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CLT UPDATE
Tuesday, May 16, 2017
Any "fiscal discipline" in the
Senate Budget?
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"There are a lot of bills floating around on
education and my opinion at this point is that we need to
focus on the Fair Share ballot question that's coming up in
November of '18 because the $2 billion or so that will be
raised will be a major source of funding for the future of
education."
— Senate
President Stan Rosenberg, D-Amherst, on the likely 2018
ballot question that would impose an additional 4 percent
income tax, on top of the current 5.10 percent tax, on
taxpayers' earnings of more than $1 million.
"Sounds like Sen. Rosenberg is telling the
teachers union to focus on taking more taxpayers' money 'for
the children,' then come back and lower education
standards."
—
Chip Ford, Executive Director of Citizens for Limited
Taxation.
Beacon Hill Roll Call
Monday, May 15, 2017
Quotable Quotes
There appears to be a slight disagreement on
Beacon Hill over whether lawmakers should invest more of
their energy into campaigning for a tax increase on
millionaires — or into a bill that would toss out the MCAS
test and guarantee that kids get recess every day.
Can the sponsors of these measures really be
this out of touch? ...
We suspect Rosenberg may support the meat of
Rush’s bill — but isn’t thrilled at the idea of going 10
rounds over mandatory recess, or giving fired teachers more
tools to fight their termination, while at the same time
trying to convince the public to give Beacon Hill billions
more to spend on schools.
In the end neither approach puts a premium
on accountability. That’s a standard Massachusetts can’t
afford to weaken.
A Boston Herald editorial
Friday, May 12, 2017
Lesson in accountability
For a state that insists its old
“Taxachusetts” label is outdated, there’s a lot of
tax-raising talk on Beacon Hill these days.
There’s the proposal dubbed the
millionaires’ tax. And a push for additional taxes on
marijuana. There’s a plan to tax Airbnb users. And a bill to
impose a tax on sugary drinks....
Ever since Baker took office in January
2015, he and House Speaker Robert A. DeLeo have effectively
put the kibosh on raising taxes. But as state tax revenues
come in far short of expectations month after month, and the
state faces what could be a half-billion-dollar budget gap,
the Democrat-controlled Legislature — in particular the
Senate — is looking to raise revenue.
“We have to get more revenue into our
system,” Senate President Stanley C. Rosenberg said, “just
to be able to support the public services that we need to
maintain a robust economy.”
In an interview, Rosenberg emphasized his
belief that “we have a 20th-century tax system in a
21st-century economy.” He said he is open to including new
taxes in the state budget plan his chamber will unveil and
debate this month.
The chatter is already drawing criticism
from low-tax advocates.
“It’s déjà vu all over again,” groused
Chip Faulkner of Citizens for Limited Taxation.
“They overspend in the good times, and then when the revenue
slows down or the economy slows down, their first talk is
not of cutting the budget, but of slamming the taxpayers.”
...
“Obviously the cry for more revenue
increases when revenues come in below expectations, and
that’s happened for the last couple of years,” said Eileen
McAnneny, the president of the business-backed Massachusetts
Taxpayers Foundation. “That pressure is real.” ...
“Getting spending under control,
particularly for MassHealth, will be an important part of
any sustainable solution,” she said.
McAnneny, whose group opposes the
millionaires’ tax, also cautioned that the Legislature has
to be careful tinkering with tax policy to avoid unintended
consequences, especially since there are signs that the
economy could be heading for a downturn....
State Representative Jay R. Kaufman, House
chairman of Joint Committee on Revenue, said that Beacon
Hill policy makers have been so unwilling to talk about
taxes for so long that “the accumulation of service cuts and
disappointments is finally beginning to be manifest. We
simply can’t continue to have a high-cost state — and that
includes state services — and expect to be the Commonwealth
we would like to be without paying for it.”
On the other hand, McAnneny, of the
taxpayers foundation, emphasized that in the sweep of
Massachusetts history, a slew of tax increases is not so far
in the rearview mirror.
In 2009, then-Governor Deval Patrick signed
into law increases in several taxes, including boosting the
sales tax rate from 5 to 6.25 percent....
How Massachusetts’ taxes compare to other
states depends on the measurement and the tax.
For example, this year Massachusetts has the
35th highest combined state and local sales tax rate in the
nation but the fourth-highest cigarette tax, according to
the Tax Foundation.
Yet, it will take Massachusetts residents
longer than most to reach tax freedom day — how far into the
year they have to work before they have earned enough money
to pay all federal, state, and local taxes for the year. It
is May 5, putting Massachusetts near the bottom of the
nation, 47th, according to the foundation.
The Boston Globe
Monday, May 15, 2017
On Beacon Hill, new talk of raising taxes
City and town treasuries are due tens of
millions of dollars in unpaid motor vehicle taxes, but local
officials have few options to make scofflaws pay up.
The unpaid bills — which in many cases are
years old — are especially frustrating for cash-strapped
city and town halls that have scaled back services amid
dwindling revenues and rising costs....
