CLT UPDATE
Thursday, January 18, 2007
Connecting the dots to taxpayers
disaster:
Someday never comes
Patrick is following a pattern common to new
governors for at least 30 years: A budget deficit suddenly appears or an
existing gap widens significantly when a new administration takes
control on Beacon Hill.
A budget gap is the difference between expected revenues and the
spending required to maintain programs and services.
Barbara C. Anderson, executive director of Citizens for
Limited Taxation, said incoming governors want to create the
impression they are skilled executives who can manage their way out of a
budget deficit, while the outgoing governor wants to show he is leaving
the state in good fiscal shape.
"That's kind of the modus operandi of government in general," Anderson
said.
Massachusetts Taxpayers Foundation president Michael J. Widmer said he
has seen the pattern repeated over the years.
It happened in 1975 when newly elected Gov. Michael S. Dukakis declared
a deficit of $500 million, then took credit for balancing the budget
when he ran for president in 1988.
The Springfield Republican
Tuesday, January 9, 2007
Patrick's warning of deficit
echoes past pronouncements
But budget specialists said the future looks grim.
"We have trouble ahead, the only question is how bad, how deep is the hole,"
said Michael Widmer, president of the
Massachusetts Taxpayers Foundation, who has been advising the incoming
administration.
Patrick, who will be inaugurated Thursday, pledged during the campaign to
increase aid to local governments so they can cut property taxes, saying that
was more fiscally responsible than rolling back the state income tax as voters
approved in a 2000 referendum.
But Widmer said, "the fiscal picture
suggests that it will be virtually impossible to provide any relief to the
property taxpayer in the short term."
The Boston Globe
December 30, 2006
State
could face $1b deficit in '07
New governor may have to revise agenda
Slow sales tax growth in Massachusetts is hampering a pair of
state authorities whose fates are tied to the 5 percent levy, especially the
MBTA.
At a hearing of state government’s top budget writers, state Rep. Frank Hynes
(D-Marshfield) said sales tax receipts have risen about 2 percent per year since
fiscal 2002. That’s troubling, he said, because the sales tax is a major revenue
source for the Massachusetts Bay Transportation Authority (MBTA) and
Massachusetts School Building Assistance Authority (MSBA), and both authorities
count on sales tax collections rising by at least 4 percent a year....
Michael Widmer, president of the Massachusetts Taxpayers Foundation ... at
today’s hearing, said Massachusetts’ 5 percent sales tax is among the lowest in
the nation ...
State House News Service
Tuesday, January 16, 2007
Slow sales tax growth felt at two state agencies
dependent on its revenues
Gov. Deval Patrick’s prediction of a $1 billion budget
deficit is provoking sharp questions on Beacon Hill, with Republicans charging
that the doom-and-gloom forecast amounts to a political cop-out.
“This deficit is nothing but smoke and mirrors,” said Brian Dodge, executive
director of the state’s Republican Party. “There is no indication of a revenue
shortfall that would lead to a deficit, absolutely none. Therefore, any deficit
will be caused by the Democrats’ wild spending.”
Patrick’s assessment of next year’s budget has grown increasingly bleak since a
campaign in which he made expensive promises to voters. Patrick’s aides deny
that he is manufacturing a crisis, saying the numbers came straight from former
Gov. Mitt Romney....
But Republicans say Patrick has given mixed signals -- first restoring $384
million in Romney cuts, then saying that stagnating revenues will strap the
state in the fiscal year that starts in July....
Economic experts differ sharply on the matter. “There is no
outlook that suggests we have to start cutting,” said David Tuerck of the Beacon
Hill Institute. “It’s hard to understand what this billion-dollar budget gap is
all about.”
But Michael Widmer of the Massachusetts Taxpayers Foundation said revenue growth
has slowed to 3.5 percent this year from 8 percent last year. “These are real
numbers,” he said. “There is a real problem here.”
The Boston Herald
Wednesday, January 10, 2007
GOP rips gov for bleak budget pic
Patrick also pledged to support legislation that would allow
cities and towns to hike the state's 5 percent meals tax to as much as 8
percent.
"Many cities and towns need alternative revenue sources, beyond property taxes,
to support the services your residents want," Patrick told the local officials.
"I trust you and your neighbors to determine whether a 1, 2, or 3 percent
increment on lunch at the local pub is appropriate and fair." ...
"It's families that end up paying those taxes, and that makes Massachusetts less
affordable," said Senate minority leader Richard R. Tisei, a Wakefield
Republican. "In Boston, they point out, it's tourists who end up paying a lot of
the tax, but when you really boil it down, it's average families who want to go
out for dinner, and it's additional costs that you're putting on them."
The Boston Globe
Sunday, January 14, 2007
Patrick proposes new fee on criminals
Money would fund hiring of more police
Governor Romney claims Massachusetts is headed for a
billion-dollar surplus and can afford a tax cut without sacrificing services,
then makes emergency spending cuts because the state is contending with an
unbalanced budget.
Governor Patrick restores Romney's spending cuts, then warns that the state is
facing a billion-dollar deficit in next year's budget.
Is it any wonder that the public is confused about the true condition of the
state's fiscal affairs? ...
The Patrick administration faces a huge challenge in managing sky-high
expectations with limited resources, a task made more difficult by the overblown
rhetoric and confusion surrounding state finances.
The Boston Globe
Tuesday, January 16, 2007
Massachusetts' state of fiscal confusion
By Michael J. Widmer
Before taking office, Governor Deval Patrick announced his
intention to restore $384 million in spending previously cut by Governor Romney
from the state budget. Included in the restored spending is $100,000 apiece for
a gazebo in Braintree and an ice rink in Randolph and $735,000 for HIV treatment
and prevention.
Immediately after the announcement, Patrick's aides warned about a looming
deficit of $1 billion in the state budget, partly the result, the governor then
implied, of mismanagement by the Romney administration. The governor began to
hedge on some of his promises for new programs. The possibility of a tax hike is
in the air. Taxpayers might wonder why, if the new governor faces a $1 billion
deficit, he didn't forgo the gazebo and ice rink as part of the price of
treating people for HIV. They might also wonder how the state came to face a
budget gap, considering that state tax revenues have come in over budget by $782
million per year over the last 10 years....
Voters tried to impose a revenue constraint in 2000 when they cut the state
income tax rate from 5.85 percent to 5 percent. But as soon as the first budget
"crisis" came along, the Legislature froze the rate temporarily at 5.3 percent
and did so at the urging of the same budget experts who have the governor's ear
now.
The Boston Globe
Wednesday, January 10, 2007
Preaching and practicing fiscal discipline
By David G. Tuerck
Despite a looming budget gap, Gov. Deval Patrick’s top
financial aide says it will be highly difficult to keep his campaign promise to
slash $735 million in wasteful state spending, setting up a stark choice between
deep service cuts or a tax hike....
“We don’t have a revenue problem, we have a spending problem,” said Senate
Minority Leader Richard Tisei (R-Wakefield). “It’s just a question of the
Legislature having a ferocious appetite to spend every dollar that comes in and
then some.”
The battle lines over the budget became clear yesterday as economists testified
that the state is facing a $1 billion deficit in the fiscal year that begins in
July. The deficit is being driven by costs for state programs that are rising at
a far greater rate than revenues.
Even though revenues are expected to grow by $600 million next fiscal year -- an
increase of between 3 and 4 percent over this year -- costs for Medicaid, school
building assistance, pension obligations and other items will jump by at least
$1.6 billion and maybe more, officials said....
“We have to live within our means,” said state Sen. Michael Knapik
(R-Westfield). “Massachusetts is already one of the most unaffordable states to
live in. We can’t do anything to exacerbate that.”
