overpayment as fast as it reached their hands. They diligently made sure
nothing was left over to return to us providers of all state funds.
Some even had the temerity to assert that no such
promise had ever been made!
House Speaker Thomas Finneran disputes Anderson’s
contention that Beacon Hill promised to roll back the 1989 tax
increase once the debt was paid. “Maybe somebody at the time said,
‘Well, gee, maybe we should or maybe we could consider rolling it
back,’ but Barbara has been around long enough to know statements come
and go and language is statutory. I don’t know how someone would
attach legitimacy to a comment made in the hall, in a hearing, or even
on the House floor.”
Beacon Hill, Jun. 23, 1997
Senate President Thomas Birmingham, D-Chelsea,
first of all, disputed [Gov.] Cellucci's assertion that lawmakers
promised to lower the 5.95 percent income tax rate to a 5 percent
after the tough fiscal times of the early 1990s were over. “No such
promise was made.... No such representation was made,” Birmingham said
at a news conference called to respond to the budget.
Associated Press, Jan. 27, 1999
Again we exposed their indefensible denials with our
collage, "Was
it a Promise or Wasn't It? You Decide!" 59 percent of the voters
decided along with us in 2000 and kept the scoundrels' promise for them.
But the Legislature quickly defied them and broke it again. We've
resurrected The Promise and posted it prominently on the CLT
website in a printable PDF format. You and others can now download your
own copies and have The Promise at your fingertips.
Meanwhile, the Senate begins debate on its version of
the FY'06 budget next week. Though it doesn't contain the rollback to 5
percent, or any rollback at all, it proposes to spend "tens of millions"
more than either Governor Romney's or the House's proposed budgets. The
Senate, of course, has an advantage over the House spending: The April
revenue figure citing the "the largest single monthly total ever" -- so
it's got more of our surplus money to play with and pass out. State
senators have until Friday to submit their amendments for the feeding
frenzy.
CLT's associate director, Chip
Faulkner, today testified before the Joint Committee on Revenue
(formerly the Committee on Taxation, but they know the "T" word doesn't
fly with the public so decided to call it something else) and the Joint
Committee on Elder Affairs against
House 2341. If this bill becomes law, it would exclude senior
citizens from property tax increases imposed by Proposition 2˝
overrides. This divide-and-conquer tactic is intended as little
more than a boost to easier passage of overrides, It would encourage
seniors to stay home and away from the voting booths where they'd vote
in their own interest -- and that of other taxpayers. He reports that he
had quite a heated exchange with state Rep. Cory Atkins (D-Concord) over
-- not this bill but -- the income tax rollback! He reports that she
"went ballistic" ranting to others in the audience waiting their turn to
testify.
He also delivered
CLT's memo to the Committee on Revenue.
It looks like governors across the nation are finally
waking up to -- or admitting -- the looming crisis just over the
horizon: the day of reckoning for lucrative public employee pensions and
benefits. While politicians past and present generously doled out favors
to government workers to keep them happy and voting right, the debt has
been piling up and will soon come due. As always, of course, they
promised payment in OPM (Other People's Money -- ours). If they
don't get this transfer of wealth under control immediately if not
sooner, the result will be devastating to those stuck with paying their
bill -- us as usual -- while they blithely drift away beneath
their own taxpayer-funded golden parachutes.
 |
|
Chip Ford |
The Brockton Enterprise
Monday, May 16, 2005
An Enterprise editorial
Taxpayer's life: 'Poor, nasty, brutish, short'
House Speaker Salvatore DiMasi thinks Gov. Mitt Romney's campaign to let
workers keep more of their hard-earned money is based on accounting
"gimmicks." But the real gimmick is the Democrats' never-ending cry of
poormouth, in which crisis follows crisis and the only real solution is
to continue to soak taxpayers.
DiMasi knocked Romney's plans at the Metro South Chamber of Commerce in
Brockton last week and said he won't support any income tax cut. He
admitted that the economic situation in Massachusetts has improved — he
had no choice, considering the record revenues pouring into the treasury
— but he warned that "we're not out of the woods yet."
