House Debate on Proposed FY
2001Budget - H.5100
Tax Rollback Proposals
(From State House News Service Report)
HOUSE SESSION - MONDAY, APR. 10, 2000
CONVENES: The House convened at 10:13 am with Speaker Thomas Finneran of Mattapan
presiding. Chaplain Robert Quinn offered the prayer and the Pledge of Allegiance was
recited.
MORNING PLANS: Speaker Finneran said the
chair intends to put the House into recess until the hour of 12 o'clock. There will be a
caucus of House Democrats at 10:15 in room A-1. At 11 am, there will be a meeting of all
committee chairs and leadership in the speaker's office.
RECESS: At 10:25 am, the House recessed with the intention of returning at 12 pm. The
House returned at 12:08 pm.
[...]
FY 2001 BUDGET: Question came on engrossment of H 5100 appropriations for the fiscal year
2001. Rep. Festa doubted the presence of a quorum and a roll call was ordered.
BY ROLL CALL VOTE OF 151-0, QUORUM ESTABLISHED
The chair recognized Rep. Haley of Weymouth.
Rep. Haley said good morning. We have some work ahead of us. But I'm very
pleased we are here this morning because I think this is important work and we need to get
on to the business of putting together a recommendation as to how to spend some $21.7
billion worth of taxpayers' resources. A very sobering amount of money will be
apportioned, allocated and directed this week. We have a very, very important
responsibility and I look forward to working with all of you on both sides of the aisle to
discuss the priorities we ought to be setting to make sure we meet the important
obligations the Commonwealth has, in the face of a number of significant challenges, not
the least of which is the fact that the federal government has continued to relinquish its
responsibilities in some areas, forcing us to absorb some reductions not only in our share
of the federal highway gas tax, which is very significant. We had to manage a $300 million
reduction in our share and as you know we still haven't fully filled that void. We have a
proposal we've all adopted that we need to negotiate with the Senate on.
Rep. Haley continued: At the same time as we had to deal with cuts in Medicare and in
other federal programs, we are met by an enormous need on so many different fronts, from
so many different constituents, a need that is very difficult to meet, even with $21.7
billion out there to allocate. That is a resource that has grown from $12.5 billion the
legislative body 10 years ago had to apportion. It's important for all of us to realize
that though our budget recommendation is $1.4 billion more than it was last year, how much
of that we really have no control over, how much is driven by obligations we've already
undertaken as a legislative body, as a state government, as a House, a Senate, an
administration. I talk to the $200 million we need to budget in new resources to deal with
Medicaid, which we all ought to be concerned about. It is quickly becoming what it was 10
years ago - a potential budget buster. In addition, we have $124 million to build into
debt service as we continue to build the underpinnings of a modern economy. As a minimum,
we need to support $132 million in distributions to all the municipalities in Chapter 70
aid to continue to support foundation budgeting for all our education systems. We have to
build into our pension system, despite the fact it's already a billion-dollar annual
commitment, we had to build in an additional $112 million to meet the unfunded pension
obligation by 2018. We heard from the treasurer on how important it is to fund it
adequately. We also embarked upon a plan last year to restructure the finances of the T.
To retire the short- term notes, $89 million must be put to the task. We have honored our
commitment to the cities and towns to eliminate the cap on the Lottery. All proceeds go
back in unrestricted aid, a $60 million appropriation. The governor had $54 million for
SBA authorizations and $32 million for employees' health insurance, just based on what he
calculated to be the inflation factor. That is unequivocally the base. In the governor's
recommendation, his was $803 million higher than last year. His was 7.2 percent higher
than his own recommendation one year ago. He recognizes as we do the enormous commitments
we have undertaken these last 10 years - to improve access to health care, support
services to seniors, improve education at both lower and higher education levels. Our
recommendation before you today is a bill that not only includes the $803 million, but
also $232 million in additional need. I talk about the need for a statutory balance. You
need to file a budget under the law that requires a half-percent of all the tax revenues
for that year available at the end of the year be unencumbered. The governor neglected to
do so. We had to add $52 million to make sure we have the statutory balance. We also
restored the percentage of health premiums that will be put upon our public employees, who
if you look at their entire compensation package would suggest that while the health
benefit is generous, their compensation is not as high as similar employees in other
industrialized states. The state would pick up 85 percent. They're required to spend 15
percent. And also to adjust for the inflation factor that we now realize is out there in
the health industry. We had to build $49 million more than the administration funded in
their budget. And there's not a single amendment in that can to suggest public employees
should pay more for the health insurance. The administration has pushed that initiative
and it has been overwhelmingly rejected. We restored $47 million in additional assistance
to the cities and towns. The governor suggested incentives for housing stock. The proposal
did not have definition. The cities and towns wanted the resources back. No one is
suggesting we take that money back. We also did $27 million more than the administration
suggests for education. That is a significant commitment. This branch has been very
supportive of the education reform act, very supportive of putting the resources back to
the cities and towns. Last year, when the governor vetoed, this branch was the first
branch to take up that override, that commitment of $90 million new dollars back to the
cities and towns. We also had to fund two collective bargaining agreements, $32 million
and $12 million respectively, the latter for the courts. And the $10 million required to
meet the statutory obligation to cities and towns that have joined the state pension
system. Those are all commitments that I believe each and every one of you support.
