CLT
UPDATE
Thursday, January 26, 2006
The Romney Budget:
Tax cuts don't "cost the state"
Capitalizing on the Bay State's rising tax revenues,
Governor Mitt Romney unveiled a $25.2 billion state budget yesterday for
fiscal 2007 that would raise overall spending by 5.3 percent and funnel
more money to most areas of state government, from state colleges to
prisons to public health....
Yesterday he highlighted increases in other areas and renewed his call
for a cut in the state income tax rate. Legislative leaders, saying the
state cannot afford it, have resisted cutting the rate to 5 percent,
which voters called for in 2000. Citing rising revenues and the will of
the voters, the Republican governor has proposed lowering the tax rate
to 5.15 percent next year and to 5 percent the year after.
The Boston Globe
Thursday, January 26, 2006
Budget would hike spending 5.3 percent
Gov. Mitt Romney’s budget for the next fiscal year proposes a
5.3 percent hike in spending, drawing on revitalized state revenues to invest
substantially in programs that were pared during the recent fiscal crisis.
Based on a tax revenue projection of nearly $19 billion, Romney’s plan includes
a phased, two-year rollback of the residential income tax, and a boost of more
than $250 million in spending on kindergarten-through-high school education.
With an eye on the debate over a health care reform law crackling on Beacon
Hill, Romney followed through on last week’s promise to funnel $200 million to a
health care reserve that he hopes will make it easier for Democratic legislative
leaders to reach an accord.
The Republican governor’s "balanced budget," which now heads to the Democrat-run
Legislature, would enlarge total state spending over this fiscal year by $1.3
billion to $25.19 billion ...
"We’re generating the surpluses that allow us to invest where we care most
deeply," Romney said at a press conference here. "And for me, that’s education,
it’s health care, it’s supporting our municipalities. And, of course, it’s
listening to the voters and doing what they, in a democratic system, told us to
do." ...
Michael Widmer, president of the Massachusetts Taxpayers Foundation,
questioned whether state revenues could underpin the Romney budget. Widmer said
the governor’s budget may be $500 million out of balance.
"In fiscal crises, we have to dip into resources," Widmer told reporters after
the administration’s presentation. "But in better fiscal times we should not be
spending any more than we’re taking in in any given fiscal year."
Widmer acknowledged the "ironic" nature of his criticism, given that Democrats
and local officials have historically pilloried Romney for not spending enough.
He called the governor’s spending propositions "very generous."
Romney communications director Eric Fehrnstrom said Widmer’s criticism didn’t
take into account this year’s surpluses, which mean next year’s revenues are
growing off a larger base....
Since 2001, the cost to the state of furnishing health insurance to state
employees, both active and retired, has soared by almost 30 percent. The
Legislature briefly agreed to increase the portion of health care costs paid by
state employees, but this year restored previous benefit ratios, citing
recovering state revenues....
Romney’s budget takes a step towards implementing a new capital gains tax law.
It appropriates $60 million to reimburse taxpayers who paid taxes in 2002,
before passage of a law this year that changed the date of that tax hike. The
$60 million would be drawn from the state’s so-called rainy day fund, which
Romney said would still rise to a record $2.3 billion.
Repeating his call for rolling back the personal income tax, the governor’s plan
puts forth a staged, two-year plan sliding the 5.3 percent rate back first to
5.15 percent, then to 5 percent, the level decreed by voters in a 2000 vote.
Those rollbacks would cost the state $132 million in calendar 2007 and $488
million the next year, according to the governor’s office.
Fielding questions from reporters after his presentation, Romney said that
proposal’s fate in the Legislature, which has traditionally resisted the voter
mandate, would be "kind of hard for me to predict."
"It’s very hard to go to the voters and say, 'We still need your money.' And, I
think for that reason, that there will be a recognition that bringing it down,
in a stepped fashion, will work," Romney said, noting that he would prefer a
one-year reduction to 5 percent....
Several of the state’s largest spending priorities are funded "off-budget," and
not included in Wednesday’s discussion: the public employee pension system, the
state’s share of the Massachusetts Bay Transportation Authority budget, and the
school building assistance fund.
