and the
Citizens Economic Research Foundation

Massachusetts House
Dodges Income Tax Rollback, again

October 18, 2005

State House News Service
House Session - Tuesday, October 18, 2005


CONVENES:  The House convened at 11:03 am, Rep. Petrolati of Ludlow presiding. Chaplain Robert Quinn offered a prayer and the Pledge of Allegiance was recited....

FISCAL í06 $300M SUPPLEMENTAL BUDGET:  At 3:22 pm, question came on ordering to third reading H 4440 making nearly $300 million in fiscal 2006 appropriations.

Rep. DeLeo urged passage of the appropriations bill.

As has been widely reported, the Commonwealth realized a surplus in fiscal 2005. Due to rising revenues and responsible budgeting on the part of this Legislature, we find ourselves in the enviable position of how best to deal with surplus funds.

In a large measure, we have already done so. In Chapter 106 of 2005, the Legislature deposited $691 million of that surplus into the stabilization fund.

This was an item which I know was so important to each and every member of this body to put that money back and once again rebuild the fund for what someday may be a rainy day. We knew our responsibility was to put back what we took out in the fiscal 2005. We knew we had the responsibility to build the account to pre-recession levels.

After paying outstanding bills and funding obligations, we are left with a modest amount of funds. The bill spends about $300 million in one-time revenues. It seems like an awful lot of money.

Itís interesting to note that we have 405 amendments before us. It approaches the regular budget debate. We have requests totaling $2 billion. I could take this $300 million and all the stabilization funds and still we do not have enough money to satisfy the wishes today. I hope the members would consider this as we begin a very long day.

We provide some $100 million for a capital reserve fund between the UMass system and state and community colleges. We provide $55 million for roads and bridges through Chapter 90. We provide $20 million for LIHEAP. This is going to be the first step in this Speakerís role in addressing some of the energy needs. We provide $15 million for community development action grants and $8 million for higher education endowments to leverage private donations. We provide $7.2 million to address monetary deficiencies of local housing authorities. We provided $5 million for a reserve to ensure that seawalls that protect coastal residents are in good order, $5 million for various transportation programs, and $10 million to improve environmental and historic resources. We provide some $25 million to address the waiting list for MassHealth Essential.

Many members have spoken relative to the devastation that has occurred throughout the Commonwealth as a result of rain and flooding which has occurred these past two weeks. In talking to A&F there is going to be hopefully a supplemental budget, which is going to be out in the not too distant future to address some of these concerns. In talking to Secretary Trimarco, I informed him of the need to do this as expeditiously as possible, which he ensured me he would do.

I have an amendment requesting from A&F to report back to us the monetary needs to address this devastation and what kind of timeframe they are talking about and what resources are available. These and other provisions address the memberships concerns, but not all of them. We try to meet as many needs as possible without violating the tenets of fiscal responsibility.

INCOME TAX AMENDMENT:  Rep. Jones offered amendment 361, which, among other things, set the income tax rate at 5 percent effective Jan. 1, 2006.

Rep. DeLeo headed into Speaker DiMasiís office.

Rep. Binienda was recognized.

Rep. Flynn said point of parliamentary inquiry. Amendments had to be filed by noon. Can someone still file an amendment to an amendment?

Rep. Petrolati said further amendments are in order.

DOR STUDY AMENDMENT:  Rep. Binienda offered a further amendment regarding a Department of Revenue study.

Rep. Binienda said this will give us a chance to hear back form DOR on the effect of the amendment on a tight budget we have before us. I hope the further amendment is adopted.

Rep. Jones said it really comes as no surprise that the chair of Rules said weíd have a debate and this is the appropriate vehicle. He was erroneous in his observation or needed a further opportunity to research the issue. A story over the weekend relative to the Legislature looking at additional taxes, so I think itís appropriate to have a debate about taxes.

The Election Laws Committee is having an oversight hearing on signature gathering and while itís appropriate to be concerned about the sanctity of the process, we should be equally concerned about respecting the will of the voters.

A similar amendment was offered in the budget, with a similar request by the chair of Revenue. There has been ample opportunity and warning available so an analysis could be readily available. At least allow the open debate that should be the hallmark of this chamber and was the promise of the leader of this chamber.

Rep. Peterson said he hopes the further amendment is not adopted.

Last week we talked about what would be within the scope and we had the idea that a bill reducing the income tax might not be within the scope. If it was though we could go back to the age-old process of requiring a study. Can you tell me how many reports have been issued over the years after studies were ordered? Last time I checked I donít think Iíve seen any report on any of those studies that were requested. I can guarantee you there will not be a report issued to us on this further amendment in the near future or in the future.

The general public took it to the ballot box and the voters said you the Legislature should roll back the income tax. A similar petition that was more drastic would have done away with the personal income tax so $14 billion we generate, we would not have to appropriate. Surprisingly, that referendum question came very close to passing, somewhere around 47 percent.

The people of the Commonwealth would like to see their personal income tax rate rolled back to 5 percent. They have said it at the ballot box.

We hear about the fiscal crisis. There are legitimate concerns. But we are seeing unprecedented rates of income and having over $1 billion in the rainy day fund, I think it would be prudent and wise to abide by the will of our voters who are trying to come up with money for heat and gasoline and fuel and energy for their small businesses. The best pay raise for a small business is to reduce the personal income tax burden. Defeat the further amendment.

Further amendment ADOPTED. Rep. Peterson doubted the vote and there was support for a roll call.

Rep. Petrolati opened the roll call at 3:41 pm and said it would be open for three minutes.


Rep. Wagner received permission to vote late and voted yes at 3:47 pm.

Jones amendment, as further amended, ADOPTED.

Bill ordered to third reading at 3:48 pm.

At 3:49 pm, Reps. Wolf, Haddad, and Petersen received permission to vote on the last roll call and they voted yes.

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