CLT Update
Thursday, November 8, 2001

Birmingham emerges from bushes
CLT defends against ambush of Tax Rollback

Yesterday, in an effort to gauge Senate sentiment, Birmingham presented members with lists of programs they could save if the income tax is frozen. Included on that list was local aid to cities and towns, education funding, state funded summer programs for children, and several  health care programs, senators said.

The Boston Globe
Nov. 8, 2001
Lawmakers hedge on freezing tax cut

"It's very telling that after there's no agreement on the budget for 131 days in the Legislature, the very first thing they ask their members about is freezing a tax cut to take more money out of consumers' pockets." 

Gov. Swift's spokesman 
Associated Press
Nov. 8, 2001
Support for delaying income tax seen in Senate

Despite his initial resistance, Finneran said he's willing to cut a deal. The House would like to slap economic triggers onto the tax cut, freezing its phase-in only in the economy really tanks, he said....

Citizens for Limited Taxation chief Barbara Anderson scorned legislators' claims that a freeze would be only "temporary."

"We're not that stupid out here in real people-land," Anderson said. "They're talking about repeal."

The Boston Herald
Nov. 8, 2001
Finneran counters Senate
with economic trigger plan

On Oct. 4 ( "Making up the rules as they go along" ) I noted: "Government by rules made up as the Legislatur  goes along. Only in Massachusetts, the People's Republic."

The Massachusetts "Great and General Court" is proving that not only is there "an exception to every rule," but that the rules themselves are meaningless, discarded when they get in the way -- the "exceptions" run rampant on Beacon Hill.

When the Stabilization ("rainy day") Fund nears its limit and approaches an automatic tax cut -- why they simply raise the limit.

And if they can't raise the limit, then they create a new "Transitional Escrow Account" slush fund in which to stash the taxpayers' overpayment to keep it from them until you can spend it.

When the rules require the Legislature to at last go home for the year after idling for months, but there are things legislators finally want to do -- like overriding the governor's vetoes -- they simply suspend the rules and get on with it.

If the pols don't like the outcome of a hard-won ballot question campaign -- they simply repeal it (with a "moratorium" as the first step) and thumb their noses at the voters.

And they plot to repeal it in a four-month overdue budget that didn't include a tax hike in either the House or Senate versions when both went to conference committee. It is a preposterous scheme; a violation of their joint rules and likely illegal.

Only in Massachusetts, the People's Republic, do the rule-makers, the lawmakers, make the rules then ignore them when they're in their way: Rules apply only to their subjects, us mere citizens.

Chip Ford

November 8, 2001

Contact: Barbara Anderson - (508) 384-0100
              Chip Ford - (781) 631-6842

Birmingham emerges from bushes
CLT defends against ambush of Tax Rollback

CLT has been expecting a "Poor Loser" attack from rollback opponents since last November. We are now watching activity in the Legislature, and want to point out that:

1.  A vote to repeal the rollback would be a slap in the face to the same taxpayers who elect state senators and representatives. It would say "Dear voter, you were smart enough to elect me but then took a Dumb Pill to vote for the ballot question."

2.  A "moratorium for one year" or the "Finneran Trigger Plan" would say, "Dear voter, you took a whole lot of Dumb Pills if you really believe that this is not the first step of a permanent repeal. Just look at our track record, dummy."

3.  Since the governor does respect the will of the voters, two-thirds of each branch would have to make the "My voters took Dumb Pills" statement to override her veto.

4.  We do not think this will happen. But if it does...

5.  The rollback repeal (aka, "moratorium") cannot be included in the state budget, since there was no income tax hike in either the House or the Senate version and therefore, there is no tax hike in conference.

6.  If passed with a separate bill, the rollback repeal will be the subject of a CLT-led repeal referendum that will be on the 2002 ballot -- along with, say, Tom "The Voter-Slapper" Birmingham running against Jane "The Veto" Swift.

In a news report yesterday, Sen Birmingham disingenuously stated: "It's not as if we've been hiding in the bushes waiting to ambush the tax cut at the first opportunity." He didn't duck into the thicket until voters mandated the tax rollback, but we spotted him crawling among the shrubs long ago. For an extensive list of his pre-ambush opposition statements, see our website.


