CLT Update
Wednesday, November 14, 2001

Good news watched cautiously

In the News Today:

Any budget must protect the tax cut

Freeze of tax rollback is now seen as unlikely

Senate push to delay income tax cut founders

Most state lawmakers shut out of budget talks

Legislators, beware of a fiscal quagmire

Negotiators talking concepts
nearly 5 months after budget law due

Today we have apparently good news:  According to some news reports today, it appears that legislative leaders don't have the two-thirds vote required to override Gov. Swift’s promised veto of "freezing" our tax rollback.

I say "apparently" because it seems that your phone calls and contact with your representatives and senators are having an impact -- but we just don’t know yet if the reports are true, or simply a tactical feint meant to throw us off-guard. You’ll note that both the Boston Herald and Boston Globe reports [below] quote "a high-ranking legislative source" or "legislative sources" -- unnamed.

On the other hand, according to Boston Globe columnist Scot Lehigh, a new poll just released indicates that "51 percent opted for delay [of the rollback], while 36 percent wanted to press forward with the tax cuts." There is no mention of who commissioned this Opinion Dynamics poll, but count on its results being touted by the Gimme Lobby and other rollback opponents in the days ahead.

We cannot let up our pressure until the budget is done, the Legislature finally goes home for the year, and our freedom and money are again safe at least for a while.

Keep those calls and contact with your legislators going!

Chip Ford

The Boston Herald
Wednesday, November 14, 2001

A Boston Herald editorial
Any budget must protect the tax cut

If you can believe the headlines, leaders of the Massachusetts House and Senate are close to agreement on a budget for the state getting on toward five months late. This is not necessarily good news.

It would be bad news indeed if they achieve an agreement at the cost of postponing, reducing or cancelling the reduction in the state income tax rate from 5.6 percent to 5.3 percent scheduled for January. That would represent the triumph of tax-and-spend politics as usual over every other consideration, including fiscal discipline and the will of the voters who made the tax cut the law.

The first priority of getting a real budget should be protecting this tax cut (and the one scheduled for 2003 pushing the rate down to 5 percent). Acting Gov. Jane Swift has pledged a veto to do so. We trust she will remain firm.

The second priority should be protecting the state's reserve funds. No one knows how long or how deep the recession will be. Budgeting next year and the year after will be every bit as difficult as it has been this year. Politicians may try to protect favorite programs by taking more money than they should from the state's $2.3 billion in reserves. The case for tapping the reserves this year is overwhelming, but this year that should be limited to a quarter of the total available. The reserves then can last four years if need be.

The sum to be saved this fiscal year by cancelling the tax cut is less than $200 million -- less than 1 percent of any plausible budget. The entire $1.3 billion would not come from spending cuts and should not. The governor is looking for about $700 million in cuts, with the rest to come from using some combination of reserves and off-budget income like the tobacco settlement payments. If the two budget priorities are respected, the details ought to be achievable, assuming there is a will to do so.

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The Boston Globe
Wednesday, November 14, 2001

Freeze of tax rollback is now seen as unlikely
By Rick Klein
Globe Staff

The Legislature's budget agreement will probably not include a freeze of the voter-approved income tax rollback, a high-ranking legislative source said last night.

House leaders do not believe that two-thirds of members will support a delay to the tax cut, the source said. House Speaker Thomas M. Finneran has indicated that he would not pursue the issue unless he had the two-thirds vote needed to override Acting Governor Jane Swift's promised veto.

"It's a long way from two-thirds," the legislative source said. "It seems doubtful in the timeframe we're operating under."

The source said House support is also lacking for plans to slow the tax reduction in other ways -- such as tie any future drops in the tax rate to economic indicators.

Some Senate and House members have been eyeing a freeze of the rollback as a way to save up to $200 million, and prevent deep cuts in programs. But the idea is controversial, and many members are fearful of taking a vote that would force citizens to pay more in income taxes. Voters overwhelmingly approved the tax cut last year.

