CLT Update
Tuesday, November 13, 2001

Birmingham:  It's not "a new tax, it's a freeze"!

In the News Today:

Overcoming Fiscal Fright:
Tax Cuts Can Move Forward Without Fear of Budget Cuts

Budget necessity

Letter to the Editor

Save the rollback

Protecting doomed racetracks

Tax holiday is no fantasy

State budget outline said near
Leaders eyeing $500m in cuts

Risk seen in $66m cut to health budget
Swift plan is called ill-timed

Frustrated Swift demands lawmakers finish budget

Agencies, lawmakers feeling budget pressure

"Nobody's talking about a new tax," Tom Birmingham tells us in doublespeak language that would make George Orwell proud. "It's a freeze."

"Public health and bioterrorism prevention should be in the same current [funding] situation as the police and the military," Dr. Richard Zane, chairman of the disaster committee at Brigham and Women's Hospital, said.

There's that "terrorism" excuse again -- blame killing our tax rollback on Osama bin Laden! Except that nobody's proposed cutting bioterrorism prevention. The proposed reductions include $17 million from AIDS prevention programs; $5 million from breast cancer screening and awareness efforts, and; $5 million for family planning and health services, including programs for teenage mothers; and $2.8 million for prostate cancer research.

If you haven't already, it's definitely time to contact your legislators!


Chip Ford

Beacon Hill Institute
at Suffolk University
15 Court Square, Suite 900, Boston, MA 02108

November 9, 2001

Overcoming Fiscal Fright:
Tax Cuts Can Move Forward Without Fear of Budget Cuts

A new study, released today by the Beacon Hill Institute at Suffolk University shows that Massachusetts can weather the current fiscal crisis without cutting spending and without postponing planned tax cuts. Last year, Massachusetts voters overwhelmingly approved a ballot measure that called for a reduction in the state income tax to 5% by 2003. Postponement of this tax cut would be unnecessary and would, moreover, deepen the recession into which the state is currently sinking, according to the study.

Conclusion:  Stay the Course

Our analysis shows that the large surpluses accumulated in the 1990s make it possible for the state to manage the current revenue falloff with only minimum adjustments in its spending plans. Postponing the tax cut would be both unnecessary and unwise. There is no need to take an action that would destroy 33,000 jobs just as the state finds itself struggling to recover from a recession.

Even if spending cuts were necessary, however, the legislature might be advised to think twice before postponing the scheduled cuts in the income tax or increasing other taxes. Legislators and others who would postpone tax cuts approved by the voters are threatening to compromise the democratic process. The idea that the state cannot "afford" a tax cut presupposes that individual taxpayers can, on the other hand, afford to make sacrifices of their own. Better to adopt a policy of "shared sacrifice" than to go on blithely running up the state budget.


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The Boston Globe
Tuesday, November 13, 2001

A Boston Globe editorial
Budget necessity

MASSACHUSETTS voters approved a tax cut just last November, but given the sudden onset of the state fiscal crisis it might as well have been a lifetime ago. House and Senate leaders, as they work on their long-overdue budget, would be irresponsible if they did not suspend the tax cut to cope with the sudden drops in revenue and the unexpected expenses caused by the Sept. 11 attacks.

Acting Governor Swift has filed a $26.5 million request for extra money to pay for State Police overtime and a new class of police cadets to provide additional security after the attacks. That is only a down payment. The governor and Legislature need to make sure that the Department of Public Health, for instance, receives adequate money to provide better protection against bioterrorism.

Yet the Swift administration is talking about a $66 million cut in public health programs. This may be no more than a ploy to force the Legislature to devise a budget that will use the reserve money that Swift cannot tap on her own. But it does underline the magnitude of the problem as Massachusetts continues to operate for the fifth month without a budget.

The Legislature dawdled two years ago, but during that prosperous time, most state agencies could at least count on receiving the same amount of money as in the previous years. There can be no such guarantee now. Even with the $200 million tax cut suspended this year, the state would be facing hundreds of millions of dollars in cuts as revenues drop to recessionary levels. Government agencies need a budget now so that they can reduce costs with a minimum of pain.