The Boston Herald
Thursday, November 8, 2001

Finneran counters Senate with economic trigger plan
By Elisabeth J. Beardsley

House Speaker Thomas M. Finneran spurned a Senate scheme to freeze the voter-approved income tax cut yesterday, but countered with an economic trigger plan that critics say would amount to the same thing.

Finneran said he suspects Senate President Thomas F. Birmingham's members will "insist" on stopping the second step of the three-year income tax cut, overwhelmingly approved by voters last year.

The Senate plan would drum up $200 million next year, but Finneran said it barely makes a dent in a $1.35 billion budget shortfall that could widen even further.

"I'm reluctant to pursue it or even propose it because I don't think it gets to the heart of the matter," Finneran said.

The tax cut's fate is bound up in budget negotiations that are still dragging on, four months into the new fiscal year. Massachusetts is now the only state in the union without an annual spending plan.

The last-minute move against the tax cut comes as budget-writers race to slash a half-billion dollars or more from programs, and do it in time to beat a looming, end-of-session deadline.

Budget writers are deadlocked over how much money to cut, how deep to dip into the state's $2.3 billion reserve funds, and policy questions like freezing the tax cut and hiking the cigarette tax.

Birmingham, a likely candidate for governor, threatened deep cuts in local aid, education and health care if something drastic like freezing the tax cut isn't done to raise money.

"You can't get there without cutting some of the primary functions of government," he said.

Despite his initial resistance, Finneran said he's willing to cut a deal. The House would like to slap economic triggers onto the tax cut, freezing its phase-in only in the economy really tanks, he said.

The champions of the tax-cut ballot question howled in protest, threatening to take the matter to court or back to the ballot.

Citizens for Limited Taxation chief Barbara Anderson scorned legislators' claims that a freeze would be only "temporary."

"We're not that stupid out here in real people-land," Anderson said. "They're talking about repeal."

Acting Gov. Jane. M. Swift reiterated her veto promise. "Now is not the time to take money away from consumers," Swift said.

Lawmakers are also plotting an end-run around the legislative rules that require them to adjourn Nov. 21. If they fail to finish the budget by this weekend, they risk forfeiting their right to override gubernatorial vetoes.

Both Finneran and Birmingham said they'd be willing to abandon the rules and call a special session to take up veto overrides at their leisure.

The Boston Globe
Thursday, November 8, 2001

Lawmakers hedge on freezing tax cut
Override chances remain unclear

By Rick Klein
Globe Staff

A majority of House and Senate members appear ready to freeze the income tax rollback as part of this year's state budget, but it's still unclear whether either branch has the votes or political will to override Acting Governor Jane M. Swift's promised veto.

Senators and representatives emerged from long, closed-door meetings yesterday without consensus on how to proceed on the income tax freeze, which would give the state an additional $200 million this fiscal year to help close a $1.35 billion budget gap.

Many lawmakers are hesitant to vote to hold the tax rate at 5.6 percent because voters overwhelmingly approved a drop to 5.3 percent last year. Still, the current fiscal crunch, which may force as much as $600 million in program cuts, is making the freeze increasingly attractive to lawmakers eager to protect pet programs.

House and Senate leaders say they won't push to freeze the income tax rate unless two-thirds of the members agree to it before the measure is taken up on the floor. The leaders do not want to force their rank-and-file members to take a politically difficult vote -- to halt a tax cut -- unless they are convinced the measure will ultimately prevail.

"This is not a Parisian salon or an Oxford debating society," said Senate President Thomas F. Birmingham, who is personally backing the freeze to avoid damaging budget cuts. "Whether there is a two-thirds vote -- I wouldn't say that just yet."

Yesterday, in an effort to gauge Senate sentiment, Birmingham presented members with lists of programs they could save if the income tax is frozen. Included on that list was local aid to cities and towns, education funding, state funded summer programs for children, and several health care programs, senators said.

House Speaker Thomas M. Finneran also raised the tax freeze issue with his colleagues yesterday, but he stressed that he would only push the issue if the Senate insists that it be part of a budget agreement. "I'm reluctant to pursue it or even propose it because it doesn't get to the heart of the matter," he told reporters yesterday. "[But] at this point, given how late we are in the season, I don't think anything can be off the table."

Finneran said some members would like a freeze to include provisions for the income tax rate to automatically drop in the future, when the economy recovers.