Rep. Haley continued: We recognize that despite the fact we have made so many improvements
to so many programs to every single population in the commonwealth, there is still a need
to do more. We also need to reflect on the fact that we cannot meet every need. We need to
work with the cities and towns and suggest to them they have never been in a better
position than they are currently. The average amount of free cash is 6 percent. So in this
budget we need to redefine and reaffirm our commitments to the cities and towns, and
continue to empower people to reach their full potential. We do that on a number of
fronts. I suggest the small amounts of resources we apportion are prudent investments. We
provide $15.6 million to increase state support for foster care families. Why? We're
willing to take on society's children. Foster care parents who take needy children into
their own homes and care for them should not only be compensated fairly but they need to
be encouraged. We've allowed families that are willing to adopt the state's children to
take a full deduction for all the associated costs. We also want to make sure all these
children have the hope of a life they might never have had. But most importantly, we
expanded on the governor's initiative to say those children might have a free tuition
experience at our state colleges and universities. We've expanded on that to include all
DSS children. But we also recognize it's time to step back from six years of unbridled
expansion and return to an emphasis on quality over quantity. We've expanded child care
slots by 400 percent. There aren't enough providers to fill those slots. Rates are not
sufficient. They're seeing 35 percent annual attrition. So we support that with $39
million. We also recognize a major challenge this year is housing. Some say the state
needs a $500 million program. Where are we going to find those resources? What we can do
is shore up the programs that have already demonstrated some success. We propose to
increase the rental assistance voucher by $100. We create a new program to help victims of
domestic violence move out of shelters. We increase funding for the lead abatement program
and we offer more assistance to first-time homebuyers. We increased that program by 25
percent this year. We also target some specific dollars to help improve the lot of
children and adolescent mental health situations. We commit $10 million to improve
residential services because there are no adequate discharge options. We're proud of that.
We also need to commit some significant resources to once again deal with our enormous
infrastructure needs. We all have been met back in our districts with tremendous concern
over how can you fill the gap in the Central Artery funding, and still manage to improve
all of our other state infrastructure, specifically the statewide road and bridge program?
We propose to dedicate $175 million over the next five years of existing income taxes to
leverage $750 million right now so we can make sure the statewide road and bridge program
goes on time and meets the commitment we have made. We also will be leveraging some $150
million to fund $450 million in long overdue drinking water and sewage construction. We
make $75 million available for education technology grants. Why do we borrow? Because we
need those resources now and we cannot borrow through the normal channels. We have the
third highest per capita debt. We also make $75 million available in no-interest loans to
improve classroom space for kindergarten and preschool and existing school buildings. And
we make $50 million available to repair our existing public housing stock. If we can't
build new public housing, we damn well better maintain what we've got. We've assisted
those who are still on public assistance. There's not been an adjustment in their cash
assistance for 10 years. We make a reasonable adjustment, but also make sure they have an
opportunity to work and learn and obtain a skill to overcome those barriers. There's $21
million for that purpose. But I want to point out there's some $1 billion in amendments
sitting in the amendment can for your consideration this week. I can tell you we cannot
absorb, we cannot embrace 1 billion. We can't embrace anywhere near that. We have
basically looked to the resources that were available to meet the needs in housing, rates
in child care and foster care, and on the education front with a focus on reading,
writing, obtaining the skills necessary to compete in a very competitive global
environment.
Over these last 10 years, we have done the job in meeting the need of virtually every
population that's out there. We cannot continue on that pace, a pace that's unsustainable,
especially in light of the fact that over these last 10 years, we have either implemented
or embraced $3.1 billion in tax cuts.
Speaker Finneran said the gentleman's time has expired. Rep. McManus yielded his time.
Rep. Haley continued: We have long since shed the phrase that was coined about our
wonderful Commonwealth back in the late 80s, that of Taxachusetts. If you look at the $3.1
billion we have cut out, that is 15 percent of what we are allocating this year. We have
adjusted the tax rate for every significant industry in Massachusetts - banking,
manufacturing, financial services. We wanted to make sure they were competitive. In
addition, we've cut taxes for individuals. I'd ask you to keep in mind that any initiative
you may suggest be affordable, realize that in addition to many other needs in the coming
years, we need to build in any initiative that would annualize beyond what we are able to
commit resources to today. I look forward to hearing from the minority party on a number
of issues, but I note they have been the lead sponsors on some $400 million in additional
spending. Not only do they suggest we might cut taxes further, they don't look to strike
any of the spending that is in this budget recommendation. My last message to you is you
can't have it both ways - dramatically cut back your revenue base and at the same time,
make dramatic new commitments. That's the reality. That's the math. All too often, it
comes down to this chamber to take the leadership role in this building, to say we want to
help seniors and we want to help vulnerable populations, but it must be budget neutral. It
must pay for itself over time. We want to help seniors. We need to focus on catastrophic
pharmacy costs. Our plan is reasonable and responsible. I'm asking you to help us continue
the course of responsible budgeting. That's our legacy.
MARINI: Minority Leader Marini was recognized. Rep.
Marini said I was going to wait until we dealt with the 1,400 amendments, but since the
chair of ways and means challenged the minority, I thought I'd offer my thoughts. They're
saying that while Ways and Means has not been fiscally prudent, we would like you to be.
The two groups that get whacked are the cities and towns and the taxpayers. Last year, I
said I saw a yellow light. The light has turned red. This is 1989 all over again. We have
dramatically increased spending over the last decade, yet it wasn't enough. We need to
dramatically increase spending this year and not only that. We need to borrow money. The
chairman used the word leverage. Generally, leverage is used when you put some money up
and some other entity matches it. But in this discussion, leverage is another word for
borrowing. We have an amendment to strike the $175 million to borrow up to $875 million.
