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CLT UPDATE
Thursday, October 20, 2016
The lust for tax increases never
abates
|
Tax collections surged in September and are
running near budget benchmarks one quarter of the way into
fiscal 2017.
The Department of Revenue reported Wednesday
that September collections rose by $189 million, or 7.4
percent above collections in September 2015.
State House News Service
Wednesday, October 5, 2016
September surge has tax receipts running close to benchmarks
With a deadline looming on Saturday, Gov.
Charlie Baker on Thursday said over the next couple of days
he will discuss whether the state budget matches revenue
projections and whether any corrective measures are
necessary....
The governor and Secretary of Administration
and Finance Kristen Lepore have until Saturday to affirm or
adjust the estimate of revenues available to fund the
current fiscal year budget.
Revenues are closely tracking the estimate
that lawmakers used to build the budget that Baker signed in
July. In the first two months of the fiscal year, revenues
lagged significantly but bounced back in September to within
$11 million of revenue benchmarks.
The governor indicated the budget might be
out of alignment even if revenue benchmarks are met.
In July when he signed most of the fiscal
2017 budget, Baker vetoed $256 million from the $38.9
billion bill. Lawmakers subsequently restored all but about
$24 million of that vetoed spending with overrides....
On Thursday the MassBenchmarks Board of
Editors, taking a measure of the state's economic strengths
and challenges, recommended additional tax revenues to meet
the state's infrastructure and educational needs.
Finding "solid improvement" around the state
in economic performance, the group of economists announced
that it "strongly recommends that the legislature and
governor take steps necessary to increase tax revenues
available to meet the state's urgent unmet educational and
infrastructure needs."
Baker on Thursday reiterated his aversion to
tax increases, but said he was not familiar with the
MassBenchmarks statement.
"I don't believe our problem is that our
taxes are too low. I think our problem is that we continue
to work on improving the way that we spend money," Baker
said.
After receiving the first of two required
affirmative votes by lawmakers earlier this year, the
Legislature could take up a proposed constitutional
amendment again in the next legislative session that would
allow the voting public to decide in 2018 whether to impose
a surtax on the state's highest earners....
State House News Service
Thursday, October 13, 2016
Baker considering midyear budget moves
House Speaker Robert A. DeLeo said in a
television appearance last month that he wanted to consult
economists about whether the state needs to raise taxes. A
panel of Massachusetts economists took it upon themselves to
come up with an answer, and Thursday they delivered it: Yes.
The editorial board of the economic journal
MassBenchmarks, made up of 16 economists from the state’s
colleges and universities along with the Federal Reserve
Bank of Boston, took the rare step of recommending that
legislators consider higher taxes to invest in education and
infrastructure.
The board “strongly recommends that the
legislature and governor take steps necessary to increase
tax revenues available to meet the state’s urgent unmet
educational and infrastructure needs,” the board said in its
report....
“It is clear that reductions in the
Commonwealth’s revenue generating capacity has stymied
efforts to meet the pressing education and infrastructure
needs that present ongoing threats to the state economy,”
the report said.
The report was embraced by one Beacon Hill
leader: Senate President Stanley C. Rosenberg. He said in a
statement that the Massachusetts has “fallen behind in
meeting our commitment to education and infrastructure.” And
he highlighted the left-leaning Senate’s support for a
proposed 2018 ballot measure, known as the millionaires tax,
that would raise as much as $2.2 billion in new revenue
annually from wealthy taxpayers.
The Boston Globe
Friday, October 14, 2016
Economists push state to raise taxes
Continuing to chase after state budget
solutions, Gov. Charlie Baker’s administration on Friday
identified what it sees as a $295 million deficit in the
$39.25 billion budget just three months into the fiscal
year, prompting the governor to pursue a reduction in
workforce and contemplate likely spending cuts across state
government....
The announcement established Baker’s
authority to use his so-called “9c” powers to make emergency
mid-year budget cuts, but the administration did not
explicitly commit to cutting the full $295 million in
spending from the budget or outline any specific
reductions....
[Baker’s budget chief Kristen Lepore] said
she has “commenced an exercise with Executive Branch
agencies to identify spending reductions or other solutions
that will be needed to balance the budget…”
“The administration will bring the budget
into balance with savings initiatives and spending
reductions that could reduce Executive Branch spending by
about 1% of overall spending. Accounts such as local aid to
cities and towns, local school aid, and core services at DCF
will not see reductions. We will work with our executive
branch agencies to identify solutions to close this gap,”
Lepore said in a statement.
In revising the revenue estimate ahead of
Saturday’s deadline, Lepore reduced the estimate of tax
collections to support state spending in fiscal 2017 from
$26.231 billion to $26.058 billion. The new estimate
reflects 3.1 percent growth in tax revenues, or $789
million, above actual fiscal 2016 collections....
