CLT UPDATE
Thursday, May 8, 2008
State's "fiscal crisis"
From boom to bust in a week
Revenue Commissioner Navjeet K. Bal today announced
that preliminary revenue collections for April 2008 totaled $2.737
billion, up $400 million or 17.1 percent from last April....
FY08 year-to-date tax collections total $17.126 billion, up $1.219
billion or 7.7 percent ahead of the same period a year ago, and are $702
million above the FY08 year-to-date benchmark corresponding to the FY08
tax revenue estimate of $20.225 billion.
Department of Revenue
Monday, May 5, 2008
April Collections of $2.737 Billion
Exceed Benchmark
State tax collections shot up by more than 17 percent
in April, shattering the monthly benchmark by $333 million and adding a
layer of complexity as the state Senate prepares to take up a bill
sponsored by Democrats that raises taxes by nearly $500 million.
The April tax haul put overall tax collections for fiscal 2008 at more
than $1.1 billion above the original numbers used to build this year's
$26.8 billion state budget....
Senate Republicans called the numbers "embarrassing" for supporters of
tax increases and claimed that with revenues pouring in at record
levels, state government leaders must address spending patterns. Senate
Minority Leader Richard Tisei said the state's new health care law was
one of the main reasons behind rising spending and also pointed to
"exploding" personnel costs at state agencies.
Noting that even as lawmakers consider tax increases – in what the
administration terms a way of closing “loopholes” – tax collections are
on pace to trigger an income tax reduction, Tisei said, “We don’t have a
revenue problem in this state. We have a spending problem.” ...
The share of the state's workforce funded through the annual operating
budget . . . rose 2.6 percent from June through December last year....
Senators said they are anticipating a vigorous effort to generate new
revenue by increasing the taxes on alcohol, along with cigarettes....
With the tax increase, Tisei said, a carton of cigarettes will cost $68
in Massachusetts, compared to $35 in New Hampshire.
State House News Service
Monday, May 5, 2008
April tax revenues set new record
The state raked in more than $156 million in gasoline taxes
last summer from June through August, according to the Department of Revenue,
and will collect an estimated $674.6 million in taxes at the pump next year.
"The amount of dollars is so small per household, like pennies a week, and we
have a huge infrastructure problem that would be exacerbated," said Michael
Widmer, president of the Massachusetts Taxpayers Association. "The only
responsible approach here is to retain the gas tax because we have huge
infrastructure needs."
The Patrick administration announced yesterday that state revenue for the month
of April has exceed benchmark expectations by $333 million, growing more than 17
percent over last April's figures....
The state has collected about $484 million more than projected in fiscal 2008,
not counting about $218 million in one-time revenue from settlements....
Widmer agreed with Patrick and his administration that the good tax news from
April should no be interpreted as a sign that the state is now flush with cash
that can be spent in years to come.
"The size of the number, in one sense, is stunning. It's quite large. But
looking forward, sales taxes and other indicators that affect the economy are
flat," Widmer said. "We might see this pace through May and June, but then I
suspect we might see a slowdown."
The Lowell Sun
Tuesday, May 6, 2008
Mass. gas tax holiday called a gimmick
The House voted Friday night to tack $45 million back onto
the state budget that leadership was initially hoping to save by tiering health
insurance premium payments from state workers.
The 144-10 vote, stripping a major provision out of the Ways and Means Committee
budget, occurred without debate.
State House News Service
Friday, May 2, 2008
House retreats from state worker health reform
The House early Saturday morning voted 136-19 to approve a
$28.2 billion budget, fattened throughout the week with spending amendments.
The party line vote occurred after the quick adoption, without debate, of a
long, earmark-laden economic development that was put together behind closed
doors throughout Friday night.
House Minority Leader Brad Jones said the House had added $210 million in
spending during the week and expanded its draw from state reserves to pay for
the budget to $412 million at a time when "warning signals abound" over a soft
economy.
Jones said the House had overspent all week without citing new revenue sources
and may turn to higher taxes to eventually foot the bill.
State House News Service
Saturday, May 5, 2008
House okays $28.2 billion budget early Saturday morning
Local lawmakers added hundreds of thousands of dollars for
pet projects to the $28.2 billion budget approved by the House last week,
including money for Haverhill veterans, a school for autistic children in
Andover, and the YMCA of Greater Lawrence.
The budget now goes to the Senate and requires the governor's signature before
any of the spending requests become law....
But Michael Widmer, president of the Massachusetts Taxpayers Foundation, said
the mix of new spending and increased reliance on the state's rainy day fund is
troubling.
"This is not a realistic budget," said Widmer, who believes the Senate would
have to reduce spending by "hundreds of millions" of dollars to be prepared for
a drop in state revenues caused by an expected recession.
Rep. Bradley Jones Jr., R-North Reading, said he thinks the Senate is poised to
add, not subtract, from the House budget. He pointed to Senate plans to vote on
a $472 million tax increase tomorrow that expands upon the $392 million tax
increase the House passed in April.
