CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

CLT UPDATE
Wednesday, January 11, 2006

No matter how you look at it, blame MTF


Soaring healthcare costs are poised to consume large portions of many communities' budgets in the coming months, forcing cash-strapped cities and towns north of Boston to consider cutting back on other services, such as road maintenance, or asking employees to bear a larger part of the burden....

Over the past five years, health costs have doubled in some communities -- growing four times faster than the communities' entire operating budgets, according to data provided by the Massachusetts Municipal Association....

Increasing healthcare costs have become a perennial budget buster for municipalities, and the worst, leaders say, is yet to come.

A wave of baby boomers poised for retirement, coupled with a new accounting rule that will require communities to report the impact of future retiree health costs, is creating shudders in local governments....

Currently, most communities do not report, or even calculate, these costs until an employee retires and actually starts drawing retirement benefits. Few communities have set aside money to cover future health costs, according to the Governmental Accounting Standards Board, the nonprofit organization that issued the new accounting rules. The board sets accounting standards for local and state governments....

"The increase is forcing every other line item to hold steady or go down, which is a terrible crunch," [Georgetown Town Administrator Stephen] Delaney said. "It comes out of road maintenance, schools. We are trying to be proactive this year and make sure we are doing the best we can." ...

Several local leaders said they are frustrated by state laws that make it difficult for communities to lower their health costs. Currently, state law requires that each proposed change to a local union contract be approved by all unions in a community.

For instance, if a community's firefighters were to agree to pay an increased health premium, local officials would need to bargain similar increases with the community's police, custodians, and other union workers before the increase could take effect....

Public employees nationwide generally receive more-generous health benefits than their counterparts in the private sector, according to a recent survey by the nonprofit Kaiser Family Foundation.

On average, municipal and state employees pay just 9 percent of the premium for a single-person plan, while private-sector workers pick up 16 percent of their premiums, the survey showed....

Barbara Anderson, executive director of the Marblehead-based Citizens for Limited Taxation, said it may be time for municipalities to stop paying for health coverage altogether.

"Raising taxes on property owners, or taxpayers in general who are also facing out-of-control healthcare costs, is not a solution," Anderson said.

Anderson is pushing a plan that would require all employees, both public and private, to purchase their own health insurance policies and deduct the costs from their state income tax bills.

"Health insurance, Medicare and Medicaid, is going to get worse as the population ages," Anderson said. "The problem is going to get worse before it gets better."

The Boston Globe - North Edition
Sunday, January 8, 2006
Healthcare costs threaten local budgets
Many officials say they must cut back on other services


With state tax collections rising, the state Legislature is proposing more than $1 billion in new spending to pay for health coverage for the uninsured, salary increases for court clerks, county sheriffs and judges, to create jobs, and to fund favorite projects for House and Senate members.

Near the end of last year, legislators approved $80 million for heating assistance, $11 million for grants to prevent gangs and comprehensive bills to spend surplus budget dollars and jump-start the economy....

The bills to spend the surplus are drawing the most criticism because they include scores of pet projects in the districts of legislators and substantial pay hikes for court clerks, assistant clerks, judges, registers of probate and county sheriffs.

Barbara C. Anderson, executive director of Citizens for Limited Taxation, said legislators put a priority on the pay raises.

Anderson said legislators should have cut the state income tax rate from 5.3 percent to 5 percent to comply with a ballot question approved by voters in 2000. "They've got too much money and they want to spend it before they run out of reasons not to do the income tax rollback," Anderson said....

Because of increasing collections of sales, business and income taxes, the state's tax collections for this fiscal year through December were $172 million, or 9.2 percent, more than expected. For the fiscal year that ended June 30, the state collected $436 million more than expected.

With strong revenue growth, legislators can spend hundreds of millions without raising taxes....

Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said the increase in tax revenues is slowing, and legislators need to rein in some of the planned spending.

Widmer said the current $24 billion state budget is barely in balance and only through the use of $600 million in reserves....

"There are too many of them," Widmer said of local projects in the bills. "The Legislature is overreaching."

The Springfield Republican
Monday, January 9, 2006
New spending to hit $1 billion


Despite well-documented fiscal worries over the past few years, California has a good financial standing and won't have problems selling bonds to pay for better roads, schools and other improvements, financial experts said.

Moody's Investors Service and Standard & Poor's, the two largest independent credit-rating services, consider the state a good lending risk. Also, there should be no shortage of banks that like California's future economic prospects and will want to invest in these bonds....

