Limited Taxation
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CLT Update
Friday, February 4, 2000


"I don't spend a whole lot of time holding the administration to their promises. This is how they do business."

Senate Ways and Means Chairman
Mark Montigny (D-New Bedford)
The Boston Herald
Feb. 4, 2000

"Since a politician never believes what he says, he is surprised when others believe him."

Charles DeGaulle
Former-President of France

Talk about "the pot calling the kettle black," Sen. Montigny's charge reminds me of the schoolyard kid's retort, "it takes one to know one!" Obviously he subscribes to Gen. DeGaulle's candid observation and knows better than to ever trust a politician's promise -- after all, he knows what his are worth.

As we noted yesterday, the Gimme Lobby's full-court press campaign against our proposed rollback of their eleven-year old "temporary" income tax hike is already in full swing. Today this is demonstrated by AFL-CIO union boss Robert Haynes' and Democrat big-money fundraiser (and potential 2002 gubernatorial candidate) Steve Grossman's collaboration in the Boston Globe op-ed column.

Welcome to Campaign 2000, taxpayer.

CFord-Sig2.gif (4854 bytes)

Chip Ford

The Boston Globe
Friday, February 4, 2000

Cellucci vows to stand by tax cut plan
By Frank Phillips
Globe Staff

Governor Paul Cellucci yesterday vowed to press on with his $1.1 billion tax cut plan despite the stunning news that the cost of the massive Big Dig project is expected to jump $1.4 billion, to $12.2 billion.

Cellucci, making his first public comments since the new price tag was announced this week, also expressed confidence that managers of the Central Artery/Ted Williams Tunnel project can absorb the additional costs without needing more state funds.


But Cellucci, who had been in Washington testifying against an Internet sales tax when news of the cost overruns was made public on Tuesday, skirted questions raised by some fiscal watchdogs and other Beacon Hill leaders about the impact of $1.8 billion in tax cuts if they win approval from voters in November.

In addition to Cellucci's ballot initiative calling for a $1.1 billion tax cut, voters will decide another ballot question that would create tax credits for tolls and auto excise taxes. That plan, if passed, would cost the state as much as $700 million annually, according to the Massachusetts Taxpayers Association.

Pressed to explain the fiscal consequences if both ballot questions are approved, Cellucci declined to comment on the tax credit issue, saying he would not be "diverted" from focusing on his income tax cut proposal.

But he dismissed arguments that the new Big Dig cost should raise questions about the fiscal prudence of his tax cut plan, which would be phased in over three years.

"I think it strengthens our arguments for our tax cut," Cellucci said, saying that the reduction of the income tax rate from 5.85 percent to 5 percent would be a boost for the state's economy and would, in the long run, increase state revenues.


Some Democratic legislative leaders have called on the governor to acknowledge that state funds will have to be used to pay for the project, which is scheduled for completion in 2005.

But House Speaker Thomas F. Finneran, who has opposed Cellucci's tax cut plan, said the administration should be given time to prove that the turnpike authority can develop a plan to cover the newest cost estimate....

The Boston Herald
Friday, February 4, 2000

Cellucci defends Big Dig $$ hikes:
Embattled gov denies misleading voters, pols

by Cosmo Macero Jr. and Laura Brown

Gov. Paul Cellucci yesterday denied charges that he misled voters, lawmakers and even Wall Street bond analysts about the true costs of the massive Big Dig project amid reports of a stunning $1.4 billion cost overrun.


Senate Democrats blasted Cellucci for continuing to press a $1.4 billion tax cut and for refusing to take a position on a ballot initiative that would give Turnpike toll payers $600 million in tax credits and auto excise rebates.

Meanwhile, the non-partisan Massachusetts Taxpayers Foundation warned the initial toll hikes will help only "a tiny bit."

"They're between a rock and a hard place," said MTF president Michael Widmer.

The toll hikes were originally scheduled for Jan. 1, 2002, but they were already earmarked to repay bonds floated to pay for the Big Dig. Moving them up one year only brings a one-time revenue increase of $60 million, Widmer said.

The Taxpayers Foundation estimates the Central Artery Project will need about $50 million a year for 40 years to make up for the cost overruns.

Widmer said several "manageable but unpopular" scenarios could bring in that cash: an increase in the Route 128 and Allston-Brighton exit tolls to $1.50, bringing the cost of a round trip between Boston and Natick to $6; an increase in those tolls to $1.25 and the Harbor tunnels to $4; or an increase in the Harbor tunnel tolls to $5.

