CLT UPDATE
Wednesday, August 27, 2008
Miniscule tax cut likely remains "frozen"
Anyone surprised?
State officials say tax revenue
growth, once adjusted for inflation, appears insufficient to trigger a
scheduled cut in the income tax to 5.25 percent next year from 5.3
percent, a morsel of tax relief compared to a question on this
November’s ballot that would cut the rate in half and then eliminate the
income tax.
Eight years ago, Massachusetts voters instructed the Legislature to
reduce the income tax rate from 5.85 percent to 5 percent .... But in
2002, facing state budget imbalances, the Legislature froze the income
tax at 5.3 percent ... and laid out a series of alternative tax cuts
with each one dependent on tax revenue growth hitting certain
thresholds.
The 0.05 percent income tax cut, worth a collective $100 million to $120
million to Massachusetts taxpayers, was on track for January 1 but now
appears unlikely because soaring inflation has cut into “baseline” tax
revenue growth in fiscal 2008 over fiscal 2007, according to state
financial disclosure documents....
The Department of Revenue is expected to finalize its calculations later
this week, but “at this time there appears to be insufficient
inflation-adjusted revenue growth” to trigger the tax cut, according to
the state documents.
If triggered, the tax cut would mean $11 a year for a single, renter
filer with income of $33,000 a year, $32 for a married couple with no
kids earning $76,000 a year, and $41 for a married, homeowner couple
earning $104,500 a year with two children, according to estimates
provided by the state Department of Revenue....
House Speaker Salvatore DiMasi said, “We put the statute together so
that there would be triggers based on the revenues and the economic
status of Massachusetts, and if they don’t meet the criteria, well,
that’s what we set up.”
State House News Service
Tuesday, August 26, 2008
Despite record revenues,
inflation is latest obstacle to income tax rate cut
Gov. Deval Patrick has added almost 2,000 new workers to the
state payroll in the past year even as he warns of dire budget cuts in the face
of a $1 billion deficit, a Herald review shows.
And his administration continues to dole out millions in overtime, with nearly
80 prison guards raking in more than $100,000....
“It’s very worrisome,” Jim Stergios, executive director of the Pioneer
Institute, said of the hiring frenzy. “It’s a problem, given that we’re probably
heading into a recession, and we’ve been borrowing extensively.”
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the
state’s report to the bond market last week also shows a disturbing work-force
hike.
“This trend is very troubling given the huge economic uncertainties,” Widmer
said. “This is the time we should at least hold the payroll constant.”
Stergios noted the state’s “budget-funded” work force has risen steadily over
the past five years by more than 5,500 employees.
And, he pointed out, once you hire a new state worker, “it’s forever.” Hefty
pensions and health benefits come with the package....
Barbara Anderson, founder of Citizens for Limited Taxation, said
it’s time for state officials to get off “the gravy train.”
“They just don’t get it. It’s over. Even in Massachusetts, there’s a limit,” she
said. “We’ve reached that time.”
The Boston Herald
Monday, August 25, 2008
What Cri$i$?
State payroll swells as economy tanks
Chip Ford's CLT
Commentary
"Color me surprised" we said in the CLT News Release
("Income
tax rate – Color me surprised," May 12):
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.
Gee whiz, there seems to be a problem -- another
problem -- with pulling that "trigger" on the 5.3 percent income tax
rate. It's now 19 years since the rate was initially hiked beyond
its traditional 5 percent -- "temporarily" you know; six years since the
Legislature's last promise to roll it back, eventually.
Another problem. Somehow I'm not surprised.
The editorial elites at the Boston Globe might be
surprised, but I doubt it. They wrote ("A
business-as-usual budget," May 6):
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 Senate and House "compromised" on their
respective branch's budgets -- they increased each other's in the final
version, spent even more.
This year, the excuse for keeping our money is
"inflation." The state apparently believes inflation effects only
government, not taxpayers. The state needs to take our money more
than we need to keep it, for our rising cost of heating oil, food, gas,
and everything else. We have no needs. Only government has
needs. "Unmet" needs especially. So many "unmet needs" that
the Legislature and governor had to spend an additional billion dollars
of our money in this year's budget. So many the Legislature and
governor were forced to borrow over $3 Billion above that to meet those
ever elusive and always expanding needs.
So many "unmet needs" have arisen that the governor
was forced to hire another 1,900 state workers; put them on the state's
payroll, provide them with first-class health insurance and golden
parachute pensions when they retire after a few years. 1,900 more
unmet needs, just like that. So many unmet needs, so little time
and money.
Don't mind me if I'm not even a little surprised that
we're not going to get the promised point-zero-five (.05) percent cut in
the income tax rate this year again, miniscule as it would be. In
my commentary for the CLT Update of July 14 ("State
spending, big spenders, gone insane"), I wrote:
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.
As Barbara told Boston Herald reporter Joe Dwinell,
“They just don’t get it. It’s over. Even in Massachusetts, there’s
a limit. We’ve reached that time.”