"Any number of banks will be willing to underwrite this issue," said David Hitchcock, director of S&P's government group....

An advocacy organization for limited taxes said Schwarzenegger's proposal to enact a debt ceiling is a good way to reassure taxpayers and investors concerned about his massive bond pitches.

"Wall Street usually likes it in that it affects your bond rating," said Barbara Anderson, executive director of Citizens for Limited Taxation, whose home state of Massachusetts has a statutory debt ceiling. "Standard & Poor's and everybody likes to see that there's a limit."

Banks may like the spending proposals but be less interested in the debt ceiling, Anderson said. Banks tend to like to lend money to governments and don't like limits on governments' indebtedness, Anderson said.

The Press-Enterprise - Riverside, CA
Monday, January 9, 2006
California's well worth bond risk


Most undocumented immigrants who graduate from Massachusetts high schools are as American as apple pie and Tom Brady....

Yet, because their parents entered the country illegally, they are undocumented immigrants - illegal, some prefer to say - so they must pay more in tuition costs than in-state residents if they want to attend a state college or university....

The Massachusetts Taxpayers Foundation estimated in a report released last week that the enrollment of undocumented immigrants would increase from nearly 100 students in the fall of 2006 to about 600 in 2009 if the bill becomes law. Rather than a loss, the report says that the state will reap millions of dollars in new revenue if undocumented immigrants are allowed to pay in-state tuition....

In Massachusetts, the land of higher education, all high school graduates should be treated equally.

A Springfield Republican editorial
Sunday, January 8, 2006
Illegal immigrants ... or future Americans?


The Massachusetts Taxpayers Foundation is the latest interest group to weigh in on this debate, which should reach the floor of the House today. The MTF claims that by offering the lower in-state tuition rate to illegal immigrants, the state will collect millions in new revenue.

With all due respect to Mass. Taxpayers, that’s some fuzzy math. Funding for public higher education in Massachusetts has been slashed more deeply than any other state over the past few years, and college presidents are pleading for a bailout. Is now really the time to begin absorbing additional costs, even if they are small?

The MTF report ignores the possibility that Massachusetts might well be forced to extend the discount to all students regardless of where they live — or rescind it for everyone — if this law passes. Can the state afford that?

The report projects that enrollment of illegal immigrants would grow from 100 in 2006 to 600 in 2009 if the law passes. Do the numbers just keep going up?

No one wants to deny a student the chance for a college education. But taxpayers are under no obligation to finance that education for families who circumvent the law.

A Boston Herald editorial
Wednesday, January 11, 2006
Price is too high for tuition bill


Public colleges could make $2.5 million by 2009 if they enrolled these students at in-state tuition rates, according to new research from the business-backed Massachusetts Taxpayers Foundation....

Critics say these students would displace citizens. But public college officials say they have the capacity to grow without incurring significant additional costs.

Massachusetts needs more young college graduates. According to Census figures, the state lost 5 percent of its 25- to 34-year-olds, some 44,000 people, from 2000 to 2004....

The Boston Redevelopment Authority estimates that each dollar spent on tuition would result in a $4.20 return in income taxes over a 40-year career.

Legislators should pass it as an easy, low-cost way to enrich the Commonwealth.

A Boston Globe editorial
Wednesday, January 11, 2006
College break


Massachusetts’ economic expansion slowed to a "virtual standstill" late last year — with no improvement in sight, according to a pessimistic University of Massachusetts report released yesterday.

The state’s economy has slowed so much, one UMass economist said, that it’s reminiscent of stagnant economic times after World War II when Massachusetts lost many manufacturing jobs.

"It’s alarming," said Alan Clayton-Matthews, an economist who helped compile the "Benchmarks Bulletin" for the UMass Donahue Institute.

"This slowdown in the Massachusetts economy is not really the downside of a business cycle, but rather reflects an economy that is stagnating under the pressures of a high cost of living, outsourcing (of jobs), offshoring (of jobs), and competition from Asia for the state’s information technology products," wrote Clayton-Matthews.

The Boston Herald
Tuesday, January 10, 2006
Mass. slowdown:
Economy’s growth rate ‘alarming’


Chip Ford's CLT Commentary

Michael Widmer and his so-called Massachusetts Taxpayers Foundation continue to be quoted as somehow still relevant.  Most news reports now term MTF "business-backed" since we've successfully eroded its former appellations of "highly-respected" and "non-partisan."  Today, The Boston Herald took MTF down yet another notch, terming it "the latest interest group." We're knocking down MTF and it's once-unquestioned credibility gradually but surely.  Soon we won't be alone in recognizing it for what it's been for too long.

