CLT UPDATE
Tuesday, December 13, 2011
Too little too late, but we'll take it without thanks
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For the first time in 10 years, the state income
tax in Massachusetts is set to be cut on Jan. 1.
But don't get too excited about the extra money
that will stay in your pocket next year. The reduction is scheduled
to be so minuscule that the savings might be only $9 to $39 a year
for typical taxpayers, according to the state Department of Revenue.
Under a state law, the state's 5.3-percent
personal income tax is set to drop to 5.25 percent on Jan. 1. It
would be the first cut in the income tax since January 2002, when it
fell to its current level under a ballot question approved by voters
in 2000....
When state legislators approved the 2002 law, it
negated a voter-approved ballot law in 2000 that set a phased cut in
the then-5.85 percent income tax to 5 percent by January 2003. The
phased cut was stopped dead in its tracks in the 2002 law.
Barbara C. Anderson, executive director of
Citizens for Limited Taxation, said she welcomed the tiny cut
in the income tax – on principle. The cut shows the income tax is
moving in the right direction and that legislators are showing some
respect to voters, she said.
"I don't care if it's 5 cents," Anderson said. "I
want it."
Anderson's group sponsored the 2000 ballot
question, which was approved by 59 percent of voters.
The Springfield Republican
Sunday, December 11, 2011
Massachusetts income tax cut — a tiny
one — triggered by economic growth
Massachusetts taxpayers appear set to receive an
automatic, though slight, cut in their state income taxes on Jan. 1,
revenue officials said Monday. It would be the first such reduction
in the tax rate since it was frozen nearly a decade ago.
The cut, from 5.3 percent to 5.25 percent, would
be triggered by a sustained period of growth in tax revenue during
the last year and a half....
The savings for the typical taxpayer would be
small -- a family with $50,000 in taxable income would save about
$25, for example -- but many fiscal observers still viewed it as a
positive development for the state economy....
Massachusetts voters approved a ballot question
in 2000 to gradually lower the state income tax from 5.95 percent to
5 percent. Two years later, the Legislature froze the rate at 5.3
percent, while also adding a mechanism that would allow the rate to
fall if growth in annual revenues meets certain benchmarks.
Associated Press
Monday, December 12, 2011
Mass. taxpayers in line for slight income tax cut
What the three officials heard at Monday’s
hearing were stark warnings that, even with an expected uptick in
tax collections ranging from 2.7 percent to 4.1 percent next fiscal
year, required spending on “non-discretionary” items like Medicaid,
pension obligations and debt service will swallow up all of the
growth....
The officials also indicated they’re anticipating
an automatic income tax cut for Massachusetts residents beginning
Jan. 1, triggered by sharp revenue increases over the last year. The
cut, which will bring the tax rate to 5.25 percent from 5.3 percent,
falls far short of a voter-approved measure that called for reducing
the rate to 5 percent, but it would still result in $111 million to
$117 million in tax relief in fiscal 2013, revenue officials said.
State House News Service
Monday, December 12, 2011
Slower job growth, Europe, Fed cuts seen as threat to tax receipts
It almost seems too good to be true — that
taxpayers will actually get a break from the state in the coming
year. But then, of course, we’ve all been waiting for it since,
well, 2000....
Massachusetts voters gave themselves a tax cut
(back down to 5 percent) at the ballot box in 2000. But legislators,
of course, knew better how to spend our money so in 2002 they came
up with a scheme to keep the rate at 5.3 percent but put in some
economic triggers that could eventually lower it (in increments of
.05 percent) to what voters wanted in the first place.
Frankly we thought it would never happen. It’s so
very easy to be a cynic here about tax cuts and legislative sleight
of hand. But even Revenue Commissioner Amy Pitter acknowledged
yesterday that this tax cut looks like a done deal — thus “lowering”
state revenue collections. (We love the way state officials always
make that sound like a bad thing.) ...
A Boston Herald editorial
Tuesday, December 13, 2011
Happy New Year indeed
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Chip Ford's CLT
Commentary
Last summer, after the close of Fiscal Year 2011,
Statehouse reporter Dan Ring of Springfield's daily newspaper, The
Republican, wrote ("Massachusetts
brings in $723 million more in taxes than projected," July 19):
Tax collections for the recent fiscal
year in Massachusetts rose $723 million more than
projected and nearly $2 billion more than the prior
year, reflecting a “noticeably stronger” economy and
most likely assuring a sales tax holiday in August, the
state Department of Revenue and a top legislator said.