Senate members are meeting today to discuss the issue. A two-thirds vote there is also far from assured, and a lack of support in the House will probably make yes votes even harder to find in the Senate, since most lawmakers would rather not take the vote at all unless they are certain it would prevail in both chambers.

Delaying the rollback would cost a typical family about $150 next year. But Senate President Thomas F. Birmingham has said it would also save valuable programs, as Beacon Hill tries to deal with a sudden $1.4 billion budget gap.

Not pursuing the rollback would mean that the Legislature could end up recommending close to $700 million in cuts. Lawmakers are reportedly set to cover the rest of the shortfall with reserve funds.

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The Boston Herald
Wednesday, November 14, 2001

Senate push to delay income tax cut founders
by Elisabeth J. Beardsley and David R. Guarino

A Senate push to shelve the voter-approved income tax cut hit the rocks yesterday, after the House fell short of the two-thirds vote necessary to override a promised veto, legislative sources say.

Senate President Thomas Birmingham has been pushing the plan to delay one or both of the last two years of the three-year tax cut as a way of drumming up nearly $200 million this year to avoid deeper spending cuts.

House leaders have been polling members on the plan, but a legislative source said lawmakers are 32 votes short of the 106 that would be needed to override a veto.

"It's just not going to happen," one source said.

Legislative leaders are struggling to close a $1.35 billion hole in the $22.65 billion budget, which is four-and-a-half months overdue.

Since the House controls which vetoes are taken up for override, the House's abandonment of the tax-cut delay effectively kills the Senate push.

The Swift administration applauded the news. One administration official praised House Speaker Thomas M. Finneran for "standing up for the will of the voters."

But Senate Ways and Means Chairman Mark Montigny (D-New Bedford) said if the tax cut is not delayed, lawmakers will have to find another $200 million in programs to cut.

"It goes from bad to worse," Montigny said.

House and Senate leaders are still deadlocked over how much spending to cut and how deep to dip into the state's $2.3 billion in cash reserves. The House has pushed for more cuts; the Senate has pushed for more reserves.

Democratic senators will huddle in a private caucus this morning to discuss the income tax cut and other budget options.

Earlier in the day, Birmingham insisted that the tax cut delay should remain "in the mix." While noting that more than half of state senators would vote to override the veto and put off the tax cut, Birmingham expressed doubt that he could roust up two-thirds.

"It's idle talk unless we have two-thirds of the members, which we don't have right now," Birmingham said.

The tax cut was also a hot topic of discussion at a meeting of the Local Government Advisory Council, where municipal officials pleaded with acting Gov. Jane Swift to support a one- or two-year delay.

"Local aid, if it's cut, will be devastating," said Watertown Town Councilor Marilyn Petitto Devaney.

But Swift categorically refused when the locals pleaded with her to back down from the voter-approved income tax cut.

"Make no mistake -- the tax cut isn't causing our deficit," Swift said.

On the local aid front, Swift is reconsidering a $100 million cut, after municipal officials offered to severely tighten their belts next year in exchange for fiscal amnesty this year.

"The cities and towns weren't just saying don't cut," said Administration and Finance Secretary Stephen Crosby. "That was of interest to (Swift)."

The Swift administration yesterday also faced new pressure to fund the voter-approved plan for public financing of elections after Democratic gubernatorial candidate Warren Tolman said he qualified for $811,000 in matching funds.

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The Boston Globe
Wednesday, November 14, 2001

Most state lawmakers shut out of budget talks
By Rick Klein
Globe Staff

Every day, state Representative Frank I. Smizik gets phone calls from his constituents, pleading with him over the state budget: Don't cut school nurses. Save state workers' jobs. Keep special education classes.

Smizik listens sympathetically, but then he levels with them: There is little he can do to help.

"You try to influence the people who make the decisions as best you can, but there's not much of a vehicle for that," said Smizik, a Brookline Democrat. "It's frustrating."

