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CLT UPDATE
Monday, December 16, 2013
Another Tax-on-Driving Proposal Even As
Revenue Climbs
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There’s good news from the state Department of
Revenue: Tax collections in 2013 were high enough to trigger a
reduction in the state income tax rate, which will drop from 5.25
percent down to 5.2 percent for the tax year that begins Jan. 1.
Now, the fact that a cut of five one hundredths
of 1 percent is cause for celebration speaks volumes about the
strange fiscal world we live in. Bay State taxpayers don’t quite
have to offer up their first-born to score a tax cut, but it sure
can feel that way sometimes.
Recall that the voters of the commonwealth
approved a ballot question in 2000 that would have repealed a
“temporary” increase in the income tax, bringing the rate down from
5.95 percent to 5 percent by 2003.
But Beacon Hill famously (rather, infamously)
balked at the full rollback, and in 2002 froze the rate at 5.3
percent. Voters and taxpayer advocates were apoplectic, so lawmakers
also adopted a series of economic triggers that could bring the rate
down in tiny, future increments.
More than a decade later, the rate has been
reduced all of one-tenth of 1 percent — from 5.3 percent now down to
5.2 percent. While any reduction is a hopeful sign of economic
growth, we’ll hold off on ordering champagne....
A Boston Herald editorial
Monday, December 9, 2013
Taxpayers get a ‘break’
Massachusetts taxpayers received some good news
Wednesday — the state is in great financial shape, triggering an
automatic, though slight, reduction in the income tax rate.
That’s good, but we can think of something that
would be much better — lowering the sales tax....
Today it’s a different world. The state is
rolling in the dough. It’s collected $359 million more than it
anticipated from July through November, and the trend just keeps
surging upward. Indeed, November was the tax-fattest month of all,
with collections exceeding expectations by 10.6 percent.
There’s so much money rolling in, the state is
forced to automatically reduce the income tax from its current 5.25
percent rate, down to 5.2 percent. Happy days are here again.
A Salem News editorial
Friday, December 6, 2013
Lawmakers should reduce sales tax
The Telegram & Gazette
Friday, December 6, 2013
Editorial cartoon by David Hitch
Massachusetts could follow close behind Oregon in
pioneering the vehicle-miles-traveled alternative method of taxing
drivers, if a bill before the Transportation Committee that is
backed by a group of liberal legislators becomes law.
Sponsored by Rep. Carl Sciortino, a Medford
Democrat, and Tricia Farley-Bouvier, a Pittsfield Democrat, the bill
(H 3142) would direct the Department of Transportation to launch a
pilot program with at least 1,000 volunteers.
The method of taxation has been knocked by
Congressman Michael Capuano, a Somerville Democrat, among others
because of concerns it would provide information to the government
about each vehicle’s travels....
[Rafael Mares, staff attorney at the
environmental group Conservation Law Foundation] said the technology
would allow for incentives for fuel efficient cars to be factored
into the VMT system, a meter could show how much a driver is
spending on the road, and the system could be adjusted based on a
driver’s income.
“That’s impossible for the gas tax,” Mares said,
about the potential for income adjustment.
State House News Service
Tuesday, December 10, 2013
Miles-traveled tax still in mix as lawmakers urge pilot program
Local legislators have given mixed but
predominantly negative reviews to a proposal to charge fees per mile
a person drives as a way to bring in enough revenue to pay for
infrastructure and transportation at a time when money collected
from the gas tax has fallen.
Proponents believe it will create new revenue for
state programs and help clean-air initiatives. Opponents see it as
an invasion of motorists' privacy, since a tracking device would be
attached to vehicles, and as an unnecessary new tax.
"I'm truly in favor of exploration and
experimentation," said state Sen. Mike Barrett, D-Lexington, whose
district extends from Chelmsford to Weston. "With respect to any tax
system, we want it to be both fair and effective."
Rep. Jim Lyons, a Republican from Andover, said
he's focused on rolling back taxes, not potentially adding more.
"I have no interest in supporting additional
taxation or ways of taxing hard-working families of Massachusetts,"
Lyons said. "I see it as just one more way to tax an already
overtaxed population." ...
The bill seeks to launch a pilot program that
would charge a fee for each mile a person drives, instead of or in
addition to the gas tax. Testing would include surveying public
acceptance of the technology, collection of payments, and the
ability to ensure drivers' privacy while their locations are
tracked. Costs aren't yet determined.
Massachusetts raised the gas tax by 3 cents per
gallon this year and voted to tie future increases to inflation. But
at a time when total miles driven have fallen and cars use gas more
efficiently, revenue from the gas tax isn't generating enough money
to cover the costs of a backlog of transportation and infrastructure
needs.
Jamie Eldridge, a Democratic senator from Acton,
compared the proposed fee to taxes on cigarettes meant in part to
discourage a harmful activity, in this case pollution. Eldridge also
spoke of the need for innovative solutions to fiscal issues, but
expressed concern about privacy in a program in which a driver's
location is tracked.