Baker in July vetoed $265 million in
spending from the budget, but the Legislature overrode $231
million of those spending vetoes. At the time, Baker
identified similar deficiencies that he felt lawmakers left
underfunded. Legislative budget leaders did not respond to a
request for comment on Friday.
State House News Service
Friday, October 14, 2016
Baker gearing up to solve latest budget problem: A $295
million deficit
The coalition that successfully pushed for
earned sick time for workers at the polls in 2014 is
throwing its weight behind incumbents supportive of its
latest agenda - paid family leave, a $15 minimum wage and
higher income taxes for the highest earners.
The Raise Up Together super PAC began
running a mail and digital ad campaign on Friday to support
27 legislative incumbents, including one Republican, who
voted this year to advance a constitutional amendment to
impose a surtax on household incomes over $1 million.
The committee is prepared to spend at least
$175,000 on the ad campaign in the coming weeks as it looks
to return supportive lawmakers to Beacon Hill next session,
according to someone associated with the group.
The political action committee, which was
formed in late September by the Service Employees
International Union, the Massachusetts Teachers Association,
and the Coalition for Social Justice, began sending out
mailers Friday, three weeks before election day....
Deb Fastino, of the Coalition for Social
Justice, would not say how much money the committee had
raised or how much it planned to spend in support of
candidates beyond indicating they were prepared to spend
"enough to make a difference in the election cycle."
"Anyone who supports the Raise Up agenda
will get some kind of support from the PAC," Fastino said.
The super PAC was organized on Sept. 26, and
has not yet filed any reports with the Office of Campaign
and Political Finance.
State House News Service
Friday, October 14, 2016
Super PAC putting $$$ behind lawmakers who advanced income
surtax
The Massachusetts High Technology Council is
asking its members to raise $400,000 to lay the groundwork
for a Beacon Hill campaign to kill the so-called
“millionaires’ tax” ballot initiative before it reaches
voters in 2018.
The council, a 130-member trade association
that lobbies on behalf of the state’s high-tech industry at
the State House, wants to determine the best strategy to
persuade Massachusetts lawmakers to reverse their initial
approval for the proposed constitutional amendment.
The money will allow the group to build a
potential legal challenge and help sharpen its arguments to
lawmakers that the tax would damage the state economy....
The High Technology Council wants to
assemble a legal team to lay out the argument that the
petition — created by Raise Up Massachusetts, a coalition of
labor unions, faith based organizations, and community
activists — does not meet constitutional muster....
The council argues that the proposal
violates a provision in the state Constitution prohibiting
initiative petitions from earmarking the revenue they raise
for specific budget line items. The “millionaires’ tax”
ballot question would direct the money raised to be used for
public education and transportation.
Raise Up Massachusetts, which spearheaded
the ballot initiative by collecting 157,000 voter signatures
in 2015 to qualify for the ballot, argues that Attorney
General Maura Healey’s ruling that its petition meets
constitutional muster is sound.
Citing case law, the group’s legal counsel
says the tax proposal meets constitutional requirements
because it does not make line-item appropriations, but
rather states that the revenue will be used to “provide the
resources for quality public education and affordable public
colleges and universities, and for the repair and
maintenance of roads, bridges and public transportation.”
“The mere fact that there are limitations on
those funds does not mean it is an appropriation,’’ said
Raise Up’s attorney, Peter Enrich, a Northeastern University
law professor and an expert in public administration. “It’s
not an appropriation until the Legislature identifies a
specific sum and makes it available expenditure for a
specific purpose.”
The Boston Globe
Wednesday, October 19, 2016
High-tech panel will fight ‘millionaires’ tax’
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Chip Ford's CLT
Commentary
Last month the state took in
7.4 percent more than it collected in September 2015.
According to the state Department of Revenue's October 5th new release ("September
Revenue Collections Total $2.740 Billion"), "For the first three months of
the Fiscal Year, total revenues are 3.9% greater than the same period
last year."
Still — some would have us believe
— it's not enough, the state needs even more
of our money.
This cannot be blamed on inflation, because benefits for more than 60
million Social Security recipients will go up next year by a mere 0.3 percent,
the Social Security Administration
announced on Tuesday.
That's the smallest cost-of-living adjustment (COLA) since the mid-1970s, and
comes after recipients received no increase in benefits for 2016
because inflation was so low.
If that 3.9% in increased state revenue this fiscal isn't enough
— it's clearly because the
state is spending more than even the revenue increase provides.
In July Gov.
Baker vetoed $256 million from the $39.25 billion budget bill sent
to him by the Legislature. Legislators overrode all but $24 million of his
spending cuts — decided to storm ahead and spend
more than they had. A mere three months later a deficit of $295 million
has suddenly been miraculously discovered.
"Finding 'solid improvement' around the state in economic
performance," the State House News Service reported, "the group of
economists announced that it 'strongly recommends that the legislature and
governor take steps necessary to increase tax revenues available to meet the
state's urgent unmet educational and infrastructure needs.'"