Legislators also discussed the possibility of including in the budget a cigarette tax increase of 50 cents per pack. That would generate more than $100 million for health care programs and could be attractive to legislators in the current fiscal crunch. But Birmingham and Finneran said they did not foresee the tax increase in a budget agreement.

Swift spokesman James Borghesani blasted the Legislature for complicating negotiations when the spending plan is already more than four months late in reaching the acting governor's desk.

"It's very telling that in these tough fiscal times, and after we've been without a budget for 130 days, the first instinct of the House and the Senate is to poll their members on raising taxes," he said.

House and Senate leaders continued their budget talks yesterday and said negotiations are progressing well. But Birmingham and Finneran both acknowledged that they won't be able to finish the budget by the end of this week, which they had earlier hoped. They said they would be open to extending the legislative session, due to end the day before Thankgiving, to finish the budget.

Because Swift will have 10 days to prepare vetoes, tomorrow would be the last day for the Legislature to approve a final budget and still be able to override Swift's actions and end the session as scheduled. The session can be extended with a majority vote in the House and the Senate.

Associated Press
Thursday, November 8, 2001

Support for delaying income tax seen in Senate
By John Mcelhenny

BOSTON (AP) More than half of the state Senate's Democrats support delaying an income tax cut approved by voters last year, Senate President Thomas Birmingham said on Wednesday.

If the tax cut is enacted as scheduled on Jan. 1, Birmingham said, the state would lose $200 million in revenues, and lawmakers would have to consider cutting spending on education, aid to cities and towns, and health care.

Lawmakers in the House and Senate now expect about a $1.4 billion budget shortfall, and Birmingham said the Senate is exploring where spending can be cut to achieve most of that sum.

But unlike acting Gov. Jane Swift and House Speaker Thomas Finneran, Birmingham, D-Chelsea, said he also supports delaying the income tax cut to avoid some cuts in state spending.

"That represents a blended approach which will mean better news for hospitals and health care, better news for school programs, better news for local government, to the tune of $200 million," Birmingham said.

Swift, a Republican, says she'll veto any freeze or delay in implementation of the income tax cut, and she again criticized the Legislature on Wednesday for failing to approve a budget, even though the fiscal year began four months ago.

Massachusetts is the only state in the country that has yet to pass a budget for this fiscal year.

"It's very telling that after there's no agreement on the budget for 131 days in the Legislature, the very first thing they ask their members about is freezing a tax cut to take more money out of consumers' pockets," Swift spokesman James Borghesani said.

Birmingham spoke after a four-hour caucus in which Democratic senators discussed spending priorities and the impact of the income tax cut, which is scheduled to lower the state income tax from 5.6 percent to 5.3 percent in January.

Because of Swift's threat of a veto, more than two-thirds of the Legislature would be needed to approve delaying the tax cut over her opposition.

Birmingham said more than half of the Democratic members who make up the vast majority of the 40-member Senate support the delay, but the number who support it is still not the two-thirds required.

Finneran, D-Boston, is reluctant to support a delay in the tax cut because it would only save the state $200 million, which is relatively little compared to the $1.4 billion dollar shortfall.

Instead, he said, lawmakers should focus on where spending cuts will come from.

Voters approved the income tax cut by a nearly 3-to-2 margin last November. When fully implemented in 2003, it will lower the state income tax to 5 percent.

The Telegram & Gazette
Worcester, Mass.
Thursday, November 8, 2001

Budget gap imperils services
By Shaun Sutner
Telegram & Gazette Staff

BOSTON -- The tax cut voters gave themselves last year may soon become a casualty of budget negotiations on Beacon Hill, as lawmakers try frantically to close a yawning $1.3 billion to $1.6 billion gap in the state budget.

Both branches of the Legislature are considering a freeze in the first year of the three-year $1.2 billion income tax cut -- approved by a 3-2 margin in a ballot referendum last year -- or tying the cut to economic indicators.

Rolling back the tax cut, a move steadfastly opposed by Gov. Jane M. Swift, seemed unthinkable earlier this year, but is now among options being considered.

Senate President Thomas F. Birmingham said the bleak economic situation, worsened by the Sept. 11 terrorist attacks, has come down to a likely choice between suspending the tax cut and slashing important programs.

