CITIZENS   FOR  LIMITED  TAXATION  &  GOVERNMENT

 

CLT Update
Tuesday, September 11, 2001

Twenty Reps unanimously kill Tax Reduction Fund


The action eliminates the near-term possibility of an automatic one-time tax cut that would have kicked in later this week if the surplus revenues were not designated in some fashion.

Acting Gov. Jane Swift called the transitional escrow account proposal a "legislative slush fund" that keeps taxpayers in the dark about the disposition of their money. It's "high on the list of veto bait," said one Swift aide.  "It just reserves for them the right, without any checks and balances, to spend it," Swift said.

Finneran spokesman Charles Rasmussen said the bill effectively throws the $579 million fiscal 2001 surplus into the larger talks over the $22.9 billion fiscal 2002 budget....

State House News Service
Sept. 10, 2001
"...Lawmakers put surplus into escrow account"


We're still not clear how it occurred, what happened to the objection of one member in an informal session halting a controversial proposal in the deficiency budget ... or if one member even did in fact rise and object yesterday (we're awaiting a return phone call from Rep. Vinny deMacedo).

But, as usual, Speaker Finneran had his way and more than half a billion bucks of taxpayers' overpayment -- the FY 2001 surplus -- has been swallowed up into the insatiable maw of state government, removed from the reach of taxpayers.

"On a standing vote of 20-0, the House adopted an emergency preamble to H 4532 deficiency budget." the State House News Service reports. "Five minutes later, the House enacted the bill." It's amazing that even 20 of the 160 state reps were present to vote, even if not on-the-record by roll call.

So ends the annual debate on needing to raise the cap on the Stabilization Fund in order to prevent triggering an automatic tax cut: The fund is full at $1.8 billion and never again will there be a need to stash away ever-increasing amounts of money in it.

From this day forward, any surpluses will simply be hoarded in a new shell-game fund created by Finneran: a "transitional escrow account." That's the official name for a new slush fund with no tax cut trigger that will carry over into the next year, and the next, and the next ... until it's spent.

I was hard-pressed today to find any news on this scam anywhere in the mainstream press, besides the State House News Service report. But I've been hard-pressed to find any reporting about the escalating raid on the Tax Reduction Fund all along, so I'm not too surprised.

Chip Ford


State House News Service
Monday, September 10, 2001

Unable to agree on a bill,
lawmakers put surplus into escrow account

By Michael P. Norton

STATE HOUSE, BOSTON, SEPT. 10, 2001 ... Another slew of policy proposals on Monday joined dozens of initiatives that are being held hostage to the ongoing philosophical differences between the Massachusetts House and Senate and their Democratic leaders.

The House and Senate passed a budget bill appropriating $165 million to pay overdue and unexpected bills from the fiscal year that ended June 30 while, more controversially, placing $579 million into a transitional escrow account because the branches can't agree on what to do with the fiscal 2001 surplus.

The action eliminates the near-term possibility of an automatic one-time tax cut that would have kicked in later this week if the surplus revenues were not designated in some fashion. The tax cut is triggered when the state has more money in its rainy day reserves than is allowed under current state law.

Under the bill passed in a day, the $579 million will flow into a pair of reserve funds on Nov. 30 if House and Senate leaders are unable to reach an agreement before then. The surplus-spending bill now joins the overall, 10-week-late fiscal 2002 budget as the subject of further talks among legislative leaders.

With fall fast approaching, Massachusetts is heading for a repeat of the famous 1999 budget stalemate between the branches and their leaders, House Speaker Thomas Finneran (D-Mattapan) and Senate President Thomas Birmingham (D-Chelsea). Two years ago, the branches, facing the annual early summer budget deadline, didn't reach an agreement until just before Thanksgiving.