No, of course we're not — not as long as the budget keeps growing and
spending increases year after year. Taxpayers will never be able to fork
over enough cash to satisfy the hungry beast of state government.
Romney's proposal to cut taxes is simple and fair; DiMasi has no
proposals to help taxpayers, just more spending plans.
At least DiMasi understands the importance of business to the
Massachusetts economy, even if he is taking the circuitous route to
attracting business. DiMasi wants to offer surplus property and extend
licensing and permit breaks to get companies to add jobs or come to the
state. But the best way to create jobs and attract business is to create
a conducive business climate. That includes lower taxes and — just as
important — tax certainty. That means that businesses and individuals
will know what their tax rates are. The ongoing farce of imposing
retroactive capital gains taxes on people will have one clear effect —
to drive investment away from the Bay State.
DiMasi probably can't help himself. He rose to the top by being a good
Democrat in a state owned by Democrats. He is not about to admit that
lower taxes and giving the public more control over their financial
lives are good for anyone. DiMasi is a Democrat in the mold of Thomas
Hobbes, who said that allowing people to have control over their
destinies was intolerable and would lead to life being "solitary, poor,
nasty, brutish, and short" — which sort of describes the fate of
taxpayers in this commonwealth.
Return to top
The MetroWest Daily News
Sunday, May 8, 2005
A MetroWest Daily News editorial
Beacon Hill tax charade
A single month of higher-than-projected revenue was enough to provoke
another round of the tiresome debate over lowering the state income tax
rate. But while no change in state policy is likely to emerge from this
familiar dance, out in Massachusetts' cities and towns, property taxes
keep going higher while services suffer.
Gov. Mitt Romney was quick to embrace an 11.2 percent gain in April
state tax receipts as further proof that the economy is on the rebound
and another reason why the state income tax rate should be dropped from
5.3 percent to 5 percent. A good businessman like Romney should know
better. The April numbers reflected a one-month surge in capital gains
receipts. Confusing stock market windfalls with healthy economic
activity was a mistake state leaders made in 2000, one that proved
costly when the market went sour.
It has become a familiar pattern on Beacon Hill. The Republican governor
calls for a tax cut, leaning heavily on emotional arguments about how
the people deserve more of their money, how state officials promised a
higher rate would be temporary when they enacted it in 1989, how the
views expressed by voters in 2002 must be respected. The Democrats who
run the Legislature must be more responsible about balancing the budget,
so they resist cutting revenue the state can't afford to lose.
In the end, the tax rate stays the same, and the Beacon Hill dancers
congratulate themselves with the fiction that they kept a lid on taxes.
All the state politicians have done is force ever higher tax increases
at the local level. When the economy tanked in 2001, lawmakers cut
spending in lots of areas. Tuition and fees at UMass Amherst, for
instance, have risen nearly 50 percent in four years. But the widest
pain was felt by cities, towns and school districts. While there have
been slight increases this year and last, state aid to cities and towns
still runs $500 million below levels of three years ago.
Local officials have done what they can to keep a lid on taxes. First,
they tapped their rainy day accounts, then they raised fees. They've
added fees for trash collection. They've begun charging students to ride
the school bus and play on the soccer team.
More and more communities are now turning to Proposition 2 1/2
overrides. For a long time, these voter-approved tax hikes were enacted
to pay for new schools and other capital needs. Now we're seeing more
operating overrides -- requests to raise the property tax rate to
prevent cuts in municipal services.
This is not a good trend. Property taxes are based on the market value
of assets, not on income or ability to pay. They are especially hard on
senior citizens with limited income and young families already squeezed
by high housing prices.
But because of cuts at the state level, cities and towns are ever more
dependent on property taxes. According to the Mass. Municipal
Association, property taxes now account for an average of 54 percent of
local budgets -- the highest level since 1982.
State officials need to stop the charade. They aren't controlling taxes,
they are just passing them down the food chain. We need more than a
balanced budget from them; we need an honest debate about a state and
local tax structure that is neither fair nor sufficient for the
challenges governments face.
