Commonwealth of Massachusetts
Department of Revenue
April 4, 2000
Contact: Nicole St. Peter
Jeffrey Busha (617) 626-2201
March 2000 Revenues Total $1.40 Billion
Revenue Commissioner Frederick A. Laskey today announced that revenue
collections for March 2000 totaled $1.40 billion, up $172.7 million or 14.1 percent from
las March. Year-to-date revenue collections totaled $11 billion, up $749.4 million
or 7.3 percent above last year. Collections for FY2000 are $160 million above the midpoint
of the revenue estimate range, which is based on the Administration & Finance annual
estimate of $15.288 billion.
"As we move into the end of tax filing season, revenue
collections remain solid with income tax collections leading the way," said
Income tax collections for March totaled $469.2 million, an increase
of $132.7 million or 39.4 percent when compared to March 1999. Withholding tax collections
totaled $669.2 million, up $92.1 million or 16.0 percent. Sales and use tax collections
totaled $268.8 million, up $3.3 million or 1.2 percent. Corporate excise collections
totaled $374.8 million, up $41.7 million or 12.5 percent compared to last March.
Year-to-date income tax collections totaled $6.12 billion, up $509.0
million or 9.1 percent. Withholding collections totaled $5.61 billion, up $492.4 million
or 9.6 percent Total sales and use tax collections totaled $2.62 billion, up $200
million or 8.3 percent Corporate collections totaled $806.0 million, up $55.8
million or 7.4 percent.
So far this tax season, DOR has received 1.6 million returns and has
issued 1.3 million tax refunds totaling $513 million with an average refund amount of
$373. DOR ha processed 662,000 electronically filed tax returns, up 18 percent
compared to last year and has directly deposited 166,000 refunds into taxpayers' bank
accounts, up 25 percent from last year.
The Beacon Hill Institute
Wednesday, April 5, 2000
Contact: Aubrey Haznar, 617/742-9102
New Analysis Shows Governor's Tax Cut
Would Benefit the State Economy Most
Massachusetts could strengthen its
position at the forefront of the new economy and, in the process, capture substantial
economic benefits by adopting a cut in the personal income tax as proposed by Governor
Cellucci and slated for inclusion on the November 2000 ballot. This is according to a new
analysis released today by the Beacon Hill Institute (BHI). The analysis shows that the
Governor's proposal would confer substantially more benefits than a "compromise"
proposal offered by the Massachusetts Taxpayers Foundation (MTF).
In cutting the tax rate to 5% by 2003, as
proposed by the Governor, the state would create 74,505 new jobs, $956 million in new
factories, equipment and other capital, and $3.733 billion in new payrolls by 2003, about
3.8 times the benefitsconferred by the MTF proposal. BHI obtained these estimates by using
its State Tax Analysis Modeling Program (STAMP).
A number of factors support this
Since 1994, state revenues have been
growing by nearly $1 billion per year or at about twice the inflation rate. This means
that, even with the tax cut and at current rates of growth, the state will bring in about
$23.3 billion in FY 2003, enough to finance all existing state programs.
Over the last eight years, the state
has consistently underestimated tax revenues, running up huge surpluses, portions of which
disappear into spending projects tha didn't appear during the normal budget process.
Over the period FY 1996 -- FY 2000, these surpluses will have averaged about $770 million
A frequent worry -- a Big Dig cost
overrun of $1.4 billion -- turns out to have little importance in considering a tax cut.
The debt service on additional borrowing in this amount would come to only about $130
million per year or about 0.6% of the current budget.
With over $3.3 billion in reserves
($1.8 billion in the unemployment insurance fund; $131 million in the welfare caseload
reserve and $1.4 billion in the stabilization fund), recurrent large budget surpluses and
a strong economy, the state is in a position to absorb a slowdown in tax collections.
The MTF proposal makes tax policy a
hostage of past economic growth rates that bear no relation to current economic
conditions, and it complicates tax planning.
Dr. David Tuerck, Beacon Hill Executive
Director and Chairman and Professor of the Department of Economics at Suffolk University,
said "Massachusetts taxpayers would be best served by a simple reduction in the
personal income tax rate to 5%. There should be no compromise when it comes to the
Massachusetts economy and its taxpayers."