During the last downturn, in 1989-91, the state had not yet committed to its ambitious guarantee that children in every Massachusetts community would receive an adequate education. This must be protected in the budget, but this necessity reinforces the urgency of suspending the tax cut for now. The state needs a budget quickly -- one that is fiscally and socially responsible. The tax cut can wait until prosperity returns.

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To:  The Boston Globe, Letter to the Editor
Submitted:  November 13, 2001

In its editorial, "Budget necessity" (Nov. 13), the Boston Globe decreed: "The tax cut can wait until prosperity returns." Who do they think they are fooling?

Throughout the past decade of a booming economy, staggering state surpluses, and record prosperity, not once did the Boston Globe call for an end to the 1989 "temporary" tax increase. The Globe continues still to oppose "keeping the promise," even though voters took matters into their own hands last November and overwhelmingly voted to roll it back, responsibly over three years.

For a newspaper that champions full-funding of the voter-approved "Clean Elections Law" -- also adopted overwhelmingly by the voters -- its narrow-minded hypocrisy is simply staggering, though not uncharacteristic.

Director of Operations
Citizens for Limited Taxation

The Telegram & Gazette
Worcester, Mass.
Friday, November 9, 2001

Save the rollback

Under the guise of budget austerity, the Legislature on Wednesday kicked off a campaign to delay -- translation: nullify -- the long-awaited rollback of the state income tax.

The move to derail the phase-out of surcharges imposed after the collapse of the Massachusetts "miracle" was hardly surprising. The Beacon Hill tax-and-spend crowd is contemptuous of the notion that the Legislature should honor its pledge that the tax hikes would be temporary.

What was astonishing was the in-your-face timing: exactly one year after voters decisively approved Question 4, forcing the rollback.

The move is ill-timed economically as well. Massachusetts' sluggish economy needs the stimulus of tax relief now more than ever.

State government's fiscal position is, indeed, serious. A prolonged slump could mean tax collections would fall short of budget-writers' projections by as much as $1.35 billion.

That means lawmakers have to trim back the $22.9 billion spending wish lists, compiled in the heady atmosphere of revenue surpluses six months ago, to the fiscal 2001 spending level of $21.5 billion.

Serious belt-tightening is in order, but drastic measures to balance the books are not required. There is no justification for such measures as defunding the Clean Elections Act -- another people's mandate lawmakers are striving to nullify -- or slashing local aid, education and health care, as Senate President Thomas F. Birmingham threatened to do.

While lawmakers pondered taking away the people's tax rollback with one hand, they were passing out goodies to special interests with the other -- including a $5 million giveaway to the well-connected Massachusetts racing industry.

And even a cursory examination of legislative perks would yield fat that's ripe for trimming, such as the $92,000 position of Statehouse physician, even though some of the world's premier hospitals are just minutes away.

A year ago this week, voters sent the clear message that they want prudent, sustainable growth in state government, not hyperinflated expansion. Lawmakers should heed that message and forget the dubious schemes for withholding the long-overdue tax-rate rollback.

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The Berkshire Eagle
Monday, November 12, 2001

Protecting doomed racetracks

It should be obvious to even the most committed racing fan that the state's horse and dog tracks were not even an endangered species anymore. Not so with the state legislators, who never met a contributor or lobbyist they didn't like, even in a state faced with major budget problems. The result: A bailout of $5 million to the track owners who, unlike small family groceries or pharmacies or convenience stores, will have some taxpayer-paid insurance against falling markets, at least for the moment.

The tracks are dying, but it isn't the business of government to keep them alive, especially by allowing the perilous introduction of slot machines, which some legislators quietly advocate.

While the state ponders cuts in education, health care and social service programs, it is a disgrace to be throwing millions of dollars at an industry that should be allowed to die an overdue death by natural causes.

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The Boston Herald
Tuesday, November 13, 2001

A Boston Herald editorial
Tax holiday is no fantasy

While legislative leaders continue to count noses to see if they have the votes to take back the tax cut people voted themselves last year, acting Gov. Jane Swift is going in a whole other direction.

Swift last week proposed a two-day sales tax holiday -- an effort to jump-start the holiday shopping season, which already has merchants jittery enough to be planning pre-Christmas sales. Computers, toys, electronic gear, even cars would all be covered under the proposed tax-free days.