The governor's budget was a 7.5 percent increase over his proposal last year, but what the
governor didn't mention was the governor's proposal wasn't enacted. So let's try and keep
the comparisons to apples and apples. We have plenty of time over the rest of this week to
debate each and every one of these 1,400-odd amendments. Each deserves to be thought about
and heard and a decision made on the merits. We are not being fiscally prudent in my
judgement. This budget is not fiscally prudent in my judgement. And I would agree we
cannot afford to add onto what we already have another billion dollars. I suggest to you
that this budget is really the best case for the people voting to cut their own taxes in
November because we certainly can't be trusted to handle their money. Thank you, Mr.
Speaker.
TOBACCO: The House ADOPTED amendment #1 adjusting tobacco fund split to properly reflect
House Ways and Means appropriation (Haley).
TOBACCO: The House ADOPTED amendment 2 adjusting tobacco fund split to properly reflect
House Ways and Means appropriation (Haley).
HOME CARE: The House ADOPTED amendment 4 striking an earmark for the Home Care Reserve
line item and reducing the funding for the case management line item (Haley). The item
will still be fully funded after the reduction, according to the HW&M analysis.
TAX DEBATE: Speaker Finneran said the House will
take up amendment 5, relating to a freeze of the gas tax. The chair expects some debate.
The chair would inform the members that debate will continue while lunch is provided. The
chair has been informed that lunch is now available. Members are alerted that debate will
continue and that roll calls will occur during lunch.
INCOME TAX CUT: Following a lengthy rostrum conference, Speaker Finneran said the chair
intends to take up amendments 194, 193, 364, a slew of amendments identical to 364, and
amendment 1106. The goal is to put in front of the members in a timely fashion the
different tax cuts and tax rate proposals. Question came on adoption of amendment 194
reducing the income tax rate to 5 percent over three years. Rep. Marzilli doubted the
presence of a quorum and a roll call was ordered.
ON ROLL CALL VOTE OF 154-0, QUORUM ESTABLISHED
With Rep. Nagle in the chair, Rep. Gauch was recognized. Rep. Gauch requested a roll call
vote on the amendment and there was support.
Rep. Gauch said what amendment 194 does is reduce the rate of taxation on
income to 5.6 percent on Jan. 1, 2001, and to 5.3 percent on Jan. 1, 2002, and to 5
percent on Jan. 1, 2003. The revenues in the Commonwealth are the greatest they've been in
history. Years ago we made a promise when we increased the income tax rate that when
things got better, we'd bring it back to 5 percent. If we don't tackle that now, we'll
never tackle it. After me you're going to hear a lot of mumbo-jumbo - and that's what it
is, mumbo-jumbo - about why we can't do it. This budget is a good example. We'll find a
way to spend every buck that comes into this place unless we return it to the taxpayers.
We made a promise. It's incumbent on us to live up to that promise. If we keep putting it
off, the only people who will lose are the hardworking men and women of this Commonwealth.
I would hope that we all come to our senses and OK this amendment. We'll never have a
better opportunity than we do right now.
Rep. Rogeness said I rise in support of the amendment and I ask you to
support it and give taxpayers a return on the investment they made a decade ago. Taxes
were raised so bonds could be paid off to keep the Commonwealth going. Those bonds have
been retired, so the purpose of the tax increase has been done away with. Endorsing this
amendment would meet many of the goals of the other amendments by putting more money into
the pockets of the taxpayers. Another important reason for this is it has been put on the
ballot, so it will be taken up without our approval in November. By reducing the tax on
small unincorporated businesses, it will go a long way toward preparing our economy for
the downturn that is not an if, but is a when. When times get tough, the taxes will be 5
percent on those small businesses, rather than the 5.85, 5.8 or 5.75, as they will be
without this amendment. It's keeping the promise. It's keeping the faith. I ask for your
support.
Rep. Rogers of Norwood said I hope this particular amendment as drafted
does not prevail. In this budget, we have language that does automatically reduce the
income tax rate. We do so as members of the majority party in response to an otherwise
reckless and irresponsible reduction of the income tax rate that this amendment calls for.
This amendment would cut out in three years $1.2 billion from the state's coffers. We
heard earlier that this is 1989 all over again. The minority leader was referring to the
Dukakis era of spending, spending beyond our ability to pay. Fiscal discipline, however,
is not defined just by spending beyond one's ability to pay. It's also defined by
decreasing the state's ability to pay for commitments already made. In this budget, we
have increased spending based on commitments already made - $1.1 billion in increased
spending for education, health care, road and bridge programs, Medicaid and the like.
Seventy percent of our increases in this budget are due to financial commitments we have
already made. So on one side of the ledger, you don't keep spending and reduce revenues
dramatically that affect our ability to pay. It's as reckless and irresponsible as
spending out of control alone. It comes down to one word: financing. We take a more
responsible approach. It gets to 5 percent, but it has triggers based on the growth in
personal income. If cumulative growth exceeds 2.5 percent, you get a rate cut. There will
be a further amendment after this one which will not only allow a trigger indexed to the
rate of personal income growth, but also a trigger-lock. That is, in periods of high
unemployment, when unemployment exceeds 6 percent, the rate cut is frozen. That's fiscal
discipline. I hope this amendment in its present form does not prevail.
Rep. Marini said only in Massachusetts can a return to the historic 5
percent tax rate, a move endorsed by our governor and that has gotten 120,000 signatures
and will be voted on, be termed reckless and irresponsible. They tell you there is a plan
to return to 5 percent, it begins a few years from now, until sometime around the middle
of the next century, assuming the economy continues to prosper, we will get back to the 5
percent. After the debacle of the 80s, the budget was $13 billion. We have increased
spending each and every year since then until it's $22 billion today. We have done that in
spite of the tax cuts we hear whined about regularly from this podium. Not only has
disaster not befallen the Commonwealth, if we take a look around, things are pretty good.
