Limited Taxation
Post Office Box 408     Peabody, Massachusetts   01960     (508) 384-0100
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CLT Update
Wednesday, February 16, 2000


February 16, 2000

Chip Ford - (781) 631-6842
Barbara Anderson - (508) 384-0100

Connections: The Income Tax Rollback, the Big Dig,
and the Tobacco Settlement


In the '80s, taxpayers paid one of the highest tax burdens in the nation and expected that some of the money was being used to pay state Medicaid bills.

In 1989, they discovered that during the "Massachusetts Miracle" Dukakis presidential campaign, the bills had not been paid.

The income tax rate was "temporarily" increased and roughly $480 Million of that increase -- over half -- was used to pay those unpaid Medicaid bills.

After the fiscal crisis was over and its bonds were paid, the higher "temporary" income tax rate remained. The state used the extra money for various purposes, doubling the state budget.


The Commonwealth joined with 45 other states in a lawsuit to be reimbursed for Medicaid costs.

The taxpayers paid the Medicaid bills (some of them twice, when they thought the Dukakis administration was passing the money along to Medicaid providers, and again when the providers were actually paid with the income tax hike.) Therefore, taxpayers should get the reimbursement.

In other states, the reimbursement is being used for many purposes. According to Reuters (Aug. 25, 1999) this includes capital construction projects in West Virginia, a new morgue in North Dakota and tax cuts in Connecticut. Michigan plans to use 75 percent of its money for a new college scholarship fund; most of North Dakota's settlement goes for water projects and education. California will put its money into the state's general fund, and Idaho will pay down its deficit. Only Massachusetts used initial funds from the settlement to enhance a tobacco prevention program.


In 1986, taxpayers were told by the Dukakis administration that the Big Dig would cost 2.6 Billion. We now know that the Big Dig will cost over $12 billion, with the latest overrun 1.2 billion.

CLT PREFERENCE:  Rollback the income tax rate as promised and give us our Medicaid reimbursement, use state surplus and slush funds for the Big Dig overrun.

ALTERNATE PLAN:  Rollback the income tax rate as promised and use the tobacco reimbursement for the Big Dig. Feel free to put signs on the Central Artery that read "smoking is bad." DO NOT RAISE TAXES, TOLLS, OR FEES.


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