CLT UPDATE
Monday, July 14, 2008
State spending, big spenders, gone insane
With an economic backdrop of soaring
energy prices and a stumbling stock market, Gov. Deval Patrick slashed
$122.5 million out of the Legislature's $28.223 billion fiscal 2009
budget proposal, requested expanded powers to make midyear spending
cuts, and asked the Legislature to require the business and insurance
communities to pay more for health care....
Including the cuts, the final budget totals $28.11 billion, a 4.86
percent increase in spending from fiscal 2008. The vetoes include the
elimination of 260 earmarks - out of 960 approved by the Legislature -
worth $54 million....
A two-thirds vote of each branch is required to override a gubernatorial
veto.
House budget chief Robert DeLeo responded to the budget signing with a
statement praising the governor for approving "99% of the appropriations
the Legislature approved." ...
Patrick said the fiscal 2008 surplus was the result of a raft of
mid-year spending controls and higher-than-expected revenue intake -
revenues in the fiscal year that ended June 30 surpassed initial
estimates by about a billion dollars ...
A $120-per-year cost of living increase for state retirees would be
scaled back under the governor's changes, applying only to retirees with
pensions of under $40,000. The administration retained a three-year
extension of the pension funding schedule, which is expected to
significantly increase costs for the state in the long-term to pay for
the cost of living adjustments.
State House News Service
Sunday, July 13, 2008
Patrick vetoes $122M,
seeks new cutting powers, health care revenues
Governor Deval Patrick took his veto pen to the state budget
yesterday, striking $122.5 million in spending on lawmakers' pet projects, while
asking the Legislature for expanded power to make midyear cuts to state services
if needed.
Faced with the prospect of diminished tax collections as a result of the sour
economy, Patrick cut three times more from the 2009 fiscal budget than he did
the previous year....
Despite the governor's cuts, one budget watchdog agency said Patrick virtually
guaranteed that he would need to invoke that increased authority by not making
deeper slashes. The Massachusetts Taxpayers Foundation estimated the $28.2
billion state budget approved by House and Senate negotiators and sent to
Patrick on July 3 was at least $1 billion out of balance. Patrick's vetoes put
only a small dent in that projected shortfall.
The Boston Globe
Monday, July 14, 2008
Patrick vetoes $122.5m in budget
Cuts 260 legislative pet projects,
ensures his key initiatives
“It’s an ugly scene to say the least,” said Michael Widmer,
president of the Massachusetts Taxpayers Foundation.
Patrick vetoed $122.5 million from the pork-packed budget yesterday, but
financial watchdogs say the reduction isn’t nearly enough to stave off
additional cuts in a few short months.
“We called for cuts of more than double this,” Widmer said....
“A fiscal downturn could come upon us very quickly, and I think we need to be
ready for it if that is the case,” said Senate Ways and Means chairman Steven
Panagiotakos.
The Boston Herald
Monday, July 14, 2008
Deval Patrick seeks more budget cuts
For the first time in memory, a budget emerged from
conference committee with a higher bottom line than either legislative branch
had proposed. At $28.22 billion, the budget is $160 million more than the senate
version and $30 million higher than the house proposal.
Despite all the talk about fiscal restraint and belt-tightening, state spending
will actually increase by 5.2 percent this year....
What these numbers tell me is that state agencies are expanding and growing at
an unsustainable rate. Some of the increases are for new and expanded
programming, which makes no sense considering we can barely afford to pay for
many existing programs.
We are in denial if we think we can afford this budget....
The Legislature seems to be doing everything it can to ensure that the income
tax repeal ballot question passes in November. The public is fed up with high
gas, food and energy costs, and this “tax and spend” attitude only gives further
ammunition to those who are calling for a repeal.
The Malden Observer
Saturday, July 12, 2008
Budget puts state on unsustainable spending path
By Sen. Richard Tisei
Lawmakers have disguised more than $1 million in pork-filled
pet projects in the state budget under repetitive or often misleading feel-good
labels, a Herald review has found.
One earmark targeted for child safety is actually being used by Everett Mayor
Carlo DeMaria Jr. to buy a new pothole-patching machine....
When pressed, he admitted the machine isn’t reserved for schools alone. “What do
you want me to say? ‘It’s not going to be used anywhere else?’ It’s going to
help every resident and, more importantly, it’s going to help children.” ...
“This is just the kind of thing that undercuts the public trust,” said
Massachusetts Taxpayers Foundation president Michael Widmer. “The fact that
money is being spent under the guise of child safety is outrageous.”
Another $200,000 child safety grant will fund police, fire and ambulance
services in Hull when they respond to emergency calls on Nantasket Beach.
“I’m sure it’s only for children’s emergencies. If the grandparents have an
emergency they’re out of luck,” scoffed Barbara Anderson, head of
Citizens for Limited Taxation. “You can have any program you want and so
long as it’s for the children, it’s fine.”
The Boston Herald
Saturday, July 12, 2008
Pols wrap pork with kid labels
More than $1M of budget misleading
The Massachusetts Republican Party is so concerned with
excessive state spending, it publicized Sen. James Marzilli’s $160 daily salary
to complain that he remained on the payroll after being charged with accosting
four women.
Sen. Richard Tisei and Rep. Bradley Jones, the Republican leaders in the Senate
and House, support tax cuts and constantly complain about a state budget that’s
grown 43 percent in a decade, from $19.5 billion in fiscal 1999 to $28 billion
for fiscal 2009.
Yet, when it comes to Question 1, the fall ballot initiative that proposes to
cut state spending by eliminating the income tax, the GOP and its leading
lawmakers don’t have a knee-jerk reaction.
They offer a very Democratic response in explaining why they oppose it.
"There are a lot of essential services we would not be able to perform," said
Tisei of Wakefield. "It’s too extreme."
Said Jones, of Reading: "It’s one thing to say the budget should be lower than
$28 billion, but it’s another thing to say, ’Let’s take $12-13 billion off the
table.’ And we also have debts we’ve incurred that we have to service. We made
commitments we have to fulfill." ...
The Legislature refused to enact a 2000 ballot question that proposed trimming
the income tax rate from 5.95 percent to 5 percent. It passed with 59 percent of
the vote. Instead, lawmakers froze the rate at 5.3 percent in 2002.
"How can we possibly have any other attitude after they’ve kicked us in the
teeth for 20 years?" said Barbara Anderson, co-founder of Citizens for
Limited Taxation, which had supported the prior rollback to 5 percent.
"Maybe the people need to give them a little kick and get their attention
again."
Anderson, who has previously supported more incremental reductions in the tax
rate, said her support for eliminating the income tax was not symbolic.