The Boston Herald
Wednesday, January 17, 2007
Budget realities hinder campaign vows
For the first time in four years, Massachusetts taxpayers
will not receive a higher personal tax exemption in 2008 under current
projections, a sign of a slowing economy that could force difficult decisions on
Beacon Hill this spring.
Department of Revenue officials announced at a legislative hearing yesterday
that a freeze in the personal income tax exemption was likely....
The economists appeared before a joint hearing of the Senate and House
Committees on Ways and Means to help lawmakers arrive at a consensus on revenue
estimates to be used in the next round of budget negotiations.
They offered varying predictions for revenue increases in the upcoming fiscal
year, which begins July 1, ranging from a low of 1.8 percent from Department of
Revenue tax analysts to 6.4 percent from the Beacon Hill Institute, a
conservative think tank.
The most pessimistic analysts said the state is looking at a deficit of up to
$1.5 billion, a gap that will make it difficult for the new governor to keep
costly campaign promises, such as hiring 1,000 new police officers and expanding
full-day kindergarten.
"I think it would be an achievement if this administration and this Legislature
are able to achieve a balanced budget without gimmicks, without drawing on
reserves and maintaining the present level of services," said Michael Widmer,
president of the Massachusetts Taxpayers Foundation, which is predicting revenue
growth next year of only 3 percent, compared to an estimated 4.2 percent this
fiscal year and an actual 8.2 percent increase the previous year. Costs are
expected to rise much more, he said....
The predictions of reduced revenue growth led lawmakers to raise the prospect of
turning to new revenue sources, possibly legalized gambling or an increase in
the gas tax. Raising income or sales taxes is unlikely, they said....
One analyst said yesterday he doesn't believe that a funding crisis is
inevitable. David Tuerck, executive director of the Beacon Hill Institute, said
the state can balance the budget by making reasonable spending choices.
"It's as big or as small as the lawmakers want it to be it," he said, referring
to the gap. "It's entirely under their control." Tuerck said his projections
show a small deficit in 2007 and none in 2008.
He urged lawmakers to cut waste from "patronage-laden" agencies such as the MBTA
and the Turnpike Authority before looking for new revenue. Practices such as
paying Turnpike Authority toll collectors $60,000 a year "sour taxpayers on the
need for additional revenues," he said.
The Boston Globe
Wednesday, January 17, 2007
State likely to freeze tax exemption
Analysts cite slow growth in revenue
DeLeo and other top Beacon Hill fiscal policymakers
entertained a buffet of revenue-raising options during the hearing, but declined
to commit to any specific strategy, instead remaining open to a number of
proposals put forth in recent days by Gov. Deval Patrick. Patrick has proposed
allowing municipalities to levy meals and lodging taxes and imposing "safety
fees" on convicts, kept open the option of expanded gaming in the state, and
backed off earlier pronouncements ruling out a gas tax increase....
The state's contribution to its pension system is also expected to increase, one
of three funding sources for the $45 billion account; the other two are employee
contributions and investment revenues. The level of the increase is uncertain,
House budget aides say, but likely will range between $65 million and $200
million....
Democratic lawmakers have all but abandoned the attitude of holding the state's
stabilization account sacrosanct, last year willing to use those reserves to
bankroll legislation that included, among other projects, UMass studies of the
winter moth and Victorian street lighting in Melrose.
"The Rainy Day Fund is always there," DeLeo said, "but I think it's always been
our goal … to see that that account is increased upon - untouched, or increased
upon."
DeLeo and Widmer agreed that the account, which currently holds $2.1 billion,
likely won't need to be tapped to fulfill the spending initiatives slashed by
Gov. Mitt Romney and restored by Gov. Deval Patrick earlier this month.
State House News Service
Tuesday, January 16, 2007
Revenue slowdown seen,
House budget chief sees level funding ahead
But for me, it was over on the day it was supposed to start
-- the day he took office. I suspect this will not cause the governor any
anxiety. I wasn't a member of his hypnotic, lockstep "Together-we-can" brigade
anyway.
Still, I have a feeling I am not alone. Sure, he's a nice, bright, articulate
guy. He'd probably make a good therapist. He makes people feel good by saying
stuff that doesn't really mean anything....
He is also, I am shocked to say, backing off on campaign promises. Property tax
relief? Uh, what he meant was "stabilization" - maybe....
It reminds me of when he was a candidate and met with the editorial board of
this newspaper. He said -- shades of Bill Clinton -- that he thought it
appropriate to "ask" the wealthy to pay more in taxes. Ask? Of course not. It
won't be a request. If he gets his way, it will be a demand, with the force of
law. But it sounds so reasonable. Who cares if it isn't true? ...
Look at the state budget. Look at how many billions go to education, health care
and welfare. Government is spending plenty on those groups. But what is the most
powerful political force in Massachusetts? It's not the poor. It is public
employee unions. No elected legislator dares to cross the cops, firefighters or
teachers. And the governor has been in bed with them since his campaign
began....
He has abandoned any pretense of supporting the American ideal of independence.
In his view, the more dependent on government we are, the better.
The Eagle-Tribune
Sunday, January 14, 2007
You could time Patrick's honeymoon with a stopwatch
By Taylor Armerding
Chip Ford's CLT Commentary
Just two weeks ago today he was sworn into office, is
now hot off
almost a week of whirlwind inaugural parties around the state, and Gov.
Patrick has settled into business. Already he's declared his first
"fiscal crisis" and is looking to -- raise taxes. What a downright
surprise.
During the campaign, Deval Patrick vehemently opposed
the voters' 2000 ballot mandate to roll back the income tax to its
historic 5 percent. (We now know how much he respects the
initiative process.) Patrick's campaign promise alternative escape
valve was to propose undefined "property tax relief." (See
Boston
Globe report below.) "Together we can" do the
voters' rollback, maybe
someday.
You can now forget about a reduction in your property
tax burden too, his alternative to the rollback when cornered during the
campaign. His new administration and its lackeys have suddenly
discovered that they can't afford to keep this campaign promise either.
Instead, he now proposes to supplement it with a new three
percent local meals tax hike. We'll get to property tax relief, he
now intones --
maybe someday.
And that income tax personal exemption the
Legislature substituted incrementally for our tax rollback before our
rollback fully kicked in, with great fanfare? For the first time
in four years suddenly that too is unlikely this year. Maybe we'll
get it again --
someday.
Every Patrick concept of tax relief has been put off
until -- someday.
But as John Fogerty and his Creedence Clearwater
Revival warned, "Someday Never Comes."
Well, I'm here to tell you now each and ev'ry mother's son
You better learn it fast; you better learn it young,
'cause, someday never comes.
(Read the full lyrics if you choose by
clicking here --
replay with your "refresh" button)
This might well become our Gov. Deval Patrick
administration anthem . . .
Michael Widmer and his so-called
Massachusetts Taxpayers Foundation is again playing its role.
Again, it is covering for bigger government, enabling more government
spending -- ultimately borrowing. "Michael Widmer, president of
the Massachusetts Taxpayers Foundation, who has been advising the
incoming administration" has found a sympathetic ear and certainly will
continue to provide it with cover and concealment.
At yesterday's hearing, he again subtly proposed an
increase in the state sales tax. MTF has been advocating this for
years.
When you see or read "Michael Widmer" or the
"Massachusetts Taxpayers Foundation." just remember what they are and
advocate, who they represent. Believe me, it's not you and
me.
Widmer and MTF have in recent years been countered --
fortunately -- by the
Beacon Hill
Institute, especially David Tuerck, its executive director.