The tax, which charges $25 per every $1,000
on a vehicle’s value, dates to the 1940s when it was created
to help pay for the war effort. Collections vary by
community, but the state's 351 cities and towns collectively
charge about $800 million a year....
Unlike real estate and property taxes,
however, communities have limited ways to collect unpaid
motor vehicle taxes. They cannot seize a vehicle in the same
way they might place a lien on a house.
In Lawrence, if vehicle tax bills aren’t
paid within 30 days, the city sends a demand notice and
tacks on a $30 fee. If that doesn’t work, it issues a
warrant for the outstanding tax and dispatches a deputy tax
collector to visit the owner.
Like most communities, the city charges 12
percent interest on delinquent excise taxes. It tacks on
additional fees, ranging from $12 to $22, for bills that
remain unpaid.
“It can really add up over time,” said Kelly
Oakes, the city’s treasurer and tax collector.
If its collection efforts don’t work, a
notice is sent to the motor vehicle registry, which can
suspend a driver’s license and registration until the
balance is paid....
Tax watchdogs question the need for the
excise tax, citing sales taxes on new vehicles, bi-annual
registration fees and yearly inspection charges that
motorists have to pay.
“We don’t believe they should have it
anymore,” said Chip Faulkner, a spokesman for
Citizens for Limited Taxation. “There’s just too many
taxes and fees to own a car.”
The group, founded by the late Barbara
Anderson, successfully pushed to get the excise tax
lowered from $66 per $1,000 of valuation as part of the
Proposition 2½ ballot initiative approved in 1980.
Since then, the levy has remained unchanged.
The Salem News
Thursday, May 11, 2017
Unpaid excise taxes a drag on local budgets
Unpaid excise taxes on cars, vans and
trucks, along with late fees and interest, are dripping red
ink off local books — one estimate puts the statewide total
at $176 million. A portion of the uncollected money is
certainly the fault of scofflaws unwilling or unable to pay
their share. But some portion owes to the simple fact that
cars and trucks get sold, and local officials never find
out.
That’s because sellers and buyers are now
responsible for informing town halls when a vehicle changes
hands. If they don’t — perhaps someone sells a car then
leaves town — local officials continue to bill the former
owner. Late fees pile up. In some cases, people who’ve left
the state are on the hook for vehicles they no longer
own....
A relatively simple, administrative move can
fill part of this void — or at least keep it from getting
much larger in the future. It involves the state’s Registry
of Motor Vehicles cluing in local treasurers and collectors
when a car, minivan or truck in their communities changes
hands. Rep. Diana DiZoglio, D-Methuen, is asking for just
that in what should be a non-controversial, no-brainer bill
that will make life easier for many — including drivers and
taxpayers....
DiZoglio’s solution to this issue isn’t the
only proposal to make excise taxes collection more
reasonable. She also wants to reset the tax, itself, so that
it’s based upon the current estimated value of a vehicle —
not the value of the car when it was purchased.
This is more than fair for a tax that was
first assessed to raise money for the war effort — the World
War II war effort, that is. The excise tax, first levied on
sales of Packards and Studebakers, has now lingered into a
new century due to the immutable force of government some
might know as Anderson’s law — that a tax, once
imposed, never goes away.
“We don’t believe they should have it
anymore,” Chip Faulkner, spokesman for the group
founded by the late Marbleheader Barbara Anderson,
Citizens for Limited Taxation, told Statehouse reporter
Christian Wade. “There’s just too many taxes to own a car.”
That, or something along those lines, undoubtedly crosses
the minds of most people as they try to keep the adhesive on
the EZPass transponder to adhere to a car windshield.
An Eagle-Tribune editorial
Sunday, May 14, 2017
Make the excise tax make sense
Tomorrow’s release of its budget plan will
be a good test of how seriously the state Senate is taking
the sad state of current state tax collections. How
refreshing it would be if Senate President Stan Rosenberg,
Senate Ways and Means chair Karen Spilka and their team were
to file a budget plan that embraces reform and doesn’t put
the arm further on taxpayers....
And senators must refrain from trying to
squeeze taxpayers even further, which was their approach two
years ago, when they tried to undo the will of the voters by
freezing a planned income-tax reduction.
It’s bad enough that Senate leaders are
fully on board with a campaign to raise taxes on the wealthy
through a job-killing ballot question in 2018.
Nickel-and-diming regular folks —through, for example, a
heavy new tax on soda, which supporters lobbied for last
week — would be downright greedy.
It could be a tense couple of months, as
Baker and the House and Senate try to reconcile the current
revenue picture with already-authorized spending and next
year’s budget. It would help the process immensely if
senators agree to set up shop in the real world.
A Boston Herald editorial
Tuesday, May 16, 2017
Sense in the Senate
Massachusetts residents are used to pleas
from cities and towns to approve Proposition 2½ overrides —
local property tax increases that proponents say are vital
for maintaining services amid rising costs.
But Hopkinton voters are facing the opposite
request: that they pass an “underride.”
For the second time in three years, the
town’s Board of Selectmen has placed a property tax cap
decrease before voters this spring....