State House News Service
Wednesday, January 26, 2006
Romney budget would raise spending by $1.3 billion
With state revenues on the increase, this is a good year to
reconsider the formula that provides education aid to Massachusetts school
districts....
While state revenues are on the rise, another decline is inevitable in a few
years. The governor, however, expects the rainy day fund, which provides a
reserve to soften economic downturns, to stabilize at about $2.6 billion --
hardly enough to protect state programs from the ravages of a recession.
The need to increase the state's reserves strengthens the argument against a tax
reduction. Cutting taxes now would be like rebuilding the New Orleans levees
just as they were before Hurricane Katrina.
A Boston Globe editorial
Thursday, January 26, 2006
Rejiggering school aid
"We don’t see how this state is going to pay for it on an
ongoing basis," said Widmer, usually the last guy to question budgetary
largesse.
A Boston Herald editorial
Thursday, January 26, 2006
Kiss for the commonwealth
Chip Ford's CLT Commentary
Some rather obvious connections and observations:
Governor Romney's proposed budget increases spending
by 5.3 percent, to $25.2 billion in Fiscal Year 2007 (beginning on July
1, 2006). The state's "rainy day" stabilization fund "would still
rise to a record $2.3 billion." His proposed incremental rollback
of the 17-year old "temporary" income tax hike "Those rollbacks would
cost the state $132 million in calendar 2007 and $488 million the next
year, according to the
governor’s office." (State House News Service)
Actually, it doesn't "cost the state" anything and
isn't calculated in the governor's budget as a cost: it's
subtracted first from anticipated revenue before his spending begins.
So when you hear that term "cost the state, " remember: When you
or I suffer a tax increase, we don't consider it "increased
spending." So why should anyone consider a four-year old voter-mandate
to roll back the 17-year old "temporary" income tax "increased spending"
either? As we recognize when our take-home paychecks get lighter, it is
simply less income to spend as we'd like.
As CLT's motto goes: "Every tax is a pay cut --
a tax cut is a pay raise."
"Michael Widmer, president of the Massachusetts
Taxpayers Foundation, questioned whether state revenues could underpin
the Romney budget. Widmer said the governor’s budget may be $500 million
out of balance." (State House News Service)
"Those rollbacks would cost the state $132 million in
calendar 2007 and $488 million the next year, according to the
governor’s office." (State House News Service)
"Michael J. Widmer of the Massachusetts Taxpayers Foundation, a
business-funded group, said that while the local aid increases are
significant, 'the other areas of the budget, despite modest increases,
remain well below where they were five years ago, certainly in
inflation-adjusted dollars.'" (Boston Globe)
"'We don’t see how this state is going to pay for it on an
ongoing basis,' said Widmer, usually the last guy to question budgetary
largesse." (Boston Herald editorial)
I'll bet we all know from where Michael Widmer wants to
cut that "$500 million" to balance the budget he says isn't.
Widmer has never seen a tax cut he likes or won't fight against --
unless it benefits just the fat-cat big-business members of the
so-called
Massachusetts Taxpayers Foundation.
"By raising state employee group health insurance
contribution percentages to 25 percent from their current 15 percent
levels, Romney said, another $85 million could be saved."
(State House News Service)
"Several
of the state’s largest spending priorities are funded "off-budget," and
not included in Wednesday’s discussion: the public employee pension
system, the state’s share of the Massachusetts Bay Transportation
Authority budget, and the school building assistance fund."
(State House News Service)
"Since 2001, the cost to the state of furnishing
health insurance to state employees, both active and retired, has soared
by almost 30 percent. The Legislature briefly agreed to increase the
portion of health care costs paid by state employees, but this year
restored previous benefit ratios, citing recovering state revenues...."
(State House News Service)
Hey Widmer, if you're still looking for where to cut $500
million, start there.
We'd prefer that the voters' 2000 mandate be finally
if belatedly respected and obeyed -- but recognize the Legislature
couldn't care less what voters think. The governor's proposal is
likely the best we can hope for -- stripping away the Legislature's
transparently lame excuse that the state "can't afford it." Let's
see how long that excuse can stand -- in an election year -- with the
state increasing spending by 5.3 percent, $1.3 billion more than this
year, just in Governor Romney's budget proposal alone.