Who is this "group of economists" lusting for tax hikes? You may not have
ever heard of MassBenchmarks, but it's an extension of the Gimme Lobby and its
assortment of tax-borrow-and-spenders. According to
its
website:
MassBenchmarks is a
journal of the Massachusetts economy published by the University of
Massachusetts Donahue Institute in cooperation with the Federal Reserve
Bank of Boston and managed by the Institute's Economic and Public Policy
Research unit.
You got that? The state taxpayer-subsidized University of Massachusetts,
"in cooperation with" the Federal Reserve Bank of Boston. Check out
MassBenchmarks'
editorial board. Note especially its Senior Contributing Editor, Alan
Clayton-Matthews of Northeastern University
— who hasn't found a tax
hike he didn't support. We've come across him before, in fact
often over the years. A few CLT Blasts from the Past follow:
. .
. “This slowdown had to occur. We couldn’t
continue to grow at the phenomenal rates we were
because the national economy has been slow to
recover,” said Alan Clayton Matthews, an
associate professor of public policy at
Northeastern University and the director of the
New England Economic Partnership, who delivered
the forecast of the Massachusetts economy during
the NEEP fall conference at the Federal Reserve
Bank on Wednesday....
He said the structural deficit can also be
expected to grow in coming years as spending
needed to keep pace with increases in education,
health care and debt service obligations will
grow at 6 percent a year, while revenue growth
will lag at 5 percent annually.
With one of the highest per capita revenue
capacities in the country,
Clayton-Matthews suggested that if the state
were to set tax rates and fees at the average of
all states it could increase revenue by $5
billion above current levels, based on a
New England Public Policy Center study of fiscal
2002 revenue and spending.
. . .
According to the State House News Service,
Alan
Clayton-Matthews, director of the New
England Economic Partnership, suggested that
if the state were to set tax rates and fees
at the average of all states, it could
increase revenue by $5 billion above current
levels, based on a New England Public Policy
Center study.
Hey, why not? The majority of Massachusetts
voters will probably be happy to pay $5
billion in new taxes to sustain
Massachusetts' tried and true, familiar,
business-as-usual political system.
It's so ... reliably, predictably
outrageous.
It’s
Massachusetts’ version of the federal tax debate
that bitterly divided Congress: Will
tax
increases of the kind recently proposed by
Governor Deval Patrick help or hurt the
local economy?
And much like the federal debate, economists
disagree. Some support the governor’s plan,
lauding it for creating jobs and making the
state more attractive to businesses, while
others object to raising taxes on the heels of
federal tax increases.
“I think
it’s really positive in terms of the impact it
will have,” Northeastern University economist
Alan Clayton-Matthews said of Patrick’s
proposal, citing the benefits of a
better-educated workforce.
But Brian Bethune, an economics professor at
Gordon College in Wenham, disagreed, saying tax
increases would hamper economic growth.
This is “one of the worst ideas I’ve heard in a
long time,” Bethune said....
Chip Faulkner has
more to say about the Boston Globe report on
MassBenchmarks and its tax hike proposal in his
commentary below. He couldn't resist, asked that it be
included.
Both sides of the
proposed Graduated Income Tax (aka, the "Millionaire's
Tax," aka, the "Fair Share Amendment") are gearing up for the next
vote to put this on the 2018 ballot as a constitutional
amendment. The cabal of usual Gimme Lobby suspects
— the teachers unions, public employee unions, and
hands-in-our-pockets liberal special interest groups
—
is raising money to support candidates for the
Legislature who will support their scheme.
Meanwhile, our allies from our Proposition 2½ campaign,
repeal of the Dukakis surtax, income tax rollback, and
other pro-taxpayer ballot questions, is gearing up to
oppose the Grad Tax ballot question again.
What I found most
interesting is that the proponents trying to have the
argument both ways
—
which of course is not possible. They know this
too, but facts aren't going to slow them down.
Remember how, they
promise, the revenue taken in from their "Millionaire's
Tax" will be specifically dedicated and spent on
transportation infrastructure and education? We've
argued that this is constitutionally not permitted, that
the ballot question should not have been certified by
the state attorney general. Confronted by the
Massachusetts High Technology Council's threatened
lawsuit based on that position, the Gimme Lobby now
argues:
Citing case
law, the group’s legal counsel says the tax
proposal meets constitutional requirements
because it does not make line-item
appropriations, but rather states that the
revenue will be used to “provide the resources
for quality public education and affordable
public colleges and universities, and for the
repair and maintenance of roads, bridges and
public transportation.”
“The mere
fact that there are limitations on those funds
does not mean it is an appropriation,’’ said
Raise Up’s attorney, Peter Enrich, a
Northeastern University law professor and an
expert in public administration. “It’s not an
appropriation until the Legislature identifies a
specific sum and makes it available expenditure
for a specific purpose.”