The proposal has caught the attention of groups
like the Massachusetts Taxpayers Foundation and AAA.
The Taxpayers Foundation generally supports the bill as an
alternative to the traditional gas tax, President Michael Widmer
said. Gas-tax revenue has fallen as infrastructure repair and
replacement needs have risen, he said, and "something's got to
give."
The Lowell Sun
Thursday, December 12, 2013
Mileage tax plan has some pols braking
Privacy issues, economy cited by bill's opponents
State officials have begun assembling what
will be Gov. Deval L. Patrick's final state budget with
expectations of a steady increase in tax revenues next year that
could be undercut by rising costs for health care, education and
social programs as well as uncertainty over federal funding.
According to a budget analysis being offered
by state Secretary of Administration and Finance Glen Shor at
pre-budget planning hearings, a growing allocation of state
funds for health care subsidies and state employee insurance now
account for 54 cents of every state dollar in the budget.
When spending on social service programs,
education, debt service and pensions are added, only 13 cents on
the dollar are available for all other needs including courts,
police, transportation, housing, prisons, economic development
and environmental programs....
A chart in Mr. Shor's budget overview shows
state revenues that fell to $18.2 billion in 2009, grew to $22.1
billion — an amount higher than pre-recession levels — in fiscal
2013.
The Telegram & Gazette
Wednesday, December 11, 2013
State budget plan under microscope: Social costs on the rise
State tax collections this fiscal year could
grow by as much as 4.8 percent, up from the 3 percent growth
rate used by lawmakers and the Patrick administration when they
built the $34 billion fiscal 2014 budget, according to an
updated Department of Revenue estimate.
In testimony prepared for lawmakers who are
starting fiscal 2015 budget deliberations, DOR Commissioner Amy
Pitter concluded fiscal 2014 collections may surpass original
estimates by between $272 million and $383 million....
Tax revenue growth in fiscal 2015 will
accelerate to between 4.3 percent and 5.2 percent, according to
Pitter’s testimony....
The Beacon Hill Institute at Suffolk
University on Wednesday predicted fiscal 2014 state tax
collections will grow 5.3 percent and tax receipts in fiscal
2015 will surge by 7.9 percent, driven by growth in personal
income....
The Massachusetts Taxpayers Foundation
estimates state tax revenues will grow by 4.7 percent in fiscal
2015, a rate of growth that the foundation said was below the
rates of previous economic recoveries. MTF estimates fiscal 2014
tax collections will reach $23.27 billion, or $470 million above
the forecast used to build the state budget.
Foundation President Michael Widmer predicted
increases in “non-discretionary spending” in areas like employee
pensions, debt service and Medicaid, in addition to expanded
outlays on transportation, will consume “most” of the $1.1
billion in predicted new tax revenues....
Under Pitter’s forecast, the Legislature and
the Patrick administration would have $993 million to $1.2
billion in new tax collections available for spending next
fiscal year.
State House News Service
Wednesday, December 11, 2013
Experts see rising tax collections, continued economic growth
Looking for some comic relief this holiday
season? Then don’t miss today’s scheduled revenue hearings in
the bowels of the Massachusetts State House.
Rarely does one have the opportunity to view
so many rare and exotic creatures — in this case state lawmakers
— in their natural environment. But once a year our elected few
assemble in the cavernous Gardner Auditorium to slouch, snooze
and gaze into space as a lineup of usual suspects — in this case
lobbyists and economists — drone on about why the state’s tax
collections are heading to infinity and beyond. It is an annual
ritual of people-watching at its finest.
Of course, lost in the auditorium’s sea of
turquoise carpeting is any notion of seriousness among attending
legislators and their hand-picked presenters. Sure, there will
be plenty of head nodding and looks of consternation as speaker
after speaker peers into his or her crystal ball to say why tax
revenue will rise, fall or move sideways in the months ahead.
These growth forecasts are always conveniently refined down to
the last basis point....
Take it from someone who has seen first-hand
how this sausage is made. In a former life I warmed a seat at
the Massachusetts Taxpayers Foundation — a perennial presenter
at the state’s revenue hearing — and witnessed a final
“forecast” get more or less plucked out of thin air before being
offered as a bona fide revenue prediction for the months ahead.
Lawmakers were no worse for the wear.
That’s because these predictions rarely land
near their targets. In fiscal 2008 the consensus estimate was 5
percent below actual collections. The following year, when the
downturn struck, the consensus overshot actual receipts by 15
percent, or nearly $3 billion. The ensuing years haven’t been
much better, including for the current fiscal year; collections
through November were up 9.7 percent, versus a consensus
forecast of 3.9 percent for all of fiscal 2014.