Despite its purported concern for the business climate of Massachusetts and the state's long-term fiscal condition, for years MTF has eroded both.  Now it has contorted itself further by attempting to drive up the cost of government even higher, imposing an even greater bite on law-abiding taxpayers.

Why?  Why would a so-called "business-backed" group billing itself as a "taxpayers foundation" boldly insinuate itself into such a blatantly anti-taxpayer issue like taxpayer subsidies for illegal aliens?

How can someone allegedly as astute as Michael Widmer perennially whimper without effect for over a decade about state profligacy with one face, while consistently oppose tax cuts for average taxpayers with his other face?  How can a man with the alleged objective brilliance he evokes not see the connection; fail to appreciate that so long as our money is on the pols' table they will spend it and come back for more, as they always have?  How many fiscal crises does it take for someone with even average intelligence to learn this lesson, to appreciate this simple reoccurring dynamic?

Could it be, as Barbara noted when called by a California newspaper, The Press-Enterprise, that there is some benefit to MTF's members when the government runs itself deeper into debt -- by following Widmer's advice when it serves some politicians' purposes.  We know that average taxpayers are consistently the target of MTF and Widmer, whether it's support of tax hikes on us or opposition to our tax cuts.  So how does an alleged "taxpayers foundation" stay in business, who benefits from Widmer's and MTF's poor advice?

First, of course, the recipients of the state's largesse, extracted by force from its taxpayers.

Second, the bankers who loan Massachusetts the money to bail itself out of fiscal disaster -- for millions of our dollars in interest of course.  What better way to profit bankers than to help create fiscal disaster, which the state then needs bankers' money to dig out from beneath?

Even though it calls itself the Massachusetts Taxpayers Foundation, notice that its members are not exactly average taxpayers like us, for example:

MTF Executive Committee

Karen Kruck, Treasurer
Senior Vice President
State Street Corporation

Stanley J. Lukowski
Chairman and CEO
Eastern Bank

James E. Mahoney
Director of Public Policy
Bank of America

MTF Board of Trustees

Donald J. Barry, Jr.
Senior Vice President and Counsel
Citizens Bank of Massachusetts

Christopher W. Bramley
State President, CEO
Banknorth Massachusetts

William S. Hogan, Jr.
President and CEO
Easthampton Savings Bank

Karen Kruck
Senior Vice President
State Street Corporation

Stanley J. Lukowski
Chairman and Chief Executive Officer
Eastern Bank

James E. Mahoney
Director of Public Policy
Bank of America

M. Robert Rose
Executive Vice President
Sovereign Bank

MTF Program Committee

Joseph Ailinger
Vice President- Manager, Media Relations
Mellon New England

James E. Mahoney
Director of Public Policy
Bank of America
Boston

James McCarthy
Executive Vice President and COO
DanversBank

Edward H. Seksay
General Counsel
Rockland Trust Company

Nobody can be as wrong as Michael Widmer and the so-called Massachusetts Taxpayers Foundation, so often over so long, without intent or a strategy (see a little of MTF's track record over the years).  None can be as unintentionally ineffective with reducing the profligate government spending it whines about year after year, and remain relevant. Time after time MTF is just providing cover for that spending when it counts, and it's becoming apparent to more, slowly but surely.  Since its latest news release disguised as a "report" supporting taxpayer subsidies for illegal aliens, it must be getting difficult for a growing number to not recognize MTF's true agenda and tactics.

Chip Ford


The Boston Globe - North Edition
Sunday, January 8, 2006

Healthcare costs threaten local budgets
Many officials say they must cut back on other services
By Kay Lazar, Globe Correspondent


Soaring healthcare costs are poised to consume large portions of many communities' budgets in the coming months, forcing cash-strapped cities and towns north of Boston to consider cutting back on other services, such as road maintenance, or asking employees to bear a larger part of the burden.

Some local leaders say they are expecting the cost of healthcare premiums for their employees to jump between 10 percent and 20 percent this year, expanding an already strained part of the budget.

Over the past five years, health costs have doubled in some communities -- growing four times faster than the communities' entire operating budgets, according to data provided by the Massachusetts Municipal Association.