If we cannot afford, in the greatest economy known to humankind, where we enjoy a standard
of living undreamed of by the vast majority of people who have ever been on this planet,
if we can't afford to return to the historic rate, when are we going to be able to? I
would urge my colleagues to save the people of Massachusetts the effort of voting for this
tax cut in November, which they most assuredly will. Let's do it know. Let's tell our
people we can manage the state government on 5 percent of the income taxes, that we have
done good things with their money. Believe me when I tell you they will make better
decisions on how to spend it than we will. I urge you to vote in favor of this amendment.
Rep. Peterson of Grafton said I want to take a little walk down memory
lane. It starts back in 1989, early 90s. The state was facing a crisis and we had to raise
the tax rate. We needed those resources, but we told them that when times were good, we're
going to lower your personal income tax. We fought year after year after year and
incrementally we've been able to adjust it down. But when we were raising those tax rates,
a funny thing happened to the revenue stream. It shrunk. Until Gov. Weld and Gov. Cellucci
came in. First, they said we need a balanced budget, then they said we're going to do
something unique - we're going to start cutting taxes. And what happened? The revenue
stream didn't shrink. It increased. This is after 30 tax cuts. We need to honor that
promise and when we do that, the citizens will create an economy that will increase
revenues for years and years. I hear people say we can't afford tax cuts.
Rep. Peterson continued: The chairman of ways and means said all the tax cuts we've given
up so far have cost $3.1 billion. Yet the revenue stream has continued to increase. I urge
the members to vote for this tax plan and save the people of the Commonwealth from having
to vote for it in November.
Rep. Jones of North Reading said to me, there are a tremendous number of
good reasons for doing this. First and foremost is the integrity of the institution. This
Legislature made a commitment. I was raised to believe that keeping a commitment was the
right thing to do. If there's not a surer sign we should do that, look at the book of
1,433 amendments, which would add a cumulative $1.3 billion to the bottom line. These
1,433 amendments are going to break the bank unless we put some brakes on the institution.
But more importantly, this tax cut will insure the economic well being of the Commonwealth
so in the future, we can continue to meet the needs. This Legislature can choose to lead
today or to follow in November. I'm quite confident the citizens are going to tell us it's
important for us to keep our word. I urge you to do the right thing and vote for this
amendment.
Rep. Frost said I rise in support of this amendment, one I feel we need
to do today so that we can keep the trust of the people. This body made a commitment a
decade ago. Times are better and now we need to keep that promise. How can they trust us
when we won't keep a big promise that was made to them? If this body ever goes back to the
public and asks them to trust us again, they will trust us and know that we keep our
promises.
Rep. Rogers of Norwood said I just wanted to respond to a couple of
points. It all comes back to fiscal prudence. It all comes back, not so much to 1989, but
to the year 2000. That's the time we've been charged to set a responsible tax rate and
spend those tax dollars on behalf of the citizens. The authors of this amendment cut out
$135 million from this year's budget, and yet those same authors have in the can
amendments in an aggregated value of $472 million. That's irresponsible, and I will use
that word again. You can't increase spending by $472 million, then take out $135 million
in revenue. That's irresponsible and unfair. You know who gets that concept? The governor.
Last week, he appeared before the Taxation Committee in favor of the initiative petition.
I asked him if he also favored the so-called commuter tax relief petition, which also most
likely will be on the ballot. The governor's response was that he opposed it. Two points -
first, the governor said that $645 million tax cut goes too far, too fast. In reaction to
that, that's exactly what we're saying. This amendment, that initiative petition, goes too
far, too fast because it's fiscally imprudent. It doesn't take into consideration periods
of economic downturn. The second point -
Rep. Peterson asked if the gentleman would yield for question, which he
did. Rep Peterson said even if we adopt this amendment, would that preclude the coming
Legislatures from changing that at a later date?
Rep. Rogers said the answer is no. A future Legislature could cut the tax
rate to 4 percent if it so wisely would choose to do so. However, it must be able to meet
financial commitments it's already made. Future legislature could cut the income tax
altogether. The second point I would like to make is the evidence the governor submitted
was that tax cuts have helped grow the economy. And indeed, in part that is true. In fact,
many of you have received a list of tax cuts we have embraced since 1992. We have made law
$2.5 billion in tax cuts. Ask the people whether we've cut taxes and they say no. But
we're here to tell the truth. We have cut taxes. But that alone doesn't mean the economy
has grown just because of tax cuts.
Rep. Rogers continued: We would like to take credit for the growth in jobs, the economic
expansions, for our high tech industry's success. But that's giving the Legislature too
much credit. It's the hard work of the employees and employers. So it's misleading to say
it's all about the tax cuts. If that was the case, the governor would be in favor of the
$645 million commuter relief package. So it's about us, the people, setting the tax rate
on behalf of the people. That balances the budget in a fiscally prudent, smart and
responsible way, not capriciously, arbitrarily, blindly and recklessly. I hope this
amendment does not prevail.
Rep. Cresta said I'd like to further expound on the point of the tax cuts
that have occurred since fiscal year 1992. He talks about $2 billion worth of tax cuts.
The sky hasn't fallen, education and health care haven't suffered. Our issues in our
districts haven't suffered. People say this is going to hurt the economy and our ability
to raise revenues and address the issues. Guess what ladies and gentlemen? During those
tax cuts since 1992, we've had economy growth far superior to what has happened
nationally. I figure this purely and simply as an amendment offered by 155,000 men and
women across Massachusetts, that are Democrats, Republicans, unenrolled and all political
persuasions. This is going to be on the ballot. Let's get out in front on this issue. Rep.