The Boston Business Journal
Wednesday, December 11, 2013
Bring in the frowns: It's revenue-day at the State House!
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Chip Ford's CLT
Commentary
The Salem News editorial ("Lawmakers should
reduce sales tax") seemed to overlook a very important principal. I
wrote a response to the paper:
Rolling back the sales tax to 5% would be
good ― too
― but the priority remains
keeping the promise the Legislature made when it
"temporarily" hiked the income tax in 1989.
Twenty-five years after we were promised by the Legislature
and then-Gov. Michael Dukakis that their tax hike would be
"only temporary," last for "only 18 months," and be used
"only to pay down the unexpected debt" (See "The
Promise" in their own words), their promise remains
unkept, proven false ― a lie 25-years ago.
The
voters mandated by 59% on the 2000 ballot that the
income tax rate be rolled back to its historic 5%
― only to again be thwarted by
Bacon Hill when the Legislature "froze" it at 5.3% in 2002.
25 years of a broken promise is too long. A dozen years of
voters and taxpayers suffering the Beacon Hill middle-finger
salute after they demanded the rate be returned to 5% by
2003 is an outrage.
Roll back the "temporary" income tax rate
― as voters demanded
― then roll back the sales tax
too.
The
sales tax was hiked from 5% to 6.25% in 2009, four years ago.
It should be rolled back, restored to 5%. But the "temporary"
income tax hike was imposed twenty-five years ago and its
rollback is unconscionably overdue. It should be rolled back to 5%
immediately ― and then
― with revenue coming in almost faster
than can be spent (never fear that ever happening)
― we can work on rolling back the sales tax.
We don't agree with the term "automatic"
when referring to the occasional and miniscule five one-hundredths of one percent income
tax reduction. It is not "automatic"
― it is based on an arcane formula
devised by the Legislature in 2002 when it thwarted the voters'
mandate that it continue to be rolled back to 5 percent.
Barbara Anderson and others have been questioned by
reporters about why we support "automatic" tax cuts but not
"automatic" (gas) tax hikes. We've explained the above
to them: We don't support automatic tax hikes,
nor did or do we support the automatic pay raises for
legislators. Making laws automatic is becoming a pernicious
trend on Beacon Hill. The Legislature is now looking at
increasing the minimum-wage law and making future increases
"automatic." If legislators want something, let them vote out
in the open and on the record to achieve it. That is why they're elected
― and receive those automatic pay
raises and much more from us taxpayers.
It's hard to add much to "Bring in the frowns:
It's revenue-day at the State House!" by Craig Doulas in the Boston
Business Journal. CLT has been challenging the so-called
Massachusetts Taxpayers Foundation ―
it's mission and its prognostications ―
for decades. (See:
So-Called Massachusetts Taxpayers Foundation: The Fat-Cats' Trojan
Horse)
In a Boston Herald report of Jul. 31, 1991,
"Tax
group's $ forecast is hardly a sure bet", Barbara was quoted:
"I could do a better job than the Taxpayers Foundation with my
hand-held pocket calculator." In a
news release on Jan. 22, 2002, CLT issued a challenge to MTF:
"So-called Mass. Taxpayers Foundation: How accurate is it ...
this time? CLT challenges MTF: Put last two decades of revenue
projections on your website."
Financially backed by the
largest banks, insurance and other corporations and institutions in
the commonwealth, MTF has almost always opposed tax cuts for average
taxpayers while advocating them for its fat-cat membership. (E.g., see
its support for the proposed Vehicle-Miles Traveled tax in the Lowell
Sun report.) According to
its 2011 filing with the IRS, from its net assets of $2,687,921, MTF
president Michael Widmer's compensation alone ($431,929) was more
than twice as much as CLT's entire annual operating budget.
In his BBJ article, Craig Doulas summed it up:
"Take it from someone who has seen first-hand how this sausage is
made. In a former life I warmed a seat at the Massachusetts
Taxpayers Foundation — a perennial presenter at the state’s revenue
hearing — and witnessed a final “forecast” get more or less plucked
out of thin air before being offered as a bona fide revenue
prediction for the months ahead."
Or as Barbara observed two decades ago: "I
could do a better job than the Taxpayers Foundation with my hand-held
pocket calculator."
It can't but help but make me recognize how overpaid
and over-valued Michael Widmer is ― or
conversely, how underpaid and under-valued we are at CLT,
which has saved taxpayers billions.
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Chip Ford |
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The Boston Herald
Monday, December 9, 2013
A Boston Herald editorial
Taxpayers get a ‘break’
There’s good news from the state Department of Revenue: Tax
collections in 2013 were high enough to trigger a reduction in the
state income tax rate, which will drop from 5.25 percent down to 5.2
percent for the tax year that begins Jan. 1.
Now, the fact that a cut of five one hundredths of 1 percent is
cause for celebration speaks volumes about the strange fiscal world
we live in. Bay State taxpayers don’t quite have to offer up their
first-born to score a tax cut, but it sure can feel that way
sometimes.