So, now they're arguing that
the promise they've made and have been asserting
—
that all revenue raised from their proposal will be
dedicated to specific spending
—
isn't dedicated to anything whatsoever, acknowledging
that the constitution doesn't allow that.
Just
as we've said all along.
What they now argue is that,
yes, only the Legislature can decide where any revenue
can be spent.
Just as we've said all along.
They now assert that what they
propose is not dedicating funds to specific
spending
—
but are "limitations" on how this new revenue can be
spent. And that's somehow different?
Are they just wrong and back-peddling, dodging
the facts, or have they been knowingly lying about how the
estimated $2.2 billion in additional revenue will be directly spent?
I suspect the latter, so they must think their Big Lie will deceive the
voters.
We hope the Mass. High Tech
Council prevails in its challenge, strangles this
abomination in its crib. It would be so much
better than having to fight the sixth campaign to defeat
another proposed Grad Tax constitutional amendment.
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Chip Ford
Executive Director |
Chip Faulkner's Commentary
The October 14th Boston Globe article
(“Panel presses state on tax raise”) startled me. You mean
there are actually people existing in Massachusetts who
think we need MORE taxes? There is, if you consider the
panel calling for higher taxes consisted mostly of 16
economists from the state’s colleges and universities. It
isn’t enough for these befuddled academics that the state
only recently raised the sales tax to 6.25% or that recent
attempts almost succeeded in raising taxes on computer
services and an automatic gas tax increase.
They want to increase tax revenues available
to “meet the state’s urgent unmet educational and
infrastructure needs.” Educational costs consist mostly of
salaries and benefits. The increased revenues would
undoubtedly fatten the pay checks of these state college
economists proposing the tax hikes. How unselfish of them!
Did they ever consider the alternative to
asking for more tax dollars? How about reining in the
exploding cost of a college education? The number of
administrators in most colleges and universities has risen
dramatically in the last 30 years, as well as examples of
professors teaching only a few hours a week and hauling in
over $100,000 a year. Yet these economists don’t seem to
care, but you can bet the students — and parents — paying
the bills care.
They talk about “infrastructure needs” as a
reason for more tax revenue. Not so fast. The gas tax
increase was defeated at the ballot in 2014 precisely
because the public saw the waste and inefficiency built into
the state’s transportation system. Opponents of the gas tax
increase pointed out that the administrative costs per mile
of road construction in Massachusetts were the second
highest in the United States. Oh, did I mention that the Big
Dig’s original estimate was $2.6 Billion and ended up at
more than $24 Billion. If these economists ever got out of
their ivory towers and experienced the real world, they
would realize their cluelessness.
The most incredible statement in the whole
article was the contention of the economists that “a 2000
ballot initiative approved by state voters to reduce the
income tax rate from 5.9 per cent to 5.0 percent has cut
billions of dollars from the state’s coffers.” This elitist
statement reeks of condescension. God forbid that state
taxpayers prefer to spend their own money as they wish —
rather than hand it over to the state! This group of
economists deserves nothing but contempt for even suggesting
a tax hike.
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Chip Faulkner |
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State House News Service
Wednesday, October 5, 2016
September surge has tax receipts running close
to benchmarks
By Michael Norton
Tax collections surged in September and are
running near budget benchmarks one quarter of
the way into fiscal 2017.
The Department of Revenue reported Wednesday
that September collections rose by $189 million,
or 7.4 percent above collections in September
2015.
September collections beat the monthly benchmark
by $26 million and collections over the first
three months of the fiscal year are running $11
million, or 0.2 percent below benchmarks.
Gov. Charlie Baker said recently that he wanted
to review September collections before deciding
whether changes are needed in the state's $38.9
billion budget.
Lawmakers in late July overrode scores of Baker
budget vetoes, adding spending back to the
budget, and Baker says they also underfunded
other accounts that will need to be shored up at
some point in the fiscal year.
State House News Service
Thursday, October 13, 2016
Baker considering midyear budget moves
By Andy Metzger
With a deadline looming on Saturday, Gov.
Charlie Baker on Thursday said over the next
couple of days he will discuss whether the state
budget matches revenue projections and whether
any corrective measures are necessary.
Fresh from a vacation in Ireland, Baker said the
administration would have more to say about the
budget picture on Friday.
The governor and Secretary of Administration and
Finance Kristen Lepore have until Saturday to
affirm or adjust the estimate of revenues
available to fund the current fiscal year
budget.
Revenues are closely tracking the estimate that
lawmakers used to build the budget that Baker
signed in July. In the first two months of the
fiscal year, revenues lagged significantly but
bounced back in September to within $11 million
of revenue benchmarks.
The governor indicated the budget might be out
of alignment even if revenue benchmarks are met.
In July when he signed most of the fiscal 2017
budget, Baker vetoed $256 million from the $38.9
billion bill. Lawmakers subsequently restored
all but about $24 million of that vetoed
spending with overrides.