The Beacon Hill Institute at Suffolk
University is a nonprofit, nonpartisan research organization that applies state-of-the-art
economic methods to the analysis of current public policy issues.
State House News Service
Wednesday, April 5, 2000
Lawmakers Have Cutting Remarks
for Tax Reduction Ballot Questions
By Elisabeth J. Beardsley
STATE HOUSE, BOSTON, APRIL 5, 2000 ... A
trio of tax cuts headed for the November ballot received a decidedly cold reception from
lawmakers today, even as Gov. Paul Cellucci argued that a massive income tax rate
reduction is necessary to preserve the state's economic fortunes.
The Taxation Committee today aired three
initiative petitions that would reduce the income tax rate to 5 percent, grant a full tax
credit for auto excise and tolls, and create tax deduction for charitable
giving. The Legislature has until May 2 to act, after which proponents must gather another
9,517 additional signatures to place the questions before voters.
Arguing for his plan to reduce revenues
by $1.2 billion over three years, Cellucci said the rate cut would insulate the state
against another disastrous recession. With some o the highest income taxes in the
country, Massachusetts was the hardest-hit state during the fiscal crisis of the late
'80s. The governor reminded lawmakers that their first act then was to slash local aid by
25 percent, forcing the layoffs of thousands of teachers, police and firefighters.
Raising his voice and angrily jabbing a
finger at committee members, Cellucci said, "You're worried about losing a little
revenue next year. I'm worried about losing thousands of jobs in five years because we
have not protected the economic base of this state. We cannot be the state that has the
highest income tax in the country."
According to the Department of Revenue,
Cellucci's income tax cut will reduce revenues by $1.2 billion, the toll-reduction plan
would remove $675 million a year and the charitable giving plan will cost $175 million.
Discussion of the income tax cut
monopolized most of the hearing, as the debate turned quickly into a squabble over
competing proposals to fill the Big Dig financing hole. The overrun now stands at $1.4
billion but could grow to double that, according to preliminary indications from federal
auditors combing the massive projects' books. Cellucci blasted the House's plan for $750
million in new borrowing to shore up road and bridge projects. The governor proposed
freeing up $650 million for projects by paying off high-interest debt.
"You talk about the loony left. This
is the loony left," Cellucci said of the House plan. "It's lunacy to borrow $750
million to create a special fund when you can accomplish the exact same thing by paying
off $650 million in high-interest debt. It's irrational. It makes no sense. It's a
compelling argument that we need fiscal discipline."
Committee members jumped on the governor
with both feet. Vice Chairman Joseph Wagner (D-Chicopee) interrupted and said, "I
think it's lunacy that the Legislature is faced with having to step up and fix the
problem, the $1.4 (billion), that comes out of left field and in the 11th hour."
Taxation Committee Co-chairman Rep. John
Rogers (D-Norwood) said of the Big Dig: "It's a cancer on the state budget. It's a
blue whale in state government. It's eating up everything in sight." Of the income
tax cut plan, Rogers added: "It's blind to the economic health of the Massachusetts
economy, and it's blind to the needs of Massachusetts (residents)."
Tangling over Chapter 90 road/bridge
spending, Wagner demanded that Cellucci commit to an extra $50 million. Cellucci protested
that since the 1980s, "We've ramped it up substantially." Wagner countered that,
"We'd like to see it at $150 million." Cellucci fired back, "You'd like to
see it at $250 million -- admit it, admit it." A visibly angry Wagner spat: "I'd
like to see a project in Chicopee get done."
Committee member Rep. James Marzilli
(D-Arlington) criticized Cellucci's Big Dig proposal to extend certain bonds to 50 years
from the more standard 40 years, saying it's not "fair" to foist the cost onto
"our grandchildren." Marzilli then brought up this morning's news stories about
potential burgeoning of the overrun, and asked Cellucci directly: "Do you expect the
shortfall to exceed $1.4 billion?"
Cellucci said, "I learned a long
time ago not to believe everything you read in the newspapers. I can't guarantee anything
when they're working under a 350-year-old city but I don't expect that (costs
exceeding $1.4 billion) to happen."
Before the governor's arrival at the
hearing, legislative heavyweights turned out to oppose the tax cut initiatives. House Ways
and Means Chairman Paul Haley (D-Weymouth), who opposes all three tax cuts, predicted that
the state would be in "very serious straits" if voters approve the income tax
cut. Major government investments in infrastructure, education and health care cannot be
maintained if an estimated $2 billion in revenues is taken off the table, he said.