He also noted yesterday's state revenue report that showed collections bested
expectations by more than $2 billion in April. Patrick administration officials
cautioned the figure reflected the year on which the taxes were paid, 2007, and
not the coming year. But Jones said it supports his contention that the
Democratic-controlled Legislature has its priorities wrong.
"I think clearly there's much more data to suggest we have a spending problem
and not a revenue problem," Jones said.
The Eagle-Tribune
Tuesday, May 6, 2008
House adds hundreds of thousands
for local projects
As we feared, our tentative nod to the Massachusetts House a
couple of weeks ago for keeping the 2009 state budget under $28 billion was
premature....
But the proposal to hold spending growth to 4 percent, about $1.1 billion,
seemed to signal an awareness of the need for restraint. The committee even
embraced a provision, endorsed by the governor and House leaders, to raise the
employee contribution for health insurance slightly, to a modest 20 percent for
those with salaries over $30,000, 25 percent for those over $50,000.
Subsequently, however, the House loaded the committee plan with $200 million in
spending for lawmakers’ pet projects. Members rejected the insurance reform and,
on a party-line vote, crushed a Republican proposal to increase state aid to
cash-strapped municipalities by $200 million. The cost of the earmarked spending
was almost double the $109 million Ways and Means had chopped from spending
requests....
Taxpayers’ last hope evidently is to persuade senators it is
their duty to pass a sustainable, fiscally responsible spending plan.
A Telegram & Gazette editorial
Thursday, May 8, 2008
Hey, big spenders
House goes on $200 million earmarking spree
Massachusetts tax collections in April soared 17.1 percent
compared with a year ago. But this news, announced yesterday, shouldn't cause
the Legislature to abandon all restraint on spending....
The House, perhaps sensing the good news, voted Saturday to increase the $28
billion budget proposed by the Ways and Means Committee by $200 million before
sending it on to the Senate....
The growth in revenue last month probably means that the state will end the 2008
fiscal year without a shortfall. The budget under consideration by the
Legislature is for fiscal '09, which begins July 1, when projections become
murky....
Because of the revenue surge, the state income tax rate will be going down
slightly, from 5.3 to 5.25 percent, the result of a law intended to blunt voter
anger over the Legislature's decision in 2002 not to drop the rate to 5 percent.
Given its commitments, the state can't afford 5 percent.
But a business-as-usual budget, full of local goodies, invites a voter backlash,
and an initiative petition to abolish the income tax is expected to be on the
budget this November. The Senate needs to devise a more responsible budget.
A Boston Globe editorial
Tuesday, May 6, 2008
A business-as-usual budget
The state Senate is poised today to approve a $472 million
tax package despite new data showing the state is hauling in far more tax
revenue than anticipated this year....
The expected Senate action comes after the Department of Revenue yesterday said
April tax collections were up $400 million, for a 17.1 percent increase over the
same period last year.
Meanwhile, tax collections so far this fiscal year are running $1.2 billion, or
7.7 percent, above last year’s levels.
The Boston Herald
Tuesday, May 6, 2008
Senate set to OK tax plan
The state Senate’s move to raise the cigarette tax by
$1-a-pack, making Massachusetts one of the most expensive states to buy
cigarettes, has smoker’s rights groups puffing mad and health advocates
applauding....
The $1-a-pack tax was included in a nearly $500 million tax package that the
Senate approved yesterday....
The Senate and House still need to agree on the tobacco tax hike and Gov. Deval
Patrick must sign off on it....
Massachusetts already has one of the highest cigarette taxes in the nation.
The current state cigarette tax is $1.51 a pack, but once federal taxes, sales
tax and tobacco settlement surcharges are included the tax is $2.76 a pack, said
[Stephen Helfer, founder of the defunct Cambridge Citizens for Smoker’s Rights],
who actively lobbied against the tax increase.
The Boston Herald
Wednesday, May 7, 2008
Senate’s cigarette price hike has smokers fuming
The Boston Herald - May 8, 2008
Editorial cartoon by Jerry Holbert
Chip Ford's CLT Commentary
Beacon Hill Politics 101: If you don't have a "fiscal
crisis" to blame for raising taxes and thwarting the voters' 2000 tax
rollback mandate, then by god create one quick!
Despite months of doom-and-gloom about budget gaps
and revenue shortfalls, when the latest announcement of
record-shattering tax revenue could no longer be hidden, it had to be
spent immediately on anything. $1.2 billion more than last year's
take couldn't be left unspent, a temptation to taxpayers and voters who
in 2000 demanded the income tax rate be rolled back to its traditional 5
percent.
So the Beacon Hill feeding frenzy went into
overdrive, burned the midnight oil until an additional $210 million in
spending could be added to the 2009 budget and $412 million was spent
from the alleged "rainy day" stabilization fund.