"Local aid is imperiled. Aid to hospitals, education ... areall in very real danger," he said.

The Statehouse yesterday was a whir of caucuses, hallway press conferences and deal-making as a Friday deadline loomed for agreement on a budget that was due on July 1.

Ms. Swift blasted the Legislature again for the long delay. By law, she has 10 days from the day the spending plan is approved by the Legislature to review it.

"We've entered the 131st day without a budget. We're the only state in the country that doesn't have a budget on the table, and it's irresponsible," she said.

With the possibility of not having a budget by tomorrow, legislators said they may suspend their own rules. That would allow them to return after the end of the legislative session on Nov. 21 to override any vetoes from the governor.

Representatives and senators were told yesterday by their leaders that virtually every discretionary part of the budget -- except a few protected areas such as direct school aid and expenditures for police protection -- is "on the table."

The branches have different ideas of what is vulnerable to cuts, and they are also arguing about how much money to draw from the state's rainy day account and tobacco fund.

Working to whittle down a $22.9 billion budget for fiscal 2002, House leaders say they will protect from cuts Medicaid funding for hospitals, school and local aid, public safety and state pension fund contributions.

For everything that is left, "we are talking about substantial cuts in programs," said state Rep. Vincent A. Pedone, D-Worcester.

Lawmakers who were in the closed caucuses yesterday said cuts could be 10 percent to 15 percent or more, bigger than any since the recession years of the early 1990s.

"We're in a situation where if we don't cut this good program, we'll have to cut that good program," said Rep. James B. Leary, D-Worcester. "But if we don't do this now, in two or three years these programs are going to be cut even more."

Only the budgets for public safety and so-called "Chapter 70" aid to local school districts are protected, Senate leaders said.

Legislators were reluctant to name programs targeted for cuts.

But social service advocates, college administrators and environmentalists said everything from higher education to programs at state parks and beaches and human service workers' salaries could go under the budget knife.

Sandra Kurtinitis, president of Quinsigamond Community College in Worcester, said she has already planned for cuts by freezing hiring, merit raises and travel accounts, and slowing down computer upgrades on campus.

"We're anticipating that these steps will stand us in good stead as the budget shakeout occurs, though we do anticipate that it may not be a pretty picture," she said.

One traditional revenue-producing tool was discussed again yesterday: a hike in the cigarette tax.

Although a show of hands in the House caucus gave majority support to the proposed 50-cents-a-pack increase, which would raise about $75 million, House Speaker Thomas M. Finneran said he is not enthusiastic about it. That tax, and any tinkering with the tax cut, would need a two-thirds vote to override expected vetoes from the governor.

Mr. Finneran also said he sees a rollback of the income tax cut as a last resort, which he would agree to only reluctantly and if the Senate was wedded to it.

Mr. Birmingham, who is running for governor, has been a supporter of the cigarette tax in the past. But he is giving little emphasis to it these days -- a possible acknowledgment of how unpopular a new tax could be in a general election.

By contrast, the Senate president's apparent support for suspending the tax cut could help him in the crowded Democratic primary by painting him as the candidate who saved needed programs.

"This is something we do with the greatest reluctance," Mr. Birmingham said of the rollback proposal gathering steam in the Statehouse. "Once the referendum passed, it was my full intention to implement it.

"But there are times in public life when we have to make difficult decisions," he said.

State House News Service
Wednesday, November 7, 2001

Tax policy added to debate over cuts, reserves
as budget talks heat up

By Rick Collins and Michael P. Norton

STATE HOUSE, NOV. 7, 2001 ... House and Senate budget negotiators appear to be closing in on a long overdue deal that will include deep spending cuts, substantial use of state reserves and possibly, either a cigarette tax hike or a delay in the voter-approved income tax cut.

Senators met in a private reading room for more than three hours, and state representatives did the same in the building's basement. By mid-afternoon, Senate President Thomas Birmingham said more progress has been made "in the past 48 hours than the previous four to six weeks."

But there wasn't enough progress to announce a deal. The hope is that an agreement will be reached by the end of the week but no one was offering any guarantees. That fueled rampant speculation about the possibility of a special session after Thanksgiving to consider expected budget vetoes. Under legislative rules, formal sessions are due to end this year Nov. 21 and lawmakers are running out of time.

