Barbara Anderson Debates President of
So-Called Massachusetts Taxpayers Foundation

The November ballot question debate season has opened: yesterday Barbara joined in her first debate against Michael Widmer, president of the so-called Massachusetts Taxpayers Foundation and an opponent of our tax rollback.

At the 7:30 AM breakfast meeting sponsored by the Alliance for Amesbury, a local business group, their members seemed quite supportive of the Cellucci/CLT tax rollback proposal over the watered-down substitute proposed by MTF and adopted by the House.

The MTF version has enough of an escape clause, even before the House added its additional unemployment rate loophole, to almost guarantee it would never be fully implemented ... unless you still believe in the tooth fairy and legislative promises. Even Widmer agreed that a ballot question adopted by the voters has more force and stands a better chance of enduring than a law passed by legislative fiat. Proposition 2 was an example both agreed upon. The MTF opposed Prop 2 as well.

Barbara again pointed out that, although MTF expresses perennial concern over the spending binges and recognizes that the ongoing level of profligate spending cannot be sustained in an economic downturn, it offers no solution whatsoever to the ever-increasing budgets. She again asserted that the only way to control spending is to take our money off the Legislature's table.

Almost to underscore Barbara's position and undermine their own, yesterday the MTF also released their analysis of the House budget, excerpted below.

CFord-Sig2.gif (4854 bytes)

Chip Ford

Massachusetts Taxpayers Foundation
(617) 720-1000

April 26, 2000

House 2001 Budget: Important Initiative Undercut
by Spending Growth and New Entitlements


In MTF's view, however, these accomplishments are seriously undercut by both the short- and long-term spending obligations built into the House budget: on the one hand, an excessive rate of spending growth -- approaching 8.0 percent above fiscal 2000 -- that cannot be sustained with normal revenue gains; and on the other, the addition of new entitlement programs for early teacher retirement and prescription drug benefits that will impose major additional spending requirements beyond 2001. Moreover, it will be difficult to hold spending authorizations for 2001 to even this high rate of growth through the rest of the budget process -- in recent years, differences between the House and Senate line item recommendations have too often been resolved by choosing the higher spending amount.

Tax Cuts

In a particularly positive step, the House budget proposes to reduce the income tax rate to 5 percent at a gradual pace tied to growth in the state economy, an alternative to the Governor's ballot initiative to reduce the rate over three years. Based upon a plan developed by the Foundation, the House proposal would provide a fiscal hedge against a slowing of the economy while ensuring that the state can address a range of critical spending issues....

Spending Growth

Based upon a preliminary analysis of floor amendments, the House budget proposes about $22.44 billion in 2001 spending, $1.6 billion or 7.7 percent more than the 2000 budget and $470 million more than the Governor's fiscal 2001 recommendation of $21.966 billion (including $645 million of spending moved off-budget under MBTA reforms adopted last year). While the House spending total is an estimated $55 million higher than the House Ways and Means recommendation -- only slightly more than the amounts added during budgetary debate in recent years -- the impact of the floor amendments on future budgets is significantly larger.... What tips the scales, however, are new entitlements for prescription drug benefits and early teacher retirement adopted on the House floor that are likely to add hundreds of millions of dollars to future spending obligations.

Tobacco Settlement:   Maintaining the agreement included in the fiscal 2000 budget, the House has wisely dedicated 70 percent of this year's tobacco settlement money to a trust fund created to meet future health care needs, rejecting the Governor's proposal to reduce to 50 percent the share of tobacco monies pledged to the fund.

Education Reform:   The budget proposal provides $2.96 billion of direct aid to local schools, $159 million above fiscal 2000. The House recommendation is $32 million more than the funding proposed by the Governor and $28 million less than the amount supported by the Senate leadership. For all the hoopla surrounding this issue, there is clearly agreement that significant additional education aid is necessary in 2001 -- the differences among the three parties are relatively minor. While the Governor's funding recommendation is the lowest of the three amounts, it fully funds the requirements of the education reform law, and there is a legitimate question whether spending above the required level will result in improvements in student performance.

New Entitlements

Prescription drug benefit:   In a fiscally worrisome development, the House has adopted a major new entitlement program that would place Massachusetts alone among the states in offering coverage of all prescription drug costs for senior citizens. While the new program is close to revenue neutral in the first year, a combination of factors -- including the plan's structure, the demographics of the "baby boomers," soaring drug costs, and the powerful political forces that will be unleashed -- are likely to push the state's expenditures up by hundreds of millions of dollars in just a few years. In a telling indication of these cost pressures, House amendments to the plan have already added 15 percent to its annual costs.

Early teacher retirement:   In another troubling expansion of entitlement programs, the House adopted separate legislation to provide early retirement benefits to teachers. The proposal is similar to an initiative in the fiscal 2000 budget which was appropriately vetoed by the Governor.... This expensive and problematic proposal would require an additional $50-70 million of annual appropriations and will likely open the door to similar costly demands for all state employees. The proposal would reduce the teaching ranks at a time when schools are trying to retain quality teachers, while making it more difficult for districts to hire new teachers because of the reduction in take-home pay arising from the increase in the required retirement contribution.

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