"When you don’t have an income tax, it changes the culture of your Legislature,"
Anderson said. "You end up with a part-time Legislature that is more responsive
to the people," which she said was the case in New Hampshire.
Associated Press
Friday, July 11, 2008
Mass. GOP leaders oppose no-tax Question 1
Gov. Deval Patrick is expected to release his budget vetoes
tomorrow. The list had better be long and add up to hundreds of millions of
dollars.
Because a “fiscal meltdown” is looming, according to the Massachusetts Taxpayers
Foundation, and our top leaders appear to be whistling past the graveyard....
It also includes a costly plan to increase cost of living raises for state
retirees and teachers, which should top the list of Patrick’s vetoes. We don’t
begrudge retirees a reasonable cost of living increase, but lawmakers haven’t
provided any reasonable way to finance the billions it will cost over time.
A Boston Herald editorial
Saturday, July 12, 2008
Trim the fat now, or pay up later
Massachusetts could be headed for a “fiscal meltdown” unless
state lawmakers and Gov. Deval Patrick slash several hundred million dollars
from the proposed 2009 state budget, a prominent state watchdog group warns.
The $28.2 billion spending plan is already $1 billion “out of balance,” and that
is before two major potential budget busters are taken into account, the
Massachusetts Taxpayers Foundation says....
“The current level of spending is unsustainable, and there is no plan to deal
with the economic and fiscal challenges ahead,” according to a budget warning
sent out by the taxpayers foundation.
The Boston Herald
Friday, July 11, 2008
Massachusetts: A $1B budget imbalance
Watchdog group urges state cuts
But not to worry, that steady stream of consumers already
headed over the New Hampshire border for cheap cigarettes knows full well where
to shop for bargains. It’s there or the Internet. As for those who can’t afford
to shop, there’s a really, really nice merry-go-round in Holyoke (getting
$50,000 of their tax dollars) they might like to visit instead.
A Boston Herald editorial
Saturday, July 12, 2008
Tax break merry-go-round
Massachusetts could soon have a new weapon in its ongoing war
against tax cheats: Don’t pay your taxes, and you will lose your driver’s
license....
Citizens for Limited Taxation’s Barbara Anderson slammed the proposal.
“The government doesn’t have a right to take your license, except for a
driving-related reason,” she said. “If you don’t pay your taxes, they should put
you in jail or garnish your wages. Now you can’t drive to work. What’s the
point?”
The Boston Herald
Friday, July 11, 2008
State gets license to keep tax cheats off roads
The petitions are signed, certified and delivered.
The question the Massachusetts political establishment most fears will
be on the ballot in November: the repeal of the state income tax....
We can vote income taxes away, but we can't vote away the need for
revenue to pay for those things only government can provide.
The proponents have done their job, putting a proposal on the ballot
that would, if passed, radically change the way Massachusetts state and
local governments function. The job of voters, between now and November,
is to weigh not just the initiative's potential impact on their wallets,
but its impact on their neighbors, their communities, the economy and
the state.
A Brockton Enterprise editorial
Thursday, July 10, 2008
The income tax debate begins
Massachusetts residents will be able to spend their earnings
“as they see fit within their own community,” said Carla Howell, chairwoman of
the Committee for Small Government. “Everyone will benefit.”
But while cutting wasteful government spending may be an admirable goal, Mike
Widmer, Belmont Town Moderator and president of the Mass. Taxpayers’ Foundation,
said that is not what will happen if the income tax is repealed.
“Eliminating the income tax will have a dramatic impact on every program and
service,” he said. “Everything. Prisons, higher education, local education,
human services, transportation and roads, infrastructure. Everything.”
At the same time, Widmer said, towns would be forced to raise property taxes
exponentially, and the repeal would probably result in a statewide property
tax....
Widmer said the idea that “the state government can adjust by squeezing here and
there is absurd.” ...
“There would be an immediate impact on services,” Widmer said. “There would be
major cuts in school funding, highway funding, everything. A major decline in
local services would be immediately felt.” ...
“It is a reckless proposal, but it has a serious chance of passing,” he said.
The Belmont Citizen-Herald
Wednesday, July 9, 2008
Income tax repeal —
a good switch or a bad switch?
Chip Ford's CLT
Commentary
In my commentary for the
CLT Update of June 25 ("State
spending exploding, slowed only by repeal threat") I wrote:
The Legislature's $28
billion budget is still in conference committee being "compromised"
between the House and Senate versions -- which usually means more
spending -- and the "cost of living increase" for public employee
retirees is still included.
When there are no checks
and balances, "compromise" can mean 'You can have yours if I can have
mine too.' On Bacon Hill, that's where "compromise" has evolved:
Everyone gets what they want but us taxpayers who pay for all of it,
then pay some more.
The unaffordable COLA for
retired public employees remains in the FY2009 budget, though Gov.
Patrick will attempt to trim it around its edges, as he's attempting to
do with the entire bloated budget, 5.2 percent larger than last year's.
Remember that fiscal crisis of but a few months ago? What ever
happened to it? And don't forget that miniscule income tax rate
reduction we're supposed to get this year. In CLT's Memo to the
Legislature/News Release of May 12 ("Income
tax rate – Color me surprised") Barbara wrote:
When the Legislature
"froze" the voters’ income tax rollback in 2002, it said it would
defrost it slowly when the revenues reached a certain point. We
taxpayer cynics did not believe this for a minute. We had heard
these promises before. . . .
Six years later, the rate is still 5.3 percent. But this year the
"trigger" to "defrost" the freeze was reached, and to our surprise,
so far the Legislature has not moved to stop this first step in its
promised decrease, allowing the rate to drop to 5.25 percent now.
It’s a tiny step for taxpayers, who should have been paying at 5
percent since 2003, but a bigger step for the Legislature – finally
keeping a "temporary" income tax promise.
In a Boston Globe editorial
of May 6 ("A
business-as-usual budget"), even its ivory tower
tax-borrow-and-spend elites expected it, noting:
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.
According to the state
Department of Revenue, we won't know whether taxpayers get the decrease
or not until December. Even if it's a mere pittance tossed to an
angry mob as a sop for pols stealing the voters' mandate, the
Legislature would be wise to insure it's provided, especially with
abolition of the entire income tax looming on the ballot.
Another $10 billion (yes,
that's with a B) in borrowing is in the legislative pipeline to be
rushed through before our "full-time" legislators take off at the end of
this month for their summer vacations until after their re-elections in
November. As Jim O'Sullivan of the State House News Service
reported ("Weekly Roundup - Toasting Pork"):
. . . Of course, veto
losers can take comfort from the chance that a project excised from
the operating budget could maybe perhaps crop up somewhere in the
$10 billion-plus worth of borrowing bills likely headed for law this
summer. Conversely, being shut out of the bonding bonanza is painful
only if the priorities are also excluded from the
even-better-than-bonded operating (read cash) budget. And a lawmaker
in good standing with colleagues can often count on those colleagues
to join him and her in brave button-pushing against despotic vetoes.