While en route from one meeting to another, Rep. John Rogers (D-Norwood), chairman of the House Ways and Means Committee, said, "I think we're making progress by the hour." Without announcing specific plans, the committee scheduled an executive session for Thursday at 1 p.m.

More than four months after the budget was due, legislative leaders continue to play a game of chicken, testing each other to determine which priorities they're willing to give up to help close a $1.35 billion budget shortfall. But it's an expensive game, as each day of indecision underscores another day of state government overspending. Massachusetts is the only state in the country without an approved budget.

The state has $2.3 billion socked away in reserve funds and negotiators have been debating how much to withdraw this year, and how much to save for future years, given the overwhelming global economic uncertainty. That decision affects other wrenching decisions about which state programs and services to cut. Budget negotiators have been preaching the need for cuts for weeks, without announcing any plans.

Now there are official talks underway about whether to delay the income tax rate rollback scheduled for January, when the rate on earned income is due to fall from 5.6 to 5.3 percent. Both branches polled their members on a proposal to delay the rollback; a move that save state government $200 million. The House also polled its members on a plan they approved last year that would keep the state on track to reduce the income tax to 5 percent, but interrupt that schedule during a measurable economic decline.

Also, both branches are looking at a hike in the cigarette tax, which is being pushed by health advocates throughout New England. The Massachusetts proposal would raise the per-pack tax by 50 cents to $1.26, the highest rate in the nation. The debate at the State House revolves around whether there's two thirds support, the level needed to override a promised Swift veto, and whether the new revenues should shore up existing health programs or fuel the launch of new health programs.

House lawmakers who attended the private meeting said majority support for income and cigarette tax changes was evident, but it wasn't clear whether two thirds of House members supported the changes.

Finneran said after the caucus that he was "hesitant" to support the delay because of the "recession we are clearly in," and that the "$200 million bump does not solve the problem." He added later that he would support the cigarette tax hike only if earmarked to "fill gaps" in funding for current health care programs.

Birmingham told reporters that a majority of senators did favor delaying the income tax delay -- including him -- but the Senate narrowly lacks the two thirds margin needed to override a veto from Acting Gov. Jane Swift. He said there's less interest in raising the cigarette tax, but enough to keep it on the table.

Swift released a statement late in the day reminding lawmakers that she won't support another effort to raise taxes, "especially during this time of fiscal instability." Swift said economists have advised her that "now is not the time to take money away from consumers -- it is time to put more money into their pockets to restore confidence and stimulate our economy."

Birmingham said the tax cut delay wouldn't be a "panacea," but could help take the edge off some of the unavoidable budget cuts. Senate Ways & Means Chairman Mark Montigny (D-New Bedford) characterized the cuts as "significant," and would be made with or without a delay in the rollback.

Neither branch was able to identify specific areas that would be either immune from cuts, or are being targeted. Chapter 70 money -- state aid to local school districts -- appears to be the safest, followed by Medicaid, which is caught up in spiraling health care costs. After that, both Finneran and Birmingham said everything is fair game, including local aid, human services and aid to hospitals.

Finneran said other state are envious of Massachusetts' $2.3 billion reserves. "As frustrated as I am with the inability to get a budget concluded, we are in a much, much better position than virtually every other state in the nation."

Birmingham and Finneran confirmed that there's talk of calling for a special session after Thanksgiving to deal exclusively with vetoes. A majority vote is needed in both branches to extend the session.

Finneran said "there is no reason" why the Legislature has not reached a budget deal yet. "All are to blame," he said. But both Finneran and Birmingham maintained the state is fortunate to have the budget deal under negotiation, as it has given the state an opportunity to analyze rapidly dropping revenues.

Birmingham gave the example of Connecticut, which had set a budget and spent its surplus by July 1, before it began experiencing the full impact of the slumping economy, or effects from the Sept. 11 terrorist attacks, and is now facing a deficit.

Steven Grossman, the former Democratic National Committee chairman and a candidate for governor, sketched a budget plan that would spend $750 million from the $2.3 billion reserves and use $200 million from the state's annual tobacco settlement payment. That would leave $200 million to pare from the budget, Grossman said, or $400 million less than Acting Gov. Jane Swift has proposed.

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