This is what it's like under Massachusetts' strong-fisted legislative leadership. House Speaker Thomas M. Finneran, Senate President Thomas F. Birmingham, and a few trusted lieutenants are now meeting behind closed doors to make $1.4 billion worth of changes in the state budget.

The vast majority of the 200-member Legislature will have virtually no say in shaping the final numbers. When the House and Senate finally agree on this year's spending plan, which is expected to slash $500 million from their earlier budget proposals, members will get to vote only yes or no on the full package, with no opportunity to offer amendments or alternatives.

"This is not a democratic process," said Eric Weltman, organizing director of Citizens for Participation in Political Action. "The average voter, the average citizen, is not being represented in the Legislature."

The same thing happens every year with the state budget. House members debate line items and approve a spending plan, and then the senators do the same. Leaders from each chamber then huddle privately to come to an agreement that's sent to the governor.

When times are flush, negotiators generally choose between which new programs to pursue rather than which programs to ax.

But now, the decisions that will come out of the conference committee will be far more significant: Dozens of programs may be sacrificed, state aid to cities and towns could be slashed, and jobs eliminated.

The economy has taken a startling nosedive since last spring, when the House and Senate approved their versions of the plan and nobody was talking about program cuts. Some lawmakers believe, given the dramatically different fiscal outlook, that the Legislature should debate future spending more openly.

This year, power has been concentrated more than usual. A six-member budget conference committee has stopped meeting. Decisions are being made by just four men: Finneran, Birmingham, and their Ways and Means chairmen, Representative John H. Rogers and Senator Mark C. Montigny.

Despite the small size of their group, the four have struggled to reach an agreement. The Legislature is 137 days late in sending a budget to Acting Governor Jane Swift -- the longest delay in more than 30 years -- and Massachusetts is the only state operating without a final budget.

"If you need to see what is wrong with this institution, this is a perfect case in point," said House Republican Leader Francis L. Marini of Hanson. "This is Tom Finneran versus Tom Birmingham. It's not the institutions, because we could compromise and vote."

Legislative leaders defend the process as the only practical way to make major decisions. The leaders have kept members updated about significant developments at caucuses and have asked for some feedback on big questions -- such as whether to freeze the tax rollback.

Birmingham acknowledged that the closed-door negotiations have failed to produce efficient results this year. But he said that the private talks are crucial because they encourage candor. He stressed that the decisions of a few top lawmakers are made with the consultation of the members who empower them, even though the formal talks are private.

Finneran declined to comment.

State Representative Byron Rushing said the Legislature's rules don't allow most members to have influence on legislation after the House and Senate vote on their versions of a bill.

"This is what happens when you don't have democracy," he said.

Rank-and-file members will have a chance, probably next week, to weigh in on the final version of the budget -- with their votes, yea or nay.

But given this year's delay, most senators and representatives will probably just be glad to get some budget on the books and end the embarrassment, Marini said.

"Assuming it's even half-way palatable, most people will vote yes and be done with it," he said. "What are you going to do, send these two guys back to the drawing board? Where does that get you?"

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The Boston Globe
Wednesday, November 14, 2001

Legislators, beware of a fiscal quagmire
By Scot Lehigh
Globe Staff

LIVE FROM the State House: The tax-cut tug-of-war. With bad times hard upon us, budget-makers are pondering freezing the income-tax reduction that voters approved last year at the ballot.

The political pros and cons: On the one hand, a steadily worsening fiscal situation seems to justify that action to avoid deeper budget cuts. But on the other, by approving Question 4 last November, the state's citizens made it crystal clear they wanted the tax rate reduced from 5.85 percent back to 5 percent, where it stood before the last fiscal crisis.

Do they still, however? Last year, sponsors and supporters, including then Governor Paul Cellucci, said Question 4 wouldn't necessitate large cuts in important state services. But an economic downturn worsened by Sept. 11 has left lawmakers struggling with a $1.4 billion shortfall between their previous spending plans and projected revenues.