In Salem, healthcare costs shot up 101.5 percent between fiscal years 2001 and 2006 while the city's total operating budget increased just 13.4 percent. In Melrose, the gap was even more dramatic. Healthcare costs soared 113.6 percent while the city's total budget grew just 9.2 percent

Increasing healthcare costs have become a perennial budget buster for municipalities, and the worst, leaders say, is yet to come.

A wave of baby boomers poised for retirement, coupled with a new accounting rule that will require communities to report the impact of future retiree health costs, is creating shudders in local governments.

Retiree healthcare "is a major iceberg now coming into view, and you know it's going to be big, just seeing the tip of it," said Tom Leckrone, human resources director for Salem.

Three-quarters of Salem's full-time employees -- 873 of 1,166 -- are at least 50 years old, meaning many will be eligible to retire, with health benefits, in the next five years, Leckrone said.

Beginning in 2007, a new accounting rule imposed on all state and local governments will force cities and towns to spell out each year an estimate of how much they will need to spend on future healthcare costs for already retired employees as well as current employees from their retirement until their death.

It also will require communities to report whether they have set any money aside for these future costs.

Currently, most communities do not report, or even calculate, these costs until an employee retires and actually starts drawing retirement benefits. Few communities have set aside money to cover future health costs, according to the Governmental Accounting Standards Board, the nonprofit organization that issued the new accounting rules. The board sets accounting standards for local and state governments.

The rules do not require governments to set aside money to pay future retirement healthcare costs.

But communities that don't do that risk jeopardizing their credit ratings, which can affect their ability to borrow money, said Karl Johnson, a project manager with the Standards Board.

"Municipalities will need to find money in their annual budgets to pay down that bill, and with most communities right now really struggling to make ends meet, given their current costs, this can only add to the pressure," said E. Cameron Huff, senior researcher at the Massachusetts Taxpayers Foundation.

Revere City Auditor Laurie Giardella said the city has not started to put aside money for future retirees' health coverage. Retirement costs "could bankrupt everything, especially with the baby boomers coming along," she said.

Retirement costs aside, Georgetown shouldered a 20 percent increase this fiscal year in health costs for current employees, and the town has already been told by its provider that it is likely to face another 20 percent hike for the new fiscal year, starting July 1, said Town Administrator Stephen Delaney.

"The increase is forcing every other line item to hold steady or go down, which is a terrible crunch," Delaney said. "It comes out of road maintenance, schools. We are trying to be proactive this year and make sure we are doing the best we can."

Delaney said Georgetown probably will shop around for a new health insurance provider to see if it can get lower rates.

Several local leaders said they are frustrated by state laws that make it difficult for communities to lower their health costs. Currently, state law requires that each proposed change to a local union contract be approved by all unions in a community.

For instance, if a community's firefighters were to agree to pay an increased health premium, local officials would need to bargain similar increases with the community's police, custodians, and other union workers before the increase could take effect.

Still, Salem officials are likely to push for major changes to labor union contracts for health coverage in the coming months so the city can lower its overall health costs, Leckrone said.

The city probably will recommend increased copayments; employees currently pay $5 to visit a doctor and $25 if they use an emergency room.

Leckrone said he would also like to see copayments established for in-patient hospital stays and visits to specialists.

And, he said, he will recommend that employees pay a larger percentage of their health insurance premiums. Employees now pay 20 percent of the premiums and the city picks up the rest. Leckrone said he will recommend a 30-70 split.

"The main thing is to get these in line with what the city can bear," Leckrone said. "We are looking to do it in a way that's not an undue burden to any of the population."

Public employees nationwide generally receive more-generous health benefits than their counterparts in the private sector, according to a recent survey by the nonprofit Kaiser Family Foundation.

On average, municipal and state employees pay just 9 percent of the premium for a single-person plan, while private-sector workers pick up 16 percent of their premiums, the survey showed.

In the early 1990s, when a similar accounting rule change required private sector companies to reflect retiree healthcare costs on annual balance sheets, many corporations responded by cutting back on retiree benefits rather than setting aside money to pay those obligations.

Specialists say the soaring costs of healthcare, combined with tight budgets, may prompt communities to consider similar measures. But some say that would be unfair.

"Municipalities are comparing us to the private sector, but they are not paying us like the private sector," said Melrose Fire Captain Ed Collina.

"If you want to compare apples to apples, you have to do that," he said. "We are not paid an awful lot of money for the jobs we do."