Michael Widmer, president of the Big-Business
Fat-Cats' so-called
Massachusetts Taxpayers Foundation, quickly jumped in and ran his
usual tax-spend-borrow cover. Addressing the record state tax take
it was, "The size of the number, in one sense, is stunning. It's quite
large." Then came his cover-thy-butt caveats: "We might see
this pace through May and June, but then I suspect we might see a
slowdown." With MTF's long and proven
track record of unreliable revenue forecasts who can blame him?
In one sentence he managed to fit in the qualifiers "might" and
"suspect."
He further pontificated that "the mix of new spending
and increased reliance on the state's rainy day fund is troubling.
This is not a realistic budget," he declared of the House's feeding
frenzy, adding that the Senate would have to cut the House budget by
"hundreds of millions" of dollars. That, of course, didn't happen.
Widmer's advice is never heeded, never has been. He's just a
useful idiot for wasteful government growth. We can't help but
wonder after all these years if he even realizes he's simply a tool.
Typically, when it comes to a tax break for average
citizens, Widmer as always is vehemently opposed. To a proposal
for a gas tax holiday over the summer his response was, "The amount of
dollars is so small per household, like pennies a week . . . The only
responsible approach here is to retain the gas tax because we have huge
infrastructure needs."
And how about that Boston Globe editorial board?
"Given its commitments, the state can't afford 5 percent," the
all-knowing elitists decree from on high.
What happened to the "commitment" of 1989 that the
income tax hike would be only "temporary"? The Globe has always railed
for shattering that one, and did again before concluding this editorial.
A case of selective commitments for sure. Instead of titling it "A
business-as-usual budget," it more appropriately should have been "A
business-as-usual editorial."
First come the "investments," such as "investment in
our future" or "investment in our children." This of course means more
proposed government spending. It must be government spending
because surely nobody cares what you have left to spend on
your future or your kids'. Once the spending is larded
into the budget, now come the "commitments." This congenital
Doublespeak is akin to "unmet needs" that are really endless unmet
wants.
Give us our tax rollback to 5 percent now!
It only amounts to "a cup of coffee a week," right? The
Legislature's token reduction from 5.3 to 5.25 percent won't even pay
for the empty paper cup.
 |
|
Chip Ford |
Department of Revenue
May 5, 2008
April Collections of $2.737 Billion Exceed
Benchmark
Revenue Commissioner Bal signals caution
on future revenue growth as economy slows
Revenue Commissioner Navjeet K. Bal today announced that preliminary
revenue collections for April 2008 totaled $2.737 billion, up $400
million or 17.1 percent from last April.
Total tax collections were $333 million above the April monthly
benchmark based on the FY08 revenue estimate of $20.225 billion, due
almost entirely to growth in income tax payments with returns and
extensions, both of which reflect past economic activity rather than
future economic growth.
FY08 year-to-date tax collections total $17.126 billion, up $1.219
billion or 7.7 percent ahead of the same period a year ago, and are $702
million above the FY08 year-to-date benchmark corresponding to the FY08
tax revenue estimate of $20.225 billion.
Commissioner Bal said it was necessary to exercise caution in analyzing
the robust April collections which were largely fueled by investors who
apparently experienced sizable income growth in tax year 2007. “As
history has proven, this kind of revenue growth is extremely volatile
and not likely to carry forward given current economic indicators. The
decline in withholding tax and the minimal growth in sales and use tax
revenues, which are current indicators of the state of the economy, are
sobering” she said.
Bal also noted that faster processing of tax returns, due in part to
heightened use of electronic filing, had probably netted $60 million to
$70 million in income that otherwise would have been counted in May. “We
could then see a corresponding decrease in our next month’s report,” she
said.
Corporate/business tax collections of $48 million for April 2008 were
down $7 million or 12.2 percent from a year ago and were $6 million
below the monthly benchmark. Sales and use tax collections of $336
million in April 2008 were up $9 million or 2.7 percent from a year ago
and met the monthly benchmark.
April income tax collections totaled $2.223 billion, up $401 million or
22.0 percent and $346 million above the monthly benchmark. Withholding
taxes totaled $686 million, down $5 million or 0.8 percent from a year
ago, $43 million below the benchmark. Income tax refunds totaled $305
million, down $16 million or 5.0 percent from a year ago, $9 million
below the benchmark. Income tax payments with returns and bills totaled
$1.545 billion, up $355 million or 29.8 percent from a year ago, $355
million above the benchmark.
On a fiscal 2008 year-to-date basis, sales and use tax collections are
$29 million or 0.9 percent ahead of the same period a year ago, $38
million below the benchmark. Corporate/business taxes are $88 million or
4.6 percent ahead of the same period a year ago and $218 million above
the benchmark mainly due to large one-time payments received in February
and March. Income taxes are $1.122 billion or 12.3 percent ahead of a
year ago and $540 million above the benchmark.