The robust collections could also mean that people will
receive a small cut in the state income tax in January,
in what would be the first cut in the income tax in a
decade....
Revenue Commissioner Navjeet K. Bal said that the state
collected $20.5 billion in taxes for the fiscal year
that ended June 30, an increase of more than $1.9
billion or 10.6 percent from the prior year and $723
million more than projections.
“The increase of nearly $2 billion in collections
reflects a Massachusetts economy that grew noticeably
stronger over the past 12 months,” Bal said in a
statement.
The total was close to the $20.8 billion received for
the fiscal year that ended in June 2008, the most-ever
taxes collected by the state, said a spokesman for the
revenue department. Tax collections plunged by about
$2.5 billion the following year during the recession. |
From all indications and reports so far, it
appears that we worker drones of Massachusetts are about to receive
a miniscule installment of the voters' long-overdue income tax
rollback. This is the first reduction in nine years, since the
Legislature gave voters and taxpayers the middle-finger Beacon Hill
salute in 2002.
As Barbara said, "I don't care if it's 5 cents. I
want it."
You might remember that the income tax rate was
raised "temporarily, for 18-months" in 1989 —
twenty-two years ago — from its
historic 5 percent. You might also recall that CLT put the rollback
of the "temporary" income tax hike on the 2000 ballot
— eleven years after it was imposed
"temporarily" — where it won with 60 percent of the vote
statewide.
See
Was it a promise, or wasn't it?
News accounts of the treacherous 1989 "temporary
— 18-months" tax hike
The Legislature "froze" the voters' mandate in
2002 at 5.3 percent with a promise to lower it more
— when fiscal conditions improved and certain
economic "triggers" were
met.
Conditions apparently never
improved sufficiently, triggers were never pulled, the rate remains
at 5.3 percent where it was when the Legislature "froze" it — nine
years ago. It has yet to budge.
But it's expected to
finally nudge downward — a whole five one-hundredths of one percent
— on January 1st. Apparently that light trigger pull is unavoidable,
and has value by providing a certain if minimal amount of political
cover.
At this rate — a .05%
decrease each nine years — the voters' 2000 mandate might finally be
accomplished, the 5 percent historic rate might eventually be
reached — forty-five years from now, in the year 2057.
Will any of us be alive to
see it?
Let this definition of a
"temporary tax hike" be duly noted in the annals of Massachusetts
government doublespeak: It translates into sixty-eight years,
if we're lucky.
Unless we elect legislators
and governors sooner who will respect and appreciate taxpayers,
voters, and binding ballot question results.
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Chip Ford |
With ever-increasing government spending, the
numbers have become incomprehensibly huge, requiring new
terminology (trillions) and impossibly abstract conceptions.
Consider the federal debt, $14 trillion:
$14,000,000,000,000
Or even the state’s FY 2012 budget which the
governor signed in July, $30.6 billion:
$30,600,000,000
And when government cuts taxes, the number is
incomprehensibly miniscule, also requiring new terminology
(hundredths of a percent) and impossibly abstract conceptions.
Consider the state’s barely measurable proposed income tax
reduction, five one-hundredths of one percent:
.05%
Note 1: The
FY 1990 state budget that required the “temporary 18-month” income
tax increase in 1989 to balance was $12.2 billion. This fiscal
year’s budget – twenty-two years later – has
grown larger by
$18.4 billion:
$18,400,000,000
Note 2: When
the income tax was increased in 1989, “temporarily, for 18-months,”
it was abruptly hiked by
15 whole
percent in a single jolt.