The governor had made the cuts, which he
described as "rightsizing," because the
administration believes lawmakers underfunded
accounts for snow and ice removal, sheriffs and
indigent defense attorneys.
On the minds of those who receive state services
or whose paychecks rely on state spending will
be how much revenue Baker expects the state to
take in through next June, how much he believes
the state will need, and how he plans to handle
any difference between those two numbers.
"We vetoed over $200 million worth of spending
to live within the budget that we believe we
received from the Legislature earlier this year.
And those vetoes were based on an assumption
that we would hit the benchmark that's currently
being discussed as part of the September revenue
conversation," Baker told reporters gathered in
the lobby to his office. "The Legislature
overrode the vast majority of those vetoes,
which we said at the time we believe created a
deficit, even if we bought in on what the
benchmark was. And that's a conversation
obviously that we're going to have today and
tomorrow internally, and get back to you guys
before Saturday."
In the early stages of developing the fiscal
2016 budget last January, state officials
settled on $26.86 billion in expected state tax
revenues, but adjusted the number during the
spring budget-writing process as the revenue
picture worsened. The Department of Revenue is
now benchmarking against $26.231 billion in
expected state tax revenues over the course of
the fiscal year.
Baker has been chasing budget problems since he
took office in January 2015, first after he
inherited an out-of-balance budget from Gov.
Deval Patrick and then after his administration
and the Legislature overestimated how much
taxpayers would have available to pay for fiscal
2016 spending. Right after her swearing in a
year and a half ago, Lepore said the state was
"bleeding" money.
Since then the governor and lawmakers have taken
a range of approaches to try to match revenues
to spending, initiating an early retirement
program and putting additional capital gains tax
revenues toward the general fund. The governor
has also used his executive powers to cut
spending.
On Thursday the MassBenchmarks Board of Editors,
taking a measure of the state's economic
strengths and challenges, recommended additional
tax revenues to meet the state's infrastructure
and educational needs.
Finding "solid improvement" around the state in
economic performance, the group of economists
announced that it "strongly recommends that the
legislature and governor take steps necessary to
increase tax revenues available to meet the
state's urgent unmet educational and
infrastructure needs."
Baker on Thursday reiterated his aversion to tax
increases, but said he was not familiar with the
MassBenchmarks statement.
"I don't believe our problem is that our taxes
are too low. I think our problem is that we
continue to work on improving the way that we
spend money," Baker said.
After receiving the first of two required
affirmative votes by lawmakers earlier this
year, the Legislature could take up a proposed
constitutional amendment again in the next
legislative session that would allow the voting
public to decide in 2018 whether to impose a
surtax on the state's highest earners.
The Boston Globe
Friday, October 14, 2016
Economists push state to raise taxes
By Deirdre Fernandes and David Scharfenberg
House Speaker Robert A. DeLeo said in a
television appearance last month that he wanted
to consult economists about whether the state
needs to raise taxes. A panel of Massachusetts
economists took it upon themselves to come up
with an answer, and Thursday they delivered it:
Yes.
The editorial board of the economic journal
MassBenchmarks, made up of 16 economists from
the state’s colleges and universities along with
the Federal Reserve Bank of Boston, took the
rare step of recommending that legislators
consider higher taxes to invest in education and
infrastructure.
The board “strongly recommends that the
legislature and governor take steps necessary to
increase tax revenues available to meet the
state’s urgent unmet educational and
infrastructure needs,” the board said in its
report.
Massachusetts needs to invest in schools and
public colleges, along with bridges, mass
transit, and water systems, according to the
report, which is published by the University of
Massachusetts.
“I know it’s become such a hot-button issue, no
one wants to increase taxes,” said Robert
Nakosteen, an economics professor at UMass
Amherst and the executive editor of the journal.
“Our political system can’t take a precipitous
increase in tax rates, but we need to get
started. . . . We’re really hoping to start the
discussion.”
It’s unclear, though, how far that discussion
will go. DeLeo, a Democrat, has been hesitant to
raise taxes. And his spokesman greeted the
economists’ report Thursday with a lukewarm
statement.
“Speaker DeLeo continues to view raising revenue
as a last resort,” said the spokesman, Seth
Gitell. “Currently he is in the process, along
with staff and the relevant House committees, of
compiling information and data from a number of
expert sources. Accordingly, it is far too early
to determine the Commonwealth’s revenue picture
for the upcoming fiscal year.”
Governor Charlie Baker has also opposed tax
hikes, and he did not break from that position
Thursday. “I don’t believe our problem is that .
. . our taxes are too low,” he told reporters at
the State House. “I think our problem is we need
to continue to work on improving the way we
spend money.”
MassBenchmarks takes the pulse of the state’s
economy several times a year and usually
provides projections on economic growth and the
labor market. In its 20-year history, it has
rarely delved into political issues, although it
has generally discussed the need for greater
investment in preschool education and roads in
the past.
