and the
Citizens Economic Research Foundation

September 7, 2005

Hamill Commission report:
If you can't dazzle them with brilliance, baffle them . . .

Municipal Finance? Well, that was 96 pages of alleged helpful.

CLT’s best shot at a summary of the latest Hamill Commission report  (a PDF file):

Though the commission includes some of the original 1980 opponents of Proposition 2˝ and we can identify no friends of Prop 2˝, it is very concerned about property tax increases. It recommends local aid changes and someone should do something about the formulas.

Don’t even think about rolling back the income tax rate to 5 percent, in fact a ˝% increase would be nice, or maybe a 1% hike in the sales tax; but for sure, an increase in the auto excise, the creation of local option taxes and an internet hotel sales tax, maybe the telecommunications tax depending on who wins the debate, the mayors or MTF.

And give communities the tools to control costs if it’s still necessary after the new revenues arrive and if the teachers unions don’t object too much.

Note page 37: new growth receipts of 2.4% added to the allowed 2.5% of Prop 2˝.. This means that property tax receipts have averaged 4.9% increase per year.

Nice charts, though where is the chart showing the recommended increase in auto excise costs for drivers?

The narrative leaves something to be desired.  Sample paragraph (emphasis ours):

"Although some observers occasionally suggest that some municipal employment contracts have been overly generous in recent years, it seems that most have been conservative enough to produce annual average growth per employee of only 0.7%, in inflation-adjusted terms between 1994 and 2003, compared to 1.8% for private sector and 1.0% for state employees over the same period."

What the heck does that tell us?  Add health care and pension benefits.  Then ask the private unions if they are doing so much better. And in 96 pages, shouldn’t they have found a place to compare municipal pay with teachers’ salaries, which other recent reports place above the national average?

Why is everything in the report "per employee" or "per capita," except the tax burden, which is "relative to personal income," 45th in the nation?  If it too were per capita, it would be 4th-highest in the nation.

CLT supports the section "Giving Municipalities the Tools to Control Costs." Do that first, before new revenues, or the Legislature and municipalities won’t ever get around to the "tools" part.

Report language on auto excise hike:

"A more realistic depreciation schedule would require only a slight modification to current law while generating significant new revenues for municipalities."

We know that Hamill Commission member Michael Widmer of the so-called Massachusetts Taxpayers Foundation has been recommending a hike in the auto excise rate from $25 to $35 per thousand. This is not in the report, but the "slight modification" would be a major tax increase for drivers of new cars – just as gas prices have increased and people contemplate buying smaller, more efficient vehicles.

Local option taxes have been discussed for years. The conclusion is always that they adversely affect intercommunity commerce. So in fact they will not work unless every community adopts the tax, which means it is no longer local option. This is another plot like "local option" smoking bans that the state eventually had to impose everywhere to "level the playing field."

Bottom line. The vague language, laying out long-known problems, recommending vague tax increases and formula changes, with less than definitive reforms, makes this report basically useless except as another Boston business community statement against the income tax rollback, a stealth attack on Massachusetts drivers and the first step in mandatory local taxes.

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