Limited Taxation
Post Office Box 408     Peabody, Massachusetts   01960     (508) 384-0100
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CLT Update
Tuesday, January 18, 2000


The House chairman of the Ways and Means Committee, Representative Paul R. Haley of Weymouth, echoed Widmer's argument that additional tax cuts would strain the state's efforts to maintain a balanced budget.

"If you cut taxes that dramatically," Haley said, "you have to hold the line on so many different accounts and make some tough decisions" in areas such as "education funding, both in local and higher ed, our assistance to cities and towns, and expansion of human services."

The Boston Globe
Tuesday, January 18, 2000
"Massachusetts budget may jeopardize
fiscal health, watchdog group warns"

Hey, that absolutely brilliant conclusion (above) must be why Rep. Paul Haley was made chairman of the House Ways and Means Committee.

The pols won't be able to keep spending more and more of our money if we demand the income tax rate be reduced as promised. They'll have to pull the plug on huge annual spending increases and settle for a budget that has merely doubled over the last dozen years. The political feeding frenzy will finally end.

That's the whole idea, Rep.

Here we go again: the fraudulently-named Massachusetts Taxpayers Foundation is back on the attack.

Just what and who is the MTF?

Actually, very little information is available to the general public, and its website is sparse. In fact, MTF doesn't have its own website, but piggybacks a page off its national affiliate:

"The National Taxpayers Conference:
A network of state-level taxpayers associations"

The NTC informs us that: "Each of the 29 member organizations has a powerful impact on the formation of public policy in their state and command enormous respect from legislators, the press, and the public at large."

Of its 1999 NTC Annual Meeting, held at Maddens Resort, Brainerd, Minnesota, it states: "Corporate sponsorships for this event are still available. Sponsorships will help us reduce the resort rates to hotel levels. Sponsorships are also available for a dinner cruise on Tuesday evening. Multi-state corporations are ideal sponsors since their involvement allows them to interact with influential groups from states where they have interests."

The single page referring to its Massachusetts subsidiary, the "highly respected" Massachusetts Taxpayers Foundation, provides only basic contact information:

24 Province Street, #353
Boston, MA 02108
Phone: (617) 720-1000
Fax: (617) 720-0799

Apparently this is provided to facilitate its further recommendation to potential "ideal sponsors": "You can enjoy the benefits of access by joining the NTC organizations in the states where you live, do business, or have investments. I encourage you to visit the web sites of the individual organizations and contact them by phone, fax or e-mail about membership. It's a wise investment."

What is the Massachusetts Taxpayers Foundation?

One thing the MTF is for sure is wrong more times than right with its economic forecasts; which could easily be construed as a lobbying gimmick to acquire tax cuts for their "ideal sponsors" at the expense of broad-based tax cuts for average taxpayers (see Barbara's column of exactly one year ago). History seems to support this conclusion.

It's a damning insight on those in the media and others who regurgitate the standard boiler-plate praise of the MTF without even for a moment exploring its dismal track-record. This is a perfect example of perception in politics being more important than substance.

What the Massachusetts Taxpayers Foundation is not is a friend of the average Massachusetts taxpayer, and it never has been.

This it has made abundantly clear.

CFord-Sig2.gif (4854 bytes)

Chip Ford

PS.  If you have any additional information on the deceptive MTF, please send it to or to our post office box address at the top of this message.

Associated Press
Tuesday, January 18, 2000

Budget watchdogs warn against tax cuts, additional spending
By Jean Mcmillan

BOSTON (AP) New tax cuts and additional increases in government spending could mean big problems for state finances, according to the Massachusetts Taxpayers Foundation.

"While fiscal 2000 is likely to end with a modest surplus, without a change in course this is a recipe for long-term disaster," Michael Widmer, the group's president, said in a statement Monday accompanying a new study.

The MTF is a business-backed group highly respected on Beacon Hill for its budget analyses.

But not everyone agrees with the group's outlook.

Barbara Anderson, who heads Citizens for Limited Taxation, said the MTF has often been wrong in its projections and is apt to favor tax cuts for the businesses that support it.

"For the most part, they are on the other side of regular taxpayers and support only business and corporate tax breaks," said Anderson, a promoter of a ballot question to roll back the state income tax to 5 percent.

However, she said, she agreed with the MTF concern over government spending. The way to slow that, she said, is to cut taxes and give the politicians less money to spend.

The MTF report, titled "State Budget '00: Expectations Soar, But Hard Landing Ahead," found that spending had increased almost 20 percent since 1997.

At the same time, the report said, tax cuts have been enacted that will reduce tax revenue by $1.7 billion or 11 percent by 2002. That included a doubling of personal exemptions, tax relief for the elderly and a cut in the income tax from 5.95 percent to 5.75 percent.