The state law Proposition 2½ limits the
annual growth of a community’s property taxes to 2.5 percent
plus revenues from new growth. An override allows the
community to permanently increase the cap. And an underride
enables it to permanently reduce it.
Statewide, there have been only 18 underride
attempts since 1988, of which 16 have succeeded, according
to state Department of Revenue data.
“It’s very unusual,” said John Robertson,
legislative director of the Massachusetts Municipal
Association.
In addition to the 2014 vote in Hopkinton,
underrides have been adopted in Ayer, Dennis, Gill,
Groveland, Holland, Lancaster, Orleans, Plymouth, Rockport,
Sandwich, Shelburne, Upton, West Newbury, and Williamsburg.
In both West Newbury and Williamsburg, voters approved the
tax decreases on two occasions. The only unsuccessful
underrides were in Amesbury and Norton.
Cities and towns already have the ability to
tax less than their levy limit, and many have accumulated
“excess capacity,” Robertson noted, referring to the
difference between how much they could raise in taxes if
they taxed to their full limit, and how much they actually
do. That excess capacity can accumulate over time, to be
used by communities if needed....
“The ‘underride’ is the result of years of
fiscal discipline,” Brian Herr, chairman of the Board of
Selectmen, said by e-mail. “For the last 10 years Hopkinton
has repeatedly not taxed to the full amount allowed by
Proposition 2½. The ‘underride’ resets the tax levy to a
lower amount to ensure fiscal discipline in the years to
come.”
Chris Sandini, the town’s finance director,
said the underride would not actually lower residential
taxes, but would instead reduce how much the town could
raise under its cap in future years.
The Boston Globe
Friday, May 12, 2017
Proposition 2½ ‘underride’ anyone?
For the second time in three years,
residents have a chance to vote on a measure to protect
taxpayers from substantial future tax hikes with an “underride.”
If approved, the underride will permanently
reduce the amount of money the town can raise through
property or personal taxes each year under Proposition 2½,
essentially the opposite of an override. The measure
overwhelmingly passed Town Meeting earlier this month.
The town approved a $1.25 million underride
in 2014....
According to information on the Mass.
Association of Finance Committees’ website, when an
underride is passed, the levy limit decreases by the amount
voted. That reduces the base for calculating future years’
levy limits, which in turn results in a permanent decrease
in the amount of property taxes the community may levy. An
underride requires a majority vote of the board of selectmen
to be placed on the ballot. It may also be placed by means
of a local initiative.
This year’s $1.5 million amount will be
drawn from an excess levy amount, which is tax money the
town is allowed to collect within the levy limit but hasn’t
done so....
"It’s the town’s budget planning that allows
for the second underride in three years," [Selectmen
Chairman Brian Herr] said. “I could see this repeating
itself every three or four years for many years to come if
we remain fiscally disciplined.”
The MetroWest Daily News
Friday, May 12, 2017
Underride heads to Hopkinton election
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Chip Ford's CLT
Commentary
Grab your wallets, hide the children —
today the state Senate is releasing its version of the next
state budget for fiscal year 2018, beginning on July 1.
Already the $40.4 billion budget
recently passed by the House likely exceeds revenue
"expectations" when and if they are "revised" downward.
The smart thing for the Senate to do would be to look for
spending cuts — but this is the
Massachusetts Senate, so its knee-jerk reaction
predictably will be to propose new "revenue enhancements."
For the rest of us that would be tax hikes.
The Boston Globe's Joshua Miller reported:
“We
have to get more revenue into our system,” Senate
President Stanley C. Rosenberg said, “just to be
able to support the public services that we need to
maintain a robust economy.” . . . He said he
is open to including new taxes in the state budget
plan his chamber will unveil and debate this month.
In
my commentary for the CLT Update of April 14 ("Spring
tax hikes talk is blooming on Beacon Hill") I noted that
the House budget enabled the Senate to include tax hikes
when its turn arrived, quoting the State House News Service:
While
Speaker Robert DeLeo eschewed broad-based tax
increases with his budget proposal, there are
provisions in the bill that make it a "money bill,"
opening the door for the Senate to consider taxes
next month when it takes a turn producing a budget.
The House bill includes a $2,000 tax credit for
businesses that hire veterans, as well as reforms to
how sales taxes are collected and remitted to the
state.
What a mess
everyone's made out of the auto excise (tax)
— "that was first assessed to
raise money for the war effort — the World War II war
effort, that is. The excise tax, first levied on sales of
Packards and Studebakers, has now lingered into a new
century due to the immutable force of government some might
know as Anderson’s law — that a tax, once imposed,
never goes away." The only good thing that can be said
about it is, as reported in the Salem News:
The group [Citizens for Limited
Taxation], founded by the late Barbara Anderson,
successfully pushed to get the excise tax lowered
from $66 per $1,000 of valuation [to $25 per every
$1,000 on a vehicle’s value] as part of the
Proposition 2½ ballot initiative approved in 1980.
Since then, the levy has
remained unchanged.
It's nice to see
that someone remembers how and why the excise tax was
reduced by 62 percent — and who
to thank!