"If they don't do tolls, they have to put it back on the state and sacrifice other capital projects, which is already happening," Widmer said.

[State Treasurer Shannon] O'Brien, who had refused to sign off on $500 million in Big Dig bonds until Kerasiotes provided details about cost hikes, appeared more at ease after meeting with project officials yesterday.

"Just putting this number on the table is the first step," O'Brien said. "Right now, I feel comfortable they have disclosed (the costs)."

But the treasurer is less comfortable with Cellucci's version of several January meetings with Wall Street bond analysts, at which the governor insists the potential for Big Dig cost overruns was disclosed.

O'Brien says she only recalls Cellucci and Administration & Finance Secretary Andrew Natsios describing the Big Dig's finances as "stable."

"I don't spend a whole lot of time holding the administration to their promises," said Senate Ways and Means Chairman Mark Montigny. "This is how they do business."

Bond analysts who met with state officials last month declined to talk about the governor's comments last night, saying the discussions were off the record....

The Boston Globe
Op-Ed Page
Friday, February 4, 2000

Cellucci is willing to put fiscal stability on the line
By Robert J. Haynes and Steve Grossman

Governor Paul Cellucci threw down a gauntlet in his recent State of the State speech, announcing that his top priority in 2000 will be to revisit the attempt -- rejected by voters in 1990 -- to roll the state income tax rate back to 5 percent via a ballot initiative.

We gladly take up that gauntlet. This ballot question offers an excellent opportunity for a substantive debate about our values and priorities in the new century. We believe that when that debate has run its course, the majority of citizens will oppose efforts to destroy our hard-won fiscal stability and unite in favor of continuing to make the investments critical to a bright future for the Commonwealth.

We are already on record in favor of lowering taxes in Massachusetts in a measured and thoughtful way. We have cut taxes in this state repeatedly, returning the dividends of good economic times to families and businesses alike. In the last two years, the Legislature has cut the income tax rate; doubled the personal exemption; increased deductions for dependents, child care, rent, and student loans; increased the Earned Income Tax Credit; extended the investment tax credit; provided property tax relief for senior citizens; and cut by half the tax on dividends and interest. Taxes have also been cut on capital gains and for businesses in many sectors.

Massachusetts is poised to be among the greatest beneficiaries of this new economy that values our greatest strategic asset -- the people who make up our well-educated, highly productive work force. Human capital is our principal natural resource.

But our future economic well-being is being threatened by the virtual absence of growth in our labor force -- due in part to the fact that young people are leaving Massachusetts because of the high cost of living, especially housing -- and a growing mismatch between the skills of workers and the jobs that are being created by new entrepreneurial businesses.

Giving an average family back $5 a week, as the governor's tax rollback will, is not going to solve that problem. Giving them the tools they need to compete for good jobs and the quality of life that will induce them to stay here will.

Citizens have again and again expressed their willingness to invest in ways that will pay dividends for working families and businesses: high-quality education for children and adults, job training and retraining, improved transportation, affordable housing, and accessible health care.

There would have to be significant cuts in services if the governor's plan is approved. The growth in tax revenues in fiscal year 1999, $266 million, wouldn't even come close to covering the cost of this tax cut, estimated at $1.2 billion a year. The "Commuter Tax Relief Act" would reduce revenue by another $700 million, for a total of almost $2 billion. And the governor's proposal would roll back the income tax rate no matter what happens, regardless of whether revenues continue to grow, with no flexibility to adapt to changing economic conditions.

So where exactly would the governor's hatchet fall? Looking at the items that he vetoed in this year's budget gives us plenty of insight: $94 million from education; $3.2 million from economic and community development grants; $4 million from state college scholarships; $4 million from employment and training grants; $1.4 million from summer jobs for at-risk youth; $23 million from the maintenance of our capital assets; and the list goes on. Those vetoes amounted to $250 million, a far cry from the cost of the tax cut.

The people of Massachusetts have already expressed their opinion on this issue. When asked in a recent poll how they would like to see the state use its budget surplus, 78 percent responded that their top priorities were improving education, child care, health care, roads, and bridges. Just 18 percent indicated they would like their taxes cut.

Massachusetts needs bold, innovative leadership to compete in the 21st century, not the irresponsible, all-or-nothing political gambit the governor has championed.

Robert Haynes is president of the Massachusetts AFL-CIO. Steve Grossman is former chairman of the Democratic National Committee.

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