While BHI's usual counter-message is probably received as "kill the
messenger," the Suffolk University School of Economics is still listened
to, and usually provides an alternative universe for fiscal policy.
It's fiscal projection news release can be found (PDF format) by
clicking here.
I'll certainly have more to say for CLT in the days
ahead. For now, you've enough to digest.
 |
|
Chip Ford |
The Springfield Republican
Tuesday, January 9, 2007
Patrick's warning of deficit echoes past pronouncements
By Dan Ring
Gov. Deval L. Patrick's warning of a $1 billion state budget shortfall
might be shocking, but should also sound familiar to Bay State
residents.
Barely settled into his third floor Statehouse office, Patrick on Friday
declared the state faces a budget gap of at least $1 billion for the
fiscal year starting July 1. Patrick's first budget is due at the end of
next month.
"Going forward, we are going to have a very tough and tight time,"
Patrick said yesterday. "There's some tough decisions we are going to
have to make."
Patrick, a Democrat, criticized former Republican Gov. W. Mitt Romney's
handling of the state's $25.7 billion budget.
"There were patches and plugs and games and gimmicks that were played by
the previous administration," Patrick said.
Patrick is following a pattern common to new governors for at least 30
years: A budget deficit suddenly appears or an existing gap widens
significantly when a new administration takes control on Beacon Hill.
A budget gap is the difference between expected revenues and the
spending required to maintain programs and services.
Barbara C. Anderson, executive director of Citizens for Limited
Taxation, said incoming governors want to create the impression they are
skilled executives who can manage their way out of a budget deficit,
while the outgoing governor wants to show he is leaving the state in
good fiscal shape.
"That's kind of the modus operandi of government in general," Anderson
said.
Massachusetts Taxpayers Foundation president Michael J. Widmer said he
has seen the pattern repeated over the years.
It happened in 1975 when newly elected Gov. Michael S. Dukakis declared
a deficit of $500 million, then took credit for balancing the budget
when he ran for president in 1988.
Gov. William F. Weld, elected in 1990 to replace Dukakis, estimated an
$850 million deficit, much higher than the $100 million projected by his
predecessor. And Gov. W. Mitt Romney pegged the deficit between $1
billion and $3 billion when he assumed control in 2003.
But there are a couple of twists in Patrick's case.
Less than a week before estimating a $1 billion deficit for next fiscal
year, Patrick restored $383 million in cuts Romney made in November to
balance this fiscal year's budget.
Critics called those moves inconsistent. If Patrick is projecting a $1
billion deficit next year, why approve additional spending for this
year?
David G. Tuerck, executive director of the Beacon Hill Institute for
Public Policy Research, questioned Patrick's moves.
"I find that difficult to understand," Tuerck said yesterday.
Patrick yesterday defended his decision to restore the $383 million.
Patrick said many state agencies and people made spending plans based on
the $383 million after it was approved by the Legislature in July; some
agencies had already spent the money before it was slashed by Romney at
the very end of his administration. "I think the right thing to do is to
make good on those promises," Patrick said.
Romney left Patrick with a blueprint for a balanced budget for the 2008
fiscal year, according to Eric P. Fehrnstrom, a spokesman for Romney.
"The challenge with the budget is overspending by Democrats in the
Legislature," he said.
Unlike Dukakis in 1975, Weld in 1990 and Romney in 2003, who all began
their governorships during economic downturns, Patrick is starting with
the economy still adding jobs each month and state revenues growing.
The fiscal picture will become clearer on Jan. 16 at the Statehouse,
when administration officials and outside economists will offer
projections on revenues the state will collect next fiscal year.
Patrick downplayed any comparisons with past governors who announced
budget deficits after they were elected.
"You've never seen a governor like me," he said.
State House News Service
Tuesday, January 16, 2007
Slow sales tax growth felt at two state agencies
dependent on its revenues
By Michael P. Norton, Jim O’Sullivan and Priscilla Yeon
Slow sales tax growth in Massachusetts is hampering a pair of state
authorities whose fates are tied to the 5 percent levy, especially the
MBTA.
At a hearing of state government’s top budget writers, state Rep. Frank
Hynes (D-Marshfield) said sales tax receipts have risen about 2 percent
per year since fiscal 2002. That’s troubling, he said, because the sales
tax is a major revenue source for the Massachusetts Bay Transportation
Authority (MBTA) and Massachusetts School Building Assistance Authority
(MSBA), and both authorities count on sales tax collections rising by at
least 4 percent a year.
Under laws enacted by the Legislature this decade, in part to provide
dependable revenue sources for two areas identified as top policy
priorities, each of the authorities receives 20 percent of annual sales
tax collections, with the school building authority on track to secure
its full share of sales tax revenues in 2011.
After Hynes expressed concern that state sales tax collections are not
capturing “e-street” sales, or Internet-related commerce, State Revenue
Commissioner Alan LeBovidge, testifying before Administration and
Finance Secretary Leslie Kirwan and House and Senate Ways and Means
committee members, said that’s out of the state’s hands.
The issue of “streamlining” state sales tax collections has been “hung
up” in Congress for years, LeBovidge said, and can’t be addressed
individually by states, which face constitutional limitations in the
taxing of remote sellers.
“This has been argued back and forth. The other (tax) administrators
know this is an issue. It’s a very contentious area,” LeBovidge said.
“We’re not going to solve the problem in Massachusetts because basically
our hands are tied.”
Without elaborating, LeBovidge said he’s aware of proposals in Congress
that would “hurt” Massachusetts, adding: “There’s all these things going
on at the federal level and that’s where the game is going to be
decided, unfortunately, for us.”
The state collected just over $4 billion in sales and use taxes in
fiscal 2006. In fiscal 2001, the state collected $3.755 billion in sales
and use taxes. In the five fiscal years since then, such receipts have
grown, in total, by 6.5 percent, with sales and use tax collections
declining 1.6 percent in fiscal 2002 and rising by .3 percent and 1.1
percent in fiscal years 2003 and 2004, before growing at a rate of more
than 3 percent in the last two fiscal years.
Sales tax collections are the sole source of funding for the school
building authority, and one of three funding sources for the MBTA, which
also uses fare and community assessment revenues to fund its operations.
Michael Widmer, president of the Massachusetts Taxpayers Foundation,
said when laws were passed to address MBTA and school construction
funding issues, people did not see Internet sales as a troubling factor.
Internet transactions are “complicated,” he said, since some businesses
charge sales tax while some do not. Also, if companies are based
out-of-state, Massachusetts may not be receiving any sales tax revenue.
“This is a problem in all the states,” said Widmer, who agreed that it’s
an issue for the federal government.
Widmer, at today’s hearing, said Massachusetts’ 5 percent sales tax is
among the lowest in the nation and that, while the exemptions for food
and clothing take significant revenue off the table, those provisions
are positive because they prevent the tax from being "regressive" --
disproportionately targeting lower-income residents.
Senate Ways and Means Chairwoman Therese Murray said that the economy is
growing but at a slower pace than it did three years ago. Changing the
funding formula to increase the amount of money the MBTA and MSBA
receive through the sales tax would take money off the table for
competing priorities.
“That would be a significant burden for us,” Murray told the News
Service.
Sen. Bruce Tarr (R-Gloucester) said both authorities need to look at
cost control and ways to be more independent of “volatile” funding
sources, such as sales tax revenues.
“We need to think what would happen if there is a downturn in the
economy,” said Tarr.
Widmer said the school building authority has to live within the amount
of money the state provides them. “Maybe we may not take up as many as
projects we would have liked,” said Widmer.
He said the MBTA financial structure faces more challenges than the MSBA
because the latter is based on a list of approved projects and it has
control over that list, whereas the MBTA has no option but serve all
patrons of the transit system.