Return to top
The Boston Globe
Sunday, May 15, 2005
$200m increase expected in Senate education budget
Plan would give school districts $160m, higher education $40m
By Scott S. Greenberger, Globe Staff
Senate leaders will unveil a budget this week that boosts education
spending by more than $200 million, exceeding the increases proposed by
Governor Mitt Romney and the House by tens of millions of dollars.
Senator Therese Murray, the Plymouth Democrat who chairs the Ways and
Means Committee, said in an interview that the Senate plan would raise
current state spending on local school districts by $160 million and
funnel an extra $40 million to state colleges and universities. The
Senate spending plan includes increases for preschool programs, school
transportation, and adult education.
With Massachusetts continuing to struggle to replace the jobs it lost
during the last recession, Murray made an economic argument for the new
money. "If we don't do something about our public education system, we
will not keep companies here or attract companies here," she said.
The Senate plan would increase public school spending by about 5 percent
in Chapter 70 funds, the state's main school-spending pool. By contrast,
Romney would increase Chapter 70 funds by 2˝ percent.
The Senate will have to persuade the House and Romney to go along with
the larger increases. Representative Robert A. DeLeo, who chairs the
House Ways and Means Committee, declined to comment on the Senate plan
until he sees it. Romney spokeswoman Julie Teer said "education is one
of Governor Romney's top priorities," but that he would decline to
comment until he sees what finally emerges from the Legislature.
In the last two weeks, advocates for more school spending have rallied
twice at the State House to demand more money. Last month, the state's
largest teachers' union launched a $1.3 million radio and television ad
campaign dramatizing the financial plight of Bay State schools. The ads
feature vignettes of teachers and students hindered by a lack of
supplies and overcrowded classrooms.
"The devil's in the details, as to how they're going to use that money,"
Tom Scott, executive director of the Massachusetts Association of
Superintendents, said of the Senate proposal. "There are lots of school
districts that are hurting, whether they are urban or rural."
When Romney unveiled his spending plan, he acknowledged that much of the
new money he was proposing would go to the poorest school districts and
that many communities would not see an increase. Education advocates and
local officials now say that under the governor's plan about two-thirds
of districts would get no extra money.
Responding to the resulting outcry, the House last month proposed adding
$28.7 million to the roughly $77 million that Romney had called for,
spreading the money around by giving most districts at least $50 per
pupil.
Murray said the Senate plan would go further by setting aside an
additional $55 million for the neediest districts, including those with
low MCAS scores and those that pay a disproportionate share of their own
education costs. Bills to overhaul the Chapter 70 formula are pending on
Beacon Hill, and Murray said the $55 million will be held in reserve in
case lawmakers change the formula.
She cautioned that the money for schools with low test scores "will come
with strings, and with solutions" aimed at encouraging schools to
improve. She did not elaborate.
The Senate plan also would increase spending on higher education by more
than $40 million, or about 4.6 percent. An additional $23 million would
be for state and community colleges and $18 million for University of
Massachusetts campuses. Romney and the House want to raise
higher-education spending by $20 million, or 2.3 percent.
James Karam, who chairs the University of Massachusetts Board of
Trustees, said "any increase will make a difference" after years of
budget cuts. State spending on higher education is less than it was in
2000, before the state's fiscal crisis began. Karam said spending on
higher education "has to be an absolute necessity" to compete in a
global economy.
Return to top
The Boston Globe
Monday, May 16, 2005
Governors target employee benefits
Cite fairness, cost in seeking change
By Charles Stein, Globe Staff
PROVIDENCE -- A number of governors around the nation are taking aim at
the benefits paid to public employees -- which, in many cases, are far
richer than those offered to workers in private industry.
Warning that his state is heading for a pension crisis, Rhode Island
Governor Donald L. Carcieri wants to boost the age at which teachers and
state workers can draw pensions and trim the cost-of-living adjustment
retirees get annually. "Our benefits are extraordinarily generous,"
Carcieri said in an interview.
In Alaska, Illinois, and California, governors are coming to the same
conclusion. Their main motivation is financial. Last year Rhode Island
contributed $184 million to its pension fund. This year it will be $278
million, and by 2010 the total will reach $400 million. In
Massachusetts, state government will spend $1.2 billion on pensions for
the year beginning in July -- more than it will spend on higher
education.