Then let's call the tax-and-spenders' bluff, relieve
them of their mantra that municipalities are suffering as a result of
state cut-backs in local aid (instead of their own profligacy) -- that
instead of a "tax cut" more should go toward relieving the local
property tax burden. Let's see how much more is provided now that
revenues are pouring in again -- and how much is instead spent on
creating and growing state programs that will again be unsustainable
come the next inevitable economic downturn and another "fiscal crisis"
now in the making. Unfortunately we all recognize that more state
money to the municipalities will only be squandered on more money for
the public employee unions -- the primary cause for local overspending.
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Chip Ford |
The Boston Globe
Thursday, January 26, 2006
Budget would hike spending 5.3 percent
By Scott S. Greenberger, Globe Staff
Capitalizing on the Bay State's rising tax revenues, Governor Mitt
Romney unveiled a $25.2 billion state budget yesterday for fiscal 2007
that would raise overall spending by 5.3 percent and funnel more money
to most areas of state government, from state colleges to prisons to
public health.
Although annual spending increases have sometimes exceeded 5.3 percent
during Romney's tenure, which began in 2003 in the midst of a fiscal
crisis, he has never proposed a budget with such a large boost.
The governor's blueprint is the starting point for Beacon Hill's budget
debate, which typically concludes in June after the House and Senate
have weighed in with their own plans. The 2007 fiscal year starts July
1.
Romney had already revealed the key components of his proposal, a 7.3
percent increase in school aid and a 17 percent jump in other help for
cities and towns.
Yesterday he highlighted increases in other areas and renewed his call
for a cut in the state income tax rate. Legislative leaders, saying the
state cannot afford it, have resisted cutting the rate to 5 percent,
which voters called for in 2000. Citing rising revenues and the will of
the voters, the Republican governor has proposed lowering the tax rate
to 5.15 percent next year and to 5 percent the year after.
Michael J. Widmer of the Massachusetts Taxpayers Foundation, a
business-funded group, said that while the local aid increases are
significant, "the other areas of the budget, despite modest increases,
remain well below where they were five years ago, certainly in
inflation-adjusted dollars."
Romney would raise spending in two areas that were hit hard during the
budget crisis: environmental programs and public health. The Department
of Environmental Protection, the Department of Conservation, and other
environmental agencies would receive increases of about $4.8 million, or
2.6 percent. The Department of Public Health would get an additional $25
million, a jump of about 6 percent.
Return to top
State House News Service
Wednesday, January 26, 2006
Romney budget would raise spending by $1.3 billion
By Jim O’Sullivan
Gov. Mitt Romney’s budget for the next fiscal year proposes a 5.3
percent hike in spending, drawing on revitalized state revenues to
invest substantially in programs that were pared during the recent
fiscal crisis.
Based on a tax revenue projection of nearly $19 billion, Romney’s plan
includes a phased, two-year rollback of the residential income tax, and
a boost of more than $250 million in spending on
kindergarten-through-high school education. With an eye on the debate
over a health care reform law crackling on Beacon Hill, Romney followed
through on last week’s promise to funnel $200 million to a health care
reserve that he hopes will make it easier for Democratic legislative
leaders to reach an accord.
The Republican governor’s "balanced budget," which now heads to the
Democrat-run Legislature, would enlarge total state spending over this
fiscal year by $1.3 billion to $25.19 billion – the budget also used
federal reimbursements and fee revenues. Over the past four years,
budgetary increases have averaged 3.7 percent, Romney said. Last year,
his initial budget plan would have bolstered spending 2.4 percent.
"We’re generating the surpluses that allow us to invest where we care
most deeply," Romney said at a press conference here. "And for me,
that’s education, it’s health care, it’s supporting our municipalities.
And, of course, it’s listening to the voters and doing what they, in a
democratic system, told us to do."
Earlier this month, Romney told local officials at an annual convention
that he would push non-school local aid to climb by $198 million to
$1.353 billion, a 17 percent hike.