State House News Service
Monday, May 5, 2008
April tax revenues set new record,
beat benchmark by $333M as tax vote nears
State tax collections shot up by more than 17 percent in April,
shattering the monthly benchmark by $333 million and adding a layer of
complexity as the state Senate prepares to take up a bill sponsored by
Democrats that raises taxes by nearly $500 million.
The April tax haul put overall tax collections for fiscal 2008 at more
than $1.1 billion above the original numbers used to build this year's
$26.8 billion state budget. The big surge in April revenues, which
officials said constituted a one-month record for receipts at $2.737
billion, was announced on the eve of the Senate's consideration of
legislation targeting corporations and smokers with new levies, while
reducing some business tax rates.
Senate Republicans called the numbers "embarrassing" for supporters of
tax increases and claimed that with revenues pouring in at record
levels, state government leaders must address spending patterns. Senate
Minority Leader Richard Tisei said the state's new health care law was
one of the main reasons behind rising spending and also pointed to
"exploding" personnel costs at state agencies.
Noting that even as lawmakers consider tax increases – in what the
administration terms a way of closing “loopholes” – tax collections are
on pace to trigger an income tax reduction, Tisei said, “We don’t have a
revenue problem in this state. We have a spending problem.”
Gov. Deval Patrick said, “You don’t make a tax vote based on a snapshot
in time. We’re looking at the long-term strength of the state’s economy,
the long-term needs to support the services that people want.” Patrick
added that “small- and medium-sized companies deserve to have those
loopholes closed.”
Talking with reporters, Patrick said he would not consider a summer gas
tax holiday, which he called “a wonderful gimmick,” saying the potential
savings would not offset the “tradeoff” in lost bridge and road
maintenance funds.
In a briefing with reporters Monday afternoon, Patrick aides downplayed
the excess revenues as indicative of economic health or budgetary
strength. They pointed to supplementary spending demands and the current
fiscal year budget’s reliance on more than $600 million in reserves for
structural balance. Administration and Finance Secretary Leslie Kirwan
said the state would likely still have to draw from its reserve funds at
the end of the year.
Total state tax collections heading into the last two months of fiscal
2008 are up 7.7 percent. In a press release, the Department of Revenue
characterized the April revenue growth as "robust" but urged caution,
saying collections "were largely fueled by investors who apparently
experienced sizable income growth in tax year 2007."
Navjeet Bal, the state revenue commissioner, said a decline in
withholding taxes and minimal growth in sales and use tax revenues were
"sobering" because those taxes are "current indicators" of the state of
the economy.
The most recent jobs figures, released in mid-April, showed the state
adding 4,500 jobs in the first three months of calendar 2008. While
bracing for a downturn, state leaders say Massachusetts is positioned
better than other states.
Bal also said faster processing of returns netted $60 million to $70
million that might otherwise have been captured in May and instead
helped push the April collection figure up to $2.737 billion. April
revenues were up $400 million over April 2007, about $346 million ahead
of the monthly benchmark. Patrick aides said $218 million in onetime
payments had also driven up receipts, and accounted for nearly all the
over-benchmark corporate receipts.
Administration and Finance Secretary Leslie Kirwan said the April
numbers mean there will be no mid-year "9C" spending cuts but that the
administration would maintain fiscal 2008 spending controls.
Kirwan dismissed Tisei’s claims of soaring hiring as inaccurate, saying
growth had been “very minimal,” but said she did not have the numbers
available. The share of the state's workforce funded through the annual
operating budget - which excludes those paid through capital budgets,
federal grants, seasonal help, boards and commissions, and
semi-independent authorities - rose 2.6 percent from June through
December last year.
The House last week added about $210 million to its proposed $28 billion
fiscal 2008 budget. Supporters of the additional spending said it would
fuel worthwhile government programs and services while critics said
Democrats had failed to cite a funding source for the spending and
questioned whether taxpayers could afford it.
Monthly revenue collection numbers are usually released with a press
release but Monday’s numbers were outlined by Kirwan and Revenue
Commissioner Navjeet Bal at a State House press briefing. House and
Senate Republicans have ripped the department for departing from the
usual process of announcing revenue on the first or second business day
of the month, alleging that the revenue information was intentionally
not announced during last week's House budget debate and pushing for the
announcement prior to Tuesday's Senate tax debate.
Kirwan dismissed concerns about the timing of the numbers’ release,
attributing the delay to the importance and complexity of April tax
collections, and saying the figures weren’t ready until Monday morning.
Tisei said April tax collections have been released on the first
business day in May during each of the past ten years, until this year.
In a statement, Bal said, “DOR sought to ensure accurate and complete
revenue numbers before releasing them, and that is what we did today.”
The Senate tax bill, polled out of the Senate Ways and Means Committee
over the weekend, will generate $472 million in fiscal 2009, according
to a summary of the bill obtained by the News Service.