In 2004, Melrose's unions agreed to pay 18 percent of their health coverage, up from 15 percent. Premiums for retirees were unchanged.

Barbara Anderson, executive director of the Marblehead-based Citizens for Limited Taxation, said it may be time for municipalities to stop paying for health coverage altogether.

"Raising taxes on property owners, or taxpayers in general who are also facing out-of-control healthcare costs, is not a solution," Anderson said.

Anderson is pushing a plan that would require all employees, both public and private, to purchase their own health insurance policies and deduct the costs from their state income tax bills.

"Health insurance, Medicare and Medicaid, is going to get worse as the population ages," Anderson said. "The problem is going to get worse before it gets better."

Doubling up in five years
Percent change in healthcare costs from 2001 to 2006: 102
Amesbury: 113.8
Georgetown: 113.6
Melrose: 118.2
Revere: 101.5
Salem: 117.2
Wenham: Does not include school budget

SOURCE: Massachusetts Municipal Association; municipal human resources and accounting departments

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The Springfield Republican
Monday, January 9, 2006

New spending to hit $1 billion
By Dan Ring


With state tax collections rising, the state Legislature is proposing more than $1 billion in new spending to pay for health coverage for the uninsured, salary increases for court clerks, county sheriffs and judges, to create jobs, and to fund favorite projects for House and Senate members.

Near the end of last year, legislators approved $80 million for heating assistance, $11 million for grants to prevent gangs and comprehensive bills to spend surplus budget dollars and jump-start the economy.

Legislators are also on the verge of approving a health care bill that could cost nearly $1 billion by the time it's in place in several years.

The bills to spend the surplus are drawing the most criticism because they include scores of pet projects in the districts of legislators and substantial pay hikes for court clerks, assistant clerks, judges, registers of probate and county sheriffs.

Barbara C. Anderson, executive director of Citizens for Limited Taxation, said legislators put a priority on the pay raises.

Anderson said legislators should have cut the state income tax rate from 5.3 percent to 5 percent to comply with a ballot question approved by voters in 2000. "They've got too much money and they want to spend it before they run out of reasons not to do the income tax rollback," Anderson said.

Kathleen C. Norbut, chairwoman of the selectmen in Monson, said she was disappointed the Legislature didn't vote for a mid-year increase in state Lottery aid to cities and towns. Norbut questioned some of the projects approved by legislators.

"There doesn't seem to be a rational fiscal approach to the expenditures," Norbut said.

Top legislators defended their spending. Sen. Michael R. Knapik, R-Westfield, said the spending reflects "a lot of pent-up demand" on the part of legislators and community leaders following the fiscal crisis that gripped state government in the early part of this decade.

"To the extent there is strategic spending, I think it does make sense," said Knapik.

For example, the Senate economic revitalization bill includes $2.5 million for improving the Routes 10 and 202 corridor in Westfield to help support a planned Target Corp. distribution center.

"You have an employer who is willing to bring in 800 jobs to a region," he said. "As we work toward restoring jobs, we have an obligation to do what we can for the infrastructure."

Sen. Stanley C. Rosenberg, D-Amherst, said legislators are also being careful to spend some of the surplus on "one-time" spending that doesn't get built into the base of the state's annual budget.

Rosenberg said most of the local projects also are fiscally responsible. Rosenberg, for example, amended a Senate surplus-spending bill to include $125,000 for Leyden to repair roads and culverts, $70,000 for Whately to repair roads and $125,000 for Bernardston for similar improvements.

"These are small financially conservative communities," Rosenberg said. "They don't have big reserves ... they can turn to."

Because of increasing collections of sales, business and income taxes, the state's tax collections for this fiscal year through December were $172 million, or 9.2 percent, more than expected. For the fiscal year that ended June 30, the state collected $436 million more than expected.

With strong revenue growth, legislators can spend hundreds of millions without raising taxes.

Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said the increase in tax revenues is slowing, and legislators need to rein in some of the planned spending.

Widmer said the current $24 billion state budget is barely in balance and only through the use of $600 million in reserves.

Tax revenues will increase by 5 percent this year and next, down from about 7 percent growth, Widmer said. Weak gains in employment will be a significant drag, he said.

"There are too many of them," Widmer said of local projects in the bills. "The Legislature is overreaching."

The House approved $318 million surplus spending bill that includes $100 million for renovations and maintenance at the five campuses of the University of Massachusetts and for state and community colleges, $25 million to reduce a waiting list of 10,000 long-term unemployed for Medicaid coverage, $3.5 million for state parks and beaches, and $55 million for Chapter 90 grants for cities and towns to improve roads and bridges.