Recall that the voters of the commonwealth approved a ballot
question in 2000 that would have repealed a “temporary” increase in
the income tax, bringing the rate down from 5.95 percent to 5
percent by 2003.
But Beacon Hill famously (rather, infamously) balked at the full
rollback, and in 2002 froze the rate at 5.3 percent. Voters and
taxpayer advocates were apoplectic, so lawmakers also adopted a
series of economic triggers that could bring the rate down in tiny,
future increments.
More than a decade later, the rate has been reduced all of one-tenth
of 1 percent — from 5.3 percent now down to 5.2 percent. While any
reduction is a hopeful sign of economic growth, we’ll hold off on
ordering champagne.
Some will balk at the “cost” of the pending tax cut and the impact
on spending, and we invite those people to peruse state tax
collections five months into fiscal 2014. According to DOR, actual
tax collections so far this year are $766 million over the same
period last year — and $359 million above benchmarks. In November
alone, tax collections were 10.6 percent higher than in November
2012.
Hey, at this rate we may score ourselves another five one hundredths
of 1 percent tax cut next year, too.
The Salem News
Friday, December 6, 2013
A Salem News editorial
Lawmakers should reduce sales tax
Massachusetts taxpayers received some good news Wednesday — the
state is in great financial shape, triggering an automatic, though
slight, reduction in the income tax rate.
That’s good, but we can think of something that would be much better
— lowering the sales tax.
Taxpayers may recall that in the dire days of 2009, when the economy
was in recession, the real estate boom had gone bust and thousands
of people were laid off, the Legislature deemed fit to enact tax
hikes to make up for lost revenue. Among them was a 25 percent
increase in the sales tax, boosting it from 5 percent to 6.25
percent. There was some talk at the time that this was a temporary
measure, but that was quickly dismissed as idle talk.
Today it’s a different world. The state is rolling in the dough.
It’s collected $359 million more than it anticipated from July
through November, and the trend just keeps surging upward. Indeed,
November was the tax-fattest month of all, with collections
exceeding expectations by 10.6 percent.
There’s so much money rolling in, the state is forced to
automatically reduce the income tax from its current 5.25 percent
rate, down to 5.2 percent. Happy days are here again.
But not so much if you are elderly and living on a tight budget, or
if you are struggling on a low income. The sales tax remains at 6.25
percent, one of the higher rates in the nation (there are 12 states
with rates higher than 6.25 percent).
It’s well known and well documented that the sales tax is one of the
most regressive taxes imposed on people. It hits the poor and
low-income workers the hardest. Most necessary commodities, with the
exception of food and clothing, are subject to sales tax. It is an
enormous and unfair burden on the poor and those struggling with low
incomes. Republicans have tried, unsuccessfully, to pare back the
rate. Where are our Democratic leaders, the ones who tell us that
they’re for the working families?
We have no doubt that once the real estate market catches fire
again, the same handwringing over “affordability” for lower-income
people will occur as it did in the boom times of the mid-2000s.
Here’s an opportunity for someone, right now, to show that they can
do something more than wring their hands for the poor.
The sales tax is also a burden for hundreds of small businesses in
our region that are trying to compete with “tax-free” New Hampshire.
It’s one more impediment to their efforts to succeed. We should be
helping them to succeed. A strong local economy is the foundation of
a healthy and financially robust community.
We don’t see anyone rushing forward to reduce the sales tax. Someone
should. Hopefully, it will be some of our local representatives and
senators, who have a front-row seat on the sales tax issue.
State House News Service
Tuesday, December 10, 2013
Miles-traveled tax still in mix as lawmakers urge pilot program
By Andy Metzger
Massachusetts could follow close behind Oregon in pioneering the
vehicle-miles-traveled alternative method of taxing drivers, if a
bill before the Transportation Committee that is backed by a group
of liberal legislators becomes law.
Sponsored by Rep. Carl Sciortino, a Medford Democrat, and Tricia
Farley-Bouvier, a Pittsfield Democrat, the bill (H 3142) would
direct the Department of Transportation to launch a pilot program
with at least 1,000 volunteers.
The method of taxation has been knocked by Congressman Michael
Capuano, a Somerville Democrat, among others because of concerns it
would provide information to the government about each vehicle’s
travels.
“We take an opportunity to take a look at a whole broad range of
things that I think you need to build support so that people feel
comfortable with,” Transportation Committee Senate Chairman Tom
McGee told the News Service. He said, “I don’t have really a
position right now on what we’re going to do on the committee on the
bill, but I think it was really a healthy discussion today.”
McGee said he visited Oregon, which he said underwent a limited
pilot program for the new taxation system and is set to expand the
pilot. In 2012, an Oregon state official told the News Service the
state had been seeking a vehicle miles traveled tax for a decade.