Amidst all the usual daily depressing challenges, I
couldn't resist adding a dose of positive news
—
truly a man-bites-dog story!
It is spring so, as usual, we're inundated by news
reports of Proposition 2½ overrides,
debt exclusions, and over-and-overrides around the state.
Projects that used to be included within a municipal budget
are now moved off-budget, the funding dependent on local
taxpayers agreeing to tax themselves more, for another
school, a fire station, whatever. Much if not most of
municipal spending problems is a result of "contract
negotiations" between town officials and the unions —
primarily the local teachers union which needs perpetual
raises "for the children." It wasn't so long ago that
municipalities were reporting "an
embarrassment of riches" in surplus cash. That
didn't last long; it never does.
It is extremely rare to hear of a
Proposition
2½ underride. The Boston
Globe reported:
In addition to the 2014 vote in Hopkinton,
underrides have been adopted in Ayer, Dennis, Gill,
Groveland, Holland, Lancaster, Orleans, Plymouth,
Rockport, Sandwich, Shelburne, Upton, West Newbury,
and Williamsburg. In both West Newbury and
Williamsburg, voters approved the tax decreases on
two occasions. The only unsuccessful underrides were
in Amesbury and Norton.
Hopkinton is about to vote on its second underride in
three years.
“The ‘underride’ is the result of years of fiscal
discipline,” Brian Herr, chairman of the Board of Selectmen
told the Boston Globe. “I could see this repeating
itself every three or four years for many years to come if
we remain fiscally disciplined,” he told the MetroWest Daily
news. Besides being the starting point for the Boston
Marathon, what's Hopkinton doing differently that the rest
of the cities and towns of the commonwealth and Beacon Hill
pols are missing?
Senate President Rosenberg and his tax-borrow-and-spend
caucus should inquire about that "fiscal discipline" thing
— before thinking about hiking
our taxes even more.
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Chip Ford
Executive Director |
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The Boston Herald
Friday, May 12, 2017
A Boston Herald editorial
Lesson in accountability
There appears to be a slight disagreement on
Beacon Hill over whether lawmakers should invest
more of their energy into campaigning for a tax
increase on millionaires — or into a bill that
would toss out the MCAS test and guarantee that
kids get recess every day.
Can the sponsors of these measures really be
this out of touch?
At a briefing with the Massachusetts Teachers
Association on Wednesday, the State House News
Service reported, Sen. Michael Rush made a push
for his bill, which would implement the 2015
recommendations of a commission that said
Massachusetts is under-investing in education to
the tune of $2 billion.
Along with a big funding boost, the bill would
effectively eliminate the concept of
accountability, which over the past two decades
has helped to ensure that students in
Massachusetts outperform their peers in other
states, and that taxpayers are getting a quality
return on their investment in education. Among
other things, the bill would suspend the MCAS
graduation requirement and forbid the use of
student test performance to evaluate teachers.
But the day before the Wednesday briefing,
Senate President Stan Rosenberg had gently
warned education reformers to pick their
battles, the News Service reported, as the
campaign for a ballot question that would boost
education funding heats up. That initiative
calls for imposing a 4 percent income tax
surcharge on individual earnings above $1
million, with the revenue intended for education
(and transportation, too).
We suspect Rosenberg may support the meat of
Rush’s bill — but isn’t thrilled at the idea of
going 10 rounds over mandatory recess, or giving
fired teachers more tools to fight their
termination, while at the same time trying to
convince the public to give Beacon Hill billions
more to spend on schools.
In the end neither approach puts a premium on
accountability. That’s a standard Massachusetts
can’t afford to weaken.
The Boston Globe
Monday, May 15, 2017
On Beacon Hill, new talk of raising taxes
By Joshua Miller
For a state that insists its old “Taxachusetts”
label is outdated, there’s a lot of tax-raising
talk on Beacon Hill these days.
There’s the proposal dubbed the millionaires’
tax. And a push for additional taxes on
marijuana. There’s a plan to tax Airbnb users.
And a bill to impose a tax on sugary drinks.
Then there’s no-new-taxes Governor Charlie
Baker’s proposed “assessment” to penalize
employers $2,000 per worker if they do not
provide adequate health insurance — which
businesses have decried as an unfair new tax.
Ever since Baker took office in January 2015, he
and House Speaker Robert A. DeLeo have
effectively put the kibosh on raising taxes. But
as state tax revenues come in far short of
expectations month after month, and the state
faces what could be a half-billion-dollar budget
gap, the Democrat-controlled Legislature — in
particular the Senate — is looking to raise
revenue.
“We have to get more revenue into our system,”
Senate President Stanley C. Rosenberg said,
“just to be able to support the public services
that we need to maintain a robust economy.”
In an interview, Rosenberg emphasized his belief
that “we have a 20th-century tax system in a
21st-century economy.” He said he is open to
including new taxes in the state budget plan his
chamber will unveil and debate this month.
The chatter is already drawing criticism from
low-tax advocates.
“It’s déjà vu all over again,” groused Chip
Faulkner of Citizens for Limited Taxation.