The Massachusetts "Temporary"
Income Tax Hike Lie
Two-Plus Decades and Counting of a Broken Promise |
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1989 |
Jul. 26, 1989 |
Gov. Michael Dukakis signs "18-month
temporary" income tax hike into law, raising the 5% rate
by
15% to 5.75%. |
| |
Dec. 6, 1989 |
CLT files sufficient signatures for
ballot question to roll back income tax rate and fee
increases to 1988 levels. |
|
1990 |
Jul. 20, 1990 |
Income tax rate raised to 6.25%
immediately and will remain there through 1991, when it
is scheduled to drop to a permanent 5.95% thereafter. |
| |
Nov. 6, 1990 |
CLT ballot Question 3 to cut income tax
and fees is defeated by vote of 60%-40%. |
|
1992 |
Jan. 1, 1992 |
Income tax rate drops by .3%, from 6.25%
to 5.95%. |
|
1998 |
May 4, 1998 |
CLT income tax rollback petition blocked
by teachers union. After lengthy challenge court rules
signatures 26 shy of required 64,928. |
|
2000 |
Jan 1, 2000 |
With second CLT rollback petition heading
for the November ballot, income tax rate is dropped from
5.95% to 5.85%. |
| |
Nov. 7, 2000 |
Second rollback petition drive/ballot
question wins by 60%-40% vote: "Temporary" income tax
hike to be rolled back from 5.85% to 5% over three
years. |
|
2002 |
Jul. 19, 2002 |
Legislature "temporarily freezes" voters'
income tax rollback mandate at 5.3%. |
|
2012 |
Jan. 1, 2012 |
5.3% income tax rate set to drop .05% to
5.25%. |
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2057 |
Jan 1, 2057 |
Projected date, at a reduction of .05%
each 9-year period, when the 1989 "temporary" income tax
hike is finally restored to its historic 5% rate. |
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The Springfield Republican
Sunday, December 11, 2011
Massachusetts income tax cut — a tiny
one — triggered by economic growth
By Dan Ring
For the first time in 10 years, the state income tax in
Massachusetts is set to be cut on Jan. 1.
But don't get too excited about the extra money that will stay in
your pocket next year. The reduction is scheduled to be so minuscule
that the savings might be only $9 to $39 a year for typical
taxpayers, according to the state Department of Revenue.
Under a state law, the state's 5.3-percent personal income tax is
set to drop to 5.25 percent on Jan. 1. It would be the first cut in
the income tax since January 2002, when it fell to its current level
under a ballot question approved by voters in 2000.
While an official announcement is expected Thursday, the reduction
of 0.05 percentage points appears assured because it has already
cleared several economic thresholds in the law for triggering the
cut. In order to go into effect on Jan. 1, the reduction needs to
pass one more modest test for measuring economic growth, according
to a top legislator.
"I'm very confident it will happen," said Sen. Stephen M. Brewer, a
Barre Democrat who is chairman of the Senate Ways and Means
Committee. "That's good news for the taxpayer."
The tax cut would cost state government $114 million for a full
fiscal year, or $54 million for the last six months of this fiscal
year, according to the revenue department.
Brewer said state government could use the money, but "it's
important to keep our word to taxpayers."
The cut stems from 2002, when legislators approved a law to freeze
the state income tax at 5.3 percent to help deal with a recession
and a gap in the state budget. At the same time, legislators
established a schedule for the income tax to gradually be lowered to
5 percent in increments of 0.05 percentage points.
The reduction is determined by a calculation for determining if the
economy is in good health. Under the law, the phased reduction could
have started as early as 2009, but the recession killed that
possibility – until this year.
Robert R. Bliss, a spokesman for the state Department of Revenue,
said that the law requires a cut in the income tax if
inflation-adjusted growth in tax revenues exceeds 2.5 percent for
the fiscal year that ended on June 30. The commissioner of the
revenue department on Aug. 30 determined that growth exploded to 7.2
percent over the prior year, well above the 2.5 percent.
Also, under the law, the inflation-adjusted growth in tax revenues
must be more than zero for each consecutive three-month period
between August and December of this year compared to the same period
in the prior year, according to Bliss.
The cut cleared those hurdles in September, October and last month.
Now, all that remains is for the revenue commissioner to certify
Thursday that revenue growth was greater than zero for the past
three months. If that happens, the cut will automatically occur for
the new tax year.
Alexandra Zaroulis, a fiscal spokeswoman for Gov. Deval L. Patrick,
said the cut in the income tax "does appear more likely than not" to
take effect on Jan. 1.
The cut won't exactly be a windfall for workers.
According to the revenue department, the cut would save $39 for a
married couple filing jointly who own a home, have two children less
than 12 years old and $100,000 in income.
The savings would be $24 for a married couple filing jointly who own
a home, have no children, and $60,000 income.