Bringing this year's budget into balance clearly means large reductions over the state's earlier plans. Now, that won't be catastrophic; the state budget, after all, has grown by $9.5 billion, or about 71 percent, since fiscal year 1990, according to the Massachusetts Taxpayers Foundation.

Still, balancing the books while cutting taxes would require real dollar reductions in dozens of accounts. And, since each step of the three-stage tax reduction costs the state between $400 million and $500 million in revenue, proceeding apace with the current schedule will clearly exacerbate the budgetary woes over the next few years.

How would voters have reacted if they knew that would be the case? Well, look at 1990. Despite the ammonia-based atmosphere of that recessionary year -- and the weight on the wallet of tax increases in both 1989 and 1990 -- they rejected a rollback that would have blown a $2 billion hole in the budget.

And now? Opinion Dynamics, a Cambridge survey-research firm, asked that question when it polled 500 Massachusetts adults (margin of error: plus or minus 4 percentage points) from Oct. 19 to 22. Told that some people want to freeze the rollback to avoid a fiscal crisis, while others favor moving forward with it as a way to stimulate the economy, 51 percent opted for delay, while 36 percent wanted to press forward with the tax cuts.

Now, a poll is only a poll. Yet those results suggest that by hewing resolutely to the ballot-question results, legislators may misread current public sentiment. Thus their dilemma: Whether to assume that voters still stand where they stood last November or to posit that they have shifted their priorities to take into account recessionary times.

Next year's statewide election offers a path through that minefield, one that would allow the Legislature to keep faith with voters' intent.

First, they could let next year's reduction, from 5.6 percent to 5.3 percent, go forward. But they could then put an advisory question on next November's statewide ballot asking whether voters would countenance a delay in the last stage, a drop from 5.3 to 5 percent scheduled for January 2003. The question would include either a concrete timeline for restarting the rollback or an airtight plan for resuming it as soon as the economy meets certain benchmarks of improvement.

Although she would still favor the current tax-cutting schedule, even Barbara Anderson, executive director of Citizens for Limited Taxation, could live with that process. "I don't think it's a good idea, but if the only alternative would be an immediate repeal, at least it gives voters a fighting chance," says Anderson. (And while they're at it, legislators could resolve their crocodile doubts over clean elections by asking whether the public really wants to spend $40 million or more per election cycle to finance political campaigns.)

The gubernatorial candidates would then be forced to take a stand on the tax rollback. Voters, meanwhile, could watch the debate and choose the position -- and the candidate -- that made the most sense. No one could claim the election lacked important issues.

And if voters approved, the way would be clear for the Legislature to postpone the last step of the tax cut -- and without sacrificing the public's trust.

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State House News Service
Tuesday, November 13, 2001

Negotiators talking concepts
nearly 5 months after budget law due

By Michael P. Norton, Rick Collins and Michael Levenson

STATE HOUSE, BOSTON, NOV. 13, 2001 ... The state budget is usually wrapped up in time for Fourth of July barbecues. These days about the best lawmakers can hope for is to trim the budget by Thanksgiving and present it in time to start wrapping Christmas presents.

As Bay Staters dig out their winter gear and make plans for Thanksgiving, Beacon Hill leaders are locked in one of the most prolonged budget struggles in state history. The most optimistic thing out of the lips of anyone with an inside track on budget talks today came from Senate Ways and Means Chairman Mark Montigny (D-New Bedford), who said there may be a budget "framework" within 48 hours.

"It's one of those things where there's no way to predict the final outcome until it's done," said Montigny. "But I think both the House and Senate leadership and members clearly want to have this done by next Wednesday. It's very difficult because it's painful to make the kind of cuts we're going to have to make."

Next Wednesday, Nov. 21, is the day before Thanksgiving and the last day, according to the joint rules, that the House and Senate may hold formal sessions this year. The budget was due July 1. Massachusetts is the only state without an approved budget. State managers have enough money on hand to pay bills through Monday. And Acting Gov. Jane Swift is ranting about "irresponsible" legislative leaders and threatening to enact sweeping budget cuts administratively if lawmakers don't act this week. And Swift, who has repeatedly filed two-week interim budgets, is considering filing a seven-month plan soon.

