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.
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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