"They just don't get it." It's
business-as-usual on Bacon Hill and in city and town halls across the
Commonwealth. They can't conceive of their gravy train running off
the tracks. The good times will never end, they're convinced; "Let'em
roll!"
This attitude has become so ingrained in
Massachusetts political culture that there are simply no alternative
views. It'll just go on forever, "At least as long as I'm here,
and then I've got my pension," they're convinced. There's always
more to take when the spending runs out -- and more, and always more.
Steal it, borrow it, just keep spending and taking whatever you need
when it's gone.
Even Question 1 -- outright repeal of the state
income tax -- on the ballot in November hasn't slowed them. They
can't help themselves. It's what they do, what they've always
done. They don't know how to do anything else. The spending
simply goes on, and on, and on, angering taxpayers more and more every
day -- voting taxpayers. But the pols still can't help
themselves, can't stop.
This craziness won't cease, until we stop it for them.
When the reality of no income tax whatsoever sinks in, it'll be a
cultural shock for them, a new reality check. Until it does, they
just don't and won't recognize -- are incapable of recognizing --
that all the money they have to spend belongs first to us, or did before
they grabbed it. The foreign notion here in Massachusetts that the
government belongs to the people, not to the politicians to do with as
best benefits them, won't begin to be realized until and unless the
people -- the voters -- assert themselves, their primacy.
First voters must repeal the income tax; provide the
pols with a new reality to ponder. Then voters must retire as many
tax-borrow-and-spend legislators as possible, provide them and their
cohorts with a sense of vulnerability, maybe even instill some grasp of
accountability if that's possible.
The only question today is, who goes down first.
If we voters don't take back control, it will be the taxpayers who are
crushed. If voters finally act responsibly in their own collective
defense, take back our government, maybe -- just maybe -- the political
culture and class can be rehabilitated, at the very least redirected.
If rehabilitation doesn't work, if their efforts
cannot be redirected to include taxpayer concerns, then more of them
will have to be challenged and retired in the next election.
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Chip Ford |
State House News Service
Tuesday, August 26, 2008
Despite record revenues,
inflation is latest obstacle to income tax rate cut
By Michael Norton and Jim O’Sullivan
State officials say tax revenue growth, once adjusted for inflation,
appears insufficient to trigger a scheduled cut in the income tax to
5.25 percent next year from 5.3 percent, a morsel of tax relief compared
to a question on this November’s ballot that would cut the rate in half
and then eliminate the income tax.
Eight years ago, Massachusetts voters instructed the Legislature to
reduce the income tax rate from 5.85 percent to 5 percent and to
institute new deductions to spur charitable donations. But in 2002,
facing state budget imbalances, the Legislature froze the income tax at
5.3 percent, suspended the deductions on charitable contributions and
laid out a series of alternative tax cuts with each one dependent on tax
revenue growth hitting certain thresholds.
The 0.05 percent income tax cut, worth a collective $100 million to $120
million to Massachusetts taxpayers, was on track for January 1 but now
appears unlikely because soaring inflation has cut into “baseline” tax
revenue growth in fiscal 2008 over fiscal 2007, according to state
financial disclosure documents.
The federal Bureau of Labor Statistics reported this month that the
Boston-area consumer price index for July 2008 surged 6.3 percent over
the July 2007 level. After adjusting for inflation, fiscal 2008 tax
revenue growth of $1.15 billion, or 5.8 percent, dips close to 0
percent, less than the 2.5 percent growth rate needed to trigger a rate
cut.
The Department of Revenue is expected to finalize its calculations later
this week, but “at this time there appears to be insufficient
inflation-adjusted revenue growth” to trigger the tax cut, according to
the state documents.
If triggered, the tax cut would mean $11 a year for a single, renter
filer with income of $33,000 a year, $32 for a married couple with no
kids earning $76,000 a year, and $41 for a married, homeowner couple
earning $104,500 a year with two children, according to estimates
provided by the state Department of Revenue.
With Gov. Paul Cellucci leading proponents and promoting savings of $500
a year for the average working family, supporters of the 2000 ballot
question to cut the income tax rate prevailed by a 56-37 margin, while
the new law to encourage charitable donations passed 67 to 26 percent
that year.
Legislative leaders said Monday they were unaware that the income tax
trigger was set up for a miss, and said the state would not revisit the
statute to force the reduction.
Senate President Therese Murray said the Legislature was prepared to
come back in November, but to grant expanded budget-cutting powers to
Gov. Deval Patrick.
“I thought that we were going to actually hit that trigger,” Murray
said. “That means the economy did not do very well in this past year. We
know it’s not going to do well in this next fiscal year. It’s going to
be very, very tough. We’ll be revisiting our budget probably in the late
fall. And [fiscal year 2010] is going to be really bad.”
House Speaker Salvatore DiMasi said, “We put the statute together so
that there would be triggers based on the revenues and the economic
status of Massachusetts, and if they don’t meet the criteria, well,
that’s what we set up.”