“They overspend in the good times, and then when
the revenue slows down or the economy slows
down, their first talk is not of cutting the
budget, but of slamming the taxpayers.”
And some fiscal watchdogs are cautioning that
new revenue will not be a panacea.
So far this fiscal year, which runs through
June, the state brought in $462 million, or 2.2
percent, less tax money than expected.
“Obviously the cry for more revenue increases
when revenues come in below expectations, and
that’s happened for the last couple of years,”
said Eileen McAnneny, the president of the
business-backed Massachusetts Taxpayers
Foundation. “That pressure is real.”
But so, too, she said, is the decline in money
available for discretionary spending as fixed
costs rise sharply. Those fixed costs include
Medicaid, the health program for the poor and
disabled also known as MassHealth; pensions; and
debt service.
“Getting spending under control, particularly
for MassHealth, will be an important part of any
sustainable solution,” she said.
McAnneny, whose group opposes the millionaires’
tax, also cautioned that the Legislature has to
be careful tinkering with tax policy to avoid
unintended consequences, especially since there
are signs that the economy could be heading for
a downturn.
There is general agreement among the Senate,
House, and the governor to impose a new tax on
people who use services such as Airbnb if they
rent from landlords who have a high-volume
business. Elected officials say it’s not a new
tax, just leveling the playing field with
hotels, which must collect a 5.7 percent state
room occupancy tax from guests.
Key legislators also appear warm to an increase
in the 3.75 percent state tax on retail
marijuana.
And the tax on high earners — via a
constitutional amendment that would impose an
additional levy of 4 percent on annual taxable
income in excess of $1 million starting in 2019
and be tied to inflation — is likely to sail
through the Legislature this year. It would be
put to voters on next year’s statewide ballot.
That could bring in more than $2 billion in new
money each year, cash intended for
transportation and education.
But any other tax increase — Rosenberg has
spoken of a tax on services, though he said in
the interview he is not proposing one — may face
skepticism from Baker and DeLeo, who is more
conservative than his Senate counterpart.
DeLeo’s spokesman, Seth Gitell, said other than
Airbnb, marijuana, and the tax on incomes in
excess of $1 million, “taxes are not part of the
conversation right now.”
Baker told reporters recently that he stands by
his 2014 campaign pledge not to raise taxes.
Yet he underscored his long-held position that
“if somebody puts a new service in place —
Airbnb — and agrees that they would like to be
taxed to level the playing field between and
among existing providers, I don’t have a problem
with that.”
Many in the Legislature, however, see a need for
big sources of new money, given the persistent
budget gaps.
State Representative Jay R. Kaufman, House
chairman of Joint Committee on Revenue, said
that Beacon Hill policy makers have been so
unwilling to talk about taxes for so long that
“the accumulation of service cuts and
disappointments is finally beginning to be
manifest. We simply can’t continue to have a
high-cost state — and that includes state
services — and expect to be the Commonwealth we
would like to be without paying for it.”
On the other hand, McAnneny, of the taxpayers
foundation, emphasized that in the sweep of
Massachusetts history, a slew of tax increases
is not so far in the rearview mirror.
In 2009, then-Governor Deval Patrick signed into
law increases in several taxes, including
boosting the sales tax rate from 5 to 6.25
percent.
In 2013, Patrick proposed raising the income
tax, cutting the sales tax, and making other
revenue-boosting changes to the tax system, in
an effort to bring in about $2 billion more
annually. But that proposal was effectively dead
on arrival in the Legislature.
Lawmakers instead raised the per-gallon gas tax
by 3 cents to 24 cents and linked future
automatic increases to inflation; instituted a
tax on certain computer software services; and
hiked the tax on tobacco products.
But, after massive blowback from the business
community, the Legislature repealed what came to
be known as the “tech tax.” And, the next year,
voters nixed linking future gas tax increases to
inflation.
How Massachusetts’ taxes compare to other states
depends on the measurement and the tax.
For example, this year Massachusetts has the
35th highest combined state and local sales tax
rate in the nation but the fourth-highest
cigarette tax, according to the Tax Foundation.
Yet, it will take Massachusetts residents longer
than most to reach tax freedom day — how far
into the year they have to work before they have
earned enough money to pay all federal, state,
and local taxes for the year. It is May 5,
putting Massachusetts near the bottom of the
nation, 47th, according to the foundation.
But the Commonwealth’s state and local tax
revenue as a percentage of personal income — a
broad measure — puts it in the middle of the
pack, according to the Urban-Brookings Tax
Policy Center.
Wherever the state stands, there are many other
tax proposals afoot in the Legislature. One is
to freeze the income tax at its current rate of
5.1 percent — instead of allowing it to tick
down to 5 percent. That effort has support in
the Senate but faces a steeper climb in the
House. Baker is also on record opposing such a
move.
Another targets a group of beverages.
Senator Jason M. Lewis held a news conference
last week trumpeting a bill to impose a tax on
sugary drinks as a way to reduce the consumption
of such beverages, particularly among children
and teens.
Joined by a physician focused on obesity
prevention, a former NHL player, and others, he
framed the effort as anchored in public health.
