CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

CLT UPDATE
Monday, November 7, 2005

Celebrating Proposition 2˝ continued, among attacks


On Friday, the group celebrated the 25th anniversary of Proposition 2˝, the law that limits property tax hikes to 2.5 percent annually.

Barbara Anderson , one of the group’s founders and its executive director, couldn’t mask the glee with which she reached the milestone.

"I’ve been eating cake and licking the frosting from my lips all week," she said.

The Patriot Ledger
Saturday, November 5, 2005
Heard in the Halls - A Political Commentary
Happy birthday


(Boston Globe Photo / Wiqan Ang; Cake: Party Favors / Nov. 6, 2005)


"Prop. 2˝ is here to stay," said Barbara Anderson, executive director of Citizens for Limited Taxation, the anti-tax group that put the question on the 1980 ballot. "Almost everyone recognizes that property taxes are still too high, and Prop. 2˝ is the only protection they have against unlimited spending."

But veterans of municipal government say the law needs updating.

"It’s time to look at 'son and daughter of Prop. 2˝," said Bob Gass of Randolph, who joined the school committee just as the new law took effect. "Exempt certain things like health insurance from Prop. 2˝, or maybe raise 2˝ to 3." ...

"I would still campaign against it, because it so undermined the ability to do what you want to do," Gass said....

Prop. 2˝ didn’t turn out to be as damaging as its loudest critics predicted, said Michael Widmer, president of the budget watchdog group Massachusetts Taxpayers Foundation....

"The limits of Prop. 2˝ are really beginning to bite in a way that is going to put greater pressure on cities and towns," Widmer said. "I think the jury is out longer term. I think we’re going to see pressures building over the next few years."

The Patriot Ledger
Friday, November 4, 2005
At 25, Prop. 2˝ still controversial:
Some want update;
others say tax cap is only protection homeowners have


And while many residents continue to groan about their property taxes, the law's founders say that without Proposition 2˝, those tax bills would be much, much worse.

Barbara Anderson, executive director of Citizens for Limited Taxation -- the group that created Proposition 2˝ and garnered enough support to turn it into law -- said the statute saved her $3,601 this year alone, based on what her town of Marblehead was charging in the 1970s.

"It's a very big deal to someone who hasn't had a pay raise in years," Anderson laughed....

"I think Proposition 2˝ is a very good thing," said Alan Vervaeke, a Dunstable representative on the School Committee for six years. "It forces towns and well-meaning politicians to live within specific means. If we want money for our schools, we're going to have to prove categorically that it's necessary, needed and there's a cost benefit to it." ...

Just because Proposition 2˝ has made it through a quarter-century unscathed doesn't mean its future is any more certain.

Some residents wonder whether it's time to change the law by increasing the restriction to, say, 3 percent to give communities more growing room. Others say the law needs to be tightened.

The Lowell Sun
Friday, November 4, 2005
25 years and countless overrides later,
Prop. 2˝ is still going strong


Its passage set off dire predictions of fiscal disaster for municipalities, some of which came true at least initially. But in the years since, Prop. 2˝ has become the sacred cow of Massachusetts politics....

Still, the most sacrosanct citizen initiative in the state's history could very well come under renewed scrutiny as municipal budgets strain under cuts in state aid and inexorable increases in costs such as health insurance -- and as its eponymous 2˝ percent formulae fail to keep property tax bills from draining homeowners' bank accounts. That could make Prop. 2˝'s next 25 years as interesting as the first.

But with new pressures coming to bear at the local level, the future of Prop. 2˝ may be less secure than it seems....

For now, however, Prop. 2˝'s guardian angels are content to celebrate. Just days ago, CLT released its own accounting of tax savings for a range of properties, starting with a five-room cottage in Marblehead, whose owner is paying a property tax $3,601 lower than if taxes had continued to rise at the 8.8 percent annual rate previous to Prop. 2˝. Who is that lucky homeowner? Barbara Anderson herself.