Jonathan Davis, deputy general manager and chief financial officer, said
sales tax growth has yielded less than 1.5 percent over the past six
years.
“Under the legislation it was widely assumed that in the worst case
sales tax would grow 3 percent a year and more likely 5 percent a year,”
said Davis.
The T relies on sales tax revenue to fund capital projects, but because
sale tax collection has not been robust enough, the MBTA is facing
increasing debt, he added. Today, the MBTA debt is $5.1 billion, he
added. Of the T’s $1.3 billion annual budget, $360 million, or about 30
percent, is directed to pay off debt service.
“Having 30 percent going toward debt service is probably the highest in
the country of any other transit authority,” said Davis.
One of the challenges is to continue capital investments despite the T’s
high debt load, he said. “We need to continue to invest in our
infrastructure and in the modernization of our system so we can improve
our system,” said Davis.
He said the MBTA has already made some reductions in the operating
budget without sacrificing service, but the real issue has been dealing
with the rising fixed costs, such as gas, electricity and health
insurance.
“I think we have a done a good job in looking at ways to reduce costs,”
said Davis.
Asked about Sen. Jarrett Barrios (D-Cambridge) legislation that asks the
state to assume nearly $3 billion of the T’s debt, Davis said: “We’re
willing to working with anyone who is interested in looking at the
financial interest of the T.”
Widmer said there may be room to compromise. “The MBTA has to bring down
their cost structure,” said Widmer. “The Commonwealth can’t assume all
that debt. Maybe we could help with a margin of that cost.”
According to Ulla Hester, budget and policy analyst of the MBTA Advisory
Board, another consequence of the slow sales tax growth has been a $4.7
million budget shortfall for this fiscal year.
Hester said the state has earmarked $734 million this fiscal year for
the T through sales tax receipts. Besides sales tax, the MBTA is also
funded through fare collection and local government assessments. This
year, local government assessments are projected to yield $140 million
and $376 million will be produced through fares. Last year, before the
implementation of the automated fare system, the T collected $333
million.
Andy Cherullo, chief operating officer at MSBA, said the state provides
the agency with a “guaranteed minimum” dollar amount every year. For
fiscal 2006, the state earmarked $488.7 million for the MSBA and $557.4
million for fiscal 2007.
He said the sluggish growth in sales tax returns has not yet impacted
the MSBA’s finances.
“Given that we are relatively new and we have the guaranteed minimums,
it doesn’t impact us in the near-term but in looking out it is an area
of concern,” said Cherullo.
He said MSBA can control its grant amounts after an application
moratorium is lifted in July 2007.
“The way we were structured is that we are going to live it,” said
Cherullo.
He said the MSBA has no plans to change the current funding formula.
The Boston Herald
Wednesday, January 10, 2007
GOP rips gov for bleak budget pic
By Casey Ross
Gov. Deval Patrick’s prediction of a $1 billion budget deficit is
provoking sharp questions on Beacon Hill, with Republicans charging that
the doom-and-gloom forecast amounts to a political cop-out.
“This deficit is nothing but smoke and mirrors,” said Brian Dodge,
executive director of the state’s Republican Party. “There is no
indication of a revenue shortfall that would lead to a deficit,
absolutely none. Therefore, any deficit will be caused by the Democrats’
wild spending.”
Patrick’s assessment of next year’s budget has grown increasingly bleak
since a campaign in which he made expensive promises to voters.
Patrick’s aides deny that he is manufacturing a crisis, saying the
numbers came straight from former Gov. Mitt Romney.
“It was through discussions with . . . Gov Romney’s budget aides that we
began learning the true extent of the fiscal challenges,” Patrick
spokesman Kyle Sullivan said.
But Republicans say Patrick has given mixed signals -- first restoring
$384 million in Romney cuts, then saying that stagnating revenues will
strap the state in the fiscal year that starts in July.
“This might be a deficit in what (Patrick) would like to do as opposed
to what actual revenues are and what we need to do,” House Minority
Leader Brad Jones (R-North Reading) said yesterday. He and other GOP
lawmakers are pushing for a $20,000 menu of tax credits to help working
families.
Patrick’s aides have said the decision to restore Romney’s cuts was
based on revenue numbers showing the state can cover the spending this
year.
Economic experts differ sharply on the matter. “There is no outlook that
suggests we have to start cutting,” said David Tuerck of the Beacon Hill
Institute. “It’s hard to understand what this billion-dollar budget gap
is all about.”
But Michael Widmer of the Massachusetts Taxpayers Foundation said
revenue growth has slowed to 3.5 percent this year from 8 percent last
year. “These are real numbers,” he said. “There is a real problem here.”
The Boston Globe
Sunday, January 14, 2007
Patrick proposes new fee on criminals
Money would fund hiring of more police
By Michael Levenson, Globe Staff
Governor Deval Patrick said yesterday that he had come up with a way to
pay for more police officers in Massachusetts: charge convicted
criminals a fee.
Unveiling his most detailed account yet of his plans for next year's
state budget, Patrick said he would propose a "safety fee," which every
person convicted of a crime would have to pay.
The program is modeled on a similar fee the state now levies against
people who violate the law, a program that generates about $6 million
annually to pay for services for witnesses and victims of crime. Those
fees range from $90 for anyone over age 17 convicted of a felony to $50
for those convicted of a misdemeanor and $45 for anyone who commits a
civil motor vehicle infraction, such as speeding.
Patrick said he had not yet set the amount of the proposed fee. But he
estimated that it would raise $10 million annually, about half of the
$20 million he expects to spend to hire 250 additional police officers
in the new fiscal year, which begins July 1. Patrick said he wants to
eventually add 1,000 new police officers to the streets, at a cost of
$85 million.
"There are debts to society that have to be paid by people who break our
laws, some of that by jail time, some of that by fees," Patrick said at
a press conference at the State House. "I don't imagine it's going to be
so onerous that it's impossible to pay, but I do think it's fair to have
people who are at the center of causing and committing crime to help us
pay."
Reacting to Patrick's announcement, advocates of prisoners' rights said
the plan was unfair.
Leslie Walker, executive director of Massachusetts Correctional Legal
Services, which represents inmates, said about 85 percent of convicted
criminals in Massachusetts earn less than $11,000 a year at the time of
their convictions. In prison, only about 10 percent of inmates work,
earning $1.50 a day.
"While this may sound logical initially," Walker said of the proposed
fee, "most defendants are indigent and are already assessed a number of
fees. Those who are sent to prison have to pay to see doctors, and get
haircuts, and who ends up paying? Their families."
"I'm dubious because disproportionately the people in the criminal
justice system are people who don't have a lot of money," said Sarah
Wunsch, a lawyer with the American Civil Liberties Union of
Massachusetts. "It seems to me imposing fees on people who don't have a
lot of money is not the way to go."
Patrick, in a speech earlier yesterday to the Massachusetts Municipal
Association, also promised to deliver a "modest increase" in state aid
to cities and towns, mainly to pay for elementary and high school
education. He also said he wants to hear ideas from local officials as
he considers whether to abolish a property tax exemption for
telecommunications companies and to legalize casino gambling or slot
machines.
Finally, he suggested allowing cities and towns to join the Group
Insurance Commission, the health insurance program for state workers,
which he said would save communities millions of dollars annually.
"We didn't come here today with a big bag of free cash, nor a series of
set mandates," Patrick told hundreds of local officials at the annual
meeting of the association, which represents the interests of city and
town governments. "We came with a few ideas about a grand bargain we
want to make with you: what we can do, what we think you can do, and
what we ought to do together to build stronger cities and towns and
ultimately a stronger Commonwealth."