Rafael Mares, staff attorney at the environmental group Conservation
Law Foundation, said the miles could be measured with a variety of
privacy settings, and said Oregon uses various zones rather than
pinpointing a driver’s location: a heavily congested area with
public transit, where the tax is greater; areas without public
transit access where the miles are cheaper, and out-of-state, where
the tax is not applied.
“The purpose of this study is to find out exactly that: ‘Can it
protect people’s privacy?’ ” Mares said to the committee. “Can it be
a reliable technology and can there be public acceptance?”
Rep. Gailanne Cariddi, a North Adams Democrat, said people in her
district often drive to work in New York and Vermont.
“They’re really concerned about something like this,” Cariddi said.
She said, “They might be gassing up in New York.”
Rep. Tim Madden, a Nantucket Democrat, and Rep. Chris Walsh, a
Framingham Democrat who signed onto the bill, also reported hearing
from constituents concerned with the proposal. Walsh suggested
billing the program as similar to the Fast Lane transponder system
that lets drivers breeze through tolls.
Farley-Bouvier and Mares stressed that the bill would create a
voluntary pilot program, and said that participants would not pay
any more than they currently pay under the current gas tax.
The gas tax, which was increased by 3 cents this year and tied to
inflation, has been losing its ability to fund the roads even as the
wear and tear has increased over the years, according to Mares.
“Since 1980 fuel consumption has gone down by 50 percent while
vehicle miles traveled have doubled,” said Mares, who said “that’s a
great thing.”
Mares said the technology would allow for incentives for fuel
efficient cars to be factored into the VMT system, a meter could
show how much a driver is spending on the road, and the system could
be adjusted based on a driver’s income.
“That’s impossible for the gas tax,” Mares said, about the potential
for income adjustment.
The Lowell Sun
Thursday, December 12, 2013
Mileage tax plan has some pols braking
Privacy issues, economy cited by bill's opponents
By Grant Welker
Local legislators have given mixed but predominantly negative
reviews to a proposal to charge fees per mile a person drives as a
way to bring in enough revenue to pay for infrastructure and
transportation at a time when money collected from the gas tax has
fallen.
Proponents believe it will create new revenue for state programs and
help clean-air initiatives. Opponents see it as an invasion of
motorists' privacy, since a tracking device would be attached to
vehicles, and as an unnecessary new tax.
"I'm truly in favor of exploration and experimentation," said state
Sen. Mike Barrett, D-Lexington, whose district extends from
Chelmsford to Weston. "With respect to any tax system, we want it to
be both fair and effective."
Rep. Jim Lyons, a Republican from Andover, said he's focused on
rolling back taxes, not potentially adding more.
"I have no interest in supporting additional taxation or ways of
taxing hard-working families of Massachusetts," Lyons said. "I see
it as just one more way to tax an already overtaxed population."
State Rep. Marc Lombardo, R-Billerica, said that in addition to
opposing new taxes, he also dislikes the proposal to invade
residents' privacy by installing a chip in their car.
"I'm adamantly opposed to it," Lombardo said. "We just had a $500
million tax increase led by Democrats, and in 2009 we had a
sales-tax increase, and I think people are just saying enough. I
think this is just one more way for Beacon Hill to make a grab at
people's wallets."
The bill seeks to launch a pilot program that would charge a fee for
each mile a person drives, instead of or in addition to the gas tax.
Testing would include surveying public acceptance of the technology,
collection of payments, and the ability to ensure drivers' privacy
while their locations are tracked. Costs aren't yet determined.
Massachusetts raised the gas tax by 3 cents per gallon this year and
voted to tie future increases to inflation. But at a time when total
miles driven have fallen and cars use gas more efficiently, revenue
from the gas tax isn't generating enough money to cover the costs of
a backlog of transportation and infrastructure needs.
Jamie Eldridge, a Democratic senator from Acton, compared the
proposed fee to taxes on cigarettes meant in part to discourage a
harmful activity, in this case pollution. Eldridge also spoke of the
need for innovative solutions to fiscal issues, but expressed
concern about privacy in a program in which a driver's location is
tracked.
The location of a vehicle should be used only to figure out a bill,
he said. "That would be extremely important."
The miles-traveled fee would cover the two objectives, Barrett said:
create revenue and cut down on greenhouse gas-causing emissions from
vehicles. Barrett supported the 3-cent increase and signed on to the
miles-traveled bill. In fact, he said, even the 3-cent increase is
not enough to cover transportation needs, and the state needs to
find new ways to create revenue.
"The private sector has to innovate to stay current, and so does the
public sector," he said.
Other legislators cited the potential for privacy violations.
"Anytime you talk about monitoring where people are going and
monitoring where they are, privacy questions come into play for me,"
said Jennifer Flanagan, a Democratic senator whose district includes
Fitchburg and Leominster. Flanagan said she wasn't sure whether she
supports the proposal.