The Boston Globe
Sunday, November 6, 2005
Back to Taxachusetts?
As Prop. 2˝ turns 25,
its proponents may have less to celebrate than they think


Barbara Anderson's "Celebrating Prop 2˝" (op ed, Nov. 4) seems myopic. Yes, we all understand that Prop 2˝ was intended to reduce the tax burden on Massachusetts homeowners. The reality is that it has had a strongly negative impact on education by reducing funding for schools, has cost jobs in local municipal employment, and has forced cuts in social services to those who need them most....

If this is the type of success that Anderson wants us to celebrate, I cannot afford to participate.

The Boston Globe
Monday, November 7, 2005
Letter to the editor
Anderson's myopia on Prop 2˝


Chip Ford's CLT Commentary

"I would still campaign against it, because it so undermined the ability to do what you want to do," said Bob Gass a Randolph school committeeman for 24 years, who joined the school committee when Prop 2˝ was voted in as law. That sums up the opposition about as well as possible in a few words:  "it so undermined the ability to do what you want to do."

Proposition 2˝ was the end of "the good old days" of school committee fiscal autonomy, of school committee gravy trains, spending whatever they desired and the teachers unions demanded with no accountability, then just raising taxes to cover other municipal incidentals -- like police and fire protection, the highway department and snow removal, trash pick-up,  libraries, and administration costs.

Though we've just celebrated passing Proposition 2˝ and hanging onto it for twenty-five years (with a report on its effects), its opponents are still seething and looking for every opportunity to gut it as soon as possible.  Even Michael Widmer of the so-called Massachusetts Taxpayers Foundation -- an opponent of Proposition 2˝ from its inception -- now admits along with other naysayers and doom-and-gloomers, it "didn’t turn out to be as damaging as its loudest critics predicted," according to a Patriot Ledger report.

That didn't stop Widmer from adding a fresh dose of doom-and-gloom:  "I think the jury is out longer term. I think we’re going to see pressures building over the next few years."

Those who lust for a return to the days of unlimited spending, unlimited tax increases, are still among us -- biding their time for the right moment to strike and bring down what's now generally recognized as an institution.  We've so far held at bay the many attempts to gradually erode and water down our law -- the voters' law, but they will continue attacking because the tax-and-spenders never give up, never go away, won't accept the will of the majority or the outcome of a democratic vote.

So long as there is Citizens for Limited Taxation, there will be a fight to keep Proposition 2˝ out of their insatiable reach -- one battle at a time, as the war has been conducted for the past twenty-five years.

Chip Ford


The Patriot Ledger
Saturday, November 5, 2005

Heard in the Halls - A Political Commentary
Happy birthday


The anti-tax group Citizens for Limited Taxation began as a group of fed-up taxpayers trying to force cities and towns to keep property taxes from skyrocketing.

On Friday, the group celebrated the 25th anniversary of Proposition 2˝ , the law that limits property tax hikes to 2.5 percent annually.

Barbara Anderson , one of the group’s founders and its executive director, couldn’t mask the glee with which she reached the milestone.

"I’ve been eating cake and licking the frosting from my lips all week," she said.

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The Patriot Ledger
Friday, November 4, 2005

At 25, Prop. 2˝ still controversial:
Some want update;
others say tax cap is only protection homeowners have
By Tom Benner, State House Bureau


Proposition 2˝ turned 25 today.

The silver anniversary of the measure that caps how much Massachusetts cities and towns can raise property taxes each year has some people renewing calls for change while others say it is the only thing protecting taxpayers from profligate government spending.

"Prop. 2˝ is here to stay," said Barbara Anderson, executive director of Citizens for Limited Taxation, the anti-tax group that put the question on the 1980 ballot. "Almost everyone recognizes that property taxes are still too high, and Prop. 2˝ is the only protection they have against unlimited spending."

But veterans of municipal government say the law needs updating.

"It’s time to look at 'son and daughter of Prop. 2˝," said Bob Gass of Randolph, who joined the school committee just as the new law took effect. "Exempt certain things like health insurance from Prop. 2˝, or maybe raise 2˝ to 3."

Gass isn’t the first local official to call for changes to make it easier for cities and towns to get around the strict cap. That effort has been under way ever since a majority of Massachusetts voters approved the limits in 1980. But so far, none of those efforts has been successful.