Pressed by local officials in a question-and-answer session, Patrick
declined to say how much he would deliver in additional local aid,
though he said the bulk would be funneled to schools. This fiscal year,
the state provided about $4.9 billion in local aid, including $3.5
billion for schools. According to the municipal association, funding for
grades K-12 has decreased by $682 million since fiscal year 2002, when
adjusted for inflation.
Citing a looming budget gap that he says could top $1 billion, Patrick
said affording an increase in state funding for local services would "be
neither easy nor instant." State funding, in addition to schools, helps
pay for trash collection, police and firefighters, and other services.
"Because the strength of our communities is central to everything else,"
Patrick said to applause at the Hynes Convention Center, "I will not
decrease local aid. In fact, we plan a modest increase."
Patrick also pledged to support legislation that would allow cities and
towns to hike the state's 5 percent meals tax to as much as 8 percent.
"Many cities and towns need alternative revenue sources, beyond property
taxes, to support the services your residents want," Patrick told the
local officials. "I trust you and your neighbors to determine whether a
1, 2, or 3 percent increment on lunch at the local pub is appropriate
and fair."
Many local officials, including Boston Mayor Thomas M. Menino, have
unsuccessfully pressured the Legislature to grant them the power to
raise such taxes. Yesterday, they welcomed Patrick's support.
"That's essential," said Geoff Beckwith , executive director of the
municipal association . "The local option tax for meals, we believe, is
long overdue. Most communities in the country have the ability to
diversify their tax base, beyond their local property tax, and in
Massachusetts, we don't have that ability."
Critics said that among the items Patrick proposed yesterday, the meals
tax seems most likely to generate opposition in the Legislature.
"It's families that end up paying those taxes, and that makes
Massachusetts less affordable," said Senate minority leader Richard R.
Tisei, a Wakefield Republican. "In Boston, they point out, it's tourists
who end up paying a lot of the tax, but when you really boil it down,
it's average families who want to go out for dinner, and it's additional
costs that you're putting on them."
Patrick said he harbored "misgivings" about legalizing casinos because
of their potential to increase crime and tax the poor. But he said he
wanted to "hear all sides" as he makes up his mind.
He also said he wanted to hear from all sides as he considers repealing
a property tax exemption for telecommunications companies. Patrick said
the tax made sense to help the industry grow when it was in its infancy,
but now he questions its merit. If the exemption were repealed, Menino
said, Boston would be able to deliver an average of $200 in property
annual tax relief to city homeowners.
"Our job is to consider whether that exemption is right today," Patrick
said, adding he wanted to "balance all of the interests."
The Boston Globe
Tuesday, January 16, 2007
Massachusetts' state of fiscal confusion
By Michael J. Widmer
Governor Romney claims Massachusetts is headed for a billion-dollar
surplus and can afford a tax cut without sacrificing services, then
makes emergency spending cuts because the state is contending with an
unbalanced budget.
Governor Patrick restores Romney's spending cuts, then warns that the
state is facing a billion-dollar deficit in next year's budget.
Is it any wonder that the public is confused about the true condition of
the state's fiscal affairs?
The saga began more than a year ago when Romney started holding monthly
press conferences to announce state tax revenues. He claimed they were
rising at a rate that would produce a billion-dollar surplus in fiscal
2006 and called for an immediate income tax cut. During the
gubernatorial campaign, Lieutenant Governor Kerry Healey and Attorney
General Tom Reilly joined the billion-dollar-surplus bandwagon, using
the claim to justify their support of a lower income tax rate.
Unfortunately, Romney's assertions had no basis in fact. Although tax
revenues in fiscal 2006 did rise by a billion dollars more than
estimated, the budget depended on $600 million in reserves, so the
actual surplus was much smaller.
For fiscal 2007, which started on July 1, the Legislature once again
ill-advisedly balanced the budget with reserves, betting that revenues
would exceed the forecast and not actually require their use. In the
meantime, however, growth in tax revenues was slowing markedly -- from
an increase of more than 8 percent in fiscal 2006 to an estimated 4
percent in fiscal 2007.
In October, Romney suddenly announced more than $400 million in
emergency spending cuts, citing slowing revenue growth and the budget's
dependence on reserves. The amount of reserves in question -- about $250
million at this stage -- is too small to warrant "emergency" action with
six months remaining in the fiscal year. While Patrick's decision to
restore the cuts leaves the state with a tight 2007 budget, there is
still a reasonable likelihood of ending the fiscal year on June 30
without drawing on reserves.
The back and forth on fiscal 2007 has created an unnecessary and
confusing distraction from the real problem, namely, how to produce a
balanced budget for fiscal 2008.
Patrick's estimate of a billion-dollar shortfall is based on calculating
the cost of maintaining current state programs next year, plus funding
new obligations like post-retirement medical care, while assuming that
the growth in tax revenues will continue to slow. Although the precise
shortfall is hard to project, this bleak fiscal picture is consistent
with the numbers presented by Romney's fiscal experts in briefing
Patrick's Budget and Finance transition working group, which I
co-chaired.
In September, the Taxpayers Foundation released a detailed analysis of
state finances for the next five years. Even with optimistic revenue
assumptions, the study concluded that the state will fall billions of
dollars short in meeting priorities like healthcare, local aid, higher
education, and capital investments.
The Patrick administration faces a huge challenge in managing sky-high
expectations with limited resources, a task made more difficult by the
overblown rhetoric and confusion surrounding state finances.
Michael J. Widmer is president of the Massachusetts Taxpayers
Foundation.
The Boston Globe
Wednesday, January 10, 2007
Preaching and practicing fiscal discipline
By David G. Tuerck
Before taking office, Governor Deval Patrick announced his intention to
restore $384 million in spending previously cut by Governor Romney from
the state budget. Included in the restored spending is $100,000 apiece
for a gazebo in Braintree and an ice rink in Randolph and $735,000 for
HIV treatment and prevention.
Immediately after the announcement, Patrick's aides warned about a
looming deficit of $1 billion in the state budget, partly the result,
the governor then implied, of mismanagement by the Romney
administration. The governor began to hedge on some of his promises for
new programs. The possibility of a tax hike is in the air. Taxpayers
might wonder why, if the new governor faces a $1 billion deficit, he
didn't forgo the gazebo and ice rink as part of the price of treating
people for HIV. They might also wonder how the state came to face a
budget gap, considering that state tax revenues have come in over budget
by $782 million per year over the last 10 years.
In fact, a budget gap is not something handed down by nature, the
economy, or a prior administration, but the creation of a government
unwilling to live within its means. And if revenues do not grow in line
with expectations, the government does not have to raise taxes. It can
just as well cut spending.
Consider school spending. Chapter 70 aid to public schools accounts for
$3.5 billion in state spending or about 14 percent of the budget. The
state could cut this spending by $374 million, which is about 4 percent
of total school spending, without cutting into the "foundation budget"
for schools.
Then there's healthcare. In fiscal year 2007, the state substantially
increased Medicaid payments to healthcare providers and expanded
eligibility for Medicaid benefits. If the state cut $484 million, or
about 6.5 percent, from its Medicaid budget, it would save $242 million,
after adjusting for federal reimbursements. Adding $374 million cut from
schools, $242 million saved on Medicaid, and Romney's cut of $384
million, which could be restored and, if necessary, extended into fiscal
year 2008, we get $1 billion in savings.
Other opportunities to save abound. The state could save money by
repealing the prevailing wage law and by ending the practice of
performing public construction projects under project labor agreements.
It could cut back on police details and Quinn Bill incentive pay, both
of which help police officers rank among the highest-paid government
workers in their communities.