The proposal would cost the state about $40 million in lost revenue, but Swift says most of that (some $34 million) could be covered by the Tax Reduction Fund, in which some previous surplus revenues (ah, remember those days!) are stashed.

Extraordinary times call for extraordinary measures. And while there is little solid economic evidence that such measures really can increase spending, never before has there been a time when people needed to be coaxed out of their homes and into shopping malls. So there is every reason to give it a try now.

The hope is that once people hit the malls, they'll be looking at all kinds of other things for which the tax holiday isn't even an issue. Most clothing isn't subject to a sales tax, but then that pretty pink sweater isn't likely to get purchased if it's never seen by customers reluctant to travel anywhere but home to work and back home again.

Of course, the tax holiday will be nothing but a sugar-plum fantasy if business leaders and their potential customers don't press their case on Beacon Hill. If clueless legislators remain focused on how much money they can take from consumer's pockets, not how much they can give back, the case for a tax holiday is lost before it even gets off the ground.

The measure demands immediate action to be effective by Dec. 1 and 2 as the governor proposed. Voters will surely remember who helped them out this holiday season, and who voted instead to put coal in their stockings.

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The Boston Globe
Tuesday, November 13, 2001

State budget outline said near
Leaders eyeing $500m in cuts

By Rick Klein
Globe Staff

House and Senate leaders are close to reaching an agreement on the long-stalled state budget that would cut about $500 million in spending -- $200 million less than Acting Governor Jane Swift has called for -- legislative sources said yesterday.

The plan would allow the state to cut fewer jobs than the 5,000 Swift has proposed eliminating, and preserve more money for health care and aid to cities and towns. It would also tap reserve funds for up to $700 million - more than twice as much as Swift would spend from those accounts.

Still undecided is whether the House and Senate will approve a freeze or slowdown of the voter-approved rollback of the income tax - a politically perilous question. If they do not pursue the freeze, the rest of the $1.4 billion budget gap would be closed with a combination of additional program cuts and the use of more money from the state's settlement with tobacco companies.

The legislative sources stressed that the plan is an outline, and said specific reductions are still being negotiated. But they said the pact could be announced within the next few days.

Legislative leaders have faced increased pressure in the past few days to end the four-month-old budget deadlock. Massachusetts is the only state in the nation that has yet to pass a budget this year, and Swift accused House and Senate leaders yesterday of acting like children because they've been unable to agree on a plan.

But the House and Senate leaders seem to be struggling to fully address the problem. Independent budget analysts have said that $500 million is the bare minimum the state must cut to balance its books this year.

Told of the House-Senate approach late yesterday, Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said lawmakers should shave additional spending. Using $700 million from reserve accounts -- which total about $2.3 billion -- may be too much, Widmer said, and would allow state government to keep spending at levels that are too high.

"It almost certainly will mean additional spending cuts next year," Widmer said.

Senate President Thomas F. Birmingham and Senate Ways and Means Chairman Mark C. Montigny declined to comment on ongoing budget talks, saying the discussions are confidential. House Speaker Thomas M. Finneran and his Ways and Means chairman, John H. Rogers, declined requests for interviews.

At a press conference, however, Birmingham reiterated his support for a freeze of the income tax rate at 5.6 percent, despite voters' overwhelming approval last year of a ballot question to roll back the rate to 5.3 in 2002 and to 5 percent the following year. The tax change is now being debated.

The income tax freeze would save the state between $150 million and $200 million this fiscal year, depending on how it is constructed. But it would force the average family to pay about $150 in income taxes next year that they would have been spared.

Birmingham and Finneran are uncertain whether they have the votes to approve the freeze. Some members fear a backlash.

The legislative leaders hope to approve a budget agreement by Nov. 21 -- the last day of the Legislature's regular session -- and then return for a special session in December to deal with what are likely to be numerous line-item vetoes of their plan by Swift. Swift has already vowed to veto any change in the income tax rollback, which she strongly supported. A two-thirds vote is needed for a veto override.

Swift plans to file legislation that includes her own recommended budget cuts -- totaling $700 million -- by Friday if the Legislature has not reached an agreement by then.