One idea currently circulating is to exempt municipal health insurance and fuel costs from the limit. Another would allow municipalities to hike the auto excise tax. A third idea is to exempt senior citizens, who as a group tend to oppose property tax hikes, from paying for overrides - when a majority of voters in a town allow the tax limit to be increased for a specific project.

"Prop. 2˝ can be realistic for normal times," said Phineas Baxandall, assistant director of the Rappaport Institute for Greater Boston at Harvard University’s Kennedy School of Government. "You get a year with terrible snowstorms, and it’s not normal times any more. It becomes less realistic, as municipalities face costs that are out of their control, like blizzards and health care inflation and homeland security regulations."

Proposition 2˝ rode in on the same political tidal wave that swept into office the Reagan Revolution and with it, the notion that less government is better.

Its supporters say Prop. 2˝ was needed then - and it’s needed now.

Barbara Anderson remembers getting angry when the school committee in her hometown of Marblehead told her to get used to annual property tax increases. The experience helped fuel her anti-tax campaign.

"You really don’t see the kind of arrogance that you used to see, especially from school committees, before Prop. 2˝," she said. "Now they’re aware they may need an override some day and they have to have voters on their side."

Had her property taxes continued to increase at the rate they were going before Prop. 2˝, Anderson calculates she’d be paying an extra $3,601 - or close to $7,000 - in annual property taxes.

"My tax bill would basically be double," she said. "Every property taxpayer has saved money from Prop. 2˝."

But others, including public school children, paid, opponents say. Gass, who was on the Randolph school committee for 24 years, remembers devastating budget cuts after the cap went into effect.

"We wound up laying off almost 25 percent of the staff, we closed two schools, we cut back elementary guidance, nurses and a range of services," said Gass, now director of the North Shore Education Consortium. "People wanted to pull their kids from the schools. It was just awful."

Gass concedes the tighter budget forced school officials to find new ways to save money, cut extras and run a leaner operation.

But he thinks Prop. 2˝ did more harm than good.

"I would still campaign against it, because it so undermined the ability to do what you want to do," Gass said. "The consolidations that came about were good, but then you get to a point where you can’t find any more efficiencies."

Glenn Koocher, executive director of the Massachusetts Association of School Committees, said Prop. 2˝ drove potentially talented teachers and administrators into more lucrative occupations, and made it harder for school districts to upgrade facilities.

"We have the low bidders doing all the work," he said. "Every time you get your car washed in the Big Dig, you can think about that."

Prop. 2˝ didn’t turn out to be as damaging as its loudest critics predicted, said Michael Widmer, president of the budget watchdog group Massachusetts Taxpayers Foundation.

That’s largely because substantial boosts in state aid, particularly during the economically flush 1980s and 1990s, allowed cities to get by without huge property tax hikes, Widmer said.

In addition, inflation remained low for much of that time, he said.

"Today there are major pieces like health care that are growing much faster than 2˝ percent," he said.

Widmer credits Prop. 2˝ with keeping property taxes relatively low - witnessed by an overall decline in the number of overrides sought by local governments in recent years. But he’s not sure how long that will continue, without the state helping to pick up more of the cost of municipal government.

"The limits of Prop. 2˝ are really beginning to bite in a way that is going to put greater pressure on cities and towns," Widmer said. "I think the jury is out longer term. I think we’re going to see pressures building over the next few years."

Baxandall, of the Rappaport Institute, isn’t sure if there is enough political will to change the popular measure.

"It does seem to be a kind of political third rail to question actually repealing it," he said. "It did address real problems and for a while it did seem to work, when the state was able to pour in extra local aid to make up for revenues. There haven’t been the same levels in recent years."

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The Lowell Sun
Friday, November 4, 2005

25 years and countless overrides later,
Prop. 2˝ is still going strong
By Rebecca Fater, Sun Statehouse Bureau


In 1992, the Moses Greeley Parker Library in Dracut unceremoniously shut its doors.

Voters had refused to pass a Proposition 2˝ override containing the library's entire operating budget, forcing its staff to turn out the lights and go home.