. . .
With the legislative days thinning on the calendar, the
Legislature's delays on the bond bills could backfire in the faces
of those hoping for cherished infrastructure projects. Senators
adorned an already well-prioritized super local transportation bond
bill with additional priorities Thursday - and higher education
facilities, bridge repair, the environment, and the potpourri
"general government" bond bill await. Next week will be the
second-to-last before the close of business, leaving precious few
hours for the time-consuming override sessions. That makes the
top-down decisions all the more important. . . .
They spent the $400 million
revenue surplus (our tax over-payment) from last year, took $310 million
from the "Rainy Day Fund," are about to borrow another $10 billion,
transferred an additional billion or two of our bucks to fund pension
increases for retired public employees, increased this year's spending
over last year's by over 5 percent -- and still, according to the
so-called Massachusetts Taxpayers Foundation, the budget handed to Gov.
Patrick is already a billion dollars in the red. But not to worry.
The governor has vetoed $122.5 million from its $28.2 billion total.
Michael Widmer of MTF and
others have the audacity to whine that Massachusetts can't afford repeal
of its income tax. Of course it can't, not while spending the
state and us into oblivion hand over fist.
But we taxpayers can't
afford to NOT repeal it and take our money back. On
November 4th at the polls, we must do the only compassionate and caring
thing: Vote YES on Question 1 and save them from themselves
before they do any more damage. It is the only hope for salvation
of the state and its taxpayers from this insanity. That and
tossing a few of them out of office and into the Dreaded Private Sector.
Defeating a few of them -- now that would be "sending a message"
in November!
 |
|
Chip Ford |
State House News Service
Sunday, July 13, 2008
Patrick vetoes $122M,
seeks new cutting powers, health care revenues
By Kyle Cheney
With an economic backdrop
of soaring energy prices and a stumbling stock market, Gov. Deval
Patrick slashed $122.5 million out of the Legislature's $28.223 billion
fiscal 2009 budget proposal, requested expanded powers to make midyear
spending cuts, and asked the Legislature to require the business and
insurance communities to pay more for health care.
"We've got to prepare for economic trouble ahead," Patrick said. "Our
present fiscal challenges simply demand increased restraint."
The governor used the late Sunday afternoon press conference to announce
plans to piece together $130 million in new revenues from the state,
health insurers and providers, and businesses to help pay for the rising
costs of the state's health insurance expansion efforts. That idea drew
an immediate backlash from insurance and business leaders who have been
pushing health care cost control ideas on Beacon Hill.
Patrick cited shrinking capital gains tax revenues and rising energy
costs among the rationale for the budget cuts, three times more than the
spending he slashed out of last year's budget. House leaders, who have
only until the end of July to attempt veto overrides, said they'll
evaluate the governor's budget moves.
Including the cuts, the final budget totals $28.11 billion, a 4.86
percent increase in spending from fiscal 2008. The vetoes include the
elimination of 260 earmarks - out of 960 approved by the Legislature -
worth $54 million.
"Some of the earmarks have merit," Patrick said. "Not all of the
earmarks have merit. Even meritorious programs had to be curtailed."
While calling for spending vigilance, Patrick also proposed to
distribute approximately $145 million in surplus fiscal 2008 spending to
add to the state's roughly $2 billion stabilization fund ($100 million),
establish an emergency fund for low-income energy assistance ($20
million) and fund the first year of a life sciences tax credit ($25
million).
The vetoed and reduced items feature a mix of local earmarks, Medicaid
programs and state offices. A two-thirds vote of each branch is required
to override a gubernatorial veto.
House budget chief Robert DeLeo responded to the budget signing with a
statement praising the governor for approving "99% of the appropriations
the Legislature approved."
Meeting with reporters after the press conference, Secretary of
Administration and Finance Leslie Kirwan said any funds restored by the
Legislature could necessitate increased spending controls and midyear
cuts.
Patrick praised the budget as representing "shared priorities" with the
Legislature, such as decreasing homelessness, funding life sciences
programs and increasing aid for municipalities and education.
Patrick said the fiscal 2008 surplus was the result of a raft of
mid-year spending controls and higher-than-expected revenue intake -
revenues in the fiscal year that ended June 30 surpassed initial
estimates by about a billion dollars, with final numbers due out this
week that may show the final fiscal 2008 tax take approaching or
eclipsing the figure used to build the budget Patrick signed on Sunday
afternoon.
Again pointing to "deteriorating" economic conditions, Patrick urged the
Legislature to pass by July 31 an expansion of his so-called 9C
authority, which enables governors to cut spending throughout the year
without legislative approval. Currently, the governor has the power to
reduce executive branch spending during the year. Under his proposal, he
would be able to cut any budgetary spending at any time.
Patrick noted that the Legislature granted Gov. Mitt Romney expanded 9C
power, although state budget officials noted that his power was more
limited than for what Patrick is asking. Governors have traditionally
exercised midyear spending cuts when revenues fall short of estimates.
"Granting that authority now, before the end of the Legislative session,
enables us to respond quickly and responsibly in the event of a serious
downturn," Patrick said.
The request for expanded 9C authority and the use of the FY 2008 surplus
are parts of a five-point plan the governor highlighted to "ensure that
state government can meet the highest priority needs of our citizens in
challenging economic times."
Other elements include paying off more than $230 million in lottery fund
deficits accrued in fiscal 2007 and 2008, capturing additional revenue
not included in the budget and increasing contributions for health care
costs from businesses, insurers and providers by $94 million. The state
would also kick in an additional $35 million from its Medical Security
Trust Fund, bringing total additional health care contributions to $130
million.
Of the new contributions, $33 million would be collected from penalties
paid by businesses who fail to insure 25 percent of their workers and
pay for 33 percent of their premiums. State administration and finance
officials said the formula would be adjusted to guarantee that the state
receives the desired contribution. Another $33 million would come from a
one-time assessment on reserves held by insurers, and $28 million would
come from providers.
"The success of health care reform has depended as much as anything on
the shared responsibility of all of the stakeholders," Patrick said,
noting that consumers had already "stepped up" by taking on higher
premiums.
Reaction to the governor's proposal to increase assessments on
businesses and insurers came swiftly.
"It just adds on top of an employer community that's already seeing
higher costs. The economy is already shaky at best," said Rick Lord,
president of Association Industries of Massachusetts. "Two weeks ago the
Legislature approved a corporate tax bill. To put forward another
assessment on employers is just a bad idea."