Rogers talked about the tax cut that has to do with tolls. I don't support that purely
because there' s not a phase-in mechanism. This amendment before you does have a phase-in,
and it's something we cannot afford not to do. We've done tax cuts for almost every single
segment of our economy. You know what one segment we haven't focused on?
Rep. Swan asked if the gentlemen would yield, which he did. Rep. Swan
said could the gentleman explain how he would pay for the Big Dig? It would be helpful to
understand how this administration didn't drop the sky, but I guess it dropped the earth.
Rep. Cresta said this House voted on a plan last week. I would hope the
plan you voted for is the plan you think would solve the problem.
Rep. Parente asked if the gentleman would yield, which he did. Rep.
Parente said would he then explain how we can show such responsibility the other day, to
vote for a plan that would bail out the administration, much to my dismay. Would you
please explain how we became so irresponsible in two days? Because I thought what we did
was very responsibly address a situation we did not create, and now, two days later, we're
being publicly chastised.
Rep. Cresta said the Central Artery and the tax cut, they are two
separate distinct issues. I'm here to talk about the tax cut.
Rep. Parente asked if the gentleman would yield, which he did. Rep.
Parente said one thing about being here a long time is institutional memory. I remember
back in 1990 and 91 when the bondholders came, when we were told the state might be placed
in receivership. There were terrible times. We went home with little or no local aid. We
had to explain cuts in human services. We were told if we bit the bullet, at some point
we'd roll back to the tax cut. Did we promise to do that? Yes. I was here. The Legislature
did. At the same time the Cellucci administration promised the Artery would come in at $6
billion. They promised the Big Dig and tunnel would come in at less than $6 billion, at
the same time the Legislature said there would be a temporary increase in revenue. What
we're facing now is absolutely a crisis.
Rep. Parente continued: Today, Jeremy Crockford said, and I quote, he said that Kerasiotes
permitted this project, he put the first shovel in the ground, he built it to 90 percent
complete. That tells me he owns it. It is a mess. It is a bookkeeping nightmare. It
appears they have lied to us, mismanaged the project. I can't believe anybody could come
to this microphone and behave like Eddie Haskell. Here we are, the eager beavers trying to
deal with the mess and the Eddie Haskells in their double-breasted suits are coming and
pointing the finger at the rest of us. I can't believe it. I will not stand here and
struggle to pay for this, and be blamed for the mess. It's dishonorable, it's wrong and
it's dishonest. In 1989 and 90, there were those of us who said this project would cost
much more.
Rep Peterson asked if the lady would yield. Rep Parente snapped,
"No." She continued: I apologize to my good neighbor, but I'm all wound up now
(members applauded). You shouldn't have done it. You don't fool around with Mother Nature.
Now, the opposition party knows that I'm a conservative, a fiscal conservative that
supported this administration every chance I had when their numbers were correct. You know
what they say about a woman scorned - I'm angry, because I've been lied to. I believed the
numbers that were given to me. So please, don't try me on for size, because I'm raring to
go (members applauded loudly).
Rep. Peterson said I want to thank the lady from Milford, although I think her comments
would have been more appropriate last week during the debate. Is $1.4 billion the end of
it? I don't know. I'm not an engineer or an accountant. But be that as it may, we handled
that problem last week with some of the surpluses that we have now in our hands. One of
the few people that haven't really benefited in the business community from any of the tax
cuts are small businesses, those one- or two-employee businesses where the only liability
they have are the payroll taxes, the income tax. That's why we need to cut the rate. This
will allow them to be more profitable. I've been a small businessman. It's a struggle. We
need this tax cut. This is not irresponsible. It's phased in over three years. We cannot
preclude a Legislature in the future from changing it so if this goes into effect as
proposed and the economy does go downhill, we can at a later date change this formula
again. I urge members to support this tax plan as proposed.
Rep. Parente said I can see this is going to be an ongoing thing with the
opposing party. We have cut taxes a minimum of 13 times over the last few years. I noticed
it when I filed my taxes last week. But let's look at the alternative plan to the one we
voted on last week. It consisted of borrowing. That's what the administration wanted to
do. We cannot borrow our way out of the Artery mess. We have to find a way to pay for it.
The feds are very clear - no good sound financial plan, no money from the feds. And we
haven't seen the audit. Before we make this kind of decision, the kind in this amendment,
you don't even know what the final cost of the Artery is. We know it's bankrupt. Would you
do that in your own house? No one wants to roll taxes back more than this fiscal
conservative. But the truth is, as much as I would like to join you in this façade, I
know the real truth, and that is the bill is still coming. We don't know what that bill
is. Your administration handled it and you dare to come to this microphone and point the
finger at the rest of us. It galls me. I can't believe you would do this to your
colleagues, that you would come here when you know it's wrong. That sky that hasn't fallen
yet? Just wait a day or two. So far, we have not kicked you around. Please, return the
favor.
BY ROLL CALL VOTE OF 32-124 AMENDMENT REJECTED.
Rep. Marini offered amendment 193 changing 2003 to 2001.
Rep. Gauch said this changes the trigger date of the ways and means tax
cut from Jan. 1, 2003 to Jan. 1, 2001.
Rep. Rogers said we've heard a lot about promises and one legislature
binding another. But we are responsible for the promises we make. Last year we made a
promise to phase down the income tax rate to 5.85 this year and 5.80 next year and 5.75
the year after. This amendment would mean a $34 million revenue loss in this budget at a
time when Republicans have $465 million in spending amendments in the can.
Rep. Jones supported the amendment. The governor's effort to reduce the
income tax to 5 percent and the successful ballot campaign has already had an effect on
this institution. Ways and means chose to have it start in 2003 and we want it to start
earlier.