The savings is only $9 for a single person with two children who
rents and makes $40,000.
When state legislators approved the 2002 law, it negated a
voter-approved ballot law in 2000 that set a phased cut in the
then-5.85 percent income tax to 5 percent by January 2003. The
phased cut was stopped dead in its tracks in the 2002 law.
Barbara C. Anderson, executive director of Citizens for
Limited Taxation, said she welcomed the tiny cut in the income
tax – on principle. The cut shows the income tax is moving in the
right direction and that legislators are showing some respect to
voters, she said.
"I don't care if it's 5 cents," Anderson said. "I want it."
Anderson's group sponsored the 2000 ballot question, which was
approved by 59 percent of voters.
Alex Sherman, chairman of the Springfield Republican City Committee,
said that the reduction to 5.25 percent is a step in the right
direction but not enough considering approval of the 2000 ballot
question. "Eleven years and still the people's voice continues to
fall deaf on the ears of our state government," Sherman said in an
e-mail.
Before the income tax was eligible to start falling, the 2002 law
first called for restoring personal exemptions, or the amount of
income not subject to taxation.
In the 2002 tax-increase law, legislators also raised revenues by
lowering personal exemptions by 25 percent.
The 2002 law also contained triggers to lift the personal exemptions
in annual stages if the economy grew enough. The exemptions were
fully restored in 2008.
Associated Press
Monday, December 12, 2011
Mass. taxpayers in line for slight income tax cut
By Bob Salsberg
Massachusetts taxpayers appear set to receive an automatic, though
slight, cut in their state income taxes on Jan. 1, revenue officials
said Monday. It would be the first such reduction in the tax rate
since it was frozen nearly a decade ago.
The cut, from 5.3 percent to 5.25 percent, would be triggered by a
sustained period of growth in tax revenue during the last year and a
half. Massachusetts Revenue Commissioner Amy Pitter told lawmakers
Monday that a final determination on the tax cut would be made
Thursday after collections for the past three months are reviewed,
but added that officials had already factored the anticipated
reduction into revenue forecasts for the remainder of the current
fiscal year and for the next one.
The savings for the typical taxpayer would be small -- a family with
$50,000 in taxable income would save about $25, for example -- but
many fiscal observers still viewed it as a positive development for
the state economy.
"It's a tiny amount, but it's in the right direction," said Michael
Widmer, president of the Massachusetts Taxpayers Foundation, a
nonpartisan budget watchdog group.
Pitter said the revenue impact of the tax cut is expected to be
about $54 million in the current fiscal year and about $114 million
in the next fiscal year that begins on July 1, 2012.
Massachusetts voters approved a ballot question in 2000 to gradually
lower the state income tax from 5.95 percent to 5 percent. Two years
later, the Legislature froze the rate at 5.3 percent, while also
adding a mechanism that would allow the rate to fall if growth in
annual revenues meets certain benchmarks.
The first test was passed in the fiscal year ending June 30, Pitter
said, when inflation-adjusted revenue grew by more than 2.5 percent
over the previous year. The second threshold, which also appeared to
have been met, requires revenues to show some continued increase
from August through November compared to the same period a year
earlier.
"I think it's a positive sign to the citizens that, 'Hey, it was
going to be triggered at some point,' and there won't be in my
estimate an attempt to reverse that," said Widmer.
Fiscal experts including Widmer were quick to point out that while
the state's modest economic recovery is causing tax revenue to grow
at a higher clip, Massachusetts is still taking in less in total
taxes than it did prior to the Great Recession. The state is
forecast to collect $700 million less in taxes in fiscal 2012 than
it did in fiscal 2008.
Monday's hearing at the Statehouse was called as part of an effort
to arrive at a consensus revenue estimate to guide lawmakers and
Gov. Deval Patrick's administration in constructing a state budget
for the next fiscal year.
In her testimony, Pitter projected that fiscal 2013 revenues would
increase $560 million to $683 million over fiscal 2012, a growth
rate of 2.7 percent to 3.2 percent.
The taxpayers foundation forecast revenues to increase 3.9 percent,
or $822 million, while another independent research group, the
Beacon Hill Institute at Suffolk University, came in with a slightly
more optimistic projection of 4.1 percent growth over the current
fiscal year.