But he also floated a projection for how much
money it would bring it, should the new levy
become law: $368 million every single year.
The Salem News
Thursday, May 11, 2017
Unpaid excise taxes a drag on local budgets
By Christian M. Wade, Statehouse Reporter
City and town treasuries are due tens of
millions of dollars in unpaid motor vehicle
taxes, but local officials have few options to
make scofflaws pay up.
The unpaid bills — which in many cases are years
old — are especially frustrating for
cash-strapped city and town halls that have
scaled back services amid dwindling revenues and
rising costs.
Lawrence, with one of the largest deficits in
the North of Boston region, is due $2.3 million,
according to the state Department of Revenue. Of
that, $774,977 is due from last year.
The city is also owed $857,245 in unpaid taxes
on personal property, and $1.9 million in real
estate tax.
Other cities and towns also struggle with unpaid
auto taxes.
Peabody is owed more than $1.3 million;
Haverhill $1.8 million; Salem $741,695;
Newburyport $586,626 and Gloucester $531,308,
according to the state.
Boston, with the largest amount of past-due auto
taxes, is owed more than $23 million.
All local governments in the state were owed
more than $176 million in motor vehicle excise
taxes as of two years ago, according to the
revenue department.
The tax, which charges $25 per every $1,000 on a
vehicle’s value, dates to the 1940s when it was
created to help pay for the war effort.
Collections vary by community, but the state's
351 cities and towns collectively charge about
$800 million a year.
Every year, the Registry of Motor Vehicles sends
cities and towns lists of locally registered
vehicles. Tax collectors then send bills to the
owners. The tax decreases over time but never
drops below 10 percent of the manufacturer's
list price of a vehicle.
In many communities, the excise tax is one of
the largest sources of revenue, next to taxes on
real estate and personal property, and state
aid. Generally the money goes toward usual
operating expenses — such as payroll, pothole
repairs, or fixes for water and sewer pipes.
Difficult to collect
Unlike real estate and property taxes, however,
communities have limited ways to collect unpaid
motor vehicle taxes. They cannot seize a vehicle
in the same way they might place a lien on a
house.
In Lawrence, if vehicle tax bills aren’t paid
within 30 days, the city sends a demand notice
and tacks on a $30 fee. If that doesn’t work, it
issues a warrant for the outstanding tax and
dispatches a deputy tax collector to visit the
owner.
Like most communities, the city charges 12
percent interest on delinquent excise taxes. It
tacks on additional fees, ranging from $12 to
$22, for bills that remain unpaid.
“It can really add up over time,” said Kelly
Oakes, the city’s treasurer and tax collector.
If its collection efforts don’t work, a notice
is sent to the motor vehicle registry, which can
suspend a driver’s license and registration
until the balance is paid.
Oakes said the city is aggressive about going
after unpaid taxes, and in recent years it’s had
a 97 percent collection rate.
But some unpaid debts take years to collect, she
said.
Some lawmakers fault the system for allowing
consumers to rack up huge tax debts.
Proposed fixes
A proposal filed by Rep. Diana DiZoglio,
D-Methuen, would require the Registry of Motor
Vehicles to notify local officials when someone
turns in their plates or sells a car.
The RMV doesn't inform local tax collectors when
a vehicle has been taken off the road, DiZoglio
said, leaving that responsibility to
individuals. In some cases, people who've left
the state are still being sent tax bills for
vehicles that have been sold and registered by
another owner.
“People shouldn’t be paying taxes on a vehicle
they no longer own,” she said.
DiZoglio has also filed a bill that would
require vehicle values to be assessed using
“Blue Book” values — not the purchase price.
“It’s really an issue of fairness,” she said.
“We shouldn’t be placing unfair burdens on
taxpayers.”
Other bills would exempt the elderly and
low-income veterans from paying.
Tax watchdogs question the need for the excise
tax, citing sales taxes on new vehicles,
bi-annual registration fees and yearly
inspection charges that motorists have to pay.
“We don’t believe they should have it anymore,”
said Chip Faulkner, a spokesman for
Citizens for Limited Taxation. “There’s just
too many taxes and fees to own a car.”
The group, founded by the late Barbara
Anderson, successfully pushed to get the
excise tax lowered from $66 per $1,000 of
valuation as part of the Proposition 2½ ballot
initiative approved in 1980.
Since then, the levy has remained unchanged.
Tax collectors say some people overlook their
bills and rack up hefty late fees.
“They get the bill in the mail and put it aside
to pay and forget about it,” said Alicia McOsker,
treasurer and collector for the city of
Haverhill. “After they get a couple notices and
a visit from the deputy they usually come into
city hall and pay it.”
Others ignore or refuse to pay, she said.
“They think if they ignore it, it will go away,”
she said. “But it never goes away.”
Christian M. Wade covers the Massachusetts
Statehouse for The Salem News and its sister
newspapers.
