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CLT UPDATE
Wednesday, October 17, 2012
Another plot to stall our income tax rollback?
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Gov. Deval Patrick’s administration on Monday
ordered tighter controls on state spending and hiring but opted not
to revise its revenue estimate for the current fiscal year in the
face of lagging tax collections.
Jay Gonzalez, the state Secretary of
Administration and Finance, said in a letter to the governor and key
lawmakers that he believed the state would have enough revenue to
meet its budget obligations.
Tax collections in Massachusetts, while running
ahead of a year ago, fell $95 million short of benchmarks during the
first three months of the fiscal year that started July 1....
Among those risks: the costs of the legal crisis
stemming from allegations of mishandling drug evidence at a former
state Department of Public Health lab in Boston.
Gonzalez said it was his assumption that the
costs to the state of responding to the crisis would be taken from
the state’s so-called rainy day fund, or other ‘‘one-time
resources,’’ so as not to directly affect the budget’s bottom line.
Patrick told reporters Monday that he did not yet have an estimate
of how much the state would have to spend to deal with the fallout
from the investigation.
It was also possible that, by law, the state’s
income tax rate could automatically fall from 5.25 percent to 5.20
percent on Jan. 1, Gonzalez said, resulting in a loss of about $57
million in revenue for the final six months of fiscal 2013.
Associated Press
Monday, October 15, 2012
Mass. tightens spending after revenue misses mark
Last week we issued a friendly warning to
House Speaker Robert DeLeo, urging him not to go wobbly on the
issue of tax hikes. This week, amid news of sluggish state tax
receipts and a call from the Patrick administration for new
spending controls, we’d like to repeat that warning for everyone
on Beacon Hill....
Gonzalez ... raised the fact that the state
income tax might drop ever so slightly in January, thanks to a
trigger in state law tied in part to last year’s tax receipts.
Now, Gonzalez certainly has to account for
that tax cut possibility, which would “cost” the state $57
million this fiscal year.
But we know how some people on Beacon Hill
think. And those people shouldn’t get any clever ideas about
tinkering with that trigger.
Voters approved a rollback in the income tax
from 5.95 percent to 5 percent back in 2000, a vote that was
gutted by the Legislature when it froze the rate at 5.3 percent
in 2002. At that time lawmakers also added a mechanism for
additional reductions if revenues hit certain benchmarks. Last
year the rate went down from 5.3 percent to 5.25 percent; if
triggered again this year, it would drop to 5.2 percent.
OK, so it isn’t enough for taxpayers to
finance a beach house (maybe a beach towel). But it represents a
commitment to the taxpayers and it must be honored.
A Boston Herald editorial
Tuesday, October 16, 2012
Don’t get any ideas
Revenue Commissioner Amy Pitter today
announced that preliminary revenue collections for September
2012 totaled $2.204 billion, $8 million more than the state took
in last September, but $32 million below the monthly benchmark
based on the FY13 revenue estimate of $22.011 billion....
Tax collections for the first quarter of the
fiscal year total $5.080 billion, $15 million above those of a
year ago and are $95 million below the year-to-date
benchmark....
September sales tax collections totaled $416
million, up $11 million or 2.6 percent from a year ago, $5
million below benchmark.
Commonwealth of Massachusetts
Department of Revenue
October 3, 2012
September Revenue Collections Total $2.204 Billion
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Chip Ford's CLT
Commentary
Already the trial balloon is airborne in the
first step to again deny taxpayers a rollback of the 23-year old
"temporary" income tax hike of 1989.
The Commonwealth of Massachusetts again doesn't
think it can "afford" what 59 percent of the voters ordered the
state to do — but which the Legislature
"froze" two years later at 5.3 percent.
In 2003, when the voters demanded the rate
finally be restored to its historic 5 percent, it remained "frozen"
at 5.3 percent — where it remained
until this tax year. Last year, Beacon Hill pols allowed it to drop
by five-one-hundredths of one percent (0.05%), to 5.25 percent.
Though miniscule, this was the first reduction since it was "frozen"
over nine years before.
In the CLT Update of Dec. 13, 2011 ("Too
little too late, but we'll take it without thanks") I wrote:
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?
Gov. Patrick's Secretary of Administration and
Finance now estimates that reducing the income tax rate by another
five-one-hundredths of one percent to 5.20% would "cost" the state
$57 million in revenue. But already, in the first quarter of fiscal
year 2013 (July through September), the state has taken $15 million
more from us than it took in the first quarter of last fiscal
year. If it continues at this rate, the state will collect $60
million more than it did last year. After the miniscule
income tax reduction, that still leaves the state with $3 million
more than last year.
So what's the problem?