The proposed assessments "certainly threaten" the delicate balance of
support among businesses, insurance companies, providers, consumers and
government, Lord said.
Lord noted that employers already contribute to the state's Medical
Security Trust Fund, which Patrick is calling to draw from as well.
Dr. Marylou Buyse, president of the Massachusetts Association of Health
Plans, said a new assessment on insurers would drive up costs for
everyone.
"We don't think taxing health care to pay for health care makes sense,"
she said. "The more spent, the more the cost of care goes up and the
further everyone is away from affordable health care."
Buyse said insurers' reserves, which the governor is proposing to tax
under rules to be devised by the state's health care finance and policy
agency, were meant to guard against catastrophic events.
"This is a basic consumer protection to make sure that health plans are
solvent so they can pay doctors and hospitals at times when there are
things like pandemic flu and other catastrophes," she said.
Patrick noted that a pending federal decision on payments to support
Massachusetts health care programs was still under negotiation. Patrick
met Saturday with U.S. Health and Human Services Secretary Michael
Leavitt, who in turn has been working with the president's Office of
Management and Budget to secure funds for Massachusetts's health care
programs.
"We're not quite there yet," Patrick said. "We're going to keep at it."
A $120-per-year cost of living increase for state retirees would be
scaled back under the governor's changes, applying only to retirees with
pensions of under $40,000. The administration retained a three-year
extension of the pension funding schedule, which is expected to
significantly increase costs for the state in the long-term to pay for
the cost of living adjustments.
Many of the governor's policy changes were filed as part of a
supplemental budget, which the governor proposed to close the books on
fiscal 2008. The supplemental budget also includes funding for charter
schools, snow and ice removal, municipal police training and bills for
business owners with underground storage tanks.
The governor is working with the comptroller to officially pay off FY
2008 deficiencies by August 31.
The Boston Globe
Monday, July 14, 2008
Patrick vetoes $122.5m in budget
Cuts 260 legislative pet projects,
ensures his key initiatives
By John C. Drake
Governor Deval Patrick took
his veto pen to the state budget yesterday, striking $122.5 million in
spending on lawmakers' pet projects, while asking the Legislature for
expanded power to make midyear cuts to state services if needed.
Faced with the prospect of diminished tax collections as a result of the
sour economy, Patrick cut three times more from the 2009 fiscal budget
than he did the previous year.
"We've got to prepare now for economic troubles ahead," Patrick said at
a late-afternoon budget signing ceremony yesterday. "While there is
merit to many of the budget items I have eliminated or reduced, our
present circumstances demand increased restraint."
The cuts hit 260 pet projects, known as earmarks, that were inserted by
legislators, including tens of millions intended to help hospitals with
uncovered costs for Medicaid patients in the state's health insurance
system. Numerous parks, community centers, and social service programs
were denied hoped-for state grants their legislators had secured.
"Not all of the earmarks had merit, and those were vetoed," Patrick
said.
Patrick maintained funding for a number of his most-touted initiatives,
including $25 million for life-sciences research, an additional $360
million in education funding, a 5 percent increase in local aid, and an
$80 million increase for public safety.
"I am pleased the governor has lent his approval to 99 percent of the
appropriations the Legislature approved as part of its Fiscal 2009
budget plan," House Ways and Means Chairman Robert DeLeo said in a
statement. "As is the case each year, we will evaluate any vetoes in the
context of the priorities the Legislature set forth and the fiscal
realities we face."
In addition to his vetoes, Patrick is asking lawmakers to give him
unilateral authority to make midyear cuts across state government. The
governor already has authority to cut spending in Cabinet agencies at
any point, but he is seeking broader authority to cut elsewhere, should
tax collections indeed come in below projections.
"Granting that authority now, before the end of the legislative session,
enables us to respond quckly and responsibly in the event of a serious
downtown," he said.
Despite the governor's cuts, one budget watchdog agency said Patrick
virtually guaranteed that he would need to invoke that increased
authority by not making deeper slashes. The Massachusetts Taxpayers
Foundation estimated the $28.2 billion state budget approved by House
and Senate negotiators and sent to Patrick on July 3 was at least $1
billion out of balance. Patrick's vetoes put only a small dent in that
projected shortfall.
Negotiations with the federal government over how much the state will be
reimbursed for its healthcare reform law have extended beyond a July 1
deadline and the results of those talks could cost the state hundreds of
millions in projected revenues. Michael Widmer, president of the
business-funded watchdog agency, also said capital gains tax revenue to
the state could be severely hampered by declines in the stock market.
"It's a good first step, but I think it's highly likely that he will use
the emergency powers this fall to make additional cuts to deal with the
state's fiscal realities," Widmer said.
The Legislature previously granted the same expanded authority Patrick
is requesting to his predecessor, Republican Mitt Romney, in 2003. That
precedent would make it difficult for the Democratic-controlled
Legislature to deny that authority to a Democratic governor, Widmer
said.
Most significantly, expanding the governor's midyear budget authority
would allow him to reduce local aid to cities and towns, Widmer said.
"Cities and towns are already under great fiscal stress, and this would
relinquish the legislative power to the governor to make unilateral cuts
in aid to cities and towns, and that's the critical nature of the
debate," Widmer said. "Now if he has to make emergency cuts, it's only
fair that he have the authority to do it across all of the budget."
A spokesman for House Speaker Salvatore DiMasi did not immediately
respond to a request for comment yesterday.
To control state healthcare costs, Patrick separately filed an amendment
to the health reform law, seeking an additional $130 million in
contributions from providers and insurers to cover low-income residents.
He also transferred $100 million in surplus revenues from the 2008
budget to a state reserve fund, which a Patrick budget aid said could
cover shortfalls in the 2009 budget.
The vetoes touched all areas of state government, from a $150,000
toddler park in Woburn, to a $2 million earmark for acute care at
Holyoke Medical Center.
Patrick, who has pledged to support youth violence prevention in the
state's urban communities, also cut $2.2 million in funding for
youth-at-risk grants to community centers, YMCAs, and YWCAs across the
state. Patrick spokesman Kyle Sullivan said there was concern those
grants were not going where they were needed.
The budget relies on a $1-a-pack increase in the cigarette tax,
projected to bring in an additional $174 million, and a $500 million
transfer from the state's rainy-day fund, which contains more than $2
billion set aside to cover unanticipated budget deficiencies.
State government has been operating on a $1 billion temporary budget
signed by Patrick since the deadline to approve the 2009 budget passed
on June 30.
The Boston Herald
Monday, July 14, 2008
Deval Patrick seeks more budget cuts
By Hillary Chabot
Signaling a potential state
money meltdown, Gov. Deval Patrick is asking lawmakers to grant him
extraordinary budget-slashing power to make emergency cuts if the
economy takes another turn for the worse.