The Senate approved a $240.7 million surplus spending plan that includes $20 million to prevent substance abuse, $4.3 million for district attorneys across the state, $55 million for Chapter 90 grants, and $10.7 million for housing authorities and nonprofit organizations for subsidies for reduced rentals for the elderly, handicapped and veterans.

Both surplus bills also are packed with one-time spending for pet projects of legislators. The House bill, for example, includes $900,000 for another phase of improvements to East Street in Ludlow, $100,000 for upgrading the Bing Theater in Springfield, $100,000 apiece for the Partners for Community Corp. and the Puerto Rican Cultural Center, both in Springfield, and $400,000 to help finance a food market at the site of the former Basketball Hall of Fame in Springfield.

Rep. Cheryl A. Rivera, D-Springfield, said the bill is a vehicle for legislators in Western Massachusetts to designate money for important projects that otherwise wouldn't be financed. Rivera said the region is often overlooked by state agencies that award grants from lump sums in the state's annual budget.

"We're from Western Massachusetts," Rivera said. "We're going to fight for every dollar to help the quality of life."

The House approved $353 million for economic stimulus and the Senate, $473 million.

Those bills are aimed at improving the economy through job training, tax incentives, money for research money, adult education and tourism. Both bills, for instance, include $250 million in grants and loans over the next decade to improve cultural institutions such as museums and theaters.

The Senate bill also features $180 million for projects on the five campuses of the University of Massachusetts and state and community colleges including $20 million toward a planned $90 million science building on the Amherst campus.

House-Senate conference committees are crafting compromise bills on health care, surplus spending and improving the economy. They will send the compromise packages to Gov. W. Mitt Romney, probably sometime early this year.

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The Press-Enterprise
Riverside, California
Monday, January 9, 2006

California's well worth bond risk
By Jack Katzanek and Michelle DeArmond


Despite well-documented fiscal worries over the past few years, California has a good financial standing and won't have problems selling bonds to pay for better roads, schools and other improvements, financial experts said.

Moody's Investors Service and Standard & Poor's, the two largest independent credit-rating services, consider the state a good lending risk. Also, there should be no shortage of banks that like California's future economic prospects and will want to invest in these bonds.

"I think it's very positive," Rod Olea, director of fixed income for City National Asset Management, said of Gov. Schwarzenegger's proposal to raise $68 billion through the sale of bonds. The asset-management company is the investment arm of Beverly Hills-based City National Bank. "We've been very bullish on the state, long-term, since 2004."

Bonds are one of the ways governments and private industry raise large sums of money for major capital improvements. In last week's State of the State message, the governor urged lawmakers to issue new bonds and invest in a state that can expect more than 10 million new residents in the next 20 years.

California's bond ratings are a couple of notches below the best grade, according to Moody's and S&P. It is one of the lowest-ranked states, but all states are usually considered better lending risks than cities, counties and special districts.

Bonds with higher ratings are considered attractive because they are the safest investments. However, bonds rated a little lower also bring in investors because they offer higher yields.

Moody's lists California's rating at A2, sixth highest of 21 classifications. S&P has the state at A, two notches below the best of its nine grades.

"Any number of banks will be willing to underwrite this issue," said David Hitchcock, director of S&P's government group.

Hitchcock said California's existing debt could be a problem. The state owed $746 per person in 2000 but almost doubled that to $1,452 per person in 2005.

But the huge population growth that spurred Schwarzenegger's plea to upgrade the state's infrastructure also will make it easier for the state to handle its future debt because there will be millions more people paying sales and income taxes, Hitchcock said.

"With 3- to 6 percent growth, the capacity to pay will be easier," Hitchcock said. "The state will still have a high debt level, and the number will seem large because the state is so big, but it's not so big relative to what it can pay."

City National's Olea said the state helped itself by issuing only $11.5 billion of $15 billion of Economic Recovery Bonds in 2004, which will be retired in 2009.

"They didn't use it all and retired some of it early," Olea said.

He said the debt ceiling will keep the state from owing too much money. Schwarzenegger's proposal calls for debt payments to be constitutionally capped at no more than 6 percent of the state's general fund revenue.

An advocacy organization for limited taxes said Schwarzenegger's proposal to enact a debt ceiling is a good way to reassure taxpayers and investors concerned about his massive bond pitches.