Like the current debate on Social Security, the fight over pensions
revolves around a basic question: How much does society want to spend to
support retirees? But some governors insist there is a fairness issue
involved, too. At a time when fewer employees in the private sector have
traditional pensions and retiree health insurance, most workers in the
public sector have both. "We are asking taxpayers to pay for benefits
that are far in excess of what the average Rhode Islander is getting,"
Carcieri said.
Compensation has not changed much in government. Workers get the same
benefits they have always had. In private industry, benefits have grown
stingier. In the private sector, traditional pensions, with guaranteed
benefits for a given length of service, have largely been replaced by
401(k) plans, which come with no promise of future payouts. Each year
more companies stop paying the bill for retiree health.
The result: The benefits gap between the two worlds has widened
dramatically.
According to the Employee Benefit Research Institute, a nonprofit that
tracks compensation, 90 percent of state and local employees have access
to a traditional pension plan, compared with 24 percent of
private-sector workers. Forty-five percent of those government pensions
come with annual cost-of-living adjustments -- a rarity in private
industry.
About 77 percent of state and local government workers receive
healthcare benefits when they retire. Only 36 percent of private workers
at large firms get similar help, according to the Kaiser Family
Foundation, a Washington, D.C., research group. Nationally, about 110
million people work in private-sector jobs; 19 million work for state
and local government. In Massachusetts, the numbers are 2.8 million and
356,000.
Rhode Island got into pension trouble the way many states did. It cut
its contribution to the pension fund at various points, hoping the stock
market would take care of the problem. The market slump since 2000 has
created a big shortfall that can only be made up with more state money.
Like Governor Mitt Romney, Carcieri came out of the business world. He
was chief executive of Cookson America, part of a London-based
conglomerate. He can list all the ways in which Rhode Island's benefits
are out of line with those in the private sector: Workers can collect a
full pension after 28 years, regardless of age; they can earn a maximum
pension of 80 percent of their salary; and they get an automatic 3
percent cost-of-living adjustment each year.
The governor wants to set the minimum retirement age at 60. He proposes
tying the cost-of-living changes to the consumer price index. "This is
not a Draconian plan," he said.
Public employees don't agree.
"We're appalled by his proposal. It gouges retirees," said Marcia Reback,
president of the Rhode Island Federation of Teachers and Health
Professionals. Reback says comparisons between public and private
employees are unfair because her members contribute heavily -- more than
9 percent of pay -- toward their own pensions.
In California, public employees launched a full-scale attack on Governor
Arnold Schwarzenegger when he endorsed a ballot initiative that would
have put new hires into a 401(k)-style plan. Schwarzenegger branded his
opponents "special interests," but he was forced to retreat when polls
indicated he was coming across as the bad guy in the fight.
When he was first elected, Romney floated the idea of putting new
employees in a 401(k) plan. "The reaction was so negative, the idea
never went anywhere," said Michael Widmer, president of the
Massachusetts Taxpayers Foundation.
The pension struggle may be a warm-up for an equally big fight brewing
over retiree health benefits. Starting in 2007, states and cities will
have to treat those benefits the way they treat pensions -- by
recognizing their future cost on financial statements. The accounting
change sounds highly technical, but the implications are significant. In
the early 1990s, when a similar rule went into effect for corporations,
employers responded by cutting benefits, rather than setting aside money
to meet the obligation.
Public-employee unions recognize the threat and lobbied the Governmental
Accounting Standards Board unsuccessfully to get the rule changed.
In Rhode Island, Carcieri's campaign on pensions resembles President
Bush's efforts to rein in Social Security spending. Like the president,
the governor has gone on the road to sell his message in a series of
town meetings. But Rhode Island has strong unions, and both houses of
the Legislature are controlled by Democrats. Carcieri is a Republican.
"We can't sweep this thing under the rug," said Carcieri. "If we don't
do something now, the pain later will only be worse."
Return to top
NOTE: In accordance with Title 17 U.S.C. section 107, this
material is distributed without profit or payment to those who have expressed a prior
interest in receiving this information for non-profit research and educational purposes
only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
|