“I was under the impression that we will get the reduction, and if we
don’t get the reduction it’s only because the triggers didn’t come in
and the revenues aren’t there and the economy isn’t growing as we
anticipated, and that’s not a good sign either,” DiMasi told the News
Service at the Democratic National Convention in Denver.
Murray, also in Denver, said that budget cuts later this year would
“have to be across the board.”
To retain government investments and stave off additional budget cuts,
the Legislature and Gov. Deval Patrick this year raised the tax on
cigarettes by a dollar a pack and voted to approve corporate tax law
changes that are expected to generate hundreds of millions of dollars in
new revenues.
The Census Bureau reported Tuesday that real median household income in
the United States grew 1.3 percent between 2006 and 2007, reaching
$50,233, while the nation’s poverty rate in 2007 was 12.5 percent,
unchanged from 2006.
In an email appeal Tuesday for campaign donations, income tax opponent
Carla Howell described “an Army of Davids ready to do battle with the
Gang of Goliaths.”
Howell, in an emailed response to the News Service, said Tuesday that
"Beacon Hill politicians maneuvering and wasting taxpayer money” was one
reason to support abolishing the income tax and returning an average tax
cut of $3,700 per year. In a brief interview, she called the tax cut
that’s dependent on revenue growth “frankly pretty trivial,” adding,
“The culprit here is politicians playing shell games with taxpayer
money.”
Howell said off-budget spending unrelated to the $28.2 billion state
budget brings total spending up to $47 billion a year and suggested that
lawmakers curb spending and begin thinking of ways to cut $12 billion
should the tax cut ballot question pass. Many believe Beacon Hill
leaders won’t implement the question if it passes.
The Boston Herald
Monday, August 25, 2008
What Cri$i$?
State payroll swells as economy tanks
By Joe Dwinell
Gov. Deval Patrick has added almost 2,000 new workers to the state
payroll in the past year even as he warns of dire budget cuts in the
face of a $1 billion deficit, a Herald review shows.
And his administration continues to dole out millions in overtime, with
nearly 80 prison guards raking in more than $100,000.
A mid-year Herald payroll analysis reveals that since July 2007, the
number of state jobs has jumped by about 1,900, many of them new hires
in the Department of Correction and MassHighway.
The soaring payroll comes at a time when the state is stepping in to
bail out a debt-ridden Mass Pike and being asked to do the same for the
MBTA, and the governor is requesting special powers to cut the budget
this fall if the local economy continues tanking.
“It’s very worrisome,” Jim Stergios, executive director of the Pioneer
Institute, said of the hiring frenzy. “It’s a problem, given that we’re
probably heading into a recession, and we’ve been borrowing
extensively.”
Michael Widmer, president of the Massachusetts Taxpayers Foundation,
said the state’s report to the bond market last week also shows a
disturbing work-force hike.
“This trend is very troubling given the huge economic uncertainties,”
Widmer said. “This is the time we should at least hold the payroll
constant.”
Stergios noted the state’s “budget-funded” work force has risen steadily
over the past five years by more than 5,500 employees.
And, he pointed out, once you hire a new state worker, “it’s forever.”
Hefty pensions and health benefits come with the package.
In early July, Patrick asked lawmakers to grant him extraordinary
budget-slashing power to make emergency cuts if the economy takes
another turn for the worse.
“We’ve got to prepare for the economic trouble ahead,” the governor said
at the time.
For his part, Comptroller Martin J. Benison said the state payroll
fluctuates, with the average number of paychecks cut by his office this
year hovering around 104,500.
Paul Dietl, head of the state’s Human Resources Department, said the
current $5.3 billion payroll “is consistent with previous years.”
Meanwhile, spokesmen for various state departments argue bridges must be
repaired, prisoners guarded and universities staffed.
Department of Correction officials defend the scores of $100,000-plus
prison guards as a necessary evil.
“The DOC is a 24/7 public safety operation with staffing requirements,”
said DOC spokeswoman Diane Wiffin.
Wiffin declined to comment on new hires for prisons, saying staffing
details are confidential.
Jobs are also being added at Mass Highway, said department spokesman
Clark Jessen, mostly because bridge repairs are now on the fast track
under the state’s Accelerated Bridge Program.
As for the University of Massachusetts system - home to some of the
state’s top-paid employees - it’s the price you have to pay for “leaders
in their fields,” said UMass spokesman Robert P. Connolly.
The UMass system, he said, boasts almost 18,000 employees, up by less
than 100 since January.
As for the lofty pay, Connolly said UMass “benchmarks” salaries with
“peer institutions” to attract top talent to the state.
But Barbara Anderson, founder of Citizens for Limited Taxation,
said it’s time for state officials to get off “the gravy train.”
“They just don’t get it. It’s over. Even in Massachusetts, there’s a
limit,” she said. “We’ve reached that time.”
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