In addition to bracing for the effects of the shaky stock market, state
officials are working furiously to secure a Medicaid reimbursement for
the state’s new Universal Health Care Law worth hundreds of millions in
federal dollars.
“It’s an ugly scene to say the least,” said Michael Widmer, president of
the Massachusetts Taxpayers Foundation.
Patrick vetoed $122.5 million from the pork-packed budget yesterday, but
financial watchdogs say the reduction isn’t nearly enough to stave off
additional cuts in a few short months.
“We called for cuts of more than double this,” Widmer said.
Patrick echoed the likelihood of additional cutbacks as he signed the
budget and asked lawmakers to give him the power to make sweeping cuts
later in the year.
“Granting that authority now, before the end of legislative session,
allows us to respond quickly and responsibly in the event of a serious
downturn,” Patrick said. “We’ve got to prepare for the economic trouble
ahead.”
A supplemental budget Patrick filed yesterday would expand his so-called
9C cuts, which are emergency powers allowing the governor to cut within
executive agencies to balance the budget. The expansion would allow
Patrick to cut all state agencies.
Patrick cut three times more than he did in last year’s budget,
targeting 260 legislative pet projects, but the vetoes still only make
up less than 1 percent of the $28.1 billion budget.
The budget is balanced using hundreds of millions in federal Medicaid
funds. The state is negotiating a three-year extension for the
reimbursement, but has not reached a settlement and has already blown by
two deadlines as of today.
Depending on how much the feds award the state, lawmakers could be
facing a steep budget gap.
Given the tough projections for both tax revenues and the federal aid,
pols signaled early support of Patrick’s expanded power.
“A fiscal downturn could come upon us very quickly, and I think we need
to be ready for it if that is the case,” said Senate Ways and Means
chairman Steven Panagiotakos.
He said the Legislature will be out of formal session and may not be
able to approve cuts quickly after July 31. Former Gov. Mitt Romney was
granted expanded cutting power during the recession in 2003, but his
powers weren’t as expansive as the ones Patrick is requesting.
Lawmakers didn’t appear fazed by the vetoes.
“I figured it would be something like that,” said Rep. Brian Wallace
(D-Boston) when told of the $122.5 million in vetoes. That doesn’t mean
he was pleased. “No one likes to get their programs cut, and it’s
important in a special election year.”
The Malden Observer
Saturday, July 12, 2008
Budget puts state on unsustainable spending path
By Sen. Richard Tisei
The Legislature approved a
new state budget for Fiscal 2009 last week. Now, the question is, can
Massachusetts afford it?
For the first time in memory, a budget emerged from conference committee
with a higher bottom line than either legislative branch had proposed.
At $28.22 billion, the budget is $160 million more than the senate
version and $30 million higher than the house proposal.
Despite all the talk about fiscal restraint and belt-tightening, state
spending will actually increase by 5.2 percent this year.
A closer look at the conference committee report shows that more than
140 accounts were increased by more than 9 percent. For some agencies,
the increases were much higher, including 77 percent for the Division of
Energy Resources, 87 percent for the Department of Higher Education and
a whopping 106 percent for the Department of Public Safety.
What these numbers tell me is that state agencies are expanding and
growing at an unsustainable rate. Some of the increases are for new and
expanded programming, which makes no sense considering we can barely
afford to pay for many existing programs.
We are in denial if we think we can afford this budget. Considering the
latest job reports, stock market volatility, and continued revenue
uncertainty, I can’t see how we can possibly justify maintaining these
spending levels.
The Fiscal 2009 budget is built on a house of cards that could come
tumbling down at any moment. It relies too heavily on borrowing from the
Rainy Day Fund, new taxes, overly optimistic revenue projections, and
federal funding that may not be forthcoming.
The conference committee report not only withdraws $310 million from the
Rainy Day Fund, but also uses $91 million in interest, and spends
another $107 million instead of transferring it into the fund. That’s
$508 million in reserve funding being used to balance the budget.
The Rainy Day Fund was established during the 1990s so the state would
have a reserve to draw on during economic downturns to preserve vital
programs and services. In previous years, the state has been able to
replenish the fund every time money was taken out, but that won’t happen
this year.
Instead of using this fund as a savings account, the Legislature is
treating it like a line of credit, a risky proposition that will have
negative repercussions for the state down the line.
The recent implementation of a series of new taxes has also put the
state on a dangerous path. On June 30, the Legislature approved a new
$1-a-pack cigarette tax that took effect less than 24 hours later.
This increase is expected to generate an additional $175 million in
revenues, although collections from previous cigarette tax increases
have historically come in lower than original projections.
Add in a $485 million corporate tax increase approved on July 1 and $156
million in revenue enhancements for the Department of Revenue that were
included in the budget, and more than $800 million in new taxes has been
approved in a span of less than a week.
The Legislature seems to be doing everything it can to ensure that the
income tax repeal ballot question passes in November. The public is fed
up with high gas, food and energy costs, and this “tax and spend”
attitude only gives further ammunition to those who are calling for a
repeal.
Rising health care costs are another reason why the budget numbers are
unrealistic. Commonwealth Care, the state-run program that provides free
and subsidized health care to the state’s low- and moderate-income
residents, has been funded at $869 million, a figure we know is at least
$200 million short. Administration and Finance has already admitted that
the true cost will be more than $1 billion.
The state is also still in a holding pattern on the federal Medicaid
waiver, which was due to expire on June 30 but has been temporarily
extended for two weeks as negotiations continue. The budget is not only
counting on a waiver extension, but also a 14 percent increase in
federal funding, which seems overly optimistic at this point.
We may have a budget in place, but if spending starts to outpace
revenues, we could be looking at mid-year cuts. Reductions made early in
the fiscal year can be done fairly painlessly, but the further we go
into the fiscal year, the more disruptive and harmful it will be to
implement cuts.
The legislature would have been better off waiting a little longer to
see what happens with the federal Medicaid waiver and what the June
revenue figures look like before finalizing a new budget.
Given the many uncertainties that still exist this year, waiting just a
little longer would have given us a better sense of the state’s true
fiscal picture and an opportunity to craft a more realistic spending
plan.
Sen. Tisei (R-Wakefield) is the Senate Minority Leader.
The Boston Herald
Saturday, July 12, 2008
Pols wrap pork with kid labels
More than $1M of budget misleading
By Hillary Chabot
Lawmakers have disguised
more than $1 million in pork-filled pet projects in the state budget
under repetitive or often misleading feel-good labels, a Herald review
has found.