Early objections to Romney’s budget included doubts about how the state
could bankroll the plan.
Michael Widmer, president of the Massachusetts Taxpayers Foundation,
questioned whether state revenues could underpin the Romney budget.
Widmer said the governor’s budget may be $500 million out of balance.
"In fiscal crises, we have to dip into resources," Widmer told reporters
after the administration’s presentation. "But in better fiscal times we
should not be spending any more than we’re taking in in any given fiscal
year."
Widmer acknowledged the "ironic" nature of his criticism, given that
Democrats and local officials have historically pilloried Romney for not
spending enough. He called the governor’s spending propositions "very
generous."
Romney communications director Eric Fehrnstrom said Widmer’s criticism
didn’t take into account this year’s surpluses, which mean next year’s
revenues are growing off a larger base.
The Romney budget includes several "savings" proposals. Romney would
freeze nursing home reimbursement rates that have stayed ahead of
inflation while nursing home usage has declined, netting $102 million.
By raising state employee group health insurance contribution
percentages to 25 percent from their current 15 percent levels, Romney
said, another $85 million could be saved.
Since 2001, the cost to the state of furnishing health insurance to
state employees, both active and retired, has soared by almost 30
percent. The Legislature briefly agreed to increase the portion of
health care costs paid by state employees, but this year restored
previous benefit ratios, citing recovering state revenues.
The budget also calls for the elimination of the Inspector General’s
office and consolidating its powers under the state Auditor, saving
another $2.6 million. Lawmakers have rejected that idea in the past.
Through the final budget he files as the Commonwealth’s chief executive,
Romney wants to alter significantly the state’s formula for parceling
out school aid. The new policy would determine Chapter 70 distributions
by taking into account residential incomes and property values in a
manner that is similar to a funding method the Senate has twice
approved.
Currently, the formula weights property values heavily, and schools
adversely affected by the current formula have been clamoring for a
major redraft.
Romney’s budget takes a step towards implementing a new capital gains
tax law. It appropriates $60 million to reimburse taxpayers who paid
taxes in 2002, before passage of a law this year that changed the date
of that tax hike. The $60 million would be drawn from the state’s
so-called rainy day fund, which Romney said would still rise to a record
$2.3 billion.
Repeating his call for rolling back the personal income tax, the
governor’s plan puts forth a staged, two-year plan sliding the 5.3
percent rate back first to 5.15 percent, then to 5 percent, the level
decreed by voters in a 2000 vote. Those rollbacks would cost the state
$132 million in calendar 2007 and $488 million the next year, according
to the governor’s office.
Fielding questions from reporters after his presentation, Romney said
that proposal’s fate in the Legislature, which has traditionally
resisted the voter mandate, would be "kind of hard for me to predict."
"It’s very hard to go to the voters and say, 'We still need your money.'
And, I think for that reason, that there will be a recognition that
bringing it down, in a stepped fashion, will work," Romney said, noting
that he would prefer a one-year reduction to 5 percent.
The new Chapter 70 plan also incorporates enrollment trends, including
cuts to 23 school districts that show enrollment declines. Romney said
that the decision was made intentionally to discourage local officials
from preventing population growth by cutting funding for 23 communities,
a savings of under $1 million.
"We decided that that’s the wrong message to send," Romney. "Even though
the number is small, we do want to communicate to cities and towns that
if their schools are shedding students – because people don’t want to
enroll in their schools or move to their towns or they’re not opening
their doors to housing – that there will be a consequence of less
funding."
In addition to its core spending directives, the document contains 91
outside sections, including a transfer of the Alcoholic Beverage Control
Commission from the Treasury to the Executive Office of Public Safety.
Several of the state’s largest spending priorities are funded
"off-budget," and not included in Wednesday’s discussion: the public
employee pension system, the state’s share of the Massachusetts Bay
Transportation Authority budget, and the school building assistance
fund.
The House of Representatives on Wednesday almost immediately referred
Romney’s plan to its Ways and Means Committee. The document will wend
its way through the House and Senate, respectively, before a conference
committee returns the plan to his desk. The new fiscal year begins July
1.