Of course, there are immense political obstacles to these suggestions.
But that is just the point. The fact that the political culture is so
hostile to spending cuts means that taxpayers have only one recourse for
imposing fiscal discipline, which is to constrain lawmakers to live with
a certain amount of revenue and no more. Taxpayers cannot be expected to
sort out all the priorities that compete for their tax dollars. They
can, however, demand that lawmakers honor their wishes on the matter of
how much in tax revenue is available to spend.
The problem is getting lawmakers to understand this principle.
Voters tried to impose a revenue constraint in 2000 when they cut the
state income tax rate from 5.85 percent to 5 percent. But as soon as the
first budget "crisis" came along, the Legislature froze the rate
temporarily at 5.3 percent and did so at the urging of the same budget
experts who have the governor's ear now.
Lawmakers and budget experts cannot, however, preach fiscal discipline
in one breath and then defy the express wishes of taxpayers to constrain
revenue growth in the next. There is no discipline in announcing a
budget gap and then raising taxes to fill the gap. Real discipline lies
in recognizing that there is only so much revenue to spend and that the
state will have to make do with that much revenue and no more. Senate
President Robert E. Travaglini, who has declared that tax hikes are off
the table this year, appears to understand this principle.
Will the state actually have to cut spending? Probably not. It appears
that revenue growth will be strong enough to carry us through fiscal
years 2007 and 2008. Patrick should not be warning about budget gaps
that are unlikely to materialize but taking the initiative to identify
spending cuts he is prepared to make in the event that they do.
David G. Tuerck is executive director of The Beacon Hill Institute
and chairman and professor of economics at Suffolk University.
The Boston Herald
Wednesday, January 17, 2007
Budget realities hinder campaign vows
By Casey Ross
Despite a looming budget gap, Gov. Deval Patrick’s top financial aide
says it will be highly difficult to keep his campaign promise to slash
$735 million in wasteful state spending, setting up a stark choice
between deep service cuts or a tax hike.
Administration and Finance Secretary Leslie Kirwan said it may take
years to find Patrick’s promised level of savings and that there is no
“magic bullet” solution to the state’s budget problems. She spoke after
a hearing that left some onlookers guffawing at the skyrocketing cost of
state government.
“We don’t have a revenue problem, we have a spending problem,” said
Senate Minority Leader Richard Tisei (R-Wakefield). “It’s just a
question of the Legislature having a ferocious appetite to spend every
dollar that comes in and then some.”
The battle lines over the budget became clear yesterday as economists
testified that the state is facing a $1 billion deficit in the fiscal
year that begins in July. The deficit is being driven by costs for state
programs that are rising at a far greater rate than revenues.
Even though revenues are expected to grow by $600 million next fiscal
year -- an increase of between 3 and 4 percent over this year -- costs
for Medicaid, school building assistance, pension obligations and other
items will jump by at least $1.6 billion and maybe more, officials said.
Patrick said during his campaign that he could find $735 million in
waste to help bring state spending under control, a number that could
nearly close next year’s gap. But the governor’s aides said he never
expected the savings to be achieved in one year.
“The governor and his staff are aggressively searching for efficiencies
in all areas, including Medicaid fraud, enforcing wage and hour laws and
controlling health-care costs,” Patrick spokesman Kyle Sullivan said.
Sullivan said Patrick has no intention of raising taxes next year, a
pledge that was also made yesterday by budget leaders in the House and
Senate. Without raising taxes, officials said, the only other way to
close the budget gap is by sharply cutting services, a solution that
will likely draw fierce opposition from state agencies and special
interests.
“We have to live within our means,” said state Sen. Michael Knapik
(R-Westfield). “Massachusetts is already one of the most unaffordable
states to live in. We can’t do anything to exacerbate that.”
The Boston Globe
Wednesday, January 17, 2007
State likely to freeze tax exemption
Analysts cite slow growth in revenue
By Andrea Estes, Globe Staff
For the first time in four years, Massachusetts taxpayers will not
receive a higher personal tax exemption in 2008 under current
projections, a sign of a slowing economy that could force difficult
decisions on Beacon Hill this spring.
Department of Revenue officials announced at a legislative hearing
yesterday that a freeze in the personal income tax exemption was likely.
At the hearing, several economists predicted modest growth in state tax
collections next year, because of stagnant corporate profits and capital
gains.
An increase in the exemption, which is triggered the year after a rise
in tax revenue of at least 2.5 percent after inflation, would have saved
individuals $15 and couples $29 and cost the state about $60 million,
according to an agency spokeswoman. Taxpayers have seen an increase in
the exemption for the last three years. Couples can now deduct $7,700
and individuals can deduct $3,850.
"We're assuming it's not likely the exemption will kick in," said
Revenue Department spokeswoman Jennifer Parent.
Also lagging are state lottery revenues, which officials confirmed are
down 2 percent in the current fiscal year from last year. The lottery
provides more than $900 million to cities and towns.
The economists appeared before a joint hearing of the Senate and House
Committees on Ways and Means to help lawmakers arrive at a consensus on
revenue estimates to be used in the next round of budget negotiations.
They offered varying predictions for revenue increases in the upcoming
fiscal year, which begins July 1, ranging from a low of 1.8 percent from
Department of Revenue tax analysts to 6.4 percent from the Beacon Hill
Institute, a conservative think tank.
The most pessimistic analysts said the state is looking at a deficit of
up to $1.5 billion, a gap that will make it difficult for the new
governor to keep costly campaign promises, such as hiring 1,000 new
police officers and expanding full-day kindergarten.
"I think it would be an achievement if this administration and this
Legislature are able to achieve a balanced budget without gimmicks,
without drawing on reserves and maintaining the present level of
services," said Michael Widmer, president of the Massachusetts Taxpayers
Foundation, which is predicting revenue growth next year of only 3
percent, compared to an estimated 4.2 percent this fiscal year and an
actual 8.2 percent increase the previous year. Costs are expected to
rise much more, he said.
But Governor Deval Patrick, Widmer said, will be hard-pressed to spend
money on new programs or restore local aid to provide property tax
relief for homeowners, a frequent campaign pledge. "The very best they
can do would be to put a down payment on some initiatives -- take
initial steps and phase them in over several years," he said.
After the hearing, Patrick's top budget aide, Administration and Finance
Secretary Leslie Kirwan, said the governor's campaign pledge to cut $735
million annually from the budget in waste and inefficiencies would not
be realized immediately.
"As the governor pointed out," she said, "he's looking at that over a
longer period of time. We're just beginning that work with the
agencies."
Patrick recently said he does not intend to complete new initiatives all
in his first year. He said he will phase in the projects. But yesterday
was the first time his administration has said it would not quickly cut
$735 million from the budget.
The testimony before the budget committees was mostly gloomy, with
economists describing an exodus of young people from the state, a
depressed housing market and sales tax revenues that are the lowest per
capita in the country.
The predictions of reduced revenue growth led lawmakers to raise the
prospect of turning to new revenue sources, possibly legalized gambling
or an increase in the gas tax. Raising income or sales taxes is
unlikely, they said.
Senate Ways and Means chairwoman Therese Murray asked whether casinos
could bring in enough revenue to restore fiscal balance. Widmer said
legalized gambling would generate $300 million a year, not enough to
close the expected budget gap.
Efforts to legalize gambling in the state have failed so far in the
Legislature. During the campaign, Patrick said he was opposed to
expanded gambling but has since said he's willing to listen to
supporters. If Patrick decides to back a casino proposal, its chances
would greatly improve, Widmer said after the hearing.
Kirwan said the state must make structural changes to balance "slow,
steady growth in taxes" with the greater growth in fixed costs, such as
healthcare and pensions.