All of the estimates call for a slower rate of growth from a year
ago.
Lawmakers and administration officials were also frequently reminded
that the forecasts are only projections and that Massachusetts
remains vulnerable to a host of economic factors that are slowing
the recovery worldwide.
"Uncertainty over federal policies, the immense overhang of federal
debt and the sovereign debt crisis in Europe will combine to dampen
further growth of the U.S. economy and, with it, the economy of
Massachusetts, said economist David Tuerck, who heads the Beacon
Hill Institute.
State House News Service
Monday, December 12, 2011
Slower job growth, Europe, Fed cuts seen as threat to tax receipts
By Kyle Cheney
Employment growth in Massachusetts will largely stagnate over the
next 18 months, sharply slowing the state’s recovery from a
recession, state revenue officials projected Monday.
Although job growth in Massachusetts will exceed the national rate,
according to Revenue Commissioner Amy Pitter, slowing job growth
adds to a litany of economic headwinds facing Gov. Deval Patrick and
legislative leaders.
Stalled job growth could also portend enormous political challenges
for incumbents in a 2012 election year in which lawmakers will seek
new two-year terms based largely on promises they made to reverse
years of surging unemployment.
The Department of Revenue disclosed its job projections at an annual
hearing convened by finance officials in the Patrick administration
and Legislature. Pitter, the revenue commissioner, estimated that in
the fiscal year that begins next July, Massachusetts will see
employment increase between 0.2 percent and 0.9 percent, a
relatively stagnant rate of growth.
In addition, Pitter warned that ongoing fiscal turmoil in Europe,
federal spending cuts and their impact on the Bay State economy are
clouding the economic crystal ball that officials rely on to make
tax collection assumptions needed to build next year’s state budget.
“In this environment, tax revenue forecasting continues to be a
difficult and a challenging task all across the country and at the
federal level” she said.
Pitter’s testimony was backed up by a panel of economic observers,
who warned lawmakers that trillions of dollars in spending cuts
triggered by Congress’s inability to forge a debt reduction deal
would disproportionately tag Massachusetts with losses in federal
research grants and defense contracts. In addition, one public
policy professor contended that an ongoing fiscal crisis in Europe
could particularly harm the state’s export industry, lessening
demand from Massachusetts’s European trading partners and
strengthening the U.S. dollar which would make American exports less
attractive.
Rep. Brian Dempsey, chairman of the House Ways and Means Committee,
labeled the challenges a “triple threat” as the Patrick
administration and lawmakers lay the groundwork for next year’s
state budget, due to be enacted by July 1, the start of fiscal year
2013. Based in part on testimony from the hearing, Dempsey will join
his Senate counterpart, Sen. Stephen Brewer, and the governor’s top
finance adviser, Jay Gonzalez, to agree on the amount of taxes
Massachusetts can rely upon to build the fiscal 2013 budget.
What the three officials heard at Monday’s hearing were stark
warnings that, even with an expected uptick in tax collections
ranging from 2.7 percent to 4.1 percent next fiscal year, required
spending on “non-discretionary” items like Medicaid, pension
obligations and debt service will swallow up all of the growth.
“Left unchecked, cost growth in non-discretionary spending will
likely outpace new revenue,” Brewer said.
The news left Gonzalez, the secretary of administration and finance,
and Brewer foreshadowing another year of budget cuts to
discretionary budget programs and, potentially, state aid to cities
and towns.
“It is difficult to see 2013 not requiring additional ‘budget
cuts,’” said Brewer at the outset of the hearing.
The officials also indicated they’re anticipating an automatic
income tax cut for Massachusetts residents beginning Jan. 1,
triggered by sharp revenue increases over the last year. The cut,
which will bring the tax rate to 5.25 percent from 5.3 percent,
falls far short of a voter-approved measure that called for reducing
the rate to 5 percent, but it would still result in $111 million to
$117 million in tax relief in fiscal 2013, revenue officials said.
EXPERT ADVICE
The hearing included more than an hour of testimony from expert
panels that sized up the economic challenges facing the state.
Barry Bluestone, a Northeastern University public policy expert,
immediately noted what others had hinted at during the four-hour
hearing: the experts often get it wrong.
