CLT Update
Tuesday, August 28, 2001

Pols plot to expand, create new slush funds with tax surplus

"Lawmakers are rushing to spend the $550 million fiscal 2001 surplus by Friday -- the date on which any unspent  portion of the surplus goes into the Stabilization Fund, the capital reserve fund and the tax reduction fund."

State House News Service
Aug. 27, 2001

The Stabilization Fund has consistently proved to be a successful legislative dodge to avoid annual surpluses being returned to taxpayers, as was once allegedly intended. The Bacon Hill Cabal has regularly moved the goal post -- raising the ceiling to prevent the automatic spillover into the Tax Reduction Fund. But, as usual, More Is Never Enough (MINE).

Not only are they now plotting to move the goal post upfield once again -- increasing the Stabilization Fund cap from $1.8 Billion to $2.3 Billion this time -- but they're also scheming to create new "mini-Stabilization" slush funds"!

Remember the sop Finneran et. al have tossed into this ploy to hopefully placate taxpayers? If adopted, it would then require a two-thirds vote to raid the existing Stabilization slush-fund, something CLT has long advocated.

Would this two-thirds vote apply to new "mini-Stabilization" slush funds? Doubtful.

And just how do they justify a $2.3 Billion Stabilization Fund when that figure is so highly visible and grows almost every time there's a surplus (tax over-payment)?

It would be more advantageous, from the tax-and-spend pols' perspective, to have lot less visible, more easily raided, "mini-Stabilization" slush funds" zig-zagging around beneath the radar that could be dipped into with less scrutiny.

What we must now watch for is action -- or inaction -- by Republican legislators. (Obviously the alleged "fiscal conservative" Democrats like Finneran are on the "we've got it and it's ours now" binge.) As the State House News Service reported on Friday:

"Because legislators are still meeting in informal sessions, just one member can object to any action. Republican lawmakers would prefer that surplus dollars be returned to taxpayers, so it will most likely require a formal session to alter the law mandating that those dollars be moved into a tax relief fund as of this Friday."

Will the Republican minority force a formal session and a roll call vote before the Friday deadline, inconvenience their colleagues, interrupt their extended taxpayer-paid vacations?

CLT will be calling all Republican legislators throughout today to insure that they are aware of this upcoming event and prepared. We'll also hand-deliver a memo on this subject to every legislator's office before Thursday's vote. We'll update you tomorrow on our progress.

Chip Ford

State House News Service
Monday, August 27, 2001

Legislature set to spend most of fiscal 2001 surplus
by Thursday

By Elisabeth J. Beardsley

STATE HOUSE, BOSTON, AUG. 27, 2001 ... Legislative leaders have until Thursday to reconcile about $177 million worth of differences between the House and Senate versions of the fiscal 2001 year-end deficiency budget.

The House passed its $495.6 million version of the surplus-spending bill last Thursday. The Senate passed its $672.5 million version today. Lawmakers are rushing to spend the $550 million fiscal 2001 surplus by Friday -- the date on which any unspent portion of the surplus goes into the Stabilization Fund, the capital reserve fund and the tax reduction fund.

Both bills contain money for "true deficiencies," like $104 million for Medicaid and $50 million for the Chapter 90 road and bridge program. Both branches' bills boost the Stabilization Fund cap to 10 percent to avoid an automatic tax cut, and both set up "mini-Stabilization Funds" to buffer against hard times over the next two years -- although the Senate provides $100 million versus the House's $150 million.

But the branches diverge when it comes to capital spending priorities, new initiatives and earmarks for pet local projects. Nevertheless, House Speaker Thomas Finneran's spokesman Charlie Rasmussen said the House expects to spend the next few days working with Senate leaders to achieve a compromise that will be ready for passage by Thursday.

"We don't view the differences in the two budgets as great," Rasmussen said.

Senate Ways and Means Chairman Mark Montigny (D-New Bedford) was not immediately available for comment, but Senate aides also indicated that the differences between the branches are not so great.

Some differences include:

  • The House provides $3 million for a 17 percent pay raise for judges; the Senate does not.

  • The Senate provides $30 million to fund various collective bargaining agreements; the House does not.

  • The House offers $13 million toward unfunded pension liabilities at the Pension Reserves Investment Trust; the Senate does not.

  • The Senate sets up new open space acquisition and paid family leave plans; the House does not.

Acting Gov. Jane Swift in late June filed a $453 million surplus-spending bill that would have provided $150 million worth of tax relief to low-income working families. Both branches of the Legislature disregarded that proposal.


State House News Service
Tuesday, August 28, 2001

CLT seeking to stymie supp, Stabilization Fund changes

Citizens for Limited Taxation Director Barbara Anderson and her team are furiously working the phones this week, canvassing the GOP caucuses in the House and Senate in hopes of finding someone to object to Thursday's anticipated passage of a fiscal 2001 deficiency budget.

While the chambers' versions of the spending plan differ in the details and the bottom line, both contain provisions to raise the $1.8 billion Stabilization Fund's cap to 10 percent of budgeted revenues, from the current 7.5 percent.

CLT has long opposed raising the "Rainy Day Fund" cap, which Anderson says is a legislative ploy to deny taxpayers an automatic tax cut in the event the fund overflows its statutory bounds.

House Speaker Thomas Finneran was up-front that that was, in fact, his intention in offering the proposal to raise the cap again.

Anderson said she further objects to both chambers' plans to set up "mini-Stabilization Funds," an idea that first originated with the Massachusetts Taxpayers Foundation and that's intended to create a special reserve fund to be tapped over the next two years as a buffer against hard economic times and the new voter-approved income tax cut.

Finally, Anderson said she's incredulous that all this is going down in an informal session, which few members attend and which is supposed to be limited to non-controversial items.

"We're objecting to the decline of democracy in Massachusetts," Anderson said.

But lawmakers seem bent on spending at least some part of the $550 million fiscal 2001 surplus by Friday, which is the date it becomes a "statutory surplus" and must be divvied into the Stabilization Fund, capital reserve fund and tax reduction fund (although some lawmakers seem to think there's some wiggle room in the Aug. 31 date, which might be possible to extend until Sept. 15 or even beyond).

The branches have passed different versions of the spending bills, but both sides seem optimistic they'll reach a behind-the-scenes agreement by Thursday.

Meanwhile, Anderson said her crew is pinning a lot of hope on Sen. Robert Hedlund (R-Weymouth), a longtime strenuous objector to tinkering with the Stabilization Fund cap. CLT is also grilling every GOP representative and senator to determine why no one objected to the bills' initial passages.

During informal sessions, an objection from any member can scuttle action on anything, but such a move in the case of the deficiency budget would be undertaken at great political peril to the objector, who could face the wrath of colleagues whose pet projects were thwarted.

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