Rep. Jim Arciero, a Westford Democrat who sits on the revenue
committee, cited privacy concerns and said he's concerned about
whether the miles-traveled fees would be in addition, to, or
replacement of, the existing gas tax. He said he doesn't support the
proposal.
"I think a lot of folks would be uncomfortable with providing all
their information to the state, and what they do and how they do
it," he said. "That is something that needs to be looked at."
Rep. Kevin Murphy, a Lowell Democrat, said the fees wouldn't be fair
for those with longer commutes to work. "With the job market,
commutes are getting longer and longer than in the old days," he
said.
The fee would also unfairly burden those who don't have the multiple
transportation options available to those closer in to Boston, said
Lowell Democratic Rep. David Nangle.
"And now you're going to have the government tracking your
location?" he said. "Enough is enough. No."
Sen. Eileen Donoghue, D-Lowell, said she was not familiar with the
proposal and wants to study it further before making up her mind,
but she has immediate concerns about raising taxes to pay for
infrastructure.
"I would be very concerned about additional taxes," Donoghue said.
"We just did raise the gas tax for that purpose (infrastructure)."
Others were more strongly opposed.
Tom Golden, a Democratic representative from Lowell, said he "cannot
wait to vote against" the bill.
"People are already taxed, for the gas tax. Period. That's it," he
said. "There really is nothing else."
Democrat Jim Miceli, a Wilmington representative, said he sees the
proposed fee as a penalty against those who have to drive to work
and called it "a bad idea whose time has never come."
"Why should you be penalized because you're going out to earn a
living?" he said. "I just don't think this makes any sense
whatsoever. It's the bureaucrats who feel that, 'let's see if
there's another way we can absorb some cash and take it out of the
pockets of the working middle class.' "
Miles-traveled fees have been tested in Oregon and in 12 cities
nationwide, according to the federal Department of Transportation.
The proposal has caught the attention of groups like the
Massachusetts Taxpayers Foundation and AAA.
The Taxpayers Foundation generally supports the bill as an
alternative to the traditional gas tax, President Michael Widmer
said. Gas-tax revenue has fallen as infrastructure repair and
replacement needs have risen, he said, and "something's got to
give."
"The concept of doing a pilot makes sense to me," he said.
A spokeswoman for AAA said the agency is mindful of privacy concerns
and wants to be sure a solution is "fair and equitable."
"Given the gaping holes in transportation funding here in
Massachusetts and nationally, AAA believes all options have to be
considered and on the table," spokeswoman Mary Maguire said.
Sun staff reporters Katie Lannan and Robert Mills contributed to
this report.
The Telegram & Gazette
Wednesday, December 11, 2013
State budget plan under microscope: Social costs on the rise
By John J. Monahan
State officials have begun assembling what will be Gov. Deval L.
Patrick's final state budget with expectations of a steady increase
in tax revenues next year that could be undercut by rising costs for
health care, education and social programs as well as uncertainty
over federal funding.
According to a budget analysis being offered by state Secretary of
Administration and Finance Glen Shor at pre-budget planning
hearings, a growing allocation of state funds for health care
subsidies and state employee insurance now account for 54 cents of
every state dollar in the budget.
When spending on social service programs, education, debt service
and pensions are added, only 13 cents on the dollar are available
for all other needs including courts, police, transportation,
housing, prisons, economic development and environmental programs.
State legislators will hear from economists Wednesday on projections
for economic growth to plan for state revenue increases for the
fiscal year that begins July 1, 2014. Those revenue estimates will
be used to set a base line for affordable spending.
A chart in Mr. Shor's budget overview shows state revenues that fell
to $18.2 billion in 2009, grew to $22.1 billion — an amount higher
than pre-recession levels — in fiscal 2013.
Senate Ways and Means Chairman Stephen M. Brewer, D-Barre, who has
presided over tight state budgeting since the 2008 recession, said
an expected increase in revenues from economic growth will be a
positive factor in working out next year's budget.
But, he said, uncertainty over federal funding, pockets of
continuing high unemployment and rising fixed costs could create a
challenge to his hopes to increase aid for home elder care, veterans
services, and workforce training. He said lawmakers will also try to
increase higher education funding enough to avoid tuition increases
at state colleges and universities next year.
"What we are dealing with are a number of uncertainties in
Washington. If we don't get a grand bargain (on the federal budget)
soon, we could see a second year of sequestration," Mr. Brewer said
of the across-the-board automatic federal budget cuts that could go
into effect again next year without congressional agreement on a
debt and budget deal.
While the state hiked the gas tax 3 cents this year, Mr. Brewer
said, "Heck no," when asked if any tax hikes may be sought next
year. In fact, he said, revenues were adequate to provide an
automatic cut in the state income tax rate from 5.25 to 5.2 percent
this month, a cut he said he supports.