Rep. Haley opposed the amendment. In 2003 after we've gotten through a
difficult period financing the Central Artery and other road and bridge projects, things
will be more stable. How can they think we could lose $35 million next year? Where do you
find the room for the $35 million? What will we cut? Not only have we cut taxes more than
40 times in the past 10 years but we also raised taxes. We raised the cigarette tax to
extend health care access to children and the poor. Republicans didn't want the tax hike
but how would they have paid for the health care extension. We have enormous challenges.
There is no room to embrace a faster tax cut and, at the same time, meet our commitments.
I'd like to hear from the minority party as to what they want to cut. They have amendments
totaling $475 million in the can. We increased the ITC, we did the bank tax dropping the
rate, the single sales tax factor for manufacturing, the harbor maintenance tax, mutual
funds, insurance tax credits, repeal of the pay-to-play, extension of tax credits - on and
on and on. The economists said if you're going to cut taxes do it in a targeted way and
make prudent investments in infrastructure. This amendment is too expensive.
Rep. Marini said the amount of amendments we have in the can has grown
now from $410 million to $475 million. If there's a billion dollars worth in the can, by
the end of the afternoon I'll be responsible for half of it. If all our amendments were
adopted, there would be an overall reduction in the budget. There is no shortage of good
ideas on how to spend other people's money. Let's spend it by giving a little back to
them. We're just suggesting that we move it up a little. Let's keep faith with our people.
Differences of opinion are OK but if we say we can't afford this and we already approved
it last year, what will people think?
Rep. Peterson said we have this same plan as the W&M committee. The
chairman says it will cost us $35 million a year and we're going to borrow $875 million.
If we're going to be fiscally responsible, let's pay down our debts. This is a good plan
and I urge members to vote for it.
MORE INCOME TAX: Rep. Nagle said at this time, the chair will take up the
following amendments at once: 364, 409, 528, 582, 695, 759, 771, 978, 992, 1111, 1242,
1243 and 1433. The clerk read amendment 364 striking the section that would allow for
further reductions in the income tax rate from 5.75 linked to performance of the
Massachusetts economy (Balser).
Rep. Marzilli said this debate on taxes started two hours, when the
gentleman of Shrewsbury talked about a promise made 10 years ago. I don't know about
promises anyone made. I know about my promise though, the one I made in 1990 when I was
elected and the one I make every day when I wake up and come in here. It's pretty simple.
It says the people of Massachusetts deserve a certain level of services that guarantees a
quality of life they can't provide on their own. It means a quality public education. It
means no senior should be forced to live home alone. It means we should invest in the
environment, infrastructure and the basics of society. That promise drives me when I'm up
here. So when I hear talk about a promise of a tax cut, I'm puzzled and angry about it. I
don't need people to make promises on my behalf. I make promises when I run for election.
If the people of Arlington think it's a bad one, they can send me home. So we are now
offering instead what I think frankly is a bogus promise. It says at some point down the
road, some Legislature will have to figure out how to fund basic services without having
the revenue to pay for it. Look at this budget right now. Look at the trouble we're having
reconciling the demands. There's one way to do it. That's provide extra state aid to our
cities and towns. That's being denied to us because we're living under a revenue cap
that's the outcome of tax-cutting in previous years. I'm not opposed to tax cuts - the
circuit breaker, targeted breaks for seniors, expansion of the earned income tax credit.
I've sponsored some of these. It is ok to cut taxes when you have the revenues. But to cut
taxes and cut services later is unfair. There's a fundamental issue here. We don't exist
as a society to support an abstract construction called the economy. We are about a
civilized society that is educated, that has safe streets, that has the kinds of cultural
amenities that make us such a great state. We will not be a less great state if we keep
our current tax level. We will be less great if we cut services blindly. If we continue to
cut taxes without regard to the bottom line, we'll return to the late 80s. The only way we
can stop this threat to our state, to our society is to reject this proposal. It says the
impact will be dealt with later. It also has a technical problem. It's a deeply flawed
document, even in its concept. The technical problem is we're not able to gather
information on a timely basis that provides us with up-to-date status on the economy. So
if the economy tanks in just one month, we will still be cutting taxes in two years. If
this amendment was law in 1988, 1989, 1990, the bottom of the trough, we would have been
cutting taxes then, too. Think about that, trying to balance the budget while losing
revenues. It would have been impossible. We should not to do that to this Legislature or
to the people of Massachusetts.
With Rep. Fitzgerald in the chair, Rep. Marzilli requested a roll call vote and there was
support.
Rep. Rogers of Norwood said with all due respect to my fellow esteemed
members of the Taxation Committee, I hope this amendment does not prevail. The gentleman
alluded to an amendment which is next in the can which would add technical corrections to
the ways and means approach, which would trigger rate cuts based upon growth in personal
income. This amendment that I hope to take up next would impose a trigger-lock on the
trigger, which is currently in the bill before you. The trigger-lock would be an index to
the rate of unemployment. If the unemployment rate exceeds 6 percent, than any proposed
rate cut would be postponed by period so of high unemployment. The second trigger lock
would be a cap of 20 basis points, or two-tenths of a percentage point in any one year. So
assuming the cumulative growth in personal income exceeded 2.5 percent over the base year,
which is this year, and assuming the unemployment rate is below 6 percent, a rate cut of
say 5.65 could go no lower than 5.45 in any one year. So this I think addresses your
concern. This is all about preparation.