Romney was joined at the late-morning press conference by Cabinet
members and other high-ranking administration officials, including
Administration and Finance Secretary Thomas Trimarco, in his first
budget cycle as a Romney aide.
Lt. Gov. Kerry Healey, a candidate for governor, led off the budget
presentation, highlighting spending increases in a number of programs –
including substance abuse, domestic violence, and homelessness
prevention – that she called "near to my heart."
One line item Healey hailed was $750,000 for the establishment of a
"witness protection board," an anti-violence initiative tailored to
prevent gangs from intimidating witnesses.
Despite the 17 percent proposed leap in a local aid account, Romney
said, "It’s by no means a time of luxury in our municipalities. It’s
still very tight – It’s still a time for conservative spending in our
communities, and they don’t feel like they’re awash in cash by any
means."
Medicaid spending would rise 3.4 percent, from $6.8 billion to $7.1
billion, while the state adds 30,000 new "lives" to the rolls, Romney
said. Due to sound management of drug costs, he said, the Bay State’s
Medicaid spending growth is "either the lowest or near the lowest rate
of growth in the entire nation."
While acknowledging that many senior citizens have encountered problems
subscribing to the new program, Romney said that the federal Medicare
Part D changes have saved the state nearly $100 million. He is proposing
a reduction from $92.2 million to $59.6 million in the state’s
Prescription Advantage, with the difference going toward the
implementation of the Part D changes.
"It’s hard to tell at this point what it’s going to cost, but we do know
it’s going to cost significantly less," said Sue Kirby, director of the
Massachusetts Senior Action Council. "As we’re sitting right now, it
looks like that’s going to cover what’s there."
Higher education funding is marked for a 5 percent jump, with individual
institutions receiving money based on changes in their enrollment
figures. Romney’s "House 2" budget calls for an 80 percent, $8 million
drop in Lottery advertising.
"We don’t think it’s terribly effective in generating additional
revenue," Romney explained.
Lottery officials have touted advertising as an effective means of
drawing customers to their games and boosting revenues to cities and
towns. "We couldn’t disagree more," said Lottery spokeswoman Beth
Bresnahan, pointing to an uptick in Lottery revenues over the last three
years, when the commission’s advertising budget had been restored after
its elimination in FY97.
Bresnahan said, "Our advertising capabilities have a direct effect on
our ability to increase revenues and maximize the local aid return to
cities and towns. We’re hoping the Legislature will take that into
consideration when crafting their budgets for the next fiscal year."
One outside section would privatize urban skating rinks, an effort
Democratic legislators have battled in the past. Sen. Jack Hart, the
South Boston Democrat whose district includes two rinks, said reflexive
community resistance to the privatizations has eased as their physical
conditions have declined. Efforts to outsource other rinks have garnered
positive reviews, Hart said.
"It hasn’t been met with fierce opposition of late, because I think
people want to engage in the discussion about what the long-term fate of
the rinks are," Hart said.
Grants for the Massachusetts Cultural Council would decline by $1.4
million to $6 million, a cut Hart said was short-sighted. The council
distributes arts promotion grants for non-profits, schools, communities,
and artists.
"It’s unfortunate that the governor seems to be unaware of how tourism,
arts, and culture really play a huge role in our economy here," said
Hart, chair of the Joint Committee on Tourism, Arts, and Cultural
Development.
The state’s fiscal shortage taught policymakers lessons in resource
management, Romney said.
"We can economize and, in some agencies and some departments, the
reductions were a good thing. They allowed us to look and see what
things were really essential and what things were not," he said. Douglas
Foy, Romney’s secretary for development, said the Department of
Environmental Protection, which falls under his purview, is an example
of savings through regulatory changes, such as paperwork costs
transferred to computers. Foy called it "trying to get leaner and meaner
at the same time."
While one $3.2 million investment would aid mentally ill homeless
people, the Massachusetts Rental Voucher Program, which offers rental
housing assistance to homeless families, would see a $2 million drop.
Overall, lawmaker reaction to Romney’s announcements was muffled, as
leadership remained intent on resolving conference committee
disagreements on four different bills.