The spending framework, Montigny said, would merely outline what percentage of the $1.35 budget gap would be addressed with budget cuts and state reserve funds. Montigny also dismissed Swift's pledge to cut the budget herself if lawmakers don't reach an accord by Friday at 5 pm.

"The idle public relations threats coming from across the hall are non-productive and also are not influencing the way we do business," he said. "We're pretty determined to get it done soon. I can't guarantee it but I'm hopeful." Montigy said the House and Senate continue to exchange proposals.

On his way to meet with Swift and House Speaker Thomas Finneran, Senate President Thomas Birmingham said he "would certainly hope to have a conceptual agreement by Friday." Swift, Birmingham and Finneran went their own ways after the hour-long meeting. A Finneran aide said he had no comment.

The talk of a budget framework and conceptual agreements underscores the problem facing lawmakers and their own difficulties confronting it. The budget gap is large and growing and there's so much disagreement about priorities that legislative leaders are simply trying to agree first on how much to cut and how much to draw from reserves. From there, they hope to agree on which areas will be spared and which ones will be cut, and by how much. In many ways, it's like starting over nearly five months late.

Swift on Tuesday morning criticized a plan reportedly favored by the Legislature's Democratic leadership to cut spending by $500 million and tap $700 million in reserves. "The split doesn't sound right to me," said Swift, who prefers paring spending by $700 million, tapping $300 million in reserve funds and spending all $300 million of the state's annual tobacco settlement share.

The acting governor said the state can't spend its reserves too quickly. "Along with fiscal and economic crises, our nation is at war," Swift said. "That's why we shouldn't dip in the rainy day fund to a degree that would leave us with no reserves for the next several years," she said. "We don't know what's going to happen, or what we're going to have to do."

Freezing the income tax cut, another idea gaining favor in the Legislature, was again rejected flatly by Swift who said it is good policy "to return economic power to the people." Legislative leaders are counting votes to determine support for freezing the tax rollback and/or increasing the cigarette tax.

Speaking to a women's business breakfast at the Westin Hotel in Copley Square, Swift plugged her plan to suspend the state sales tax for one weekend in December to boost the economy. "Nobody can better stimulate an economy than a mother with a shopping list," she quipped. Her bill was shipped to the Taxation Committee today and a public hearing will likely be scheduled shortly.

State government is running on interim budgets that last two weeks. Thanks to the economy's swoon, the Swift administration is now spending $1.6 million more a day than the taxpayers can afford.

Swift also met with municipal government managers today. They advised her to put off any cuts in local aid until next year, because cities and towns are almost half way through their fiscal years and won't be able to easily absorb cuts now. Local budgets drawn up months ago were based on minimum levels of state funding, said Carl Valente of Weston, president of the Massachusetts Municipal Association.

The impact of mid-year budget cuts would vary, depending on the amount of surplus revenues and rainy day reserves that cities and towns have socked away. "It would have a substantial impact," Valente said.

Throughout the 1990s, cities and towns were among the major beneficiaries of increased state tax collections. In recent years, some Beacon Hill leaders have warned that municipalities will need to share the burden of cutbacks. Municipal leaders have stressed the need for funding, saying cities and towns deliver the public safety, education and recreation services that most directly affect the citizenry.

Municipal leaders also told Swift today that they support a delay in the scheduled income tax reduction and full use of the annual tobacco settlement monies if that would buy the towns until next year to deal with a possible cut in local aid.

"The more planning time you give localities, the better ability we are going to have to deal with it," said MMA board member Charles Lyons, an Arlington selectman.

The MMA also said it is working on a list of recommended changes to state laws and regulations that could allow towns to save money, in order to help offset a cut in local aid, such as the state sub-bid laws.

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