She said she has identified ways to deal with the gap, but would not
elaborate. She said Cabinet secretaries have been asked to find
potential cost savings. "What we need to understand is that we need to
look at a variety of approaches, and there's not going to be a magic
bullet," she said.
In a speech to the Massachusetts Municipal Association Saturday, Patrick
suggested that his budget would contain a modest local aid increase. He
also talked about charging convicts a "safety fee" to help fund the
hiring of new police officers.
One analyst said yesterday he doesn't believe that a funding crisis is
inevitable. David Tuerck, executive director of the Beacon Hill
Institute, said the state can balance the budget by making reasonable
spending choices.
"It's as big or as small as the lawmakers want it to be it," he said,
referring to the gap. "It's entirely under their control." Tuerck said
his projections show a small deficit in 2007 and none in 2008.
He urged lawmakers to cut waste from "patronage-laden" agencies such as
the MBTA and the Turnpike Authority before looking for new revenue.
Practices such as paying Turnpike Authority toll collectors $60,000 a
year "sour taxpayers on the need for additional revenues," he said.
After the hearing, House Ways and Means Committee chairman Robert A.
DeLeo said that he now agrees that the deficit could reach the $1
billion level. He had earlier predicted a smaller amount.
Other legislators doubted the picture was really that bleak.
"I see a lot to be positive about; I'm relatively pleased," said
Representative Lewis G. Evangelidis, Republican of Holden. "I'm not
hearing doom and gloom, the sky is falling."
State House News Service
Tuesday, January 16, 2007
Revenue slowdown seen,
House budget chief sees level funding ahead
By Jim O'Sullivan
State tax collections are expected to crawl along near the rate of
inflation, contributing to an impending budget gap of approximately $1
billion, the top House budget author said Tuesday.
After a revenue hearing that he called "sobering," House Ways and Means
Chairman Robert DeLeo said the Fiscal Year 2008 state budget likely
would require "level-funding a whole lot of different items which
probably would call out for increases in funding."
DeLeo and other top Beacon Hill fiscal policymakers entertained a buffet
of revenue-raising options during the hearing, but declined to commit to
any specific strategy, instead remaining open to a number of proposals
put forth in recent days by Gov. Deval Patrick. Patrick has proposed
allowing municipalities to levy meals and lodging taxes and imposing
"safety fees" on convicts, kept open the option of expanded gaming in
the state, and backed off earlier pronouncements ruling out a gas tax
increase.
On Tuesday, DeLeo (D-Winthrop), top Patrick budget aide Leslie Kirwan,
and Senate Ways and Means Chairwoman Therese Murray (D-Plymouth) worked
to establish low expectations for spending plans that will emerge from
all three branches in the next several months. Murray said at the outset
of a State House revenue hearing, "2008 is going to be saturated by some
very tough budget decisions and choices."
While other forecasters are more optimistic, state revenue officials
predict that tax revenue growth will be halved next fiscal year, falling
to 2.2 percent, at the same time that spending commitments spiral north.
The revenue slowdown may end the state's three-year trend of
revenue-triggered personal income tax exemption increases, top revenue
officials said. Such increases, approved as part of the last major
statewide tax increase, are triggered by tax revenue growth and are
worth about $60 million a year. They have risen three straight years.
Howard Merkowitz, the department's director of tax policy and analysis,
said projected revenues suggested no increase, but added that "it's
close at this point, based on the rate of inflation."
Once exemptions are raised in accordance with the tax increase law, the
actual income tax rate of 5.3 percent would begin to sink slowly toward
the voter-mandated clip of 5 percent. Revenue department officials say
the earliest they see that happening is 2010.
The budget chiefs also ruled out a proposal to foist $2.9 billion of the
MBTA's $5 billion debt load, expected to increase through inflation to
$8.1 billion, onto the state - Kirwan, DeLeo, and Murray all panned the
proposal.
After Massachusetts Taxpayers Foundation President Michael Widmer
diagnosed the fiscal challenges facing the MBTA, Murray asked him if the
state should assume the transit agency's debt, which consumes a gaping
portion of its overall budget. That measure has been proposed by
environmentalists, a T ridership group and some lawmakers, including
Murray's colleague Sen. Jarrett Barrios, who want the state to assume
nearly $3 billion of the debt that could stretch to over $8.1 billion
with interest.
Murray asked, "But do you think we should take up $2.9 billion in debt?"
After Widmer replied, "No, I do not," Murray nodded and said, "Thank
you." Later, DeLeo said, "I'm with them 101 percent. There's no way
that, obviously, we can assume that kind of debt." And Kirwan,
responding to Murray, said after the hearing, "I'm with her."
DeLeo said he had revised his expectations of a structural deficit
upward, from between $500 million and $750 million to a shortfall of
roughly $1 billion, the range Patrick and his aides have been discussing
for weeks. With spending requests from lawmakers beginning to stream
into the offices of the Ways and Means members, most who spoke during
Tuesday's hearing aimed at downplaying hopes for a robust budget season.
Widmer said, "I think it would be an achievement if this administration
and this legislature are able to achieve a balanced budget without
gimmicks, without drawing on reserves, and maintaining the present level
of services. That would be an enormous achievement."
But Patrick has promised expansion on the spending side, and made recent
overtures at profitable reforms on the revenue side. In a speech to the
Massachusetts Municipal Association Saturday, he suggested his budget
would contain a "modest" local aid hike and said municipal public
employee health plans would be consolidated under the state's Group
Insurance Commission. He also teased a "safety fee" on convicts to help
fund his promise of 1,000 new police officers, and said he is undecided
about both opening the state to new gaming and removing
telecommunication firm tax exemptions.
On Tuesday, Kirwan said, "It seems as though we have not a revenue
crisis; we've seen those before. This is a matter of slow, steady
growth. But on the margin if we try to balance slow, steady growth in
taxes with what's become bigger growth on the margin in the state
budget, that that's not a sustainable exercise."
The outlying projection of increased revenue in fiscal 2008 came from
the Beacon Hill Institute, whose executive director, David Tuerck,
forecast 6.4 percent growth. Revenue Commissioner Alan LeBovidge
predicted 2.1 percent growth (to $19.668 billion) next fiscal year, and
Widmer projected a 3 percent increase (to $19.85 billion).
LeBovidge also called for the state to revise its fiscal 2007 estimates
downward by $100 million, on the condition that present trends hold
through the end of the month.
Kirwan said the state this fiscal year will see revenue growth of
roughly half its rate of spending increase, noting, "That's a gap that
we have to deal with. And it looks to me as though the same solutions,
of just playing with those two things on the margin are not going to
work. And that we have to look either for more structural changes in how
we spend money and/or, hopefully, more work to do to grow the economy so
that we're not just talking about small, marginal changes in economic
growth."
Later, Kirwan said health care spending seemed a prime area to target
for decreased spending, but declined to detail other strategies.
The state's contribution to its pension system is also expected to
increase, one of three funding sources for the $45 billion account; the
other two are employee contributions and investment revenues. The level
of the increase is uncertain, House budget aides say, but likely will
range between $65 million and $200 million.
A new funding schedule is due for FY '08, and pension officials say the
state's decisions on that formula will determine whether the
contribution next fiscal year ranges as high as $1.599 billion. The
increase, they said, would be "primarily due" to losses on their assets'
actuarial value.
Democratic lawmakers have all but abandoned the attitude of holding the
state's stabilization account sacrosanct, last year willing to use those
reserves to bankroll legislation that included, among other projects,
UMass studies of the winter moth and Victorian street lighting in
Melrose.