Senate President Robert Travaglini, an East Boston Democrat, said
Romney’s restructuring of the Chapter 70 formula was not a novel
venture. Senate Ways and Means chairwoman Therese Murray (D-Plymouth)
had earlier approached him "to revisit and to modify the existing
equation" already, he said.
"She is the chairwoman of Ways and Means. When she comes to the
president and asks me to look at a condition that she finds disturbing,
I’m going to look at it," Travaglini told reporters before the
governor’s press conference. "And she’s already done that. So the
governor is just reinforcing a condition that was brought to my
attention by Senator Murray a year and a half ago asking me, in some
way, to give some time and energy to that condition. And I’m going to do
that."
Rep. Harriet Stanley (D-West Newbury), a self-described "fiscal
conservative," said of the governor’s proposal, "I think that it
reflects some needed spending, and I don’t say that lightly."
Of Romney’s suggested changes to the school aid system, Stanley said, "I
think that the governor was right on to tackle the Chapter 70 funding
formula. I don’t think he got where we need to go, but there has been no
legislative process so far."
Return to top
The Boston Globe
Thursday, January 26, 2006
A Boston Globe editorial
Rejiggering school aid
With state revenues on the increase, this is a good year to reconsider
the formula that provides education aid to Massachusetts school
districts. Governor Mitt Romney, in his budget filed yesterday, proposed
an overall increase that would benefit communities whose income levels
do not match their high property values. The Legislature, as it
considers his plan, needs to keep in mind the purpose of the 1993 school
reform law -- to help communities that lack the taxing ability to
provide a quality education.
Some communities have accused the state of maintaining an unfair school
aid system. These complaints grew sharper as overall assistance declined
as a percentage of school spending because of the budget crisis. Four
years ago, state aid comprised 40.9 percent of total school spending.
This year, the figure stood at 36.6 percent.
It is sound policy for the governor to propose an increase in school aid
of $275 million. Even more may be justified depending on projections of
state revenue growth. Legislators need to make sure that, as his budget
message says, the new formula is ''directed to districts in greatest
need of assistance." Additional aid should not go to wealthy communities
that can easily afford to raise the money on their own.
The governor would increase the foundation budget for each student --
the amount the state guarantees to the neediest communities -- from
$7,903 to $8,345. The higher figure would reflect a better estimate of
inflation. The Legislature needs to consider whether this might be
raised further to offer teacher training and support not considered as
important a decade ago as they are today.
The growth in tax revenues offers the governor an opportunity to redress
an injustice to cities and towns -- the decision by the Legislature to
divert lottery income to the state. The lottery money should go where it
was intended, to help pay for local services. Romney's budget also
contains an incentive for housing construction and reserves $200 million
for new health insurance initiatives. But there's pent-up demand for
higher education and other state services that were pared back during
the budget crisis. It's unwise to cut the income tax this year, as
Romney proposes.
While state revenues are on the rise, another decline is inevitable in a
few years. The governor, however, expects the rainy day fund, which
provides a reserve to soften economic downturns, to stabilize at about
$2.6 billion -- hardly enough to protect state programs from the ravages
of a recession.
The need to increase the state's reserves strengthens the argument
against a tax reduction. Cutting taxes now would be like rebuilding the
New Orleans levees just as they were before Hurricane Katrina.
Return to top
The Boston Herald
Thursday, January 26, 2006
A Boston Herald editorial
Kiss for the commonwealth
Gov. Mitt Romney’s parting gifts — a huge boost in local aid, plus new
money for health care, housing and education outlined in his budget
yesterday — come at a hefty price. Politically, he won’t be around to
pay for it. So does he care if the state spends more than it takes in
next year?
Maybe not. Michael Widmer, president of the Mass. Taxpayers Foundation,
says Romney’s $25.2 billion budget is off by half-a-billion dollars.
Spending goes up by $1.3 billion, but revenue is only expected to grow
by $800 million. "We don’t see how this state is going to pay for it on
an ongoing basis," said Widmer, usually the last guy to question
budgetary largesse. We’re wondering ourselves. But it makes for nice
headlines, no?
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