CITIZENS   FOR  LIMITED  TAXATION  &  GOVERNMENT

 

[V]oters strongly favor, by 63 percent to 32 percent, tapping the state's $4 billion in cash reserves, and opposed most other measures....

While 41 percent said Cellucci should eliminate his $1.2 billion tax cut plan and use the money for the Central Artery, 52 percent opposed the idea.

The Boston Globe Survey (below)
Feb. 27, 2000


According to the state Department of Revenue, which tracks local budgets, free cash accounts and so-called rainy day funds held by the state's 351 cities and towns soared from $166 million in 1992 to $773 million last year.

And total local reserves are probably closer to $1 billion because some cities and towns conceal surpluses in accounts that, on paper, are earmarked for other purposes....

... "The state is far healthier than our cities and towns," said John Robertson of the Massachusetts Municipal Association....

After accounting for inflation, general state aid to local governments climbed from $2.8 billion in fiscal 1992 to $4.6 billion in the current fiscal year, which ends June 30....

State reserve accounts have grown from $153 million in fiscal 1993 to more than $3.5 billion last year. And state officials expect a projected budget surplus and money from a legal settlement with tobacco firms to push that number over the $4 billion mark by June 30.

"We have so many reserves they're coming out of our ears," said state Secretary of Administration and Finance Andrew S. Natsios. "We're swimming in money."

"The notion that we're swimming in money is absolutely dead wrong," said Michael J. Widmer, president of the [Massachusetts Taxpayers Foundation]....

The Boston Globe (below)
Feb. 27, 2000


The Boston Sunday Globe
February 27, 2000

Despite Big Dig, towns have cash
But borrowing to pay project overrun will imperil
other projects, watchdog group says

By Michael Rezendes
Globe Staff

Once scrounging for cash, Boston is now plucking $13 million from surplus funds to create affordable housing. Across the river, Cambridge teenagers are playing basketball in a new $4 million city youth center. And in Brookline, officials recently opened a $6 million highway garage, paid for entirely with town money.

As they clamor for state funds and decry the Big Dig's drain on public dollars, cities and towns seldom mention a little-noted fact: Many of them are awash in cash.

Some municipalities are so well off that they say they can undertake local public construction projects on their own, with or without state money.

Buoyed by a decade of prosperity, real estate development, and unprecedented levels of state aid, local governments are amassing cash reserves four times as great as what they held in the early 1990s.

According to the state Department of Revenue, which tracks local budgets, free cash accounts and so-called rainy day funds held by the state's 351 cities and towns soared from $166 million in 1992 to $773 million last year.

And total local reserves are probably closer to $1 billion because some cities and towns conceal surpluses in accounts that, on paper, are earmarked for other purposes.

For example, Boston, among several other municipalities, reported no free cash or stabilization funds to state officials last year. But a recent Standard & Poor's credit report said the city had an unreserved fund balance of $127 million.

Local reserves are growing even as spending on local amenities has increased. In Boston, considered a fiscal basketcase in the early 1980s, record cash reserves have piled up through 14 consecutive budget surpluses while spending by Mayor Thomas M. Menino has climbed steadily.

"The budget is increasing far in excess of the cost of living," said Samuel Tyler of the Boston Municipal Research Bureau, a business-backed fiscal watchdog group.

While there is no question the $12.2 billion Central Artery/Tunnel project is soaking up hundreds of millions of transportation dollars each year and delaying other state road projects, so far the effect on most cities and towns has been manageable, and in some cases, even minimal.

With state aid up over the last 10 years, and property tax revenues strong, some communities have enough cash on hand to issue bonds on their own for construction projects, rather than wait for the state to assist them.

Cambridge City Manager Robert Healy said the city will launch plans to site and build a main library whether or not state assistance for library construction is cut.

"We'd do that with our own bond issue," he said.

Not every city or town is doing well. Some are struggling because local economies have not kept pace with the general statewide boom. And some local officials say inequities in the formulas used to distribute state aid have kept the pressure on their budgets.

"In terms of the overall economy, I don't think we're doing that well at all," said Framingham Town Manager George King. "Costs are way up, especially education costs. And we don't have the income tax and the sales tax, as the state does, which are economically driven."

To be sure, much of the good fortune enjoyed by cities and towns can be attributed to state largesse.

After accounting for inflation, general state aid to local governments climbed from $2.8 billion in fiscal 1992 to $4.6 billion in the current fiscal year, which ends June 30.

The increase can be traced, in part, to rising aid to local schools, which spiked from $1.3 billion in fiscal 1992 to $2.8 billion this year. Also, proceeds from state Lottery sales to local governments more than doubled during the same period, from $369 million to $716 million.