And that doesn't include the proposal to roll back the state income tax and another giving tax breaks to those who pay tolls and local auto excise taxes.

If both of the latter measures pass, Widmer said, the tax revenue base will have been reduced by a total of 25 percent by 2003.

The report said the combination of approved tax cuts and additional spending largely eliminated surpluses of $1.2 billion in 1998 and $550 million in 1999.

Widmer said no one was predicting a recession, but said the tight labor market alone will put limits on how much more the state's economy can grow.

Meanwhile, he said, the state still faces such costs as the Central Artery highway project, local education aid, Medicaid and pension expenses.

"It will only become a crisis if we don't make those choices and try to do both major taxes and continue to have increased spending at the present rate," he said.

The MTF doesn't oppose a further cut in the income tax, but recommends that it should be tied to economic growth, not automatic.

Administration and Finance Secretary Andrew Natsios said he couldn't comment directly on the report because he hadn't seen it.

But, he said, he believed the state can afford the $1.4 billion state income tax rollback, which is being backed by Gov. Paul Cellucci, if there are no major new spending initiatives.

"You obviously can't spend an unlimited amount and have unlimited tax cuts," he said.

Natsios said the state has been careful to build up reserves of nearly $2 billion to prepare for any unexpected downturn in the economy.

The Boston Globe
Tuesday, January 18, 2000

Massachusetts budget may jeopardize fiscal health,
watchdog group warns

By Brian MacQuarrie
Globe Staff

Despite flush economic times in which state ledgers are filled with black ink, a government watchdog group says the Massachusetts budget is "a recipe for long-term disaster."

In an annual report to be released today by the Massachusetts Taxpayers Foundation, the group bases its concern on a succession of large tax cuts and spending increases that the nonprofit organization says cannot be sustained indefinitely.

That combination, the foundation argues, "is propelling the state into a period of much tighter budgeting that will require difficult tradeoffs among priorities."

The growth in state spending is expected to outstrip revenue growth in fiscal 2000 for the second consecutive year. Such an imbalance, said foundation president Michael J. Widmer, has not occurred since the state's fiscal crisis of the late 1980s.

Based on state appropriations and income projections, government spending is scheduled to grow 6.6 percent this fiscal year, compared with a 4 percent increase in revenue, according to foundation figures.

But while the Legislature has shown more willingness to fund increases in social services and education, lawmakers also have approved a total of $1.7 billion in tax cuts in recent years. Suc  movement in opposite directions is doomed to create problems, Widmer warned.

"It's a paradox because we're in such good economic times that it's difficult to understand that we could be entering a period in which the situation has changed," Widmer said.

The taxpayers group, however, praised Governor Paul Cellucci and lawmakers for their "wise use of recent surpluses" and measures to strengthen the state's fiscal health, including MBTA overhaul, plans for the tobacco-settlement money, and an extension of the investment-tax credit.

However, the foundation said, the state's fiscal health will be jeopardized if two proposed initiative petitions -- to reduce the state income tax rate to 5 percent and to provide an income tax credit for tolls and automobile excise taxes -- are placed on the November ballot and become law, the foundation said.

Such a development would deprive the state of an additional $2 billion in revenue, Widmer said.

The House chairman of the Ways and Means Committee, Representative Paul R. Haley of Weymouth, echoed Widmer's argument that additional tax cuts would strain the state's efforts to maintain a balanced budget.

"If you cut taxes that dramatically," Haley said, "you have to hold the line on so many different accounts and make some tough decisions" in areas such as "education funding, both in local and higher ed, our assistance to cities and towns, and expansion of human services."

But the caution flag raised about further tax cuts will not slow Cellucci's push for the 5 percent rate, gubernatorial spokesman Jason Kauppi said yesterday. Indeed, Cellucci's budget proposal for fiscal 2001, scheduled to be released Jan. 26, will be based on that rate, Kauppi said. The state Legislature recently approved a budget that would reduce the state's income tax rate from 5.95 percent to 5.75 percent over three years.

"We have shown that tax cuts drive the economy and actually end up increasing state revenues, which allows us to meet the priorities of the commonwealth," Kauppi said. "We think that reducing the income tax will ... force fiscal discipline upon the Legislature."

The need to mesh tax policy with spending increases takes on added urgency, the foundation said, because the so-called "budget-buster" accounts present taxpayers with "a daunting list of largely unavoidable cost increases."

Those include surging expenses in Medicaid and state health insurance, pensions, funds to sustain education reform, MBTA assistance, capital projects such as the Big Dig, and social services ranging from housing to care for the elderly.

Even a continued expansion of the national economy cannot, by itself, guarantee similar good times for Massachusetts, the foundation said.

The state's tight labor market is likely to become an increasing drag on economic progress here, the group predicted.

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