The acting governor's proposal will include a $100 million to $150 million cut in aid to cities and towns; $66 million less for public-health programs; a $96 million slash in funding for human services; the elimination of 5,000 state jobs for savings of $200 million; the spending of the state's entire $290 million annual payment from the tobacco lawsuit settlement; and a $100 million reduction in state contributions to public employees' pension program.

However, Swift yesterday rejected the idea of a $34 million cut in K-12 education, according to her administration and finance secretary, Stephen P. Crosby.

Swift hopes the elimination of 5,000 jobs - representing 7 percent of the state workforce - can be achieved through early retirements. She wants to encourage workers to leave by sweetening their pensions, crediting them with more years of service than they actually worked. Crosby said that would not immediately cost the state money, but he could not say whether there would be a long-term financial impact.

Swift has not detailed all the agencies where jobs would be cut. But Crosby identified a few areas yesterday: 53 jobs from the Department of Revenue, 120 from the Massachusetts Highway Department, and 58 from the Registry of Motor Vehicles.

Other reductions are possible at the Departments of Mental Retardation and Youth Services, and juvenile courts.

Swift's proposal needs legislative approval. Birmingham yesterday said that the Legislature is making "substantial progress" on its own budget and Swift's participation is unnecessary, and he hinted that her interest in the budget process is an attempt to divert attention from problems at the Massachusetts Turnpike Authority and the Massachusetts Port Authority.

"You'll have to determine whether it's a diversion or not," Birmingham said.

However, the Senate president said he could offer no excuses for the budget stalemate.

"I'm not going to complain. I'm going to do my job as best that I can," he said.

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The Boston Globe
Tuesday, November 13, 2001

Risk seen in $66m cut to health budget
Swift plan is called ill-timed

By Ralph Ranalli
Globe Staff

The Swift administration risks reversing years of progress against disease by proposing $66 million in cuts to state Department of Public Health programs, specialists and advocates say.

Millions of dollars invested in research, screening, and education on everything from cancer to AIDS have made Massachusetts a model in preventing health troubles from becoming chronic, costly problems, specialists say. Now those programs are slated to be the first cut as Acting Governor Jane Swift aims to close a $1.4 billion gap in the state budget.

Critics charge that the planned cuts are not just short-sighted, but ill-timed. Swift is proposing them even as Congress is debating massive new federal public health spending, particularly on bioterrorism-related research and vaccines. The state reductions would send the wrong message to residents, who these days are as fretful about opening their mail as boarding a commercial jet, advocates said.

"This is going to devastate the public health infrastructure in Massachusetts ... at a time when we are facing new threats of bioterrorism," said Laurie Stillman, executive director of the Massachusetts Public Health Association. "It's incomprehensible."

Dr. Richard Zane, chairman of the disaster committee at Brigham and Women's Hospital, said that although public health has traditionally been "grossly underfunded" across the country, Massachusetts has been "ahead of the curve" and should be working to stay there.

"This is not the time to cut budgets; it is time to increase resources," Zane said. "Public health and bioterrorism prevention should be in the same current [funding] situation as the police and the military."

Administration officials, though, insist they have no choice but to trim the department's $500 million budget, because the agency is annually one of the state's 10 biggest spenders. Over the weekend, Swift proposed eliminating $700 million in state spending and letting go 5,000 state workers. The Legislature is coming up with its own plan for cuts.

"DPH has a big budget, and when you are looking at hundreds of millions in cuts, you have to look at the big areas," said Dominick Ianno, a spokesman for the state Executive Office of Administration and Finance.

Advocates say they are disturbed that two proactive and efficient programs, hepatitis C screening and school nurses, have already been cut. While the cost of early treatment for hepatitis C averages about $18,000 per person, the average liver transplant costs nearly $250,000 -- and hepatitis C is the number one cause cited for liver transplants, Stillman said.

The proposed cuts for next year slash funding for numerous programs, including:

$17 million from AIDS prevention programs;

$5 million from breast cancer screening and awareness efforts;

$5 million for family planning and health services, including programs for teenage mothers; and $2.8 million for prostate cancer research.