Tisei, during an unusual floor speech in Monday's informal session, said
Senate Republicans were prepared to block consideration of the tax bill,
unless the department released the numbers. Tisei said leaders at the
highest levels of government had the numbers but the public should know
them as well in advance of Tuesday's planned floor debate. The Wakefield
Republican said the administration's handling of the tax figures lacked
the transparency Patrick promised to bring to state government.
The Senate tax bill includes the "check the box" and "combined
reporting" reforms sought by Gov. Patrick; reduces the corporate
business excise rate from 9.5 percent to 8 percent over three years,
beginning Jan. 2, 2010; includes financial institutions in the combined
reporting regime; reduces the corporate excise rate for financial
institutions from 10.5 percent to 9 percent over three years, beginning
in 2010; clarifies that recipients of the personal earned income tax
credit must live or work in Massachusetts; and increases the cigarette
tax by $1 per pack and makes the increase applicable to the wholesaler's
inventory, effective July 1, 2008.
The committee endorsed the bill on a 10-0 vote, according to an aide.
Its passage is expected in the Senate.
The Senate tax bill also reduces the excise rate for "S" corporations
over three years starting in 2010. The rate for S corporations with
gross sales between $6 million and $9 million moves from 3 percent to
1.8 percent and the rate for S corporations with gross sales above $9
million moves from 4.5 percent to 2.7 percent.
The Senate committee version proposes a softer rate cut than the House
plan, which would reduce the corporate excise rate from 9.5 percent to
8.75 percent next year, tying future reductions in the rate to economic
growth triggers with an eventual floor of 7.5 percent. While the Senate
paring would begin in 2010, the House opted to start next year.
Senators said they are anticipating a vigorous effort to generate new
revenue by increasing the taxes on alcohol, along with cigarettes. "I
think that's going to be one of the most contentious parts," Sen.
Stephen Buoniconti (D-Springfield) told the News Service Friday.
The Senate bill also requires businesses that resell hotel/motel rooms
to collect taxes on the difference between the retail price of the room
paid by the consumer and the discounted prices the reseller pays to
acquire the room.
Senate Republicans on Tuesday plan to push budget amendments that Tisei
said would wipe out a 1946 law that he said subsidized the tobacco
industry by protecting it against competition. The amendment, if passed,
would negate the impact of the cigarette tax increase, he said. With the
tax increase, Tisei said, a carton of cigarettes will cost $68 in
Massachusetts, compared to $35 in New Hampshire. Senate Republicans are
also mulling amendments to increased tax revenue towards cities and
towns in the form of local aid.
The Lowell Sun
Tuesday, May 6, 2008
Mass. gas tax holiday called a gimmick
By Matt Murphy
Gov. Deval L. Patrick said he is sensitive to the impact of rising gas
prices on families and commuters, but shot down the idea that a gas tax
holiday should be considered as a short-term solution.
"It's a wonderful gimmick, but it's a patch. It doesn't solve our
long-term interests and the trade off in the short term is an unwise
one," Patrick said when asked about the topic that has been gaining
steam nationally.
Democratic presidential candidates Sens. Barack Obama and Hillary
Clinton spent the weekend feuding over the idea of a federal gas tax
reprieve during the summer travel months to help ease the burden on
citizen's wallets. The federal tax is 18.4 cents a gallon.
Massachusetts levies a 23.5 cent tax on a gallon of gas. Meanwhile,
state Rep. Paul Frost, an Auburn Republican, is considering filing
legislation that would put the state tax at 2.5 cents a gallon — a
reduction of 21 cents — from July 1 to Sept. 1.
It would not be the first time a gas tax holiday was considered by the
state Legislature, proposed last by House Minority Leader Brad Jones,
R-North Reading, in 2006.
Obama on Sunday called the concept, first proposed by Republican nominee
Sen. John McCain, a typical ploy used by Washington politicians to score
points with the public without addressing the underlying problem.
Clinton, meanwhile, supports the idea and intends to file her own
legislation in Congress despite a majority of economists calling it a
foolhardy plan.
She says she would pay for it with a windfall tax on major oil company
profits.
Patrick, an Obama supporter, said he doesn't believe drivers would see
an enough savings to justify the impact to state infrastructure
projects.
"The trade-off, and there would be a trade-off in terms of maintenance
and upkeep of our roads and bridges, is unwise," Patrick said.
An independent, bipartisan commission reported last year that the state
faced a $20 billion shortfall over the next 20 years to keep up with
aging bridge and road repair projects.
Patrick's comments came on a day when his administration announced that
state revenue this year has surpassed budget expectations by $702
million, while gas prices across the state climbed 2 cents on average to
$3.56. Massachusetts gas is selling below the national average of $3.61,
according to AAA Southern New England.
"Today's revenue figures probably lend some support with revenue coming
in much higher than expectations," Jones said. "I'd certainly be open to
it, but it's important to back fill the accounts that will pay (for the
holiday) from somewhere."
The state raked in more than $156 million in gasoline taxes last summer
from June through August, according to the Department of Revenue, and
will collect an estimated $674.6 million in taxes at the pump next year.