"It's a date engraved in my memory," said Susan Schwarz, library director since 1990. "The town hit a point where it couldn't keep going."

Proposition 2˝ is a statute that holds communities to raising taxes by a maximum of 2.5 percent, plus new growth (taxes incurred on newly constructed properties), annually.

And while many residents continue to groan about their property taxes, the law's founders say that without Proposition 2˝, those tax bills would be much, much worse.

Barbara Anderson, executive director of Citizens for Limited Taxation -- the group that created Proposition 2˝ and garnered enough support to turn it into law -- said the statute saved her $3,601 this year alone, based on what her town of Marblehead was charging in the 1970s.

"It's a very big deal to someone who hasn't had a pay raise in years," Anderson laughed.

Proposition 2˝ hit "frugal" communities like Dracut very hard at first, said Town Manager Dennis Piendak.

In 1992, the town posed a nine-question override to voters. At stake were police and firefighter jobs, programs for senior citizens and school spending, in addition to the library.

All nine questions failed.

"So the cuts were implemented," Piendak said. "That's the law, and we have to work with it."

Overrides allow communities to raise additional taxes above the restriction if approved by a majority of voters at a Town Meeting and on a ballot. If the override is approved, the additional taxes are permanently built into that community's property-tax base. Such overrides can add to the challenge for elderly residents and those on fixed incomes who struggle to keep up with their growing property taxes.

Dunstable has attempted overrides at least nine separate years and lost most of them, according to records held by the Department of Revenue's Division of Local Services. Those overrides were always intended to supplement the Groton-Dunstable Regional School Department budget.

"I think Proposition 2˝ is a very good thing," said Alan Vervaeke, a Dunstable representative on the School Committee for six years. "It forces towns and well-meaning politicians to live within specific means. If we want money for our schools, we're going to have to prove categorically that it's necessary, needed and there's a cost benefit to it."

"What happens when the district has lots of mandates and (they're) not fully funded, and you can't go to the property tax? You just get squeezed tighter and tighter," he said.

The establishment of Proposition 2˝ in 1980 actually led to a massive layoff of teachers and principals, because some communities were forced to dramatically cut spending habits, Koocher added. Many of those people left the education field permanently for new careers, contributing to today's crisis-level teacher and principal shortage, he said.

Just because Proposition 2˝ has made it through a quarter-century unscathed doesn't mean its future is any more certain.

Some residents wonder whether it's time to change the law by increasing the restriction to, say, 3 percent to give communities more growing room. Others say the law needs to be tightened.

Anderson's group has a bill moving through the Legislature that would limit communities to pursuing one override per year.

Initially, Citizens for Limited Taxation inserted the override option into Proposition 2˝ to give residents a way to pay for emergency projects like a new police station. Now, Anderson said, it's getting out of hand, with officials leading override efforts to supplement communities' operating budgets.

"That was unthinkable at the time," she said. "It was meant to be for emergencies."

But as with any state law, Proposition 2˝ could be repealed at any time with a simple majority vote by the Legislature.

To their credit, Anderson said, lawmakers have not done that, and attempts to tweak the law have been vetoed by the state's Republican governors.

"For a change, you can say something good about them," she said. "Why would they want to change that?"

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The Boston Globe
Sunday, November 6, 2005

Back to Taxachusetts?
As Prop. 2˝ turns 25,
its proponents may have less to celebrate than they think
By Robert Keough


Twenty-five years ago last week -- Election Day in 1980-Massachusetts voters turned state and local politics upside down by approving a ballot initiative labeled Question 2 but better known then and now as Proposition 2˝. The name came from its principal provisions, capping property taxes in each municipality at 2.5 percent of full market value and limiting increases of that overall levy to 2.5 percent annually. It was the opening salvo in the tax wars that dominated state politics for more than two decades, and which do so to a lesser extent even today.

That the property-tax-limiting measure passed was no surprise-pre-election polls showed the "yes" vote with a slight lead-even though when California's Proposition 13 passed in 1978 then-Governor Michael Dukakis commented that Massachusetts voters were "too sophisticated" to fall for such a simplistic tax-cap scheme. But the 3-to-2 vote in favor revealed the depth of anger over the high property taxes (at that time, fourth in the nation as a share of personal income, third highest per capita) that had earned the Bay State the derisive nickname of "Taxachusetts."