One earmark targeted for child safety is actually being used by Everett
Mayor Carlo DeMaria Jr. to buy a new pothole-patching machine.
“We have a lot of potholes around the schools, and residents walk their
kids to school all the time. We don’t want to see them get hurt,”
DeMaria said. When pressed, he admitted the machine isn’t reserved for
schools alone. “What do you want me to say? ‘It’s not going to be used
anywhere else?’ It’s going to help every resident and, more importantly,
it’s going to help children.”
While the $50,000 earmark barely registers in a $28.2 billion budget,
outraged taxpayer advocates scolded lawmakers for hiding their lard
behind noble causes such as child protection.
“This is just the kind of thing that undercuts the public trust,” said
Massachusetts Taxpayers Foundation president Michael Widmer. “The fact
that money is being spent under the guise of child safety is
outrageous.”
Another $200,000 child safety grant will fund police, fire and ambulance
services in Hull when they respond to emergency calls on Nantasket
Beach.
“I’m sure it’s only for children’s emergencies. If the grandparents have
an emergency they’re out of luck,” scoffed Barbara Anderson, head of
Citizens for Limited Taxation. “You can have any program you want and so
long as it’s for the children, it’s fine.”
Some of the child-safety grants are more legitimate. In Revere, the
money is used to hire security personnel in high schools and pay for
two-way radios and vehicles for the school security staff. The money
will go toward lighting for intersections outside of an early childhood
center in Melrose.
Community officials receive the cash in quarterly installments, and they
must fill out paperwork explaining what they’re using the money for.
Once Gov. Deval Patrick signs off on the earmark, however, the money
belongs to the community, said Jim Eisenburg, spokesman for top budget
writer Rep. Robert A. DeLeo (D-Winthrop).
The budget is also riddled with double earmarks costing more than $1.2
million.
The University of Amherst’s Cranberry Station at Wareham received
$25,000 in maintenance, and later got another $500,000. A program called
YouthGROW received two separate $50,000 earmarks, and the Old Provincial
State House got one earmark worth $150,000 and another for a whopping
$500,000.
Eisenberg said double earmarks are an annual hazard of the budget
process.
“Although every effort is made to eliminate clerical errors, it is
possible that some may be present in this or past budgets. As these
issues are brought to our attention, they are addressed,” Eisenberg
said.
Patrick, who has been hashing through the budget all week, is set to
release his budget veto recommendations tomorrow.
Associated Press
Friday, July 11, 2008
Mass. GOP leaders oppose no-tax Question 1
By Glen Johnson
The Massachusetts
Republican Party is so concerned with excessive state spending, it
publicized Sen. James Marzilli’s $160 daily salary to complain that he
remained on the payroll after being charged with accosting four women.
Sen. Richard Tisei and Rep. Bradley Jones, the Republican leaders in the
Senate and House, support tax cuts and constantly complain about a state
budget that’s grown 43 percent in a decade, from $19.5 billion in fiscal
1999 to $28 billion for fiscal 2009.
Yet, when it comes to Question 1, the fall ballot initiative that
proposes to cut state spending by eliminating the income tax, the GOP
and its leading lawmakers don’t have a knee-jerk reaction.
They offer a very Democratic response in explaining why they oppose it.
"There are a lot of essential services we would not be able to perform,"
said Tisei of Wakefield. "It’s too extreme."
Said Jones, of Reading: "It’s one thing to say the budget should be
lower than $28 billion, but it’s another thing to say, ’Let’s take
$12-13 billion off the table.’ And we also have debts we’ve incurred
that we have to service. We made commitments we have to fulfill."
Republican Party Chairman Peter Torkildsen acknowledged he issued a
deliberately noncommittal statement on the question, since there was
split opinion within the GOP.
"I understand the frustration and anger felt by many voters towards
Beacon Hill, and why many will vote to repeal the income tax,"
Torkildsen said in his statement. "The broken promises have piled up,
and the people are fed up."
The reactions underscore the bipartisan tinge to much of the official
response to the question. Republicans as well as Democrats have joined
top business officials to condemn the idea.
"It’s irresponsible and it goes too far, and reasonable people
understand that," Paul Guzzi, president of the Greater Boston Chamber of
Commerce, said at a business breakfast last month.
The question — sponsored by Libertarian Carla Howell — proposes to
eliminate taxes on wages, interest, dividends and capital gains. The
current 5.3 percent rate would be phased out by cutting it in half on
Jan. 1, 2009, and eliminating it altogether a year later. Supporters say
that would give 3 million taxpayers an average of $3,600 annually.
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas,
Washington and Wyoming already do not have income taxes.
"After the end of the income tax, the state will still get $17 billion
in taxes and other revenues," Howell recently told The Associated Press.
"The local governments will still continue to collect about $19 billion
in local taxes and revenues. ... The bottom line is the politicians in
this state are swimming in money, awash in cash, and the voters are
hurting."
A similar question in 2002 failed, but not before receiving 45 percent
of the vote. Proponents think the question could gain additional
traction this year because taxpayers are cash-strapped at home, state
spending continues to rise and leaders like House Speaker Salvatore
DiMasi have suggested they would ignore the result even if voters
approved the question.
There is precedent for that: The Legislature refused to enact a 2000
ballot question that proposed trimming the income tax rate from 5.95
percent to 5 percent. It passed with 59 percent of the vote. Instead,
lawmakers froze the rate at 5.3 percent in 2002.
"How can we possibly have any other attitude after they’ve kicked us in
the teeth for 20 years?" said Barbara Anderson, co-founder of
Citizens for Limited Taxation, which had supported the prior
rollback to 5 percent. "Maybe the people need to give them a little kick
and get their attention again."
Anderson, who has previously supported more incremental reductions in
the tax rate, said her support for eliminating the income tax was not
symbolic.
"When you don’t have an income tax, it changes the culture of your
Legislature," Anderson said. "You end up with a part-time Legislature
that is more responsive to the people," which she said was the case in
New Hampshire.
The Granite State also has high property taxes, a repercussion opponents
fear if the income tax is eliminated.
Tisei, the Senate leader, said that though he opposes the question, he
understands the support for it.
"They look at state government and feel there is a disconnect between
what’s going on in the building and the hurting that’s going on outside
the building," he said.
The Boston Herald
Saturday, July 12, 2008
A Boston Herald editorial
Trim the fat now, or pay up later
Gov. Deval Patrick is
expected to release his budget vetoes tomorrow. The list had better be
long and add up to hundreds of millions of dollars.
Because a “fiscal meltdown” is looming, according to the Massachusetts
Taxpayers Foundation, and our top leaders appear to be whistling past
the graveyard.