"This administration has not been
about the business of being a vicious fiscal watchdog. If they are, they have no
bite," Haley said. "We've been about prudent budgeting, but we need those
resources to continue to meet the needs."
If the economy should go south, Haley
warned that the state can't get out of a revenue jam through borrowing, as it did in the
late 1980s and early 90s. "We are leveraged to the hilt," he said. "We need
to challenge the proponents ... to say how can you fill the gap we have visited upon us
down the street, that big hole to fill, and still keep our other improvements going?"
Cellucci later scoffed at the assertion
that the state can't do it all, pointing out that over the last seven years, taxes were
cut 38 times while education spending was boosted from $1.5 billion to $3.6 billion
annually and the state embarked upon unprecedented health care expansions.
"To argue you can't meet the needs
of educating the children of the Commonwealth and the health care needs and cut taxes at
the same time, I just point out to you what's happened over the last seven years,"
Senate President Thomas Birmingham
(D-Chelsea) reiterated his now-familiar argument that the tax cut debate is about
"choices and values" and he decried the "make-believe nature of this tax
cut as a painless one." Although conceding that "the Commonwealth would not
crumble into the Atlantic Ocean" should the tax cut pass, Birmingham joined the
teachers unions in predicting dire consequences for spending on education, health care and
As evidence, Birmingham cited
Administration and Finance Secretary Andrew Natsios' testimony last year before the Senate
Ways and Means Committee that major programmatic expansions would not be possible under
the income tax cut scenario.
"Historically, we will be judged on
whether we seize the opportunity or squander the opportunity," Birmingham said.
"It's a fundamental defining choice about who we are as a Commonwealth."
Although most of today's focus was on the
income tax cut petition, the committee also engaged in some back-and-forth with anti-toll
activists. Commuter Tax Relief Coalition Chairman Douglas Barth demanded that lawmakers
keep their promise to relieve the Turnpike of tolls once the road was paid for. Tolls
collected to date have paid for the road six times over, he said.
"Public officials should keep their
promises," Barth said. "Maybe it sounds like I just walked off Walton's
mountain, but that is the foundation of sound, effective public policy."
Barth underwent a lengthy
cross-examination by Taxation Committee Co-chairman Sen. Marian Walsh (D-West Roxbury),
who was clearly put off by the ballot campaign's use of paid signature gatherers. Walsh
asked why paid gatherers were used to supplement volunteers, to which Barth replied that
there aren't enough volunteers with enough time to gather enough signatures to safeguard
against an SJC decision banning stray marks on petition sheets.
"You said the public wants this, but
in your testimony to the committee, you said people don't have the time to do
citizenship," Walsh said. "So people are unavailable to be citizens, so we
contract out politics to private companies to do the citizenship."
Barth immediately parried with:
"People are heavily taxed in this state and they don't have time on Saturday to
collect signatures because they're out working their second job."
The Boston Globe
Thursday, April 6, 2000
Cellucci, defends his tax rollback
Legislative leaders call plan 'reckless'
By Michael Rezendes, Globe Staff
Sparks flew yesterday as Governor Paul
Cellucci and legislative leaders squared off before a Beacon Hill committee considering
the governor's initiative petition to roll back the state income tax rate to 5 percent.
In a preview of what is likely to be one
of the most contentious issues on the ballot this fall, Senate President Thomas F.
Birmingham called Cellucci's plan "reckless" in light of cost overruns on the
Big Dig, and he promised to play an active role in a campaign to defeat the measure.
The chairman of the House Ways and Means
Committee, Representative Paul R. Haley, said the state has already approved more than $3
billion in tax cuts to take effect by 2003, insisting that Cellucci's tax rollback is
"We've already been cutting taxes
very aggressively in the Commonwealth," Haley said. His comments echoed the views of
Speaker Thomas M. Finneran.
Then Cellucci, during an unusual grilling
by members of the Joint Taxation Committee, defended his plan, which would cut the income
tax rate from 5.85 percent to 5 percent. The tax cut would return $600 to the average
family of four while "imposing fiscal discipline" on legislative leaders, he
Cellucci, who haggled with committee
members for more than an hour, lashed out at House leaders for coming out with a plan that
would increase his proposed $21.3 billion budget by $400 million.