Members of both branches vest an enormous amount of power in their leaders. Finneran is a conservative Democrat who believes the Senate is too generous. Birmingham is aligned with the more liberal wing of the Democratic Party and maintains his populist spending plans are fiscally sound. He is also a likely candidate for governor next year. Both are lawyers and former chief budget writers.

The House and Senate recently passed vastly different surplus spending bills, with the House focusing on judicial salary hikes, road and bridge improvements, and building state reserves. The Senate backed a major paid family leave proposal and both branches okayed boosting the rainy day fund cap to stockpile reserves and prevent a tax cut triggered when the fund balance exceeds 7.5 percent of budgeted revenues.

Entering a meeting with Birmingham and Acting Gov. Jane Swift, Finneran said the status quo regarding the fiscal 2002 budget remains. "We're not near an announcement at all," said Finneran, who met earlier in the day with Birmingham, House Ways and Means Chairman John Rogers (D-Norwood) and Senate Ways and Means Chairman Mark Montigny (D-New Bedford). Finneran repeatedly stressed the state's economic uncertainties.

Budget negotiators remain mum, declining to discuss even the existence of meeting plans. "I really can't comment on the conference committee," said House Ways and Means Committee spokesman Bill Rennie. "We'll continue to work with the Senate toward hopefully finishing this as quickly as possible."

But Senate Minority Leader Brian Lees (R-East Longmeadow) described conference committee meetings as occurring "not very often," and said that's one reason for the lengthening stalemate. "Everything is predicated on meeting," Lees said. "You can't solve a problem if you don't meet."

The House and Senate leaders are trying to craft a budget accord during a severe economic slowdown. The budget plan requires a 4.5 percent increase in tax revenues, which were down by 1 percent during the first two months of the fiscal year. Beyond the revenues, the branches disagree over adequate funding levels for public employee pensions, prescription drug programs and public campaign financing, as well as how much tobacco settlement money to spend.

Rep. Bradley Jones, a North Reading Republican, said he's as clueless about the budget as most citizens. "I would love to be privy to some of the conversations, let alone be able to participate in some of the conversations," he said. "It's once again an example of the two Toms not able to reach agreement in a timely fashion. We don't have an agreement on an '02 budget and we can't agree on a final '01 budget."

Acting Gov. Jane Swift called the transitional escrow account proposal a "legislative slush fund" that keeps taxpayers in the dark about the disposition of their money. It's "high on the list of veto bait," said one Swift aide. "It just reserves for them the right, without any checks and balances, to spend it," Swift said. "That's an example of how when you can't come to an agreement, you come up with zany ideas."

Jones said today's deal buys time. "We're essentially saying we weren't able to work out an agreement on everything but we wanted to do something," he said. "It's kind of continuing the debate for another day ... The taxpayers should be concerned about it. So much power is concentrated in one person in each branch and there's really not a lot of party balance so there's not a lot of power to force things. I don't know why these two guys can't reach an agreement. It's disconcerting."

Republicans hold 23 seats in the 160-member House and six in the 40-member Senate.

Finneran spokesman Charles Rasmussen said the bill effectively throws the $579 million fiscal 2001 surplus into the larger talks over the $22.9 billion fiscal 2002 budget. That will allow the branches to conduct analyses and "come up with a more rational document" given fears over slipping tax collections.


From the State House News Service
HOUSE SESSION - MONDAY, SEPT. 10, 2001

CONVENES: The House convened at 11:11 am, Speaker Thomas Finneran presiding. Chaplain Robert Quinn offered the prayer and the Pledge of Allegiance was recited....

INTERIM BUDGET: The House ordered to third reading and engrossed H 4517 a Ways and Means report on Acting Gov. Swift's legislation making certain appropriations prior to final action on the fiscal 2002 General Appropriation Act.