“The problem facing the state is clear - the current level of spending
is unsustainable, and there is no plan to deal with the economic and
fiscal challenges ahead,” the MTF wrote this week, while urging the
Legislature and the Patrick administration to trim the budget now rather
than put off the inevitable - midyear cuts.
After reviewing the final budget submitted by the Legislature, the MTF
found it “at least” $1 billion out of balance. Sobering, indeed.
Now, House and Senate leaders insist their plan is responsible and
balanced, although they acknowledge that there are uncertainties in the
revenue forecast.
If a federal waiver to support the Medicaid program does not
materialize, for example, then we’re up the creek. And a sharp drop in
capital gains tax collections in fiscal 2009 is possible, which would
cause the fiscal ground to shift underneath us.
And yet the budget conference committee report was higher than the plans
approved by either of the two branches. At $28.233 billion it is $35
million more than the House version - and $142 million more than the
Senate’s. And yes, that includes all of those travel and tourism
goodies, hundreds of legislative earmarks, some of which we detailed
earlier this week.
It also includes a costly plan to increase cost of living raises for
state retirees and teachers, which should top the list of Patrick’s
vetoes. We don’t begrudge retirees a reasonable cost of living increase,
but lawmakers haven’t provided any reasonable way to finance the
billions it will cost over time.
For the state’s long-term fiscal health, Patrick would be well advised
to use his red pen until it runs out of ink.
The Boston Herald
Friday, July 11, 2008
Massachusetts: A $1B budget imbalance
Watchdog group urges state cuts
By Scott Van Voorhis
Masachusetts could be
headed for a “fiscal meltdown” unless state lawmakers and Gov. Deval
Patrick slash several hundred million dollars from the proposed 2009
state budget, a prominent state watchdog group warns.
The $28.2 billion spending plan is already $1 billion “out of balance,”
and that is before two major potential budget busters are taken into
account, the Massachusetts Taxpayers Foundation says.
The proposed budget, as hammered out by House and Senate negotiators,
does not account for a potential drop in capital gains revenue. Nor does
it reflect contentious negotiations between state and federal officials
about the size of the state’s Medicaid waiver.
Both could wipe out hundreds of millions in projected revenue, the
taxpayers foundation warns. Meanwhile, despite the economic warning
signs, House and Senate negotiators put out a budget that was higher
than what either branch had proposed on its own, the group contends.
“The current level of spending is unsustainable, and there is no plan to
deal with the economic and fiscal challenges ahead,” according to a
budget warning sent out by the taxpayers foundation.
One of the biggest threats to the state’s financial stability is a
potential drop in the capital gains tax revenue, said Michael Widmer,
president of the taxpayers group.
Projected capital gains revenue accounts for roughly $1.7 billion in the
proposed state budget. But capital gains revenue, high when Wall Street
is surging, typically dries up during a downturn.
Capital gains tax revenue, for example, plunged 75 percent in 2001
during the previous recession.
While Widmer is not predicting another 75 percent plunge, even a drop of
25 percent would wipe out $400 million in projected revenue, he said.
Given the challenges ahead, the taxpayers foundation is calling upon
state lawmakers and the governor to make cuts now rather than later. In
particular, the group is urging Patrick to veto planned cost-of-living
raises for state retirees, an expected cost of least $1.1 billion.
Patrick administration officials, now reviewing the budget, declined to
comment on cuts.
“The administration is cognizant of the economic picture and our budget
review is taking those concerns into consideration,” said Kyle Sullivan,
a spokesman for the governor.
The Boston Herald
Saturday, July 12, 2008
A Boston Herald editorial
Tax break merry-go-round
Massachusetts residents may
not have much disposable income this summer, but still everybody likes a
bargain. So retailers had hoped that a two-day sales tax holiday might
be just the incentive shoppers needed to make that delayed purchase of a
laptop or iPod or a hi-def compatible TV.
Senate President Therese Murray (D-Plymouth) is on board for a two-day
holiday from the 5 percent tax in August (for items under $2,500). But a
spokesman for House Speaker Sal DiMasi (D-Boston) insists times are
tough on Beacon Hill too, making its passage “very unlikely.”
But not to worry, that steady stream of consumers already headed over
the New Hampshire border for cheap cigarettes knows full well where to
shop for bargains. It’s there or the Internet. As for those who can’t
afford to shop, there’s a really, really nice merry-go-round in Holyoke
(getting $50,000 of their tax dollars) they might like to visit instead.
The Boston Herald
Friday, July 11, 2008
State gets license to keep tax cheats off roads
By Herald staff
Massachusetts could soon
have a new weapon in its ongoing war against tax cheats: Don’t pay your
taxes, and you will lose your driver’s license.
That’s the latest strategy to recover millions of dollars from an
estimated 150,000 hard-core scofflaws who ignore repeated warnings from
the taxman to pay up or work out a payment plan.
“It will definitely get their attention,” said state Revenue
Commissioner Navjeet Bal.
Currently, people who haven’t paid their income tax receive a series of
notices as soon as the state realizes money is owed or a return hasn’t
been filed.
But there could soon be a new twist. If tax deadbeats don’t pay, appeal
or work out a payment plan, they’ll be informed the Registry of Motor
Vehicles is going to suspend their licenses.
The measure is tucked deep within the $28.3 billion state budget on Gov.
Deval Patrick’s desk. It is part of a range of tough tax enforcement
measures the governor and legislative leaders agreed to in order to
collect $157 million next year from taxpayers to close a yawning $1.3
billion budget gap.
The license would be suspended until the tax is paid or a payment plan
agreed to. The plan would take effect as soon as the budget is signed.
Massachusetts already suspends professional licenses of tax delinquents,
garnishes wages and places liens on bank accounts and home sales. In
moving to add driver’s license suspensions, Massachusetts joins Rhode
Island, Louisiana and the District of Columbia.
Last year, the state collected $700 million from delinquents using
existing methods. This tack is expected to rake in another $7 million a
year.
Citizens for Limited Taxation’s Barbara Anderson slammed the
proposal.
“The government doesn’t have a right to take your license, except for a
driving-related reason,” she said. “If you don’t pay your taxes, they
should put you in jail or garnish your wages. Now you can’t drive to
work. What’s the point?”
Bal noted the state successfully used the tactic to get deadbeat parents
to pay court-ordered child support, recouping $138 million since 2003.
But the state doesn’t want driver’s licenses, Bal said. Rather, it wants
your money.
“I can’t put a license in the bank.”
The Brockton Enterprise
Thursday, July 10, 2008
An Enterprise editorial
The income tax debate begins
The petitions are signed,
certified and delivered. The question the Massachusetts political
establishment most fears will be on the ballot in November: the repeal
of the state income tax.