The Eagle-Tribune
Sunday, May 14, 2017
An Eagle-Tribune editorial
Make the excise tax make sense
Bad debts are piling up for city halls and town
halls across the state, and the reason appears
to be at least partly bureaucratic. While one
may question whether local governments are
entitled to this money in the first place, the
fact remains that old motor vehicle excise taxes
that were counted upon to fill potholes and pay
teachers were never delivered, leaving local
budgets out of kilter.
A relatively simple, administrative move can
fill part of this void — or at least keep it
from getting much larger in the future. It
involves the state’s Registry of Motor Vehicles
cluing in local treasurers and collectors when a
car, minivan or truck in their communities
changes hands. Rep. Diana DiZoglio, D-Methuen,
is asking for just that in what should be a
non-controversial, no-brainer bill that will
make life easier for many — including drivers
and taxpayers.
Unpaid excise taxes on cars, vans and trucks,
along with late fees and interest, are dripping
red ink off local books — one estimate puts the
statewide total at $176 million. A portion of
the uncollected money is certainly the fault of
scofflaws unwilling or unable to pay their
share. But some portion owes to the simple fact
that cars and trucks get sold, and local
officials never find out.
That’s because sellers and buyers are now
responsible for informing town halls when a
vehicle changes hands. If they don’t — perhaps
someone sells a car then leaves town — local
officials continue to bill the former owner.
Late fees pile up. In some cases, people who’ve
left the state are on the hook for vehicles they
no longer own.
This leads to budgetary hassles locally.
Lawrence, for one, is still waiting to see $2.3
million in unpaid excise taxes. One the other
side of the region, in Peabody, the figure is
more than $1.3 million. Though it’s unclear how
much of that debt stems from this
miscommunication with the Registry of Motor
Vehicles, which quickly learns of all vehicles
sold, there really shouldn’t be any.
All of this can come back to bite taxpayers,
too. Called upon by a jilted tax collector, the
registry can suspend a car's registration or
even a driver’s license over the unpaid excise.
For a driver, a paperwork misfire swells into a
far larger problem.
DiZoglio’s solution to this issue isn’t the only
proposal to make excise taxes collection more
reasonable. She also wants to reset the tax,
itself, so that it’s based upon the current
estimated value of a vehicle — not the value of
the car when it was purchased.
This is more than fair for a tax that was first
assessed to raise money for the war effort — the
World War II war effort, that is. The excise
tax, first levied on sales of Packards and
Studebakers, has now lingered into a new century
due to the immutable force of government some
might know as Anderson’s law — that a
tax, once imposed, never goes away.
“We don’t believe they should have it anymore,”
Chip Faulkner, spokesman for the group founded
by the late Marbleheader Barbara Anderson,
Citizens for Limited Taxation, told
Statehouse reporter Christian Wade. “There’s
just too many taxes to own a car.” That, or
something along those lines, undoubtedly crosses
the minds of most people as they try to keep the
adhesive on the EZPass transponder to adhere to
a car windshield.
Retiring the excise tax altogether may be too
grand a hope. But making it fairer shouldn’t be,
including by granting exemptions to the elderly
and low-income veterans, as other proposals
would do. Ensuring the tax is properly collected
shouldn’t be such a tall order, either,
especially when all it entails is two layers of
government talking to each other.
The Boston Herald
Tuesday, May 16, 2017
A Boston Herald editorial
Sense in the Senate
Tomorrow’s release of its budget plan will be a
good test of how seriously the state Senate is
taking the sad state of current state tax
collections. How refreshing it would be if
Senate President Stan Rosenberg, Senate Ways and
Means chair Karen Spilka and their team were to
file a budget plan that embraces reform and
doesn’t put the arm further on taxpayers.
The Senate could pleasantly surprise us all by
embracing Gov. Charlie Baker’s proposal to cap
the amount of sick leave that state employees
can cash out when they retire — or by agreeing
to changes in calculating state welfare benefits
that account for a beneficiary’s other
government income.
But frankly we’d be satisfied if the Senate
budget plan simply comes in lower than the
versions proposed in recent months by Baker and
the House — acknowledging the recent,
discouraging slowdown in revenues. It’s
dangerous to build a budget on revenues that may
be too optimistic and require a later
write-down.
And senators must refrain from trying to squeeze
taxpayers even further, which was their approach
two years ago, when they tried to undo the will
of the voters by freezing a planned income-tax
reduction.
It’s bad enough that Senate leaders are fully on
board with a campaign to raise taxes on the
wealthy through a job-killing ballot question in
2018. Nickel-and-diming regular folks —through,
for example, a heavy new tax on soda, which
supporters lobbied for last week — would be
downright greedy.
It could be a tense couple of months, as Baker
and the House and Senate try to reconcile the
current revenue picture with already-authorized
spending and next year’s budget. It would help
the process immensely if senators agree to set
up shop in the real world.
The Boston Globe
Friday, May 12, 2017
Proposition 2½ ‘underride’ anyone?
By John Laidler
Massachusetts residents are used to pleas from
cities and towns to approve Proposition 2½
overrides — local property tax increases that
proponents say are vital for maintaining
services amid rising costs.
But Hopkinton voters are facing the opposite
request: that they pass an “underride.”