Department of Public Health officials insist that there will be no skimping on spending to prevent and detect bioterrorism, and respond, if necessary.

The department's laboratories test suspicious substances for anthrax and other contamination; its investigators monitor doctors offices and hospitals for signs of epidemics; and its staff would be in charge of coordinating large-scale vaccinations or innoculations, if they become necessary.

"The department would do what is necessary to meet the emergency," Jacobsen said.

Yet specialists like Zane and Stillman say the state should not back off its commitment to other areas. If necessary, Stillman said, the state should roll back tax cuts or divert money from the state's tobacco lawsuit settlement and the state reserve, or rainy-day, fund to keep proactive programs intact.

"If there was ever a rainy day, this is it," she said.

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The Boston Herald
Tuesday, November 13, 2001

Frustrated Swift demands lawmakers finish budget
by Elisabeth J. Beardsley

Acting Gov. Jane Swift gave a verbal spanking to lawmakers yesterday, accusing them of behaving like toddlers and threatening unilateral spending cuts if they can't finish a state budget by Friday.

An animated Swift -- jabbing her finger, raising her voice -- said she's lost patience after four-plus months of cajoling House and Senate leaders to cut a deal. Now, Swift said, it's time to deal with lawmakers like she would an unruly 3-year-old.

"We can do this the easy way, or we can do this the hard way," Swift said. "Sometimes, you don't know why, they choose the hard way."

The attack on the Legislature - which Swift made in the middle of a high-level meeting where administration officials pinpointed $500 million in spending cuts - devolved into finger-pointing between Swift and Senate President Thomas Birmingham, a likely gubernatorial rival.

Birmingham called a hasty press conference, arriving in jeans at the State House, which was closed for Veterans Day. He said he was shocked that Swift had rounded on lawmakers.

In a private weekend conversation, Swift "took no exception" to lawmakers' rejection of her offer to mediate negotiations, he said.

"I'm frankly surprised and taken aback a bit by the rhetorical tone that has been struck by the administration," Birmingham said.

Speaker Thomas Finneran declined comment, and Ways and Means Chairman John Rogers could not be reached.

Finneran, however, has supported Swift's plan to help close a $1.4 billion hole in the $22.65 billion budget by cutting at least $700 million and drawing $500 million in cash reserves.

Swift criticized what she called "dilly-dallying, denial, pretending we don't have a problem" by Senate leaders who are fighting to avoid unpopular spending cuts by spending more in cash reserves.

"If by Friday, they haven't passed a budget, then clearly they're incapable," she said. "They should just do mine and let them blame me."

Birmingham, who refused to detail his negotiating chits but claimed to be making "progress," blasted Swift's proposed cuts in local aid, education and public safety. He blamed the budgetary woes on the voter-approved income tax cut, which both the Senate and House are trying to postpone.

"(Swift's) in a straitjacket based on a no-new-tax pledge that is more appropriate for the governor of New Hampshire," Birmingham said.

As the rhetoric flew, administration number-crunchers were getting Swift's approval on the first $500 million of an expected $800 million in cuts that Swift may have to impose.

About $30 million was whacked out of education programs like early literacy, transportation and enrollment growth aid. But Administration and Finance Secretary Stephen Crosby said Swift rejected any cuts to the $3.2 billion education reform account.

In health care, Swift ordered protections for nursing homes and hospitals, children's health programs and rape crisis centers. But Swift approved most of the proposed $95 million in other human service cuts, including programs aimed at preventing AIDS, breast cancer, prostate cancer and smoking, Crosby said.

While administration officials nicked $7.5 million out of the Executive Office of Public Safety's $1 billion budget, Crosby said Swift is girding for more security-relating spending.

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The Telegram & Gazette
Worcester, Mass.
Tuesday, November 13, 2001

Agencies, lawmakers feeling budget pressure
By Shaun Sutner
Telegram & Gazette Staff

BOSTON-- Last week, state Rep. John J. Binienda, D-Worcester, called Francis R. Carroll, chairman of the Korean War Memorial Committee of Central Massachusetts, with some unsettling news.

Mr. Binienda told Mr. Carroll to expect the worst, that the $75,000 to $150,000 his group was expecting for a memorial to Worcester County soldiers who died in Korea was now at risk of being cut from the state budget.