More Is Never Enough and never will be!
History of the 23-Years-and-Counting
"Temporary" Income Tax Hike
●
1989 — The "Temporary
18-month" Dukakis income tax hike was imposed, raising the
rate from 5% to 5.75% [DETAILS].
●
1990 — The state income tax
was again increased "temporarily," from 5.75 % to 6.25%.
●
1991 — Thanks to Gov.
Weld's veto threat, a reluctant Legislature dropped income
tax rate to 5.95%
●
2000 — Faced with our
income tax rollback ballot question, the Legislature passed
a phased-in income tax reduction to be implemented over 3
tax years: 5.85% in 2000; 5.80% in 2001; and 5.75% in
2002. This was done to head off our petition drive, but it
was made clear that the rate would not drop any further; so
we pursued the ballot campaign for the 5% rate.
●
2000 — CLT and Gov.
Cellucci put our income tax rollback on the November ballot;
voters approved it with 59% of the vote [DETAILS].
It reduced the 5.95% rate to 5.6% for tax year 2001; 5.3%
for 2002; and would return it to 5% for tax year 2003.
●
2002 — The Legislature
passed the largest tax increase in state history ($1.2
Billion), "froze" voters' income tax rollback mandate at
5.3% with economic "triggers" for future reductions.
●
2009 — The Legislature
passed the second-largest tax increase in state history
— $1 Billion
— which included hiking the
sales tax by 25% — from
5% to 6.25.
●
2011 — The state deigned to
pull its "trigger" — for the
first time in a nine years since thwarting the
voter's will — reducing the
income tax rate by 5/100s of one percent, lowering it to
5.25% for tax year 2012 [DETAILS].
State budget, FY1990:
$11 Billion
(Dollars adjusted for inflation:
$20.5 Billion)
State budget, FY2013:
$32.5 Billion
The Department of Revenue reported: "Tax
collections for the first quarter of the fiscal year total $5.080
billion, $15 million above those of a year ago and are $95 million
below the year-to-date benchmark...."
State revenue so far this fiscal year is coming
in "below benchmark." But a "benchmark" is fiction; merely an
estimated projection. The state "experts'" best-guess expected to
pull in $95 million more by now than it actually has collected
— and planned it into this fiscal
year's state budget. In other words, the Legislature and Governor
are spending it before they have it.
The initial state budget for fiscal year 2011 was
$27.6 Billion. For last fiscal year (FY12) it increased to
$30.6 Billion (a $3 Billion spending increase year-over-year).
Last July, the state budget adopted for this fiscal year (July
2012-June 2013) is $32.5 Billion (a $1.9 Billion spending
increase year-over-year).
$57 million in "lost revenue" to the state owed
to taxpayers is pocket change on Bacon Hill, a rounding error.
Bacon Hill should not even think about
stiffing us taxpayers of our five-one-hundredths of one percent
income tax reduction that is far, far too long overdue.
Remember in November when you vote.
CLT's 2½ PAC-endorsed legislative candidates for the 2012 election
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Chip Ford |
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Associated Press
Monday, October 15, 2012
Mass. tightens spending after revenue misses mark
By Bob Salsberg
Gov. Deval Patrick’s administration on Monday ordered tighter
controls on state spending and hiring but opted not to revise its
revenue estimate for the current fiscal year in the face of lagging
tax collections.
Jay Gonzalez, the state Secretary of Administration and Finance,
said in a letter to the governor and key lawmakers that he believed
the state would have enough revenue to meet its budget obligations.
Tax collections in Massachusetts, while running ahead of a year ago,
fell $95 million short of benchmarks during the first three months
of the fiscal year that started July 1.
Gonzalez, who is required to periodically review revenue estimates
during the year to determine if changes are needed, said he was
immediately imposing a cap at current levels on the number of
full-time state employees in executive branch agencies. He also said
agencies would face new spending limits and ordered department heads
to begin drawing up contingency plans in case future budget cuts are
needed.
‘‘Although I do not believe there is currently a sufficient basis to
revise the FY13 revenue estimates, I am mindful of a number of
potential risks that could subsequently require a downward revision
of such estimate,’’ Gonzalez wrote.
Among those risks: the costs of the legal crisis stemming from
allegations of mishandling drug evidence at a former state
Department of Public Health lab in Boston.
Gonzalez said it was his assumption that the costs to the state of
responding to the crisis would be taken from the state’s so-called
rainy day fund, or other ‘‘one-time resources,’’ so as not to
directly affect the budget’s bottom line. Patrick told reporters
Monday that he did not yet have an estimate of how much the state
would have to spend to deal with the fallout from the investigation.