The last time it made fiscal recommendations was
during the financial crisis of 2008, when it
backed calls for the federal government to
invest in infrastructure as a way to jump-start
the economy and nearly two years ago when it
urged the state to take action to fix the MBTA
after the record snowfall paralyzed the system,
Nakosteen said.
But if the state falls behind in producing a
skilled labor force and lets its infrastructure
crumble, it could make Massachusetts less
competitive economically, said Mike Goodman, the
executive director of the Public Policy Center
at the University of Massachusetts Dartmouth.
For example, Massachusetts’ funding for
preschool programs failed to keep up with
inflation since 2009, and nearly 9.5 percent, or
487, of the state’s bridges are structurally
deficient, the economists pointed out.
At the same time, a 2000 ballot initiative
approved by state voters to reduce the income
tax rate from 5.9 percent to 5.0 percent has cut
billions of dollars from the state’s coffers,
the economists said.
“It is clear that reductions in the
Commonwealth’s revenue generating capacity has
stymied efforts to meet the pressing education
and infrastructure needs that present ongoing
threats to the state economy,” the report said.
The report was embraced by one Beacon Hill
leader: Senate President Stanley C. Rosenberg.
He said in a statement that the Massachusetts
has “fallen behind in meeting our commitment to
education and infrastructure.” And he
highlighted the left-leaning Senate’s support
for a proposed 2018 ballot measure, known as the
millionaires tax, that would raise as much as
$2.2 billion in new revenue annually from
wealthy taxpayers.
State House News Service
Friday, October 14, 2016
Baker gearing up to solve latest budget problem:
A $295 million deficit
By Matt Murphy
Continuing to chase after state budget
solutions, Gov. Charlie Baker’s administration
on Friday identified what it sees as a $295
million deficit in the $39.25 billion budget
just three months into the fiscal year,
prompting the governor to pursue a reduction in
workforce and contemplate likely spending cuts
across state government.
The estimated deficiency lines up closely with
the amount the Republican governor tried to
slash from the budget in July before the
Democrat-controlled Legislature steamrolled
through most of his vetoes.
Revenue collections rebounded in September after
a sluggish July and August, settling within $11
million of projections. But overly optimistic
estimates of sales tax revenues and chronically
underfunded programs that Baker wants to shore
up led to the actions taken at the mid-October
deadline to reassess state finances, officials
said.
Baker’s budget chief Kristen Lepore on Friday
wrote a letter to Baker explaining that she was
reducing the state’s tax revenue estimate by
$175 million due to slower than projected growth
in sales taxes, and would attempt to achieve
savings by offering one-time payouts as
incentives for state employees to retire or
leave their jobs.
The remainder of the gap, according to Lepore,
is attributable to accounts that the
administration believes were left underfunded by
the Legislature for indigent defense legal
costs, projected snow and ice removal costs and
exposures for shelter services, settlements and
judgments.
Lepore said savings plans and spending
reductions sufficient to reduce total spending
by 1 percent across executive branch agencies
could be necessary, but said local aid to cities
and towns and school districts and funding for
core services at the Department of Children and
Families would not be touched.
The announcement established Baker’s authority
to use his so-called “9c” powers to make
emergency mid-year budget cuts, but the
administration did not explicitly commit to
cutting the full $295 million in spending from
the budget or outline any specific reductions.
Instead, Lepore said she has “commenced an
exercise with Executive Branch agencies to
identify spending reductions or other solutions
that will be needed to balance the budget…”
“The administration will bring the budget into
balance with savings initiatives and spending
reductions that could reduce Executive Branch
spending by about 1% of overall spending.
Accounts such as local aid to cities and towns,
local school aid, and core services at DCF will
not see reductions. We will work with our
executive branch agencies to identify solutions
to close this gap,” Lepore said in a statement.
In revising the revenue estimate ahead of
Saturday’s deadline, Lepore reduced the estimate
of tax collections to support state spending in
fiscal 2017 from $26.231 billion to $26.058
billion. The new estimate reflects 3.1 percent
growth in tax revenues, or $789 million, above
actual fiscal 2016 collections.
The administration now expects sales tax
collections to grow by 2.3 percent, in line with
year-to-date growth through September, but
considerably lower than the 5.2 percent growth
rate relied upon in the state budget signed by
Baker in July.
To help close the gap between spending and
revenue, the administration on Monday will begin
offering state employees a one-time payout to
leave the public sector. Retirement eligible
employees can receive a one-time $15,000 payout
to leave their position, while other executive
branch employees will be eligible for a $5,000
payout to leave their job.
The program will run through Nov. 14 at which
point the administration will reassess whether
further workforce reductions are necessary. The
administration said furloughs or early
retirement incentives allowing employees to add
years to their age or time of service to boost
pensions will not be offered this year after
Baker used an early retirement incentive program
last year to address similar budget problems.