Rep. Barrios said I rise in favor of this amendment. It's important to
let the voters decide this matter. A lot of my colleagues are concerned there was a deal
made 10 years ago. Some are concerned we can afford it, some are concerned we can't. I
urge you to remember the decision is being taken from our hands in November. While we wait
for it to be decided, I suggest we not tinker with it. The voters have suggested they want
to make the decision themselves. In the meantime, we should vote in favor of this
amendment and not mess with things until they decide.
Rep. Balser said I urge my colleagues to support this amendment. We heard
there are a billion dollars worth of amendments in this book. The chair told us how even
though these are perfectly wonderful things, we really can't afford them. And I agree with
that. The budget before us is a good budget. It works with what we have. And yet, how do
we address the fact that everyone in this room has filed amendments for perfectly
wonderful things? Everything in here's something good and that we can't afford. So I ask
my colleagues how could you not support this amendment? This says if we want to do all
these wonderful things, let's be clear - we need the revenue to pay for it. How do we get
the revenue? By not cutting taxes. We bite the bullet and say to our constituents, you
want all these wonderful things? Fine. But we need the money to pay for it. I urge my
colleagues to vote for this amendment.
Rep. Swan said I rise to speak in favor of this amendment. I don't agree
with the lady from Newton that everything in here's good. Actually, there's some stuff in
here that shouldn't be in the building. But I see that the minority party has offered over
a 100 that don't have dollar amounts attached, but that in implementation require some
sort of appropriation. I guess that's legislating without taking responsibility for having
to do it. I'm convinced we are not at the right time to change the tax rate. We need the
money. The chairman of ways and means talked about the critical nature of this budget.
Based on that, I don't think we can afford not to have the revenue generated by the
current tax rate.
ON ROLL CALL VOTE OF 42-113, AMENDMENT 364 ET AL REJECTED
TAX TRIGGER: Rep. Rogers of Norwood offered amendment 1106 further
clarifying the economic conditions necessary to trigger further reductions in the income
tax rate.
Rep. Rogers said for the edification of the membership, these four
amendments we've debated and this one here covers about 13 amendments in the can. After
this, out of 1,433 amendments, there's only 1,420 to go. What this does is impose as
trigger-lock on the trigger itself. The trigger mechanism is a very wise way to phase in
an income tax of 5 percent. It was put forth by the highly respected Mass. Taxpayers
Foundation. My only problem is it's based on information that's about 18 months old. In
order for us to get a better snapshot of the health of the economy, we should have a
better snapshot of the current status. That's what this amendment does. It looks at the
rate of unemployment, which is reported monthly. It gives us a better picture of the
fiscal health of the economy so that we can further sustain revenue losses and build our
budget on those spending programs we all hold dear. Phasing in the cut does something that
legislatures need. We need fiscal discipline. Just because we have more money doesn't mean
we should spend it. Just because we have a higher income tax rate now doesn't mean we
should keep it. Therefore, I think we say to the voters here today that they need not vote
for the initiative petition question. The promise is not behind closed doors this time.
The promise is in the law. But we do so with prudence and restraint. Rep. Rogers requested
a roll call vote and there was support.
Rep. Marini said I thought I just heard the chairman of taxation say we
would support a return to 5 percent when the economy is good and when people are working.
We have the lowest unemployment rate in a generation, and the most vibrant economy in the
history of the Commonwealth. I will repeat my earlier question. If not now, when? This is
designed for when the stars are aligned, the planets are aligned -
Rep. Swan asked if the gentleman would yield for a question, which he
did. Rep. Swan said is the gentleman telling us he agrees with the chairman of taxation
and we're ready to vote now?
Rep. Marini said I agree with the chairman insofar as he said that when
the economy is good and people are working, we should return to 5 percent. In case he
hasn't noticed, people are working. The economy is good. The money's coming in over the
transom. Let's let our people keep a little of it. Vote no on this amendment.
ON ROLL CALL VOTE OF 129-27, AMENDMENT 1106 ADOPTED
FREEZING GAS TAX: Rep. Marini and others offered amendment 5 freezing the
tax per gallon of gasoline at 21 cents. Rep. Gauch requested a roll call vote and there
was support.
Rep. Gauch said you can see what the gas has done as far as per gallon
cost in the last year, a rise of 46 percent. The easiest most responsible way is to freeze
the automatic trigger we have that will increase the gas tax. We have 21 cents now. As the
price increases, the trigger automatically increases the tax. It makes no sense to start
whacking people with more gas taxes. It's irresponsible that we would even consider that.
So this amendment freezes the tax at 21 cents.
Rep. Gauch continued: At this point, we would be losing no revenue. But if we get into the
vacation season and we get a spike in prices, the tax will go up. That's ridiculous. We
should all vote for this and put some common sense into our gasoline tax structure.
Rep. Rogers said here's an initiative, an amendment I think this chamber
can embrace. The gas tax rate right now is the greater of 21 cents per gallon or 19.1
percent of the average wholesale price of gas. Yesterday, the US Energy Department renewed
its forecasts for this summer and has reported prices will peak this month and decline
steadily toward Labor Day. It's the Taxation Committee's perspective that this amendment
is revenue-neutral and it sends a message that certain initiatives we undertook in 1983,
that we can in these fiscally good times, undo. That is a very positive signal to our
motorists as we approach the high motorist season of summer vacations, tourism and
industry, using the roads on an increasing basis.
ON ROLL CALL VOTE OF 149-6, AMENDMENT 5 ADOPTED
DIESEL TAX: Rep Marini and others offered amendment 6 reducing the tax
rate on diesel fuel from 21 cents to 17 cents and exempting tractor trailer trucks and
trailers from the sales tax. Rep. Gauch requested a roll call vote and there was support.