"The Rainy Day Fund is always there," DeLeo said, "but I think it's
always been our goal … to see that that account is increased upon -
untouched, or increased upon."
DeLeo and Widmer agreed that the account, which currently holds $2.1
billion, likely won't need to be tapped to fulfill the spending
initiatives slashed by Gov. Mitt Romney and restored by Gov. Deval
Patrick earlier this month.
Both Murray and DeLeo were noncommittal about the local option taxes
Patrick wants to allow cities and towns to impose. Murray said the
Senate panel hadn't yet adopted a position on the plan, which Patrick
said would give free rein to municipal officials. Noting the House's
past opposition to similar measures, DeLeo said the discouraging fiscal
picture laid out during Tuesday's hearing could persuade members to
change their minds.
"Maybe that might be looked upon by the members as another option,"
DeLeo said.
Experts said the state's slowed housing market had contributed to the
tail-off in revenue growth. But Alan Clayton-Matthews, a UMass-Boston
economics professor, said the market's softening is incurring
"short-term pain" but could prove salubrious if it follows the pattern
of the 1990s market: "In the long run, that's going to be very
beneficial" because it will spark lower prices and increased
home-purchasing.
Meanwhile, said Federal Reserve Bank Vice-President Yolanda Kodrzycki,
the slumping market "clearly is putting the damper on the Massachusetts
economy," impacting construction and consumer spending. The state's
labor force hasn't grown since 2000, leading to concerns about future
job growth, Kodrzycki said.
Lawmakers weren't shy about injecting politics into the budget talks,
tossing in some thinly veiled partisanship over some budget battles from
the recent past.
Sen. Michael Knapik, the Westfield Republican who last session was the
ranking Republican on the Senate budget committee, peppered panelists
with questions about the fiscal repercussions of so-called economic
stimulus legislation passed by the Legislature. Murray shot back that
the $437 million package's benefits couldn't be evaluated in the first
year.
After LeBovidge laid out his projections, Sen. Stephen Brewer (D-Barre)
quipped, "It's intriguing that when Gov. Romney took his long walk out
of the State House, that apparently the billion-dollar budget surplus
went with him as well."
"I'm barely going to ask for anything," Peter Larkin, a former
legislator now lobbying with the Liberty Square Group.
"Good," DeLeo laughed, "because you're not going to get it."
The Boston Globe
September 7, 2006
Patrick says he may back tax rollback
Cut would depend on state economy
By Scott Helman and Matt Viser, Globe Staff
Democrat Deval L. Patrick, who has come under attack from his rivals in
the primary campaign for his resistance to lowering the state income tax
rate, said last night that he might support a rollback to 5 percent if
the Massachusetts economy strengthens.
Patrick, joined by four other gubernatorial candidates at a forum at
Roxbury Community College, said that although he opposes a rollback from
5.3 percent to 5 percent now, the state might be able to afford the
lower rate in the future if the economy sees a significant expansion.
"I do think that we can get to a point one day when we can sustain a 5
percent rate," Patrick said. "The only way to get there is by growing
the economy."
Patrick argues that cutting the income tax rate would starve cities and
towns of state local aid revenue, leading the municipalities to raise
property taxes. But his remarks indicating an openness to consider a
lower rate down the road are a response to the criticism he has endured
on the issue from Democratic rivals Thomas F. Reilly and Christopher F.
Gabrieli. Reilly has called for an immediate rollback, a change from his
position last year. Gabrieli has called for a phased rollback.
Patrick's remarks on taxes came as the three Democrats, independent
Christy Mihos, and Green-Rainbow Party candidate Grace Ross traded
opinions at the forum on housing, immigration, and other issues
important to urban neighborhoods.
The Eagle-Tribune
Sunday, January 14, 2007
You could time Patrick's honeymoon with a stopwatch
By Taylor Armerding
I've heard that Gov. Deval Patrick may have a short honeymoon, even with
a Democratic Legislature. After all, just because they're (almost) all
from the same party doesn't mean his legislative colleagues lack ego or
ambition.
But for me, it was over on the day it was supposed to start -- the day
he took office. I suspect this will not cause the governor any anxiety.
I wasn't a member of his hypnotic, lockstep "Together-we-can" brigade
anyway.
Still, I have a feeling I am not alone. Sure, he's a nice, bright,
articulate guy. He'd probably make a good therapist. He makes people
feel good by saying stuff that doesn't really mean anything.
But to have a honeymoon, you have to have mutual trust. And the governor
who talks on and on about "inclusion" and "together" has already
violated that trust in so many ways.
The biggest and most egregious example is, of course, his written
exhortation to the Legislature to ignore the express dictate of the
state constitution when it came to their duty to take a vote on a
citizen petition regarding gay marriage.
So, we have a governor who declares we should not be "writing
discrimination" into the constitution but wants to flout that same
constitution if its clear commands are inconvenient or don't square with
his view of the world. I'm not sure why he is concerned about anything
being written into the constitution. His philosophy is, if you don't
like it, ignore it.
He is also, I am shocked to say, backing off on campaign promises.
Property tax relief? Uh, what he meant was "stabilization" - maybe. A
thousand new cops? Maybe later. And it's all Mitt Romney's fault anyway,
even though tax collections for the year are up by nearly $300 million,
and about $100 million over estimates.
Finally, there was his inaugural speech. Patrick spent his introduction
like a lawyer (which he is) shading the truth to set up straw men that
he could then demolish.
It reminds me of when he was a candidate and met with the editorial
board of this newspaper. He said -- shades of Bill Clinton -- that he
thought it appropriate to "ask" the wealthy to pay more in taxes. Ask?
Of course not. It won't be a request. If he gets his way, it will be a
demand, with the force of law. But it sounds so reasonable. Who cares if
it isn't true?
So here is the governor, at the start of his inaugural, distorting
reality in his own words.
"For a very long time now, we have been hearing that government is bad
..." No, we allegedly "anti-government" types have not been saying that.
We've been saying it is too big. Government is necessary and, when done
right, can be very good. The problem is that Patrick has already
declared he wants to make it even bigger.
"... that it exists only to serve the powerful and well-connected."
Wrong again. The problem is that it exists to serve those on its
payroll. The powerful and well connected don't need much government. His
point, I'm sure, is that under his benevolent leadership, government
will supposedly serve all those groups that are trotted out every time a
politician wants to take more money from you - "the children ...
'hardworking' families ... the poor ... the most vulnerable among us."
Look at the state budget. Look at how many billions go to education,
health care and welfare. Government is spending plenty on those groups.
But what is the most powerful political force in Massachusetts? It's not
the poor. It is public employee unions. No elected legislator dares to
cross the cops, firefighters or teachers. And the governor has been in
bed with them since his campaign began.
"... and that all of us are on our own." Who is he kidding? To claim, in
the face of a $26 billion budget (plus other "off-budget" spending that
has the whole package crowding $30 billion), that anybody is "on their
own" ought to get him laughed out of the Statehouse.
But it won't, of course. He could hike the budget by another $8 billion
-- the amount some analysts have said it would cost to implement all of
his campaign promises -- and there would still be interest groups
clutching hankies and wailing about "unmet needs." There would still be
cops and firefighters making six figures, complaining that they are
being treated like "peasants."
And that is just fine with the governor. And that is the problem. He has
abandoned any pretense of supporting the American ideal of independence.
In his view, the more dependent on government we are, the better.
Honeymoon over.
Taylor Armerding is associate editorial page editor of The
Eagle-Tribune.
NOTE: In accordance with Title 17 U.S.C. section 107, this
material is distributed without profit or payment to those who have expressed a prior
interest in receiving this information for non-profit research and educational purposes
only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
|