Speaker Finneran said enactment of the interim budget will be required by midnight tonight. The chair anticipates that the Senate will remain in session to complete their work in a timely fashion. We intend to recess and when we reassemble we will take up a proposed limited final deficiency so the bills unpaid for fiscal 2001 could be paid in a timely fashion. As part of that, a transitional escrow of the unspoken-for balance would be proposed to carry those sums over. The chair and staff of Ways and Means are available for questions. It's a bill-paying exercise that defers the most controversial questions.

RECESSES/RETURNS: The House recessed at 11:36 am with a time for returning left up to Speaker Finneran. The House returned at 2:40 pm, Speaker Finneran presiding.

FISCAL 2001 DEFICIENCY BUDGET/FUND TRANSFER: The House ordered to third reading and engrossed H 4532 a $744 million final fiscal 2001 report in part from the House Ways and Means Committee with direct appropriations of $65.3 million and a fund transfer of $579 million. Speaker Finneran said he continues to anticipate the return from the Senate of the interim budget passed in the House this morning and the possible return of the final deficiency budget.

RECESSES: The House recessed at 2:42 pm, with a time for returning left up to Speaker Finneran.

MORE INTERIM BUDGET: The House returned at 4:40 pm, and enacted H 4517, the interim budget. Speaker Finneran said the House would then recess to allow the House Ways and Means Committee to review the Senate's changes to the deficiency budget.

MORE DEFICIENCY BUDGET: The House returned from recess at 6:32 pm, Speaker Finneran presiding. The House received word that the Senate had adopted the deficiency budget with an amendment striking and replacing section 36. The House adopted a further amendment striking and replacing section 36 regarding creation of a $579 million transitional escrow fund. The bill, as further amended, was sent to the Senate for concurrence.

DEFICIENCY BUDGET RETURNS: The House returned from recess at 7:12 pm, Speaker Finneran presiding, and received word that the Senate had concurred with the House's further amendment with a still-further amendment. The House concurred with the Senate's still-further amendment.

Speaker Finneran said the papers are being sent to the engrossment division in preparation for enactment. An emergency preamble will need to be adopted. The chair anticipates no difficulty. The House recessed at 7:13 pm, subject to the call of the chair.

RETURNS: The House returned at 7:24 pm. On a standing vote of 20-0, the House adopted an emergency preamble to H 4532 deficiency budget. Five minutes later, the House enacted the bill.

ADJOURNS: The House adjourned at 7:30 pm, to meet next at 11 am Thursday in an informal session.


From the State House News Service
SENATE SESSION - MONDAY, SEPT. 10, 2001

CONVENES: The Senate convened at 11:05 am, Majority Leader Linda Melconian of Springfield presiding.

INFORMAL: Sen. Melconian said today's session is an informal session. Only non-controversial matters will be taken up, and there will be no roll calls or debate.

RECESS: Sen. Melconian said we are awaiting paperwork from the House relative to the 1/26 budget and perhaps a final deficiency. At 11:10 am, the Senate recessed subject to the call of the chair.

RETURNS: The Senate returned at 4 pm, Sen. Melconian presiding.

INTERIM BUDGET: The Senate ordered to third reading and engrossed H 4517 fiscal 2002 interim budget.

DEFICIENCY BUDGET: Question came on ordering to third reading H 4532 fiscal 2001 deficiency budget. Sen. Montigny's amendment, striking Section 36 and inserting new text, was adopted. The bill, as amended, was ordered to third reading and engrossed.

RECESS: The Senate recessed at 4:09 pm, subject to the call of the chair.

MORE DEFICIENCY BUDGET: The Senate returned at 7 pm, Sen. Melconian presiding. Question came on concurrence with a further House amendment striking and replacing section 36 in H 4532 the deficiency budget. The Senate adopted a still further amendment offered by Sen. Montigny....

MORE DEFICIENCY BUDGET: Following House concurrence with Senate amendment, The Senate enacted the deficiency budget, which was sent to Acting Gov. Swift's desk.

ADJOURNS: The Senate adjourned at 7:31 pm, to meet next on Tuesday at 11 am without a calendar.


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