Its passage set off dire predictions of fiscal disaster for municipalities, some of which came true at least initially. But in the years since, Prop. 2˝ has become the sacred cow of Massachusetts politics. In 2002, two state representatives separately made public comments about Prop. 2˝ having "outlived" its times and its utility. Republican Susan Pope of Wayland immediately recanted, claiming her remarks had been "taken out of context," while Framingham Democrat Deborah Blumer's plan to replace the 2.5 percent levy limit with an "inflation index" for government services quickly morphed into a study commission, and even that proposal was rejected by the House of Representatives on a voice vote.

Still, the most sacrosanct citizen initiative in the state's history could very well come under renewed scrutiny as municipal budgets strain under cuts in state aid and inexorable increases in costs such as health insurance -- and as its eponymous 2˝ percent formulae fail to keep property tax bills from draining homeowners' bank accounts. That could make Prop. 2˝'s next 25 years as interesting as the first.


Prop. 2˝'s etched-in-stone character is all the more remarkable considering its back-of-the-envelope provenance. Two days after California voters approved Proposition 13, which capped property taxes in that state at 1 percent of valuation, Boston Herald American columnist Warren T. Brookes suggested that Massachusetts follow suit, writing that "a cut to 2 or 2˝ percent of fair market value would have a wondrously salutary impact on this state's staggering economy -- and a marvelously disciplinary impact on our politicians, bureaucrats, and big business." Not long afterward, Citizens for Limited Taxation (CLT), which had been founded in 1974, began the ballot drive that culminated in the 1980 victory.

The new property-tax limits did force cutbacks in municipal services, as the statewide property tax levy fell at an annual rate of 6.8 percent per capita from 1981 to 1984, before starting to grow at a modest rate (2.1 percent per year, in constant dollars, from 1984 to 2004). In addition, increases in local aid, made possible by state revenues swollen by the mid-1980s "Massachusetts miracle," helped to put local governments back on their fiscal feet. Before long, as Massachusetts Municipal Association head Geoffrey Beckwith is fond of saying, Prop. 2˝ had gotten "baked into the political landscape."

But the tax wars were just getting started. For the next 20 years, tax-reform populists of the left and right took to the ballot. And each side produced a champion whose public profile rose higher than that of most public officials of the day.

For the tax cutters, there was-and still is -- Barbara Anderson, the fiery red - (now white-) haired chief of Citizens for Limited Taxation. For the tax-and-spend crowd, who tried to steer the tax revolt to the left by arguing that the tax burden in Massachusetts was unfairly distributed rather than excessive, there was Jim Braude. Tall, fast talking, and telegenic -- enough so that he now serves as host of NewsNight, on New England Cable News, as well as cohost of a talk-radio show on WTKK -- Braude came to Boston in 1986 to become the anti-Anderson, as head of the newly formed Tax Equity Alliance for Massachusetts (TEAM).

The two mixed it up for nearly a decade, taking turns launching petition drives and battling against them. When the economy tanked in the late '80s and the Legislature passed back-to-back income tax hikes to balance the state budget, CLT put a tax rollback question on the 1990 ballot, but a Braude-led coalition of unions and social-service advocates defeated the measure. Anderson returned the favor in 1994, squashing TEAM's proposed constitutional amendment for a graduated, rather than flat-rate, state income tax.

In those fights, Anderson and Braude barnstormed the state like candidates for office, debating each other night after night in high school auditoriums and VFW halls. They also drove to most of them together, in the process becoming the rarest of political animals, bitter adversaries who are also fast friends.

The era of Republican governors -- along with public backlash to the 1989-91 budget crisis and tax hikes -- institutionalized, to some extent, the tax-revolt agenda. Bill Weld and Paul Cellucci signed more than 40 tax-reduction measures passed by the Democrat-controlled Legislature in the 1990s, undermining, if never quite retiring, the Taxachusetts moniker. Cellucci joined forces with Anderson for one more ballot question in 2000, obtaining a voter mandate for returning the income-tax rate, then hovering at 5.85 percent, to 5 percent over three years. (That step-by-step reduction was suspended in 2002, holding at 5.3 percent, as part of a revenue package to solve the state's latest fiscal crisis.)