"The amount of dollars is so small per household, like pennies a week,
and we have a huge infrastructure problem that would be exacerbated,"
said Michael Widmer, president of the Massachusetts Taxpayers
Association. "The only responsible approach here is to retain the gas
tax because we have huge infrastructure needs."
The Patrick administration announced yesterday that state revenue for
the month of April has exceed benchmark expectations by $333 million,
growing more than 17 percent over last April's figures.
Secretary of Administration and Finance Leslie Kirwin and Department of
Revenue Commissioner Navjeet Bal, however, cautioned that the strong
revenue collections were reflective of the strength of the financial
market in 2007, and not a bellwether for fiscal 2009.
Kirwin also said the excess revenue is already spoken for and will be
needed to cover the rising cost of health care, snow and ice removal
from the winter, lottery shortfalls and to pay back some of the $604
million in reserves used to balance this year's budget.
"What this news does is possibly puts us in a better position to weather
any economic downturn that might come in 2009," Kirwin said, cautioning
that the $1.3 billion structural deficit that forces the state to tap
reserves each year still exists.
The state has collected about $484 million more than projected in fiscal
2008, not counting about $218 million in one-time revenue from
settlements.
Bal said the strength of collections from large investors and capital
gains were offset by minimal 2.7 percent growth in the sales tax that
she described as "fairly anemic" and "sobering."
Widmer agreed with Patrick and his administration that the good tax news
from April should no be interpreted as a sign that the state is now
flush with cash that can be spent in years to come.
"The size of the number, in one sense, is stunning. It's quite large.
But looking forward, sales taxes and other indicators that affect the
economy are flat," Widmer said. "We might see this pace through May and
June, but then I suspect we might see a slowdown."
State House News Service
Friday, May 2, 2008
House retreats from state worker health reform
The House voted Friday night to tack $45 million back onto the state
budget that leadership was initially hoping to save by tiering health
insurance premium payments from state workers.
The 144-10 vote, stripping a major provision out of the Ways and Means
Committee budget, occurred without debate.
A consolidated amendment relative to constitutional officers shifted the
$45 million burden back to the state. The amendment also moved a $23
million salary reserve for human services workers out of the Executive
Office of Health and Human Services, reduced by $3.2 million the amount
of money transferred from the general fund to the State Retiree Benefits
Trust Fund and extended to 2010 a provision in the general laws that
pays state employees on leave for service in the armed forces the
difference between their military salary and their work salary.
Including this amendment, lawmakers have increased spending by nearly
$170 million since budget debate began. Many House lawmakers indicated
after the House Ways and Means Committee budget was released that they
were not willing to raise health premiums paid by state workers, which
Gov. Patrick had also proposed in his fiscal 2009 budget.
State House News Service
Saturday, May 5, 2008
House okays $28.2 billion budget early Saturday morning
The House early Saturday morning voted 136-19 to
approve a $28.2 billion budget, fattened throughout the week with
spending amendments.
The party line vote occurred after the quick adoption, without debate,
of a long, earmark-laden economic development that was put together
behind closed doors throughout Friday night.
House Minority Leader Brad Jones said the House had added $210 million
in spending during the week and expanded its draw from state reserves to
pay for the budget to $412 million at a time when "warning signals
abound" over a soft economy.
Jones said the House had overspent all week without citing new revenue
sources and may turn to higher taxes to eventually foot the bill.
In his closing remarks, House Ways and Means Committee Chairman Rep.
Robert DeLeo (D-Winthrop) didn't address the complaints about
overspending or revenue sources and said the budget is about more than
just numbers.
"This is the budget of our constituents, those who need services," DeLeo
said just after midnight. "That is what we did in this particular
budget."
The Eagle-Tribune
Tuesday, May 6, 2008
House adds hundreds of thousands
for local projects
By Edward Mason
Local lawmakers added hundreds of thousands of dollars for pet projects
to the $28.2 billion budget approved by the House last week, including
money for Haverhill veterans, a school for autistic children in Andover,
and the YMCA of Greater Lawrence.
The budget now goes to the Senate and requires the governor's signature
before any of the spending requests become law.
Rep. Brian Dempsey, D-Haverhill, went into budget week saying it would
be hard to do better than the $2.4 million he secured for Hale Hospital
debt relief in an early version of the House budget.
Yet, last week he secured $100,000 for the Veterans Northeast Outreach
Center in Haverhill, $80,000 for a homeless veterans shelter in
Haverhill, and $50,000 for the YWCA of Haverhill. He also got $75,000
for Link House Inc., a Salisbury drug and alcohol rehabilitation center
in Rep. Michael Costello's district.
Rep. William Lantigua, D-Lawrence, had a number of his $4.2 million in
earmarks approved, including $100,000 for the YWCA of Greater Lawrence,
$165,000 for Arlington Community Trabajando, a Lawrence affordable
housing and economic development nonprofit group, and $115,000 for Food
for the World Pantry.