He said the state dealt with a loss of a variety of federal funds
under the current year sequestration cuts that amounted to $85
billion nationally, using one-time fixes and adjustments. A second
year of sequestration, he said, would likely take a deeper toll on
state services. Moreover he said with half the sequestration cuts in
defense, the sector of the state's economy dependent on military
base operations and defense contracts could take another hit.
Mr. Brewer said while the state is looking to better control health
care costs, those efforts have to be balanced with a recognition of
the jobs provided by the medical industry and hospitals.
"We understand our providers, our hospitals, are also some of our
largest employers and we want to make sure we are thoughtful about
health care cost containment, so that we are not doing harm to those
regional economic engines," Mr. Brewer said. Adopting a medical
ethics slogan, he said his approach to health care funding will be,
"Do no harm".
Mr. Shor cited numerous reforms over the last six years that have
improved the state's budget situation, including pension reforms to
save $5 billion over 30 years; transportation agency consolidation
and employee benefit reforms that have saved $500 million to date;
replenishment of the rainy day reserve fund to $1.5 billion, one of
the highest in the nation; and credit rating improvements that have
reduced future debt service by $100 million over the next 30 years.
He said the governor continues to pursue four strategic initiatives
likely to be reflected in his final budget proposals. They are: job
stimulation, control of health care costs for government and
business; elimination of the academic achievement gap for lower
income and minority students; and reducing urban and youth violence.
The governor expects to file his budget with the Legislature no
later than Jan. 22.
State House News Service
Wednesday, December 11, 2013
Experts see rising tax collections, continued economic growth
By Michael Norton and Matt Murphy
State tax collections this fiscal year could grow by as much as 4.8
percent, up from the 3 percent growth rate used by lawmakers and the
Patrick administration when they built the $34 billion fiscal 2014
budget, according to an updated Department of Revenue estimate.
In testimony prepared for lawmakers who are starting fiscal 2015
budget deliberations, DOR Commissioner Amy Pitter concluded fiscal
2014 collections may surpass original estimates by between $272
million and $383 million. Administration officials have previously
warned that non-tax revenues might miss targets by $150 million.
Tax revenue growth in fiscal 2015 will accelerate to between 4.3
percent and 5.2 percent, according to Pitter’s testimony. Improved
economic fundamentals, including the housing market, and investments
decisions earlier this year in response to federal tax law changes
had caused tax collections to improve “significantly” in fiscal 2013
and over the first five months of fiscal 2014, Pitter reported.
The Beacon Hill Institute at Suffolk University on Wednesday
predicted fiscal 2014 state tax collections will grow 5.3 percent
and tax receipts in fiscal 2015 will surge by 7.9 percent, driven by
growth in personal income.
“Both the U.S. and Massachusetts economies have survived the fiscal
cliff and the government shutdown,” institute director David Tuerck
said in a statement. “There is uncertainty at the federal level over
the effects of Dodd-Frank, the Affordable Care Act, and eventual
tapering of federal reserve policy. But the continued capacity of
Massachusetts to outperform the rest of the country bodes well for
strong revenue growth.”
The Massachusetts Taxpayers Foundation estimates state tax revenues
will grow by 4.7 percent in fiscal 2015, a rate of growth that the
foundation said was below the rates of previous economic recoveries.
MTF estimates fiscal 2014 tax collections will reach $23.27 billion,
or $470 million above the forecast used to build the state budget.
Foundation President Michael Widmer predicted increases in
“non-discretionary spending” in areas like employee pensions, debt
service and Medicaid, in addition to expanded outlays on
transportation, will consume “most” of the $1.1 billion in predicted
new tax revenues.
While predicting 53,000 added jobs in fiscal 2014 would be the
largest annual jump in employment since 2000 and cause the state
jobless rate to fall to 5.8 percent, Widmer also said, “This modest
rebound is not likely to turn into the kind of robust economic
recovery that we have experienced in the past.”
The state and national economies are slowly recovering from the
Great Recession and the nation’s jobless rate of 7 percent has
fallen below the Massachusetts unemployment rate of 7.2 percent.
According to the U.S. Bureau of Labor Statistics, 29 states in
October had lower unemployment rates than Massachusetts.
Senate Ways and Means Committee Chairman Stephen Brewer opened the
fiscal 2015 consensus revenue hearing on Wednesday morning by
acknowledging that after the recovery in Massachusetts outpaced most
other states, Massachusetts has began to fall back to the pack.
“Our message and our thinking needs to reflect the reality that over
the last year many other states have caught up with us in
unemployment and moved ahead of us in areas of economic growth,”
Brewer said.
The Barre Democrat said it’s not “overly surprising” that other
states have begun to improve at a faster clip, nor “does it imply
that we have faltered.”
