Taxation Committee Hearing on
H.4981: Tax Rollback Initiative Petition

State House News Service

STATE HOUSE, BOSTON: The operative number this week, and this budget season, is $1.4 billion. That's the figure most often bandied about for the gap in Big Dig financing and for what the state would lose each year if the income tax cut facing voters in November ends up on the books.

On the eve of House debate over a new budget a billion dollars bigger than this year's, there'll be plenty of talk this week about efforts to roll back taxes at a time when the state must prove to federal authorities that it can properly manage the huge Central Artery/ Tunnel project. On Wednesday the House is expected to act on a Big Dig bailout plan that will likely surface Tuesday from the House Ways and Means Committee.

Wednesday will also feature a Taxation Committee hearing on three initiative petitions to place before voters this fall propositions reducing the income tax, offsetting auto excise taxes and tolls paid by Bay State motorists, and offering a further tax breaks for charitable donations. The forum is expected to bring out the big guns on both sides of the tax-cutting battle.

TAX CUTS: GOP Gov. Paul Cellucci on Wednesday leads off proponents of the income tax cut bound for November's ballot, and the Legislature's top two Democratic leaders are expected to lead the opposition.

Cellucci and former Gov. William F. Weld pushed for almost a decade to roll the income tax back to 5 percent where it resided prior to 1989, when it was hiked to rescue the state from a fiscal abyss.

Legislative inaction on the income tax cut led to the ballot campaign and the collection of more than 115,000 voter signatures to move the question forward.

Cellucci and Citizens for Limited Taxation Director Barbara Anderson led the signature-gathering effort and both will argue Wednesday that lawmakers should keep their old "promise" to drop the 5.85 percent rate back to 5 percent once the economy regained its health. That would mean the average Massachusetts family would save an extra $500 a year in taxes leaving the state with an estimated $1.2 billion less in annual revenues once the full cut is implemented over three years.

Senate President Thomas Birmingham and House Speaker Thomas Finneran have both endorsed the Campaign for Massachusetts' Future that will fight both the income tax cut and a second voter initiative giving a tax break to those who pay turnpike and bridge tolls and/or auto excise taxes. They and other tax cut foes, led by the Tax Equity Alliance for Massachusetts and labor unions, worry that the state cannot afford to give up revenues and at the same time support important services and pay the bills for the nation's largest public works project. Finneran does support a House budget proposal that would roll the tax rate back to 5 percent, starting in 2003, if the economy continues to do well.

Both Birmingham and Finneran are expected to testify Wednesday. With more than three-quarters of the 200 House and Senate members in the Democratic column, there is little likelihood that the income tax cut will be approved at the State House before the May 3rd deadline for passing any voter initiatives. That means sponsors must again hit the streets and collect another 9,517 signatures in order to keep their proposals alive for the statewide ballot.

While the legislative deck is stacked against Cellucci, he and other income tax cutters are banking on voter support come November. But Cellucci does now agree with Finneran and Birmingham that another tax break headed for the electorate could translate into long-term trouble for the state's balance sheet and should be defeated. That proposal to offer motorists a tax break for the amount they pay each year in excise taxes and in tolls would, according to the Department of Revenue, remove $675 million a year from the state's revenue base.

Coupled with the $1.2 billion eventual loss accompanying the income tax cut and another $175 million loss if voters approve a third initiative offering tax breaks for charitable giving, the state could stand to lose about $2 billion if the fall finds voters in a tax-slashing mood. (Wednesday, 1 pm, Gardner Auditorium)

Prior to Wednesday's Taxation Committee hearing, opponents of the initiatives to slash taxes plan a news conference to outline their fears about what the loss of revenues will mean -- especially in the education community. Participants include Massachusetts Teachers Association head Stephen Gorrie and teachers from the state's network of elementary and secondary schools and the University of Massachusetts. The hearing itself will be recorded by Channel 44's 'Gavel to Gavel.' It will be broadcast live if the House is not in session and broadcast at a later date if, as expected, the House spends that afternoon working on the Big Dig financing package. (Wednesday, 11:30 am, Room A-2) ...

BUDGET: As debate rages Wednesday over tax cuts, tolls and ways to close the Big Dig financial hole, members of the House will be busy trying to meet a 5 pm deadline for filing proposed budget amendments. Last week, the House Ways and Means Committee unveiled a $21.7 billion spending plan for the new fiscal year that begins July 1. It will hit the House floor for debate on Monday April 10. During four days of budget deliberations last year, the House considered 1,200 proposed amendments. This being an election year, the number will likely again be high. Members will at least want to show their constituents back home that they tried to win support for favorite local projects or for added tax cuts. (Wednesday, 5 pm, House Clerk's Office)

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