“You should worry about any forecast you hear from any of us,” he
said, noting that projections of tax collections and the economic
factors that will influence them have been off the mark in recent
years. “I think we are approaching a new normal. Being able to think
about the future the way we thought about the past is going to be
very difficult to do, particularly given all of what you heard
here.”
Christian Weller, a public policy professor from UMass Boston, said
he doesn’t anticipate Massachusetts households approaching a
“sustainable level of debt” until 2016, when he said consumer demand
would pick up substantially.
“We have certainly avoided another recession, which we were worried
about earlier in the year,” he said. “We definitely need more policy
attention to the short-term.”
Michael Widmer, president of the Massachusetts Taxpayers Foundation,
estimated that the state would add a negligible number of jobs over
the next fiscal year. An uptick in income tax collections would
occur, he added, largely because of anticipated increases in wages
and salaries.
Although several of the experts projected increases in the amount of
capital gains taxes – revenue drawn from investment income – recent
policy enacted by the governor and lawmakers prohibits relying on
more than $1 billion in capital gains revenue in any particular
budget year. The remainder must be deposited in the state’s rainy
day account.
Gonzalez, Dempsey and Brewer all discussed replenishing that
account, which peaked at $2.3 billion in 2008 before the state
relied on the account – along with billions of dollars in federal
stimulus aid – to stave off deep budget cuts. However, Gonzalez told
reporters after the hearing that he doesn’t envision next year as
the year to begin rebuilding the fund, whose balance sits at about
$1.5 billion after recent deposits authorized by lawmakers and the
governor.
Gonzalez said he anticipates a “modest rainy day fund draw” next
fiscal year because the state is “not yet at full recovery.”
He also declined to indicate whether the governor will offer any
proposals to curtail tax breaks for certain industries, programs or
services, a change some lawmakers said they would consider as part
of next year’s budget. Rep. Ruth Balser (D-Newton) wondered whether
“some people have been getting an unfair advantage” as a result of
long-standing tax breaks that no longer serve their original public
purpose.
Gonzalez added that all options to balance next year’s budget should
be on the table, including cuts to local aid for municipalities.
“I can’t make any commitments with respect to local aid,” he said,
declining to estimate what the total gap between spending pressure
and anticipated revenue is expected to be.
After the hearing, Senate Minority Leader Bruce Tarr said the
revenue hearing would reinforce Republican efforts to “propose
specific and decisive actions in January that will respond to the
need to get people back to work in our state.”
“The testimony that we heard today proves that we must intensify our
efforts to seek reforms, identify efficiencies and create a better
business climate in Massachusetts,” Tarr said in a statement. “If
anything, the economic forecast reinforces the need to continue
focusing on achieving savings, setting spending priorities and
creating jobs.”
About $1.5 trillion in cuts are slated to be implemented over the
next decade as a result of Congress’s inability to reach consensus
on a debt reduction deal through a process known as sequestration.
Defense appropriations are also slated to be included among those
cuts. But not everyone is convinced that the federal government will
follow through with the trillions of dollars in cuts expected to be
triggered next year, including at least one member of the Bay
State’s Congressional delegation.
“I don’t think they will,” said U.S. Rep. Richard Neal, a
Springfield Democrat, at a Monday morning function in Boston’s
financial district. “I think it’s a good backdrop because of the
threat that’s involved … Sequestration’s a lousy way to run the
government, but the threat of sequestration might break the logjam.”
BY THE NUMBERS
Lawmakers and Gonzalez received four estimates of potential tax
receipts for fiscal 2013, all anticipating modest growth from the
state’s current revenue estimate, which was revised upwards in
October:
● The Department of Revenue
estimated the state would see tax collections grow 2.7 percent to
3.2 percent next fiscal year;
● Northeastern
University economist Alan Clayton-Matthews predicted 2.9 percent
growth;
● Widmer,
president of the Massachusetts Taxpayers Foundation, estimated 3.9
percent growth; and,
● David Tuerck,
head of the Beacon Hill Institute, estimated 4.1 percent growth.
All but Widmer estimated a revenue slowdown in fiscal 2013 from the
current fiscal year.
TREASURY REPORT
Treasurer Steven Grossman said the state Lottery, which he oversees,
would likely reap $905 million in profit this fiscal year – nearly
all of which supports aid to cities and towns. In fiscal 2013, he
said, profits would remain largely flat unless the Legislature
increases funding for the Lottery advertising budget.