Rep. Gauch said we're talking about diesel fuel. Let me tell you about
the significance of the trucking industry - they supply 9,550 manufacturing companies,
37,000 retail stores and stock 16,360 wholesale trade companies. 86 percent of
Massachusetts communities are served exclusively by the trucking industry. We have a
diesel tax of 21 cents. It's higher than the states around us. When Connecticut reduced
theirs to 16 cents, we lost a tremendous amount of business and they picked it up. We have
a significant amount of trucking in this state, but these big rigs that have tanks that
hold 500 gallons fill up before they cross into our state. We lose the sundry items at the
truck stop. We lose the overnight stays. A study said if we reduce the tax to 17 states,
we'd get that business back. DOR confirmed today it would be revenue-neutral. So that
makes sense. We get the benefit of the expenses the trucks have, rather than just having
them tear up our roads. This is a no-brainer. It was passed through Taxation a few years
ago with an ought-to-pass, yet we've dragged out feet. Do we want to study it again while
our truckers are out there losing money on a daily basis? I would hope this amendment
passes.
Rep. Rogers of Norwood offered a further amendment stipulating that the
provision shall not take effect until the Department of Revenue has furnished a study of
the impact on the state economy.
Rep. Rogers said I hope the further amendment prevails. We had this debate two months ago.
Then, this House was recorded 125-28 in favor of this further amendment.
Rep. Rogers continued: The vast majority of you said you would not cut the gas tax from 21
cents a gallon to 17 cents until the Department of Revenue has reported back to us the
economic and fiscal impact. The DOR has been on the phone with staff members and members
of the Taxation Committee, but it has not yet been in receipt of the written analysis that
the Taxation requires.
Rep. Gauch asked if the gentleman would yield, which he did. Rep. Gauch
said would the gentleman agree to put this at the end of the can, if we have a pending
resolution from DOR that we'd have it in the next few days?
Rep. Rogers said in answer, not while I have the votes to win. In all
seriousness, the Taxation Committee has been working with DOR. It has given us preliminary
results. I made a commitment to this House that the committee would take up a certain
bill, not a budget, if the DOR analysis came back and found this to be revenue-positive. I
urge that we move on with the debate and adopt the further amendment
Rep. Marini said we've been debating this not for two months, but for two
years. What's going on at Taxation? Is DOR running that operation, or are we? We have
information that Massachusetts is losing money. The longer we have a diesel fuel tax that
is 4 cents higher than our neighboring states. Trucks stop and fill up their rigs with 500
gallons at a time in our sister states because it's cheaper. While they're there, they
have some supper. They buy a newspaper. We'd never allow this in Massachusetts, but some
of them buy a pack of cigarettes. Think about the money we're losing there alone. The
impact on the amount of revenue collected from the diesel fuel tax is zero. We'll sell
enough additional diesel fuel to offset the reduction in the tax rate. Any other benefits
we get are gravy. They're bonuses. I don't understand the resistance to this, other than
the institutional resistance to cutting taxes. We can cut this tax rate and increase the
revenue to the Commonwealth. Everyone benefits, with the possible exception of New York,
Rhode Island, New Hampshire and Vermont.
Rep. Rogeness said I hope the further amendment is not adopted and the
base amendment is adopted. I represent five towns, all of which border Connecticut. I hate
to think their DOR does a better job for their Legislature than our Legislature is able to
for us.
Rep. Jones of North Reading said I can't help but to think this further
amendment is dilatory. The Taxation Committee execed this bill favorably so we would be
competitive with our neighboring states. People will say, hey, I don't have to stop and
fill up before I get to Massachusetts. I really don't think it takes rocket scientists to
figure out this is a good idea.
Rep. Rogers said in the interest of time, I'd like to address the premise
of this amendment. It's being sold on the premise that the ancillary economic activity
will allow us to be more competitive with our neighboring states, and that by lowering the
rate, we'll increase economic activity in Massachusetts. We received an email from the
DOR. It says they have no definite estimate for ancillary economic activity. What it does
note is the real revenue losses - $14 million each year. It's an additional $3.2 million
for exempting tractor-trailers. We'll definitely lose $17.2 million, and that presents a
problem. The DOR does not run this House. The House runs this House. I ask that the
further amendment prevails.
Rep. Gauch said I hope the original amendment is passed. The facts are, a
few years ago, when Connecticut cut their diesel fuel tax, Massachusetts lost the exact
total thousands of gallons that Connecticut picked up. We lost it overnight. We'll get it
back overnight. When we get those truckers back, we get the sundry items and overnight
stays. Those are the facts. It's so simple, so easy to see, and that's why the Taxation
Committee a couple of years ago passed it through. Everybody wins here.
Rep. Peterson said the chairman of Taxation said we have no idea what's
going to happen if we cut this tax. But we've raised the 25-cent tax increase on
cigarettes, which was supposed to fund access to health care. But since 1998, those tax
revenues have gone down from $301 million to $279 million this year. That tax increase has
had a negative effect. What we have done is make it economically viable to go outside
Massachusetts. It's not worthwhile to drive out of state to purchase cigarettes, if you
can save $10 on a carton. It's the same thing with the truckers. We won't lose $14 million
per year in revenue. We have a chance of picking up revenue, through cigarettes, a coffee,
a newspaper.
On voice vote, further amendment adopted. Rep. Peterson doubted the vote and requested a
roll call. There was support.
ON ROLL CALL VOTE OF 121-32, FURTHER AMENDMENT ADOPTED.
Question came on amendment 6.
ON ROLL CALL VOTE OF 153-0, AMENDMENT 6, AS AMENDED, WAS ADOPTED.