"I'd say the $150,000 is history and the $75,000 is in jeopardy," Mr. Binienda. "Nothing is safe." The memorial is to be built in Worcester.

As most state workers stayed home in observance of Veteran's Day, House and Senate budget negotiators met again yesterday to thrash out a budget agreement that many Statehouse observers expect this week, possibly today or tomorrow.

Gov. Jane M. Swift kept up the pressure on the Legislature, repeating her threat to make her own severe budget cuts and lay off 5,000 state employees unless lawmakers hand her by Friday the budget that was originally due July 1.

Lawmakers have been wrestling with a $1.3 billion to $1.6 billion deficit caused by plummeting state revenues. They have been unable to agree on what cuts to make and how much to draw from reserve funds and the state's share of a national settlement with tobacco companies.

While the governor can make cuts if the Legislature fails to deliver a budget, she does not have the authority to draw from reserve funds, which would lessen the cuts needed.

"If they don't act, the cuts will be deeper," said Shawn Feddeman, a spokeswoman for Ms. Swift. "She's hopeful that the Legislature will act because the people will be losing out on this."

Also yesterday, Senate President Thomas F. Birmingham, D-Chelsea, said Senate and House leaders are making major strides toward an agreement.

Still an option, Mr. Birmingham said, is a temporary freeze of the first year of the income tax cut approved by voters last year. It is unclear whether the proposal has enough votes in the Senate or House to withstand a certain veto from the governor.

Calling Ms. Swift's opposition to the freeze "a straitjacket approach," Mr. Birmingham said suspending the tax cut would free up $200 million to spare schools, police and fire funding and health care programs from budget cuts.

"In typical Republican fashion, she's driven by a 'no new taxes' approach," the Senate president said. "Nobody's talking about a new tax. It's a freeze."

Charles Rasmussen, a spokesman for House Speaker Thomas M. Finneran, D-Boston, declined comment.

Besides local projects such as the Korean War Memorial, a range of programs in Central Massachusetts are likely to be cut, lawmakers and advocates say.

Worcester-based programs administered by the Seven Hills Foundation for mentally ill people, and addiction detoxification services provided by Community Healthlink are examples of human services likely to be targeted.

Also vulnerable are higher education funding, school nurses, raises for human service workers and so-called "local aid" payments to cities and towns.

While House leaders have said they do not want to cut local aid, Ms. Swift says she would make $96 million in local aid cuts, and the Senate has also refused to rule out local aid cuts.

Cities such as Worcester and Fitchburg, and some towns with diverse populations and urban-style problems such as Southbridge, Webster and Milford, depend heavily on local aid payments.

State Sen. Richard T. Moore, D-Uxbridge, who represents those three towns, advocates measures other than cutting local aid.

Like many in the Senate, he wants to draw more heavily than the House on the tobacco funds, and to lower payments to the state pension fund, a move Mr. Finneran adamantly opposes.

Mr. Moore and other legislators are also dismissing Ms. Swift's layoff threat.

"I don't know if people are paying too much attention to that kind of rhetoric, but the Legislature is working hard to produce a budget," said Mr. Moore, who does not support the income tax freeze.

Meanwhile, human service advocates are bracing for cuts that are almost inevitable. Their services are not in the areas widely viewed as protected from major cuts, such as direct school aid and most public safety expenditures.

They have met with their representatives and senators in recent weeks to plead their case. Increasingly, the response has been that anything and everything is on the table.

"Sure, we're worried," said Deborah J. Ekstrom, executive director of Community Healthlink. "I've been told by local legislators that there are parts of the budget that are sacred, and we're not sacred."

Some local people such as Mr. Carroll, of the war memorial committee, are taking a more combative approach.

Mr. Carroll said he would settle for $75,000 from the state -- the low end of what his group expected -- for the marble and brick memorial to commemorate the 189 young men from Worcester County who died in the Korean War.

"These kids who died 50 years ago, we owe it to them," he said. "Even with all the downturn we've experienced, it's too easy for a Legislature to say ‘we can't give it to you in the budget.’

"They've got the money," he said.

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