For the second time in three years, the town’s
Board of Selectmen has placed a property tax cap
decrease before voters this spring.
Endorsed by Town Meeting earlier this month, the
$1.5 million measure comes up for a ballot vote
at the annual town election on Monday. In 2014,
Hopkinton approved a $1.25 million tax decrease.
The state law Proposition 2½ limits the annual
growth of a community’s property taxes to 2.5
percent plus revenues from new growth. An
override allows the community to permanently
increase the cap. And an underride enables it to
permanently reduce it.
Statewide, there have been only 18 underride
attempts since 1988, of which 16 have succeeded,
according to state Department of Revenue data.
“It’s very unusual,” said John Robertson,
legislative director of the Massachusetts
Municipal Association.
In addition to the 2014 vote in Hopkinton,
underrides have been adopted in Ayer, Dennis,
Gill, Groveland, Holland, Lancaster, Orleans,
Plymouth, Rockport, Sandwich, Shelburne, Upton,
West Newbury, and Williamsburg. In both West
Newbury and Williamsburg, voters approved the
tax decreases on two occasions. The only
unsuccessful underrides were in Amesbury and
Norton.
Cities and towns already have the ability to tax
less than their levy limit, and many have
accumulated “excess capacity,” Robertson noted,
referring to the difference between how much
they could raise in taxes if they taxed to their
full limit, and how much they actually do. That
excess capacity can accumulate over time, to be
used by communities if needed.
Robertson said that when underrides are
proposed, there are often special circumstances,
such as when a town wants to offset an override
for a purpose that could not be carried out.
The Hopkinton underride is intended to reduce
the size of the town’s existing $3.79 million
excess capacity, according to Town Manager
Norman Khumalo.
“The ‘underride’ is the result of years of
fiscal discipline,” Brian Herr, chairman of the
Board of Selectmen, said by e-mail. “For the
last 10 years Hopkinton has repeatedly not taxed
to the full amount allowed by Proposition 2½.
The ‘underride’ resets the tax levy to a lower
amount to ensure fiscal discipline in the years
to come.”
Chris Sandini, the town’s finance director, said
the underride would not actually lower
residential taxes, but would instead reduce how
much the town could raise under its cap in
future years.
Even as they consider the underride, voters are
also taking up two debt exclusions, or temporary
tax increases, to fund the $525,000 cost of a
new HVAC system at the Main Street Fire Station
and the $1.05 million cost of traffic calming
measures on Hayden Rowe. Together the two
measures would add about $25 annually to the
average single-family tax bill.
“Our policy is to present all large capital
items to the residents for their approval,” Herr
said. “Given our strong financial position, we
borrow funds at extremely low rates. Moreover,
once the project is complete and paid for, it
falls off our budget model and does not become a
‘baked-in expense’ going forward.”
Sandini said that even with the underride, the
town would still have more than $2 million in
its surplus tax reserve next year.
“I am confident the town can meet its
obligations” and still have plenty of room under
its tax cap, he said.
The MetroWest Daily News
Friday, May 12, 2017
Underride heads to Hopkinton election
By Jonathan Phelps
HOPKINTON — For the second time in three years,
residents have a chance to vote on a measure to
protect taxpayers from substantial future tax
hikes with an “underride.”
If approved, the underride will permanently
reduce the amount of money the town can raise
through property or personal taxes each year
under Proposition 2½, essentially the opposite
of an override. The measure overwhelmingly
passed Town Meeting earlier this month.
The town approved a $1.25 million underride in
2014.
Selectmen Chairman Brian Herr said this will be
an unprecedented move to pass underrides in such
a short amount of time if voters approve it on
Monday. The polls will be open from 7 a.m. to 8
p.m. at Hopkinton Middle School, 88 Hayden Rowe
St.
“Most communities pretty much use that 2½
percent increase allowed under Proposition 2½
every year,” he said.
According to information on the Mass.
Association of Finance Committees’ website, when
an underride is passed, the levy limit decreases
by the amount voted. That reduces the base for
calculating future years’ levy limits, which in
turn results in a permanent decrease in the
amount of property taxes the community may levy.
An underride requires a majority vote of the
board of selectmen to be placed on the ballot.
It may also be placed by means of a local
initiative.
This year’s $1.5 million amount will be drawn
from an excess levy amount, which is tax money
the town is allowed to collect within the levy
limit but hasn’t done so.
Herr said this will cut the $3 million excess
levy in half, requiring fiscal discipline for
future boards and committees.
Herr said this will cut the $3 million excess
levy in half, requiring fiscal discipline for
future boards and committees.
“We still have some wiggle room in the tax levy
if we have a financial crisis,” Herr said.
"It’s the town’s budget planning that allows for
the second underride in three years," he said.
“I could see this repeating itself every three
or four years for many years to come if we
remain fiscally disciplined.”
Herr said the underride comes as the town is
renovating and expanding the library and
building a new elementary school and DPW
facility.
“We are not taxing to full amount allowed under
law, but we are providing excellent services.” |
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PO Box 1147 ▪ Marblehead, MA 01945
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