If the agency’s advertising budget is increased to $5 million – up
from $2 million – profits would increase to about $916 million, he
said, adding that the bump in advertising revenue would be a trial
run to see whether it generates additional profits. If it works, he
said, the Lottery might seek a larger advertising budget in fiscal
2014.
“If it didn’t succeed,” he said, “we’ll be happy to fold our tent,
go home, and ask for less.”
Grossman said his office is eyeing putting “player-activated”
Lottery terminals at Logan Airport and in retail stores. He said the
Lottery also plans to roll out a new game, Lucky for Life, that he
said would replace Cash WinFall, a game that generated controversy
when it was discovered that certain players found a way to guarantee
substantial winnings.
Grossman added that he was unsettled last year when members of
then-Treasurer Tim Cahill’s team surprised lawmakers with an
announcement that they expected a decline in state Lottery revenues.
Grossman pledged to deliver a monthly letter to legislative leaders
and the Patrick administration about the Lottery’s performance.
Grossman added that a task force on “online gaming” would begin
meeting “as soon as we get some representation from the speaker, the
Senate president and the minority leaders of both bodies.” He said
the task force would hear testimony from experts about online poker
or lottery games and other forms of internet gambling.
“I think we have to attract a new generation of people, of
customers,” he said.
Grossman said he expected the task force to begin meeting early next
year. Grossman also said he anticipates seeking a “new generation”
of Lottery equipment during next year’s budget process, estimating
that he may seek $50 million for that equipment.
Sen. Patricia Jehlen (D-Somerville) wondered whether the focus on
maximizing lottery revenue was to the detriment of other areas of
the economy.
“Right now, it’s almost $700 per man, woman and child in the
commonwealth,” she said.
Grossman described himself as “libertarian” on the issue.
“I think that people have a right to spend their money the way they
want. They will whether I lecture them or not,” he said. “I want
people to gamble responsibly always, and some people would say
there’s a certain oxymoronic concept to that. I also want to let
people spend their money the way they want. They will anyhow.”
Jim Lamenzo, an actuary with the Public Employee Retirement
Administration Commission, said pension officials are eyeing the
prospect of lowering the expectations for the long-term return on
investment for the state’s $50 billion pension fund.
Fund overseers are legally required to seek 8.25 percent returns,
but Lamenzo said he’d prefer to reduce that to 8 percent. He called
8.25 percent “a tad high” but noted that reducing the assumption
would add hundreds of millions of dollars to the state’s unfunded
pension liability.
“In a perfect world, I think we try to move toward 8 percent,” he
said.
The Boston Herald
Tuesday, December 13, 2011
A Boston Herald editorial
Happy New Year indeed
It almost seems too good to be true — that taxpayers will actually
get a break from the state in the coming year. But then, of course,
we’ve all been waiting for it since, well, 2000.
Senate Ways and Means Chairman Stephen Brewer confirmed yesterday
that it looks like the state income tax will drop on Jan. 1 from the
current 5.3 percent to 5.25 percent. That will put between $111
million and $117 million back in the pockets of taxpayers in
calendar 2012.
Massachusetts voters gave themselves a tax cut (back down to 5
percent) at the ballot box in 2000. But legislators, of course, knew
better how to spend our money so in 2002 they came up with a scheme
to keep the rate at 5.3 percent but put in some economic triggers
that could eventually lower it (in increments of .05 percent) to
what voters wanted in the first place.
Frankly we thought it would never happen. It’s so very easy to be a
cynic here about tax cuts and legislative sleight of hand. But even
Revenue Commissioner Amy Pitter acknowledged yesterday that this tax
cut looks like a done deal — thus “lowering” state revenue
collections. (We love the way state officials always make that sound
like a bad thing.)
And even with sluggish job growth and a not-exactly perking along
economy, state revenues for fiscal 2013 (beginning July 1, 2012),
are likely to increase by around 3.9 percent, according to the
Massachusetts Taxpayers Foundation. The so-called science of revenue
estimating has become a pet peeve of Senate President Therese
Murray, who’d actually like to see a little more historical analysis
than the usual annual educated guesstimates. And she’s right on that
score.
But come New Year’s Day it’s at least nice to know the taxpayers
will have something to celebrate.
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
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