and the
Citizens Economic Research Foundation

May 20, 2005

Memo to the Massachusetts Senate
Regarding the Tax Rollback

Memo to the Massachusetts Senate
May 20, 2005
Re: Senate Budget

We hope that the Senate has more respect for the voters than the House showed in its FY’06 budget, which ignores the mandate to rollback the income tax rate to its traditional 5 percent. Though to be fair, the House did not have the advantage of having seen the extraordinary April revenues. As growth continues to be strong, and this year’s surplus grows also, perhaps even the House will recognize that the 2000 mandate of the voters should be honored now.

It has been sixteen years since the Legislature passed a “temporary” income tax rate increase (see 1989 quotes on the back). During the strong revenue years of the 1990’s, with their annual budget surpluses, legislators refused to honor the Legislature’s promise that the rate would be restored to 5 percent. Finally, in November 2000, voters passed the income tax rollback by 59-41 percent.

In early 2002, having spent itself into another fiscal crisis – the state budget doubled since the “temporary” tax passed in 1989 – the Legislature “froze” the rate at 5.3 percent, insisting that voters hadn’t realized in 2000 how much the extra money was needed. But in November 2002, 45 percent of voters tried to repeal the income tax entirely.

Massachusetts faces many challenges as the economy changes, as the population ages. These challenges can be met only if there is respect and trust between the government and its constituents. The state can begin by keeping its word on the “temporary” income tax hike.

Citizens for Limited Taxation, which collected signatures and campaigned for the 2000 rollback, has filed a bill to restore the rate for the present tax year. However, we support Governor Romney’s proposal to restore the rate for tax year 2006. We hope you will support an amendment to honor the voters’ rollback, and incorporate that language in your final budget.

Thank you for your consideration.

Please turn over and read the back side . . .

Reverse side:  "Was it a Promise or Wasn't it? You decide!"

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