The administration would not provide an estimate
of how many employees it expects to take
advantage of the one-time payout, or of how much
it hopes to save.
Baker in July vetoed $265 million in spending
from the budget, but the Legislature overrode
$231 million of those spending vetoes. At the
time, Baker identified similar deficiencies that
he felt lawmakers left underfunded. Legislative
budget leaders did not respond to a request for
comment on Friday.
Noah Berger, president of the Massachusetts
Budget and Policy Center, said he agreed with
Baker’s push to fund expected costs for programs
such as snow and ice removal up front rather
than deliberately wait until later in the year.
“Each year’s budget should fund the costs that
you know will occur that year,” he said.
Berger, however, said the administration and
lawmakers should look beyond simply cutting
programs that have already absorbed budget
reductions in recent years to tax expenditures
that provide questionable value to the economy.
“I think it has less to do with what’s happening
in the economy now and more to do with problems
that have been in the budget for awhile, such as
a reliance on one-time revenues and underfunded
accounts. The governor is, I think, being pretty
cautious by downgrading revenue assumptions, but
against that backdrop I think the biggest issue
is getting out of the process where we’re making
these mid-year cuts. The budget process should
scrutinize the special business tax breaks like
the state single sales factor for mutual fund
companies and manufacturing that are worth a
billion dollars a year and get no scrutiny.”
Eileen McAnneny, president of the Massachusetts
Taxpayers Foundation, said it’s important that
the governor recognize the problem early and
begin to deal with it rather than wait until
later in the year. She said it’s more difficult
to recoup sales taxes because consumers are
unlikely to “double up” on purchases after they
have made a decision to cut back on spending
early in the year.
“Unemployent numbers are down and withholding
did rebound, so it’s somewhat of an enigma,”
McAnneny said about the slowing sales tax
growth.
McAnneny posited that increasing health care and
housing costs could be eating into disposable
income, and said there is some evidence that
businesses are holding back on spending and
investments due to a variety of global economic
uncertainties.
Even with the downgrade in revenue estimates to
3.1 percent growth, the projection still exceeds
the MTF’s expectation of 2.8 growth in fiscal
2017.
“We might be even more conservative, but I think
the fact that they’re taking action now is
prudent and a good thing,” McAnneny said. “I
don’t think you have to solve for the entire
deficit today, but they have to be willing to
control spending throughout the year.”
State House News Service
Friday, October 14, 2016
Super PAC putting $$$ behind lawmakers who
advanced income surtax
By Matt Murphy
The coalition that successfully pushed for
earned sick time for workers at the polls in
2014 is throwing its weight behind incumbents
supportive of its latest agenda - paid family
leave, a $15 minimum wage and higher income
taxes for the highest earners.
The Raise Up Together super PAC began running a
mail and digital ad campaign on Friday to
support 27 legislative incumbents, including one
Republican, who voted this year to advance a
constitutional amendment to impose a surtax on
household incomes over $1 million.
The committee is prepared to spend at least
$175,000 on the ad campaign in the coming weeks
as it looks to return supportive lawmakers to
Beacon Hill next session, according to someone
associated with the group.
The political action committee, which was formed
in late September by the Service Employees
International Union, the Massachusetts Teachers
Association, and the Coalition for Social
Justice, began sending out mailers Friday, three
weeks before election day.
The Legislature voted 135 to 57 in May to
advance an amendment to the state constitution
that would allow taxing incomes over $1 million
at 4 percentage points higher than the general
income tax to generate an estimated $1.9 billion
in additional revenue that would be dedicated to
education and transportation.
While supporters argued that the amendment would
impose a fairer tax structure and generate
needed revenue to support key priorities like
schools and roads, critics, including some
Democrats, equated the measure to "class
warfare" and warned that it could drive small
business owners and employers out of the state.
Others questioned whether the sponsors of the
amendment could legally guarantee that the money
gets spent on education and transportation.
The Legislature is expected to again take up the
matter in the legislative session that begins in
January when a second vote is required of at
least 50 lawmakers in support to place the
question on the 2018 ballot.
The committee is backing 17 House Democrats who
supported the "Fair Share Amendment" and 10
senators, including Republican Sen. Patrick
O'Connor of Weymouth, who are all facing
challengers.
The group said the senators receiving the
group's support also voted to support paid
family and medical leave, which never surfaced
in the House this session for a vote, even
though the Senate passed that legislation on a
voice vote with no recorded roll call.
Deb Fastino, of the Coalition for Social
Justice, would not say how much money the
committee had raised or how much it planned to
spend in support of candidates beyond indicating
they were prepared to spend "enough to make a
difference in the election cycle."
"Anyone who supports the Raise Up agenda will
get some kind of support from the PAC," Fastino
said.
The super PAC was organized on Sept. 26, and has
not yet filed any reports with the Office of
Campaign and Political Finance.