"Wall Street usually likes it in that it affects your bond rating," said Barbara Anderson, executive director of Citizens for Limited Taxation, whose home state of Massachusetts has a statutory debt ceiling. "Standard & Poor's and everybody likes to see that there's a limit."

Banks may like the spending proposals but be less interested in the debt ceiling, Anderson said. Banks tend to like to lend money to governments and don't like limits on governments' indebtedness, Anderson said.

Bonds make good fiscal sense when a state is looking at long-term public-works projects, such as those proposed by Schwarzenegger, Anderson said. Raising taxes now would unfairly burden current taxpayers, while bonds spread out the burden.

D. Linn Wiley, president and chief executive officer of Ontario-based CVB Financial Corp., parent company of Citizens Business Bank, said the bank only invests in AAA-rated government bond issues, S&P's highest rating. Wiley said he's leery of California's existing debt.

"But we certainly need to strengthen our infrastructure," Wiley said. "All I have to do to remember that is look out my window at the 10 freeway."

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The Springfield Republican
Sunday, January 8, 2006

A Springfield Republican editorial
Illegal immigrants ... or future Americans?


Most undocumented immigrants who graduate from Massachusetts high schools are as American as apple pie and Tom Brady.

They have spent most of their lives in Massachusetts.

They have succeeded in high school, performed at a level that qualifies them for a college education and earned an opportunity to learn skills in college that will prepare them for a productive life.

Yet, because their parents entered the country illegally, they are undocumented immigrants - illegal, some prefer to say - so they must pay more in tuition costs than in-state residents if they want to attend a state college or university.

That's not only unfair; it's a missed opportunity to expand the state's educated workforce.

The state House of Representatives will take up a bill this week that would allow the immigrant students to pay in-state tuition rates - about $9,300 annually compared to the $18,000 they now pay.

The Senate overwhelmingly approved the bill last year, but the House must now pass the bill by a two-thirds majority to override a veto promised by Gov. W. Mitt Romney.

Critics argue that the bill, if it becomes law, would cost the state millions of dollars in lost tuition.

The Massachusetts Taxpayers Foundation estimated in a report released last week that the enrollment of undocumented immigrants would increase from nearly 100 students in the fall of 2006 to about 600 in 2009 if the bill becomes law. Rather than a loss, the report says that the state will reap millions of dollars in new revenue if undocumented immigrants are allowed to pay in-state tuition.

These immigrant students can make important contributions to Massachusetts and its economy, through taxes in higher incomes and by expanding the skilled workforce.

In order to qualify, the students must have lived in the state for at least three years, graduated from a Massachusetts high school and signed a sworn affidavit affirming that they are applying for U.S. citizenship. For those who say the immigrant students have not earned the same rights as U.S. citizens, that seems fair.

In Massachusetts, the land of higher education, all high school graduates should be treated equally.

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The Boston Herald
Wednesday, January 11, 2006

A Boston Herald editorial
Price is too high for tuition bill


Just because the state can afford to pay for something doesn’t mean it must.

Offering illegal immigrants who live in Massachusetts the lower in-state tuition discount at public colleges and universities may be a compassionate act. It may help educate the state’s workforce.

But dress it up any way you like — providing a taxpayer-funded perk to those who live outside the law is wrong, and reasonable people know it.

The Massachusetts Taxpayers Foundation is the latest interest group to weigh in on this debate, which should reach the floor of the House today. The MTF claims that by offering the lower in-state tuition rate to illegal immigrants, the state will collect millions in new revenue.

With all due respect to Mass. Taxpayers, that’s some fuzzy math. Funding for public higher education in Massachusetts has been slashed more deeply than any other state over the past few years, and college presidents are pleading for a bailout. Is now really the time to begin absorbing additional costs, even if they are small?

The MTF report ignores the possibility that Massachusetts might well be forced to extend the discount to all students regardless of where they live — or rescind it for everyone — if this law passes. Can the state afford that?

The report projects that enrollment of illegal immigrants would grow from 100 in 2006 to 600 in 2009 if the law passes. Do the numbers just keep going up?

No one wants to deny a student the chance for a college education. But taxpayers are under no obligation to finance that education for families who circumvent the law.

This bill has struck a nerve with Massachusetts voters and it’s a bona fide campaign issue for 2006. Do you want your rep or senator — or your next governor — to turn a blind eye to the rule of law? House members who vote in favor of the bill today should be prepared to deal with the consequences.

