Tuesday, April 4, 2000
Gov. Cellucci calls budget "runaway freight train
BOSTON (AP) Gov. Paul Cellucci, fresh from a 12-day
trade mission to China, slammed the Massachusetts House's budget plan, calling it a
"runaway freight train of spending."
"This is a very bad budget for the taxpayers of
Massachusetts," Cellucci said Monday, moments before walking into a meeting with
House Speaker Thomas Finneran.
Cellucci blasted the House for using higher revenues
estimates and for not being aggressive enough on tax cuts.
The budget also should have called for a study on the
benefits of privatizing the Massachusetts Water Resources Authority, he said.
Finneran dismissed the criticism as "political
rhetoric" and defended the proposed $21.7 billion budget.
Finneran said the House used slightly higher revenues
estimates due to the continued strength of the economy. He said the question of whether or
not to privatize the MWRA should not be debated in the budget.
Finneran also called Cellucci's tax cut criticism
unfair, saying the House budget includes a significant tax cut.
"In 2003 we begin an absolutely definite tax cut
program that gets us down to 5 percent," Finneran said. "It's not wishful
thinking. It's not dependent on a vote from the electorate."
Cellucci is pushing a ballot question which would
force the state income tax rate to 5 percent by 2003.
State House News Service
Monday, April 3, 2000
CELLUCCI ON BUDGET: Fresh from a trip to China, Gov.
Cellucci lambastes $21.7 billion House budget as a "runaway freight train of
spending," and criticizes omission of tax relief and MWRA privatization plans.
"I'm stunned, stunned that the House Ways and
Means Committee would put out a budget with the kind of spending increases that it
has," Cellucci said of the budget that's 1.9 percent larger than his own.
"Usually, we wait for the Senate to add all the money. If the House starts adding the
money, you can imagine what it's going to look like when the Senate gets done with
Governor also blasts House reliance on higher revenue
estimate than administration used -- the first break from the decade-long Beacon Hill
tradition of agreeing on base revenues prior to budget debates.
"One of the things that enabled us to restore
fiscal discipline and the fiscal health of state government over the last 10 years is that
we have been using conservative revenue estimates," Cellucci says. "Now all of a
sudden, the House violates that principle by upping the revenue projections for this year
without the agreement of the secretary of administration and finance. It reminds me of the
late 80s, when spending was out of control. This is a very bad budget for the taxpayers
and for the ratepayers of Massachusetts."
House Speaker Thomas Finneran dismisses Cellucci's
criticism as "political rhetoric."
"Ignoring the irony of TEAM's
concern about tax cuts not taking place fast enough, this characterization fails to
appreciate how the proposal works in the immediate aftermath of a recession."
Massachusetts Taxpayers Foundation
April 3, 2000
TEAM ANALYSIS OF MTF TAX CUT PROPOSAL
MISSES THE MARK
In a critique of MTF's proposal to cut the income tax
to 5 percent at a pace tied to growth in the Massachusetts economy, the Tax Equity
Alliance for Massachusetts (TEAM) focuses on an issue of which the Foundation is fully
aware: The proposed tax cut trigger has a built-in delay, reflecting in part the
availability of economic information and, more importantly, ensuring that the Governor
will be able to build any tax rate adjustment into his annual budget submission. Because
of this delay, TEAM alleges, the Foundation's tax cut plan "fails by its own
standards" -- an utterly false claim that arises from a fundamental
mischaracterization of MTF's proposal.
Under the Foundation's plan, the state income tax rate
would be reduced to 5 percent in gradual steps tied to growth in the Massachusetts
economy, as an alternative to the Governor's ballot proposal to cut the rate to 5 percent
over the next three years. After an initial reduction of the current 5.85 percent income
tax rate to 5.75 percent in 2001, each 2.5 percent of annual growth in total Massachusetts
personal income since 1999, adjusted for inflation, would trigger an additional 0.1
percent cut in the tax rate until the rate reaches 5 percent. The accumulated growth from
the base year 1999 to 2000would determine the tax rate for 2002, the growth from 1999 to
2001 would determine the tax rate for 2003, and so on, until a tax rate of 5 percent is
This approach accomplishes two important goals. First,
it would put the state on a track to reduce its personal income tax burden, which is among
the highest in the nation, an essential step to improve the long-term competitiveness of
the state economy. At the same time, through a careful selection of the
"trigger" level and the amount of the incremental rate cuts, it would ensure
that the state has sufficient resources over the next several years to manage the many
budgetary challenges it faces -- in education, capital, health care and other areas -- as
well as to accommodate the impact of the many tax cuts adopted in recent years.
TEAM's analysis focuses on one aspect of the MTF
proposal, the timing of future incremental cuts, charging that -- because the cuts would
not reflect the actual growth in personal income in the year in which they are implemented
-- the plan "does not succeed in protecting state revenue during a recession."
However, TEAM has completely overlooked a crucial point: If it were possible to solve this
problem of delayed information -- if we could base the decision to cut the tax rate on
up-to-the-minute information about personal income growth -- the result would be to
trigger the cuts two years earlier than the MTF plan provides, putting in place precisely
the same tax rates that TEAM faults! Carrying TEAM's reasoning to its logical conclusion,
a tax cut would never be justified, because it is impossible to know to what extent the
economy will grow, or contract, over the next 12 months.
TEAM's inadequate evaluation of the impact of
implementation delays also leads to the erroneous claim that the MTF plan would
"block tax cuts during a recovery." Ignoring the irony of TEAM's concern about
tax cuts not taking place fast enough, this characterization fails to appreciate how the
proposal works in the immediate aftermath of a recession. Because the accumulated growth
in personal income, rather than the year-to-year change, is used in the trigger mechanism,
the income growth that is lost in an economic downturn must be "earned back"
before further tax cuts are instituted. Far from blocking cuts during a recovery, this
approach puts a brake on the pace of cuts, ensuring that rate reductions reflect real
growth in the economy over the longer term.
The Commonwealth of
House of Representatives
Representative Francis L. Marini
Contact: Darren Johnson, (617) 722-2100
March 30, 2000
Proposed Budget is like Christmas in April
BOSTON - House Minority Leader Francis L. Marini
(R-Hanson) says the $21.7B budget offered by House Ways and Means "spends every
dollar and then some." The Minority Leader added a proposal of Governor Paul Cellucci
to rollback income taxes to the five percent, which goes before voters in November, has
caused the Democratically controlled House of Representatives to go on a spending spree
and ignore the hard lessons of the 1980's.
"The budget released today spends every penny of
available tax money, borrows and spends another $750 million, then commits $875 million
over the next five years to pay for it," Marini said. "This budget gives money
to people beyond their wildest desires." Marini cited Treasurer O'Brien's budget that
was way up over even her own requests. "We give people money they didn't even ask
He continued, "this budget increases spending for
everyone and decreases funding for no one. By the time voters get a chance to roll back
their own income taxes, there will be no budget surplus left over to make up the
According to published reports, Ways and Means
Chairman Paul Haley said the proposed FY'2001 budget will "shore up our supports
rather aggressively" and added "we don't think now is the time to be cutting on
our tax base."
"This spending spree contained in this budget is
the best argument that we can afford a tax cut and still provide the services people
expect and deserve," Marini said. "If the 80's taught us anything, it is that
nothing will last forever. This budget reminds of our so called Massachusetts miracle and
obviously the Democrats are looking for another one."