The Boston Globe
Wednesday, October 19, 2016
High-tech panel will fight ‘millionaires’ tax’
By Frank Phillips
The Massachusetts High Technology Council is
asking its members to raise $400,000 to lay the
groundwork for a Beacon Hill campaign to kill
the so-called “millionaires’ tax” ballot
initiative before it reaches voters in 2018.
The council, a 130-member trade association that
lobbies on behalf of the state’s high-tech
industry at the State House, wants to determine
the best strategy to persuade Massachusetts
lawmakers to reverse their initial approval for
the proposed constitutional amendment.
The money will allow the group to build a
potential legal challenge and help sharpen its
arguments to lawmakers that the tax would damage
the state economy.
The measure, which was overwhelmingly approved
by lawmakers in May, would impose a 4 percent
levy on annual taxable income in excess of $1
million starting in 2019. The proposal needs one
more vote in the next legislative session before
heading to the ballot.
Advocates for the extra tax on the wealthy,
which would pay for education and transportation
projects, said they were confident that the
council’s assault on their proposal would fall
short, noting its arguments were soundly
rejected in the first legislative vote this
year.
The High Technology Council wants to assemble a
legal team to lay out the argument that the
petition — created by Raise Up Massachusetts, a
coalition of labor unions, faith based
organizations, and community activists — does
not meet constitutional muster.
It will also use the money to pull together a
group of economic advisers to highlight its case
that the tax proposal would damage the state’s
economy by scaring away businesses and making
Massachusetts an undesirable place for
job-creating industries to locate.
“We want to make sure we have done our homework
in order to assess what our strategy options
are,’’ Christopher R. Anderson, the council
president, said.
He said the council’s goal is to kill the tax
proposal before it becomes a referendum in the
state elections two year from now.
A proposed constitutional amendment must win
approval from at least 50 lawmakers in two
successive sessions when the 200 House and
Senate members meet jointly in a constitutional
convention.
“Our focus now is entirely on the
pre-constitutional convention,’’ Anderson said.
The council faces a steep climb to undo the May
vote, which approved the new tax by a better
than 2-1 margin and included backing from House
Speaker Robert DeLeo and Senate President
Stanley C. Rosenberg.
The council argues that the proposal violates a
provision in the state Constitution prohibiting
initiative petitions from earmarking the revenue
they raise for specific budget line items. The
“millionaires’ tax” ballot question would direct
the money raised to be used for public education
and transportation.
Raise Up Massachusetts, which spearheaded the
ballot initiative by collecting 157,000 voter
signatures in 2015 to qualify for the ballot,
argues that Attorney General Maura Healey’s
ruling that its petition meets constitutional
muster is sound.
Citing case law, the group’s legal counsel says
the tax proposal meets constitutional
requirements because it does not make line-item
appropriations, but rather states that the
revenue will be used to “provide the resources
for quality public education and affordable
public colleges and universities, and for the
repair and maintenance of roads, bridges and
public transportation.”
“The mere fact that there are limitations on
those funds does not mean it is an
appropriation,’’ said Raise Up’s attorney, Peter
Enrich, a Northeastern University law professor
and an expert in public administration. “It’s
not an appropriation until the Legislature
identifies a specific sum and makes it available
expenditure for a specific purpose.”
The state Department of Revenue has estimated
that the tax could generate up to $2.2 billion
in additional state revenue in 2019.
Anderson said the High Technology Council is
also convinced it can make a strong argument to
House and Senate members that there would be
unintended consequences to imposing an
additional tax on the wealthy.
He argues that the targets of the tax would
leave the state and that it would create a
serious hardship for Massachusetts public
leaders trying to lure firms to locate here.
But another business advocacy group — the
liberal leaning Alliance for Business Leadership
— argues that the state’s economy depends on a
good transportation system and educated workers
and that a cash-strapped state government needs
to turn to the wealthy to help provide the
funding.
“Businesses cannot thrive without safe and
reliable infrastructure and a well-educated
workforce,’’ said its president, Jesse Mermell.
“Raising money from the most fortunate among us
is the fair approach to making investments that
are good for business and the economy, and are
vital to the future of our Commonwealth.”
Lew Finfer, Raise Up’s co-chairman and longtime
social issues activist, said the High Technology
Council was “shooting itself in the foot” with
its aggressive move to keep the voters from
making the decision.
“It might help some very high-paid high-tech
executives if they can block it from passing,
but it would hurt their companies and all other
people in the state,’’ he said.
Finfer also noted that the Legislature had heard
the council’s arguments already when it voted in
May, approving the proposed tax increase by a
136-57 margin.
The state’s existing income tax rate is 5.1
percent for all income levels. Under the new
proposal, taxable income over $1 million would
be subject to the additional 4 percent tax. That
level would be tied to inflation, so the extra
tax would continue to apply only to very wealthy
people. |
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