CLT Update
Friday, January 5, 2001

CLT earns an Advocate "Halo"
while the cries continue, "The sky is falling!"

The Valley Advocate
Springfield, Mass.

January 4-10, 2001

Halos and Horns 2000

The Valley Advocate's annual round-up of
the good, the bad and the ugly of the year gone by


HALO -- Barbara Anderson and Citizens for Limited Taxation:  The folks at CLT deserve the taxpayers' thanks for their no-bullshit insistence that the state honor its long-neglected promise to roll back the "temporary" 1989 state tax hike. And shame on opponents of the CLT-backed ballot Question 4, who ran disingenuous ads claiming the rollback would mean automatic budget cuts for education and healthcare. Question 4 passed, and now it's up to legislators to decide where the money will come from. Let's hope they seize the opportunity to trim some fat and patronage from the state budget.

The Boston Globe
Friday, January 5, 2001

Decrease in state revenue stirs fears
By Rick Klein
Globe Staff

Concern over the Massachusetts economy intensified on Beacon Hill yesterday with another troubling sign that the good times could be coming to an end: tax collections dropped last month compared to a year ago.

December's state tax receipts fell 1.6 percent compared to the same month in 1999, with declines seen across the board -- in income taxes, sales and use taxes, and corporate taxes.

House Speaker Thomas M. Finneran said the latest figures have him "worried to death." The slowdown's timing could hardly have been worse, he said, with the first phase of a voter-approved $1.2 billion income tax cut starting this week.

"You have an economy that's weakening considerably, and we've locked ourselves in" with the tax reduction, Finneran said. "This is a one-two punch. Muhammad Ali tagged you with a left and then hit you with a right. Most people's knees would buckle."

State revenue collections are considered an important barometer of the economy, providing a detailed snapshot of recent consumer, business, and payroll activity. Last month's revenues fell $23 million from December 1999.

While revenues are still up 7.2 percent midway through the state's fiscal year, which began July 1, the sluggish figures recorded since October could mean funding slashes for some social programs, said Michael Widmer, president of the Massachusetts Taxpayers Foundation.

Governor Paul Cellucci, who pushed the tax cut through as a statewide ballot initiative after failing to persuade the Legislature to enact it, said that the latest economic indicators show the need for "fiscal discipline."

However, Cellucci said that the state has enough cash in reserve to ensure that no significant programs will have to be cut. The state budget should be able to grow about 5 percent in the next fiscal year, he said.

Widmer said it's too early to panic; the current budget will cover state spending through June, and there's no telling what the next 18 months will bring.

The December 2000 numbers may be lower than normal because there were three fewer days on which the state processed tax receipts last month than in December 1999, according to the state Department of Revenue.

Still, the drop is only the latest piece of news pointing to an economic downturn on the eve of budget season. Cellucci will present his budget by the end of the month, and the Legislature will then draft its own version.

The governor said that indications that the economy is slowing show the wisdom of his tax cut. A slash in income taxes, he said, will lessen the blow of an economic downturn.

But Widmer said that while that's probably true in the long term, the tax cut could make matters worse for management of state finances in the near future.

"With three consecutive months of poor revenue performance, this could spell real trouble for the state in the next fiscal year," he said.

Finneran said to expect significant funding increases in only a handful of areas where adding money is "unavoidable," such as in health care and education.

He holds out hope that the final budget will avoid cuts to social programs. "It's not impossible to do. It will be as much a political challenge as it will be a substantive budget challenge," he said.

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