Cutting taxes is the best way to control
state spending, the governor said. "What we're seeing now reminds me very much of the
late 1980s, when spending was basically out of control in this Commonwealth."
The Taxation Committee also heard from
several influential organizations likely to battle over the tax-cut plan.
The groups include Citizens
for Limited Taxation, which is working with Cellucci to win approval of
the measure, and the Massachusetts Teachers Association, which says the initiative would
threaten state aid to education.
Anderson, CLT president, said the tax cut should be approved to keep a promise made by
state lawmakers when they raised the income tax during the recession of the late 1980s.
The teachers association said cuts in
state revenue imposed by an income tax cut pose a dangerous threat to public schools.
"It is inevitable that a major state revenue loss will be felt in the
classrooms," said Stephen E. Gorrie, president of the union.
But administration officials who favor
the tax rollback noted that state revenues continue to rise and have produced budget
surpluses, even though lawmakers have cut taxes on numerous occasions over the last
State revenues were up again last month,
rising to $1.4 billion, 14.1 percent more than was collected in March of last year,
administration officials said.
"As we move into the end of
tax-filing season, revenue collections remain solid, with income tax collections leading
the way," said Revenue Commissioner Frederick A. Laskey. Tax collections for the
first three months of the year are up 7.3 percent over 1999, he added.
The Commonwealth of
Wednesday, April 5, 2000
Contact: John Birtwell
Cellucci to Legislature: Pass Tax Cut
Vows to Bring Tax Cut Fight to Ballot in November
Governor Paul Cellucci today issued a
stern warning to legislators, saying this may be their last chance to avoid a rebuke by
voters if they do not roll back the income tax to 5 percent. Cellucci reminded them time
is running out and noted that inaction on his bill will only give voters the opportunity
to cut their own taxes in November.
"This is the Legislature's last
chance to do what's right for the citizens and for the future of our Commonwealth,"
said Cellucci, in a testimony before the Joint Committee on Taxation. "The taxpaying
families of Massachusetts deserve to be the beneficiaries of our good fortune and they
should not have to continue to pay for the fiscal mismanagement of a decade ago."
Because the Legislature has refused to
keep their promise to return the income tax back to its historic 5 percent rate, Cellucci
and Swift have led a petition drive to bring the question directly to the voters. Last
summer, Cellucci and Swift filed language necessary to get the question on the November
2000 ballot and last fall they submitted 150,000 signatures in support of the initiative
-- almost three times as many as are required to place the initiative on the ballot. Under
state law, the Legislature must act on the proposal before the first Wednesday in May. If
it does not act on or it rejects the petition, Cellucci and Swift will collect the
additional 9,517 signatures necessary to put the question on the ballot, giving the voters
the chance to vote for the tax relief they deserve.
Although the Cellucci-Swift
Administration has cut taxes a record 38 times, Massachusetts still has the highest
personal income taxes of any industrial state and is the fifth most heavily taxed state
overall. Keeping the income tax at its high rate will deter future growth and put
Massachusetts at a severe competitive disadvantage in the new global economy. Cellucci
noted that cutting the income tax rate back to 5 percent will move the Commonwealth from
fifth to 10th in ranking of the most heavily taxed states. He also noted that it will
allow Massachusetts to leapfrog California and Michigan, the Commonwealth's principal
rivals for high tech jobs, and put the state neck and neck with New York, the Bay State's
chief competitor in the financial services industry.
"Lower taxes are a significant
factor in business location decisions and with the highest income tax of any industrial
state, the Commonwealth is operating with one hand tied behind its back," said
Cellucci. "We must make Massachusetts more competitive and to do that we must bring
significant, permanent tax relief."
The Cellucci-Swift plan will roll back
the income tax to 5 percent in three steps. The rate is scheduled to drop to 5.6 in 2001,
5.3 percent in 2002 and 5.0 percent in 2003, ultimately saving the average family of four
between $500 and $600 a year and pumping more than a billion dollars annually back into
the Massachusetts economy.