But a number of his earmarks were rejected, including a request for more
than $58,000 for a Hispanic performance troupe.
Lawmakers had limited success on plans to overhaul special education
funding.
Rep. Barbara L'Italien, D-Andover, got $2 million to help cities and
towns pay to transport special education students to other school
districts. She originally had pushed more ambitious plans to change the
funding formulas that would have sent at least $12.8 million a year to
local schools.
L'Italien said she didn't expect all of her special education requests
to be approved during a tight budget year.
"We were trying to strike a balance between need to do this and the
economic realities," L'Italien said.
However, L'Italien won a $2 million increase for the state Division of
Autism. The House also approved her request for $200,000 for Melmark
School in Andover for autistic children.
Costello, a Newburyport Democrat, won earmarks in excess of $600,000.
Among the items he won was $330,000 for the Newburyport shellfish
purification plant, $100,000 for the Newburyport YWCA, $40,000 for the
Newburyport Office of Economic Development, and $75,000 for Pettingill
House, a Salisbury social service agency.
Costello also wrangled $2 million more for a state program to fund local
police hires statewide.
Overall, the House budget included $210 million in new spending, despite
warnings from budget watchdogs that the state couldn't afford it.
Dempsey said the House budget reflected necessary spending.
"It's always a balancing act between meeting the demands of education,
public safety and special ed and balancing the budget," Dempsey said.
But Michael Widmer, president of the Massachusetts Taxpayers Foundation,
said the mix of new spending and increased reliance on the state's rainy
day fund is troubling.
"This is not a realistic budget," said Widmer, who believes the Senate
would have to reduce spending by "hundreds of millions" of dollars to be
prepared for a drop in state revenues caused by an expected recession.
Rep. Bradley Jones Jr., R-North Reading, said he thinks the Senate is
poised to add, not subtract, from the House budget. He pointed to Senate
plans to vote on a $472 million tax increase tomorrow that expands upon
the $392 million tax increase the House passed in April.
He also noted yesterday's state revenue report that showed collections
bested expectations by more than $2 billion in April. Patrick
administration officials cautioned the figure reflected the year on
which the taxes were paid, 2007, and not the coming year. But Jones said
it supports his contention that the Democratic-controlled Legislature
has its priorities wrong.
"I think clearly there's much more data to suggest we have a spending
problem and not a revenue problem," Jones said.
The Telegram & Gazette
Thursday, May 8, 2008
A Telegram & Gazette editorial
Hey, big spenders
House goes on $200 million earmarking spree
As we feared, our tentative nod to the Massachusetts House a couple of
weeks ago for keeping the 2009 state budget under $28 billion was
premature.
The spending plan proposed by the Ways and Means Committee was not
exactly lean. And few of the efficiencies and reforms recommended by
task forces, taxpayer advocates and the Patrick administration over the
past year were in evidence.
But the proposal to hold spending growth to 4 percent, about $1.1
billion, seemed to signal an awareness of the need for restraint. The
committee even embraced a provision, endorsed by the governor and House
leaders, to raise the employee contribution for health insurance
slightly, to a modest 20 percent for those with salaries over $30,000,
25 percent for those over $50,000.
Subsequently, however, the House loaded the committee plan with $200
million in spending for lawmakers’ pet projects. Members rejected the
insurance reform and, on a party-line vote, crushed a Republican
proposal to increase state aid to cash-strapped municipalities by $200
million. The cost of the earmarked spending was almost double the $109
million Ways and Means had chopped from spending requests.
The failure of the leadership to rein in the spree may not be surprising
in view of the behind-the-scenes maneuvering for the speaker’s seat.
While Speaker Salvatore F. DiMasi says he has no intention of vacating
it, he may be leery of eroding rank-and-file support by saying “no” to
members’ election-year wish lists.
Taxpayers’ last hope evidently is to persuade senators it is their duty
to pass a sustainable, fiscally responsible spending plan.
The Boston Globe
Tuesday, May 6, 2008
A Boston Globe editorial
A business-as-usual budget
Massachusetts tax collections in April soared 17.1 percent compared with
a year ago. But this news, announced yesterday, shouldn't cause the
Legislature to abandon all restraint on spending. The figures largely
reflect the strength of the economy last year, before the full impact of
the housing loan crisis. And the extra money that flowed to the
Department of Revenue is needed for long-term commitments, including
education aid and health-insurance expansion.
The House, perhaps sensing the good news, voted Saturday to increase the
$28 billion budget proposed by the Ways and Means Committee by $200
million before sending it on to the Senate. A $12.4 million tourism line
item in the committee budget ballooned to $34.2 million, thanks to
spending on such attractions as the Boston Symphony Orchestra summer
home at Tanglewood ($200,000), the Basketball Hall of Fame in
Springfield ($300,000), the Grand Army of the Republic Museum in Lynn
($100,000), the Waltham Tourism Council ($100,000), and the Central
Square Theater in Cambridge ($100,000). The state has more pressing
responsibilities.