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The Boston Globe
Wednesday, January 11, 2006

A Boston Globe editorial
College break


Massachusetts high school graduates sport grins and graduation robes. But those who are undocumented immigrants hit a wall. They can't get financial aid or pay in-state tuition, and many can't afford the out-of-state price, ranging from less than $10,000 a year at a community college to more than $18,000 at the University of Massachusetts in Amherst. The Legislature should right this wrong, starting with action expected in the House today.

In November, Lieutenant Governor Kerry Healey criticized a bill that would let these students pay in-state tuition. Writing in a Globe op-ed, she argued that the law would be a "taxpayer subsidy" that would cost "$14.4 million over four years." At a ceremony a month later, Healey unwittingly handed several undocumented students a letter saying they had won John and Abigail Adams scholarships, four tuition-free years at a state college, even though the students cannot claim the scholarships.

As it turns out, Healey's economic forecast is too stormy. Public colleges could make $2.5 million by 2009 if they enrolled these students at in-state tuition rates, according to new research from the business-backed Massachusetts Taxpayers Foundation.

The difference: Healey says letting undocumented students pay in-state tuition instead of the higher out-of-state price would mean a loss of $9,000 per student at the university level. But the foundation says that there's actually little to lose, since students who are priced out don't go to college. The foundation looked at Texas, the first of nine states to pass an in-state tuition law. Texas officials have not estimated the economic impact, but, in the fall of 2004, some 3,700 undocumented students qualified for in-state tuition, less than one-half percent of the state's one million public college students.

The foundation estimates that Massachusetts would enroll 600 new students by 2009, also less than one-half percent of the total. So new costs are unlikely.

Critics say these students would displace citizens. But public college officials say they have the capacity to grow without incurring significant additional costs.

Massachusetts needs more young college graduates. According to Census figures, the state lost 5 percent of its 25- to 34-year-olds, some 44,000 people, from 2000 to 2004.

Undocumented students have been called lawbreakers. But often they are here because their parents brought them. And the in-state tuition bill would require them to legalize their immigration status. The Boston Redevelopment Authority estimates that each dollar spent on tuition would result in a $4.20 return in income taxes over a 40-year career.

Legislators should pass it as an easy, low-cost way to enrich the Commonwealth.

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The Boston Herald
Tuesday, January 10, 2006

Mass. slowdown:
Economy’s growth rate ‘alarming’
By Jay Fitzgerald


Massachusetts’ economic expansion slowed to a "virtual standstill" late last year — with no improvement in sight, according to a pessimistic University of Massachusetts report released yesterday.

The state’s economy has slowed so much, one UMass economist said, that it’s reminiscent of stagnant economic times after World War II when Massachusetts lost many manufacturing jobs.

"It’s alarming," said Alan Clayton-Matthews, an economist who helped compile the "Benchmarks Bulletin" for the UMass Donahue Institute.

"This slowdown in the Massachusetts economy is not really the downside of a business cycle, but rather reflects an economy that is stagnating under the pressures of a high cost of living, outsourcing (of jobs), offshoring (of jobs), and competition from Asia for the state’s information technology products," wrote Clayton-Matthews.

In an interview, he said the unemployment rate has hovered at about 4.9 percent for more than a year, the state has added back only 37,500 of the 207,000 jobs it shed during the recession and the housing market has lost its luster.

The state’s economy grew by only 0.2 percent in November, the last figure available for 2005, he noted.

If that level holds steady in December, the state’s economy will have only grown by 0.46 percent in the fourth quarter — not even one-sixth the rate of the national economy’s projected 3.1 percent growth late last year.

Clayton-Matthews said he’s now projecting the state’s economy to grow by only 0.3 percent over the next six months.

Other experts agreed that the state’s economy has been slow to recover — particularly in the area of generating jobs.

But Gautham Iyer, an economist with Global Insight, a Lexington research firm, said his preliminary numbers show the state’s economy growing by 3.6 percent in the last three months of 2005. That’s down from earlier quarters and down from an even stronger surge in 2004, he said.

Nonetheless, the state remains on somewhat solid footing, he said, adding he thinks the state’s economy will grow by about 3.6 percent early this year.

But Clayton-Matthews said he stands by his report, which is based on analysis of payroll numbers, tax receipts, unemployment insurance claims, interest rates, consumer confidence polls and other factors.

"Historically, this (reporting) method has performed pretty well over the years," he said.

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