At best, we can hope that the initiative will prompt a serious
discussion of what citizens should expect from state government and what
it takes to pay for it. We'll get to debate not just how much taxation
is too much, but how various taxes compare in terms of fairness and
efficiency.
This will be a real experiment in democracy, a test of whether, given
the chance, people will put their personal financial gains ahead of
their obligations as citizens to support basic government functions.
At worst, we'll see what damage will result if more than half of voters
choose their wallets over the good of the commonwealth.
The damage would be considerable. Eliminating the income tax will drain
more than $11 billion from state revenues, which is about 42 percent of
this year's $28.3 billion budget. But the cuts won't be across the
board. Federal mandates including Medicare, debt service obligations and
negotiated contracts will have to be paid in full, meaning the ax will
have to cut deeper in other accounts.
How much do proponents think will be left over for state police,
prosecutors and prisons? Where do supporters believe the money for day
care and prescription drug programs will come from? How will we prevent
staffing cuts in vital services such as mental health, youth services
and housing? Which highways won't get plowed in the winter? Which state
parks won't open in the summer?
Tuition and fees at UMass, the state colleges and community colleges are
already high compared to public higher education in other states. How
much higher would they have to go if the Legislature has to cut more
than half of the $1.1 billion now budgeted for higher education?
That investment is small compared to the nearly $4 billion the state
sends to local school districts in Chapter 70 aid. It's one of the first
accounts lawmakers would have to look to if 42 percent of the state's
revenue suddenly disappeared. That's just part of the local aid on which
cities and towns depend. How many teachers, police or firefighters would
lose their jobs? How many roads will go without repairs, the potholes
growing ever deeper?
It's easy to paint pictures of devastating cuts in services, but it's
also likely that if the income tax disappears, the revenue to sustain
government functions will be found elsewhere. Other taxes will go up:
the sales tax, perhaps, to fill holes in the state budget; local
property taxes to make up for the loss of local aid.
So the debate should include a comparison of taxes. The income tax takes
the same percentage of earned income, but families with more income pay
more taxes. Property taxes are more arbitrary, based on the market value
of homes, not on people's ability to pay. Sales taxes put a
proportionately greater burden on the poor. Which tax should be cut and
which should grow?
Everyone hates taxes, but those who think Massachusetts residents are
uniquely burdened ought to hear the complaints from other states. While
the Bay State was once among the tax leaders, it now ranks 32nd in terms
of the bite state and local taxes take from family income.
Those who want to see the state drop further on the list must consider
the cost in quality of life, in the economic climate and in the value of
our homes. We can vote income taxes away, but we can't vote away the
need for revenue to pay for those things only government can provide.
The proponents have done their job, putting a proposal on the ballot
that would, if passed, radically change the way Massachusetts state and
local governments function. The job of voters, between now and November,
is to weigh not just the initiative's potential impact on their wallets,
but its impact on their neighbors, their communities, the economy and
the state.
The Belmont Citizen-Herald
Wednesday, July 9, 2008
Income tax repeal — a good switch or a bad switch?
By Cassie Norton
The Committee for Small
Government has again collected tens of thousands of signatures to
successfully include a question designed to repeal the state income tax
on the Nov. 4, a measure its chairwoman says will “eliminate waste and
end the programs doing more harm than good.”
Massachusetts residents will be able to spend their earnings “as they
see fit within their own community,” said Carla Howell, chairwoman of
the Committee for Small Government. “Everyone will benefit.”
But while cutting wasteful government spending may be an admirable goal,
Mike Widmer, Belmont Town Moderator and president of the Mass.
Taxpayers’ Foundation, said that is not what will happen if the income
tax is repealed.
“Eliminating the income tax will have a dramatic impact on every program
and service,” he said. “Everything. Prisons, higher education, local
education, human services, transportation and roads, infrastructure.
Everything.”
At the same time, Widmer said, towns would be forced to raise property
taxes exponentially, and the repeal would probably result in a statewide
property tax. The burden of that tax would fall disproportionably on the
lower and middle-income residents.
“The income tax is much fairer than the property tax,” he said. “The
rate isn’t graduated, but if someone makes more money, they pay more in
taxes. They may have a more expensive home, but the property tax they
would pay on it is nothing like what they pay in income taxes.”
The initiative would return approximately $3,600 annually to the average
resident, Howell said, a number achieved by dividing $11 billion, the
amount of money in the state budget raised from income taxes, by 3
million, the number of taxpayers.
“It’s all terribly wasteful and bloated,” Howell said. “Massachusetts is
one of the worst. It has about the fourth highest [tax rate] in the
nation” when state and local taxes are combined. “There’s a reason they
call it ‘Taxachusetts.’”
Massachusetts currently has an income tax of 5.3 percent. Under the
Committee for Small Government plan, if approved by voters, the income
tax would drop to 2.65 percent on Jan. 1, 2009. A year later, on Jan. 1,
2010, the state would stop collecting the tax entirely. There are nine
states in the country that do not have an income tax.
Widmer said the idea that “the state government can adjust by squeezing
here and there is absurd.”
Reducing the budget by $11 or $12 billion would be nearly impossible, he
said. Eliminating every state employee in every department, from the
Registry of Motor Vehicles to the Department of Environmental
Protection, would only yield a savings of $5 billion, he said.
“You still have to find the other $7 billion from somewhere,” he said.
However, Howell counters that comparatively high taxes are “why people
have left, why jobs have left” the state. Ending the income tax would
“attract businesses, attract workers and generate hundreds of thousands
of new jobs.”
Widmer though disagreed saying the local economy would see “a huge
decline because of the mess of uncertainty,” he said. “There would be a
period of political and economical chaos in the State House.”
He called the proposal “the opposite of a [good] design of a fair tax
policy.”
In a town like Belmont, where median incomes average between $81,000 to
$115,000 annually, based on the 2000 Census and recent published
reports, most residents could expect to see more than $3,600 average
suggested by the plan. At the same time, because town incomes can range
from millions of dollars each year to Social Security income, the effect
of cutting services could be keenly felt.
“There would be an immediate impact on services,” Widmer said. “There
would be major cuts in school funding, highway funding, everything. A
major decline in local services would be immediately felt.”
Widmer acknowledged that he takes the ballot initiative “very
seriously.” When the initiative appeared on the 2002 ballot, it garnered
45 percent of the vote. This time around, the economic situation in the
state is very different.
“It is a reckless proposal, but it has a serious chance of passing,” he
said. “There is a perfect set of conditions to make people want to send
a message through this ballot question. It is a very anxious time for
all but a few people. The conditions are right for people to say they
want to save some money.”
For more information about the Committee for Small Government, visit
its Web site at
smallgovernmentact.org.
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
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