The growth in revenue last month probably means that the state will end
the 2008 fiscal year without a shortfall. The budget under consideration
by the Legislature is for fiscal '09, which begins July 1, when
projections become murky. The Legislature is right to revise the
corporate tax code to remove loopholes, but these may not generate all
the anticipated money, lottery revenues are uncertain, and the
snow-plowing accounts for next winter will no doubt be too low. Health
insurance funding is also a concern.
Given these worries, it was disappointing that the House missed a chance
to make a long-term improvement in the way the state allocates its
resources. It rejected a plan supported by Governor Patrick and the Ways
and Means Committee to ask higher-paid state workers to contribute a
higher percentage toward their health insurance. The $45 million in
savings could have been spent on education or healthcare for the needy.
Because of the revenue surge, the state income tax rate will be going
down slightly, from 5.3 to 5.25 percent, the result of a law intended to
blunt voter anger over the Legislature's decision in 2002 not to drop
the rate to 5 percent. Given its commitments, the state can't afford 5
percent.
But a business-as-usual budget, full of local goodies, invites a voter
backlash, and an initiative petition to abolish the income tax is
expected to be on the budget this November. The Senate needs to devise a
more responsible budget.
The Boston Herald
Tuesday, May 6, 2008
Senate set to OK tax plan
Bill closes corporate ‘loopholes’
By Jay Fitzgerald and Casey Ross
The state Senate is poised today to approve a $472 million tax package
despite new data showing the state is hauling in far more tax revenue
than anticipated this year.
Republicans blasted Senate Democrats for pushing ahead with hikes in
cigarette and corporate taxes - but they acknowledged the tax proposals
will almost surely pass today in the Democratic-led Senate.
The Senate bill, which would raise taxes by about $75 million more a
year than a plan already OK’d by the House, would raise the cigarette
tax by $1 a pack, close so-called corporate “loopholes” to the tune of
$290 million and bump up taxes elsewhere.
In a significant break with the House’s tax bill, the Senate package
would lower the corporate income tax rate over three years from 9.5
percent to 8 percent, starting in 2010, according to senators. The House
bill would cut the rate to 7.5 percent over three years, starting in
2009.
The Senate bill also waters down, though doesn’t eliminate, a
controversial House amendment that would give offshore tax breaks for
some corporations.
The expected Senate action comes after the Department of Revenue
yesterday said April tax collections were up $400 million, for a 17.1
percent increase over the same period last year.
Meanwhile, tax collections so far this fiscal year are running $1.2
billion, or 7.7 percent, above last year’s levels.
Senate Minority Leader Richard Tisei (R-Wakefield) said the higher tax
revenue is proof that the state is facing a spending crisis - not a
revenue crisis.
But Gov. Deval Patrick’s administration said the higher-than-projected
tax revenue was mostly a “one-time” increase amid an “extremely
volatile” economy.
Patrick, who acknowledged higher tax revenue could forestall some
emergency spending cuts, said the state needs to push ahead with the tax
package due to a projected $1 billion-plus budget shortfall.
“We’re looking at the long-term strength of the state’s economy and the
long-term needs to support the services that people want,” he said.
The Boston Herald
Wednesday, May 7, 2008
Senate’s cigarette price hike has smokers fuming
By Jessica Fargen
The state Senate’s move to raise the cigarette tax by $1-a-pack, making
Massachusetts one of the most expensive states to buy cigarettes, has
smoker’s rights groups puffing mad and health advocates applauding.
“This is a very cowardly way to balance the state’s budget on the backs
of a vilified minority,” said Stephen Helfer, founder of the defunct
Cambridge Citizens for Smoker’s Rights, and a staunch opponent of
increasing the tax. “Smokers are disproportionately more likely to be
poor and low-income than well-off.”
The $1-a-pack tax was included in a nearly $500 million tax package that
the Senate approved yesterday. The Senate also voted to lift the
state-mandated minimum price for a pack of cigarettes.
The Senate and House still need to agree on the tobacco tax hike and
Gov. Deval Patrick must sign off on it.
Kevin O’Flaherty, director of advocacy for the Northeast Region’s
Campaign for Tobacco Free Kids, said the higher a state makes the
cigarette tax, the lower the number of kids who start smoking.
“This is the strongest intervention a state can do to decrease kid’s
smoking,” he said.
Smoking rates in Massachusetts and nationwide have been on the decline
for years as states boost taxes, implement aggressive smoking prevention
programs and prohibit smoking in workplaces.
Massachusetts already has one of the highest cigarette taxes in the
nation.
The current state cigarette tax is $1.51 a pack, but once federal taxes,
sales tax and tobacco settlement surcharges are included the tax is
$2.76 a pack, said Helfer, who actively lobbied against the tax
increase.
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