It was also possible that, by law, the state’s income tax rate could
automatically fall from 5.25 percent to 5.20 percent on Jan. 1,
Gonzalez said, resulting in a loss of about $57 million in revenue
for the final six months of fiscal 2013.
Michael Widmer, president of the nonpartisan Massachusetts Taxpayers
Foundation, said he believed the administration was taking the right
approach.
‘‘I agree that we don’t have enough information at this point to
lower the (revenue) forecast, but I also agree there are lots of
warning signs,’’ Widmer said. ‘‘The administration is wise to take
these actions to squeeze spending in anticipate of having to lower
the forecast’’ in the future.
Recent reports have suggested that Massachusetts, which outperformed
the nation through most of the economic downturn, might be sliding
back a bit. The state has experienced three consecutive months of
slow or negative job growth, including a preliminary estimate of
4,800 jobs lost in August.
The Boston Herald
Tuesday, October 16, 2012
A Boston Herald editorial
Don’t get any ideas
Last week we issued a friendly warning to House Speaker Robert DeLeo,
urging him not to go wobbly on the issue of tax hikes. This week,
amid news of sluggish state tax receipts and a call from the Patrick
administration for new spending controls, we’d like to repeat that
warning for everyone on Beacon Hill.
Yes, receipts are slower than anticipated so far this fiscal year,
which began on July 1, but the bottom has hardly dropped out of the
state treasury.
Still, it is sensible of Patrick’s top budget aide to take steps to
control spending.
In a letter to Gov. Deval Patrick and legislative leaders,
Administration and Finance Secretary Jay Gonzalez said he would
immediately move to cap the number of full-time employees in state
agencies at present levels and require those agencies to draw up
plans for cuts should they become necessary. That’s smart planning.
Gonzalez also drew attention in the letter to the possibility of
state revenues dropping off the federal “fiscal cliff.” And he
raised the fact that the state income tax might drop ever so
slightly in January, thanks to a trigger in state law tied in part
to last year’s tax receipts.
Now, Gonzalez certainly has to account for that tax cut possibility,
which would “cost” the state $57 million this fiscal year.
But we know how some people on Beacon Hill think. And those people
shouldn’t get any clever ideas about tinkering with that trigger.
Voters approved a rollback in the income tax from 5.95 percent to 5
percent back in 2000, a vote that was gutted by the Legislature when
it froze the rate at 5.3 percent in 2002. At that time lawmakers
also added a mechanism for additional reductions if revenues hit
certain benchmarks. Last year the rate went down from 5.3 percent to
5.25 percent; if triggered again this year, it would drop to 5.2
percent.
OK, so it isn’t enough for taxpayers to finance a beach house (maybe
a beach towel). But it represents a commitment to the taxpayers and
it must be honored.
Commonwealth of Massachusetts
Department of Revenue
For Immediate release - October 3, 2012
September Revenue Collections Total $2.204 Billion
Revenue Commissioner Amy Pitter today announced that preliminary
revenue collections for September 2012 totaled $2.204 billion, $8
million more than the state took in last September, but $32 million
below the monthly benchmark based on the FY13 revenue estimate of
$22.011 billion. Although withholding performed a bit better than
expected, it was more than offset by the shortfall in sales, estate
tax, income payments with bills and returns, as well as higher than
expected corporate and business refunds.
Tax collections for the first quarter of the fiscal year total
$5.080 billion, $15 million above those of a year ago and are $95
million below the year-to-date benchmark. Commissioner Pitter said
almost half of the shortfall can be attributed to a shift in
withholding payments from July to the previous fiscal year in June.
“Although close to half of the below benchmark tax collection
performance is due to the time shift of payments, tax collection
performance through the first quarter of FY13 is slightly below the
budgetary forecast,” said Commission Pitter. “Over the next few
days, we will be further analyzing tax collection results and
updated economic forecasts in order to help the Administration
determine whether they should continue to rely on the current FY13
tax revenue projection for the balance of the fiscal year.”
Income tax collections for the month of September totaled $1.253
billion, up $65 million or 5.5% percent, $8 million above the
monthly benchmark. Withholding collections were up $50 million, or
6.5 percent, $24 million above benchmark. Income tax cash estimated
payments were up $19 million, or 4.7 percent, $7 million below
benchmark. Income tax payments with returns were down $3 million or
10.5 percent, $9 million below benchmark, while income tax cash
refunds were up $3 million or 16.7 percent, $3 million more than
forecast.
September sales tax collections totaled $416 million, up $11 million
or 2.6 percent from a year ago, $5 million below benchmark.
September corporate/business tax collections totaled $387 million,
down $56 million or 12.7 percent, $18 million below benchmark.
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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
Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
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