The Commonwealth of Massachusetts
Department of the State Treasurer
April 5, 2000
Letter from Treasurer O'Brien on Tax Cuts
Senator Marian Walsh, Chair
Representative John H. Rogers, Chairman
Joint Committee on Taxation
Dear Chairwoman Walsh, Chairman Rogers,
and Members of the Committee:
I am writing to comment on H.4980,
H.4981, and H.4982, three initiative petitions regarding commuter tax relief, a state
income tax rollback, and charitable giving. I regret that I could not appear before you
personally, however a prior commitment has me out of the building this afternoon. I can
not support these efforts to reduce revenues to the Commonwealth at the present time,
particularly the petition to roll back the income tax to 5%. ...
Associated Industries of Massachusetts
A.I.M. Supports Prudent Tax Relief
Statement of Richard C. Lord
Associated Industries of Massachusetts
April 5, 2000
Associated Industries of Massachusetts,
the Commonwealth's principal employer organization, supports a balanced approach to tax
reduction, one that recognizes the need for public investments and for the sustainability
of government as well as for tax relief. ...
... That is why we support the proposal
initially put forward by the Massachusetts Taxpayers Foundation, and now substantially
embodied in the House Ways and Means Committee's Fiscal Year 2001 budget document. As both
Mass Taxpayers and the House have strong records as champions of fiscal responsibility, we
are confident that this is a tax plan that will work.
Massachusetts Teachers Association
Testimony from Stephen E. Gorrie, President
Massachusetts Teachers Association
Against Tax Cut Ballot Initiatives h. 4981 and H. 4980
April 5, 2000
My name is Steve Gorrie and I am
president of the Massachusetts Teachers Association. For 27 years I was a fourth grade
teacher in Winchester.
I am here to speak against two of the tax
cut initiative petitions House 4981 and House 4980 -- that are expected to appear on the
ballot in November. Combined, these tax cuts would cost the Commonwealth more than $2
billion a year when they are fully implemented. When added to the tax cuts that were
recently passed but not yet phased in, the state estimates that the revenue loss will
exceed $2.5 billion a year -- almost as much as the $2.8 billion the state is spending
this year in local aid for education (Chapter 70 funds).
Other educators here today will talk
specifically about some of the progress that has been made in their schools, colleges and
universities as a result of increased funding in recent years, some of the promise of
future improvements if the state sustains its commitment to our students, and some of the
problems we will face if these tax cut measures are passed.
Let me say briefly that a lot of progress
has been achieved, particularly in low-income school districts. As you know, thousands of
teachers have been hired enabling many schools to reduce class sizes, reinstitute programs
that had been cut and provide additional help to students who need it. Teachers are
working harder than ever to align their curricula with the new state standards. At our
higher education institutions, new courses have been offered, standards have been raised
and tuition has been substantially reduced.
These are all promising trends, but a lot
more has to be done. The MTA recently highlighted its agenda in our Teachers' Blueprint
for Educational Excellence in which educators -- our members -- said that adequate
resources, along with hard work, good will and respect, are the keys to improving
achievement. Reducing class size, establishing alternative programs for disruptive
students, providing mentors for all new teachers these are among our priorities, and we
will be filing budget amendments in the House to promote our goals. We know that money
isn't the only solution, but we also know that lack of funds makes it much, much harder to
ensure that all students are able to reach their academic potential.
Supporters of these tax cuts are unlikely
to admit that any reductions would be made in education funding. So why are we convinced
the education cuts will be deep? History, and common sense. Every time we have experienced
a major loss of revenues, spending on public schools and higher education has been cut
deeply. We learned those lessons the hard way after Proposition 2½ was passed and during
the recessionary years of the early 1990s. As for common sense: Schools will be primary
targets for budget cuts because that's where the money is. Education is the single largest
program in the budget, accounting for over one-fifth of state spending. A huge percentage
of the budget is untouchable mandatory spending, such as debt service, pensions and
entitlement programs. It is inevitable that a major state revenue loss will be felt in our
How will the impact be felt? No one can
say for sure, but it's no mystery where most of state spending on education is allocated:
teachers and other staff, textbooks and other supplies and school buildings.
If you share my concerns about what the
impact of cuts in education would mean for the nearly one million students we teach, I
urge you, members of the legislature, to send a strong message to the public by voting
"no" on the income tax reduction and toll and auto excise rebate initiative
petitions before you.