The constant, during this period, was Prop. 2˝. And while the Legislature's increasing disregard for voter-approved initiatives (dismantling the Clean Elections campaign finance system, as well as suspending the income-tax rollback) has taken some of the steam out of ballot-question populism, Prop. 2˝ has enlivened local politics by requiring referendum campaigns in towns and cities for nearly every new school and firehouse, as well as for property tax increases over the Prop. 2˝ limits to bolster municipal budgets. Some 3,600 overrides for operating funds have made it to the ballot since 1983, with about 40 percent gaining approval, while two thirds of roughly 3,000 proposed debt exclusions, which exempt capital projects from Prop. 2˝'s limitations, have passed.

But with new pressures coming to bear at the local level, the future of Prop. 2˝ may be less secure than it seems. In September, a municipal finance task force led by Sovereign Bank New England chairman John Hamill detailed the budget woes of local government, where schools, fixed costs (health insurance, pensions, and other employee benefits), and debt service have eaten up 80 percent of budget growth since 1987, leading to a "crowding out" of local services such as public works.

In the past, state government has come to the rescue, if belatedly, with infusions of local aid, in the 1990s pumping millions of dollars into local schools under the guise of education reform. But it is unclear whether it will do so again. Last year's state budget surplus raised hopes for increased local aid, but it also renewed calls for the final installment of the voter-approved income tax rollback, not only from Governor Mitt Romney but also from former Senate president Thomas Birmingham, who opposed that ballot question in 2000.

Meanwhile, local government is almost as dependent on the property tax as it ever was, relying on that levy to cover 53 percent of local budgets, compared with 59 percent in 1981 and up from a low of 46 percent in 1988. And in keeping property taxes in check, Prop. 2˝ seems to have lost some of its bite. Massachusetts had dropped to 10th in the nation in property tax per capita (22d relative to income) in 1992, but has been inching up, reaching eighth per capita (17th based on income) in 2002. And as residential property values have soared and commercial property sagged, more of the tax burden has shifted to homeowners, with the average tax bill on a single-family home growing 36 percent, from $2,679 to $3,589, between 2000 and 2005, according to the Hamill report.

For now, however, Prop. 2˝'s guardian angels are content to celebrate. Just days ago, CLT released its own accounting of tax savings for a range of properties, starting with a five-room cottage in Marblehead, whose owner is paying a property tax $3,601 lower than if taxes had continued to rise at the 8.8 percent annual rate previous to Prop. 2˝. Who is that lucky homeowner? Barbara Anderson herself.

Robert Keough is editor of CommonWealth, a quarterly journal published by MassINC, a nonpartisan think tank in Boston.

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The Boston Globe
Monday, November 7, 2005

Letter to the editor
Anderson's myopia on Prop 2˝


Barbara Anderson's "Celebrating Prop 2˝" (op ed, Nov. 4) seems myopic. Yes, we all understand that Prop 2˝ was intended to reduce the tax burden on Massachusetts homeowners. The reality is that it has had a strongly negative impact on education by reducing funding for schools, has cost jobs in local municipal employment, and has forced cuts in social services to those who need them most.

Many towns have been forced to resort to voter-mandated Prop. 2˝ overrides in order to provide essential services to their residents, particularly in the area of schools.

While I am pleased for Anderson that she is saving more than $3,500 annually in property taxes, she and her colleagues at Citizens for Limited Taxation need to look at the property tax impact on the greater population. Because of overrides, senior citizens have been forced to sell their houses because they cannot afford to pay property taxes on a fixed income. Property taxes on my house have increased by more than 50 percent from the level it was when I bought it in 1990. I do not believe I am alone.

Despite what MCAS proponents would have you believe, the quality of education in Massachusetts is poorer, social services continue to be lacking, and property taxes are on the rise.

If this is the type of success that Anderson wants us to celebrate, I cannot afford to participate.

Darryl A. Abbey
Holliston

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