The generous state aid has allowed some communities to keep residential property taxes well below the limits permitted under Proposition 2. Under the law, local property tax collections cannot increase by more than 21/2 percent each year and the total amount of taxes collected cannot exceed 2 percent of the total value of the city or town's property. State budget officials say that instead of looking to the state for more money, municipalities should maximize their own tax revenues for local projects.

Local officials, now launching their annual push for assistance from Beacon Hill, note that state revenues and reserve accounts have also soared. And they insist that increased state aid over the last decade has played a crucial role in the ability of cities and towns to provide essential local services.

"The state is far healthier than our cities and towns," said John Robertson of the Massachusetts Municipal Association. "And cities and towns are in a healthy position, not because they receive state aid they don't need but because there have been healthy economies at the local level and because local budgets have been managed prudently."

State reserve accounts have grown from $153 million in fiscal 1993 to more than $3.5 billion last year. And state officials expect a projected budget surplus and money from a legal settlement with tobacco firms to push that number over the $4 billion mark by June 30.

"We have so many reserves they're coming out of our ears," said state Secretary of Administration and Finance Andrew S. Natsios. "We're swimming in money."

That's why the pitched battle between state and local officials over transportation spending and local aid seems more about how to divide the spoils of a robust economy than how to solve a financial crisis caused by the drain of the Central Artery project.

Local authorities contend that, because of the need to direct federal highway aid to the Central Artery, state officials have reneged on a pledge to launch, or seek bids for, $400 million in new state road projects each year. As a result, they say, important maintenance and improvements on bridges and state roads have been delayed.

State officials counter that they are slightly increasing spending on state highways other than the Central Artery, paying out approximately $600 million annually on non-Artery projects. While they may not be launching $400 million in new projects each year, they say that is a poor measure, because so many projects are underway or waiting that it would be foolish to seek bids for new ones.

Nevertheless, the Massachusetts Taxpayers Foundation, a business-backed fiscal watchdog group, has spent much of the last year warning that increased borrowing to pay for the Big Dig will eventually strain the state's ability to fund crucial infrastructure projects unrelated to transportation.

"The notion that we're swimming in money is absolutely dead wrong," said Michael J. Widmer, president of the foundation. "There's not one area of capital spending that's not being squeezed, with long-term consequences for the Commonwealth."

Specifically, Widmer said previously authorized plans to improve local seaports, renovate courthouses, and clean up toxic waste sites could be compromised or put on hold indefinitely if the state continues borrowing to pay for the Big Dig.

On Friday, Boston officials said the city was shelving the idea of building a South Boston-Back Bay connector ramp, due to the unlikely availability of additional transportation dollars.

Widmer said other major projects contemplated by state officials might never materialize because of a lack of funds. These include state assistance for a new Fenway Park and new highway construction to Worcester Airport.

State officials argue that, with the Big Dig now two-thirds complete and another budget surplus on the horizon, they will be able to finish the project without compromising other programs unrelated to transportation.

But this assertion could be complicated by an economic downturn or any of three ballot questions that, if approved by voters, could cut annual state revenues by more than $2 billion.

For example, a referendum question backed by Governor Paul Cellucci that would cut the state income tax from 5.85 percent to 5 percent over four years would eliminate an estimated $1.2 billion in annual revenue.

A ballot measure allowing income tax rebates for tolls and auto excise taxes would eliminate an additional $700 million.

"If we were in an economic recession, all these things coming together would be a real crisis," said Widmer, referring to the proposed tax cuts, Central Artery spending, and other infrastructure needs. "We can't have it all."


The Boston Sunday Globe
February 27, 2000

Cellucci loses ground in poll
Big Dig appears to be big factor

By Frank Phillips
Globe Staff

According to the survey of 800 voters, [conducted for the Globe by] ... KRC Communications Research ...

[...]

As Cellucci and legislators scramble to find ways of covering the Big Dig funding gap, the poll showed voters strongly favor, by 63 percent to 32 percent, tapping the state's $4 billion in cash reserves, and opposed most other measures.

While 41 percent said Cellucci should eliminate his $1.2 billion tax cut plan and use the money for the Central Artery, 52 percent opposed the idea.

Some 87 percent opposed an increase in gasoline taxes, while 11 percent backed it. Raising tolls on the Massachusetts Turnpike, Tobin Bridge, and the harbor tunnels was supported by 39 percent, and opposed by 55 percent.

Adding new tolls to the Southeast Expressway and Interstate 93 also ran into opposition from 58 percent of those surveyed, while 33 percent approved of the idea.

In other findings, voters identified health care and health insurance as the issue that most concerned them. One-third of those surveyed called health care the most important issue, while another 15 percent rated education, and 13 percent listed taxes. None of the other public policy issues scored close to those three....


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