Noting that this is the first consensus revenue hearing he has
chaired when the state’s unemployment rate has been higher than the
national rate, Brewer said he’s hopeful lawmakers can craft a budget
for the next fiscal year to “reverse that trend.”
The hearing will inform lawmakers as they work with Gov. Deval
Patrick to agree on a fiscal 2015 tax revenue estimate, which will
in turn influence myriad decisions about spending in the fiscal year
that starts July 1, 2014.
Under Pitter’s forecast, the Legislature and the Patrick
administration would have $993 million to $1.2 billion in new tax
collections available for spending next fiscal year.
In a presentation he is delivering this week, Administration and
Finance Secretary Glen Shor, the governor’s point person on budget
matters, notes that half the roughly $34 billion budget is consumed
by spending on subsidized health care (35 percent) and local aid and
education aid (15 percent). About 75 percent of the state budget
supports health care, human services and education alone, with
another 12 percent allocated for fixed debt service and pension
costs. That leaves 13 percent of revenue for all other purposes,
including transportation, public safety, housing, labor programs,
environmental protection and economic development.
In the presentation, state budget officials also note one-time
revenues totaled $752 million in the fiscal 2014 budget, down from
$903 million in fiscal 2013.
The Boston Business Journal
Wednesday, December 11, 2013
Bring in the frowns: It's revenue-day at the State House!
Craig Douglas
Looking for some comic relief this holiday season? Then don’t miss
today’s scheduled revenue hearings in the bowels of the
Massachusetts State House.
Rarely does one have the opportunity to view so many rare and exotic
creatures — in this case state lawmakers — in their natural
environment. But once a year our elected few assemble in the
cavernous Gardner Auditorium to slouch, snooze and gaze into space
as a lineup of usual suspects — in this case lobbyists and
economists — drone on about why the state’s tax collections are
heading to infinity and beyond. It is an annual ritual of
people-watching at its finest.
Of course, lost in the auditorium’s sea of turquoise carpeting is
any notion of seriousness among attending legislators and their
hand-picked presenters. Sure, there will be plenty of head nodding
and looks of consternation as speaker after speaker peers into his
or her crystal ball to say why tax revenue will rise, fall or move
sideways in the months ahead. These growth forecasts are always
conveniently refined down to the last basis point.
In theory the testimonies are used to develop a “consensus revenue
forecast” to help the governor and lawmakers set a budget in the
year ahead. But in reality, everyone on Beacon Hill knows this
dog-and-pony show is little more than, well, for show.
At today’s event, you’re sure to hear all about economic
uncertainties, about tough times for cities and towns and the
country as a whole. You’ll hear about far-away economies in Europe
and Asia. You’ll hear about the Federal Reserve and buzz words such
as “Q-E 3” and “Obamacare.” You’ll hear the state’s most-recent
unemployment rate recited at least 100 times.
To anyone with a newspaper subscription or access to Google, this
collective analysis will sound like a summary of headlines of the
day. Because that’s essentially all it is. There’s a reason why none
of the hearing’s presenters are working on Wall Street.
Take it from someone who has seen first-hand how this sausage is
made. In a former life I warmed a seat at the Massachusetts
Taxpayers Foundation — a perennial presenter at the state’s revenue
hearing — and witnessed a final “forecast” get more or less plucked
out of thin air before being offered as a bona fide revenue
prediction for the months ahead. Lawmakers were no worse for the
wear.
That’s because these predictions rarely land near their targets. In
fiscal 2008 the consensus estimate was 5 percent below actual
collections. The following year, when the downturn struck, the
consensus overshot actual receipts by 15 percent, or nearly $3
billion. The ensuing years haven’t been much better, including for
the current fiscal year; collections through November were up 9.7
percent, versus a consensus forecast of 3.9 percent for all of
fiscal 2014.
Perhaps it would be unfair to highlight the more laughable forecasts
offered by the hearing’s mainstays, be it Mike Widmer at the
Massachusetts Taxpayers Foundation or David Tuerck of the Beacon
Hill Institute or Alan Clayton-Matthews at Northeastern University.
But that’s kind of the point, right? Who would dare point the finger
at Widmer for his fiscal 2009 airball (off 15 percentage points), or
Tuerck’s 6 percentage-point misfire for fiscal 2011, when the other
guys at the table are shooting holes in their own boots?
To seasoned hands such as state Sen. Stephen Brewer, chairman of the
Senate Committee on Ways and Means, none of this is news. But it
serves a purpose in the end, he says.
“Yes, it is an inexact science. It’s an incredible leap of faith,”
he said during a recent interview. “But it does allow for a sense of
shared responsibility.” Translation: This is about finding the
shortest path to a revenue number that agrees with most lawmakers,
accuracy be damned.
So with that in mind, go ahead and give yourself an early holiday
pick-me-up by grabbing an ass-chafing patch of turquoise carpet
today at the State House. You may not learn anything new, but there
will be plenty to chuckle at.
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