A "Nonpartisan" Report, My Assets!

11:00 ... Bob Zahradnik of the Center on Budget and Policy Priorities, a nonpartisan research organization, joins Tax Equity Alliance of Massachusetts officials to release an update of last year's report on states' preparedness to survive recessions and the impact of tax cuts .... Room B-1

State House News Service
Daily Schedule
Monday, May 22, 2000

Yesterday, the Center on Budget and Policy Priorities, based in Washington, D.C., marched into Boston to hold a news conference announcing the release of its latest "study." Its bottom line was that any tax cut, even the long-promised tax rollback, would prove simply devastating to Massachusetts.

How timely in the midst of our petition drive, with our tax rollback question going to the November ballot. "What a coincidence," you might even think!

So who or what is this "nonpartisan" Center on Budget and Policy Priorities which produced this allegedly objective report?

It's the same group which released another report last March. Conversely, that one pointed out:

"The report, "When It Rains, It Pours," by the Center on Budget and Policy Priorities, is the first-ever to examine the fiscal health of 48 state governments, including their "rainy day" or reserve funds, against the backdrop of a possible recession. The study found that only eight states -- Delaware, Indiana, Iowa, Maine, Massachusetts, Michigan, Minnesota and North Dakota -- could bridge the gaps between revenues and expenditures that could accompany a downturn of the same length and severity as the recession of the early 1990s."

What you will find perhaps most interesting about this "nonpartisan think-tank" is that its Massachusetts "contact" and recipient of CBPP financial state grants just happens to be none other than the "nonpartisan" Commonwealth Center for Fiscal Policy -- run by Jimmy St. George of TEAM (Tax Everything And More), who no doubt also is "nonpartisan."

Yes, the same Jimmy St. George who's been running around the state crying "the sky's falling!" while desperately trying to drum up opposition to our tax rollback ballot question. (He's been finding very little support, even from among his usually dependable base, from what we've observed during our recent encounters with TEAM at forums.)

If you're interested, more information on this "nonpartisan" Center on Budget and Policy Priorities and its "State Fiscal Analysis Initiative" follows the Boston Globe report of the Gimme Lobby's latest attempt to incite panic.

A "nonpartisan" report, my assets!

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The Boston Globe
Tuesday, May 23, 2000

Think tank warns against tax cuts
By Michael Crowley
Globe Staff

Recent tax cuts are draining the state's reserves and leaving Massachusetts more vulnerable to a recession, while three more proposed tax cuts could cause a budget crisis in an economic downturn, according to the Center on Budget and Policy Priorities.

The center, a liberal think tank in Washington, D.C., released a study yesterday downgrading its estimate of the state's ability to weather a recession without major spending cuts or tax hikes.

Last year the center cited Massachusetts as one of the states best insulated against a recession because of the size of its reserves, an assessment often cited by the Cellucci administration as it has pushed for new tax cuts.

But the center's new study says that a 0.2 percent income tax cut adopted in November, which will eventually total $550 million per year, has weakened the state's reserves. The proposed new cuts, which total $1.9 billion per year, could lead to a budget deficit of almost $5 billion in a recession like that of the early 1990s.

"Unless you believe that economic cycles have been repealed and we're never going to have another recession again, these tax cuts are unaffordable," said Jim St. George, executive director of the Tax Equity Alliance for Massachusetts. "Even if none of these cuts pass, we're already going to struggle."

A leader of the group pushing for Cellucci's income tax cut dismissed the report as a misguided analysis. "It's a far left-wing group that's affiliated with bigger government," said Paul A. Melkonian, chairman of Cellucci's Tax Rollback Committee.

Cellucci is promoting a three-year rollback of the state income tax from 5.75 percent to 5 percent, at an annual cost of $1.1 billion, which is likely to appear on the statewide ballot in November.

In addition to Cellucci's income tax cut, the study also gauges the impact of two other tax cuts headed for the November ballot: a $500 million "Free the Pike" plan to reimburse commuters' tolls and auto excise taxes and a charitable-giving tax credit estimated to cost $164 million per year.

The charitable-giving credit has also been included in the Senate's budget proposal. The House has offered a slower income tax rollback, which could proceed only in a strong economy.

If all three tax cuts are approved, a three-year recession could leave the state with a shortfall of $4.8 billion, or about 25 percent of state spending, even after the state exhausts its "rainy day fund," which now holds $1.4 billion.

Cellucci has said he opposes the "Free the Pike" measure. But St. George said the combination of Cellucci's income-tax cut and the charitable-giving measure would result in a shortfall of $3 billion, or 15 percent of the state budget.

The study assumes that the state budget will continue to grow at a rate of 3.3 percent. It also assumes a recession similar to the national downturn of 1989 to 1992.

Tax-cut advocates noted yesterday that the study does not take into account new economic activity that might be generated by cuts.

"The government is swimming in money," Melkonian said. "They can't spend it fast enough."

He also noted that Senate President Thomas F. Birmingham, an opponent of sweeping tax cuts, recently said: "The sky will not fall if the tax rollback passes. Massachusetts will not crumble into the ocean."

For more information on what is the "nonpartisan"
Center on Budget and Policy Priorities

The State Fiscal Analysis Initiative

NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to:

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