The Fall River Herald News
Monday, March 4, 2002
Lambert argues for state tax hike
By Michael W. Freeman
Herald News Staff
FALL RIVER -- Mayor Edward M. Lambert Jr. is defending the
decision of the Massachusetts Mayors Association, of which he's the president, to endorse a hike in the state's income tax from
5.3 percent to 5.95 percent.
"Although some would disagree with our method, it's the
responsible thing to do," Lambert said. "We know we need to be a part of the solution."
Raising the income tax would go against the wishes of
Massachusetts voters who supported Question 4 in November 2000. That referendum called for reducing the state's income tax to
5.0 percent over three years.
Lambert said he understands this, but believes voters are
prepared to reconsider that decision in light of the state's fiscal crisis. That's particularly true, he said, with
lawmakers eyeing a 10 percent cut in local aid.
"We want to support the Legislature in finding new revenues
to help preserve local aid," Lambert said. "Inclusive of that is returning the income tax to 5.95 percent, essentially
reining in the tax rollback. We're not suggesting we don't eventually implement the rollback, but in
this economy it really creates some challenging and difficult situations."
Raising the income tax back to 5.95 percent would generate
$1.2 billion in new revenue, Lambert said. The state is now facing a budget shortfall of more than $2 billion, and perhaps
as high as $3 billion.
"When you match that with the $500 million that everyone
agrees should come from the state's reserve accounts, you've almost -- but not entirely -- bridged the budget gap,"
Lambert said. "It's our belief that when voters approved Question 4, they were clearly told at
the time that Question 4 could be implemented without any cuts in state services."
With budget cuts now on the way, Lambert added, "As a group
of mayors, we strongly believe people did not vote to cut services and adult education and local aid, which will result
in the layoffs of police and firemen across the commonwealth."
Lambert is unlikely to have a tough sell to many area
lawmakers, who have acknowledged the need to raise some taxes to close the budget gap.
State Rep. Robert Correia, D-Fall River, said budget cuts
alone won't do it.
"I can't please the people who don't want any taxes raised,
and I can't please the people who want to raise taxes through the roof and go on a spending spree," he said.
State Rep. Philip Travis, D-Rehoboth, said the state should
use $1 billion from its "rainy day" savings account, make $1 billion in spending cuts, and then raise $1 billion in new
taxes.
"That would be the best approach, to average it out," he
said.
State Rep. George Rogers, D-New Bedford, added, "Anyone who
thinks we don't have to raise taxes is dreaming."
Lambert said the mayors' association wanted to support those
lawmakers who are taking the political risk of calling for a tax hike.
"We just want the Legislature to know, although it's
ultimately their decision, that we support that move as the most progressive way to deal with the budget shortfall,"
Lambert said. "It's easier to get the coalition necessary to support a tax increase when you're talking about
one tax vote as opposed to six or seven."
As Lambert noted, in addition to raising the income tax,
lawmakers are considering a hike in taxes on gasoline, cigarettes, charitable deductions and capital gains.
"The problem with them is you'll get people who will support
some of those, but not all of them, and it will be difficult to piece together enough to close the budget gap," he said.
As president of the Mayors Association, Lambert met on
Wednesday with state Senate President Thomas Birmingham, D-Chelsea, and House Speaker Thomas
Finneran, D-Mattapan, to discuss this issue.
"The cities and towns of the commonwealth are not a line
item," Lambert said. "We're a partnership. We're here to work with the governor and the (Legislature's) leadership and
support them. But we also expect them to understand what the implications are of cutting 10
percent of local aid. That would have a devastating impact on a city like Fall River, especially
in the School Department, and it's not acceptable."
Their plan won't come without opposition. Citizens For
Limited Taxation has already criticized any effort to raise taxes, saying spending should be cut first.
Citizens For Limited Taxation spokesman Chip Ford said they
have a better idea, what he calls a "painless remedy" to the budget crisis.
The group wants lawmakers to provide a check-off on all
state personal income tax forms, allowing people to contribute more taxes to the state treasury.
"That way, if people want to give more money to the state,
they can," Ford said.
Citizens For Limited Taxation issued a statement to
lawmakers, saying, "Those 41 percent of voters who supported your position against Question 4 agreed that they did not need
or want tax relief. In fairness, they should not be forced to take it. Our bill provides them with choice.
If most of them take advantage of it, it will annually generate hundreds of
millions of additional revenue dollars and state spending."
Lambert countered that if the state doesn't raise the income
tax but cuts local aid, cities and towns will be forced to raise property taxes, hurting many seniors and working families
on fixed incomes.
"If the tradeoff is asking cities and towns to increase
property taxes by unprecedented levels, that is just shifting the tax burden," he said. "We have people on fixed incomes who
own property, and when their property taxes are increased, they are squeezed much more than if
there is an increase in the income tax."
He added, "No one is suggesting that a return to that level
of taxes should be permanent. But there's no question the world has dramatically changed since voters approved Question 4."
Return to top
The Boston Globe
Sunday, March 3, 2002
False choice on services vs. tax
cut
By Steven Grossman
It's time to tell the truth about the budget. Politicians in
both parties are pitting Massachusetts taxpayers against our neediest citizens. They claim we can't protect critical
services and still preserve the voter-approved income tax cut.
I disagree. I believe that's a false choice.
I have a very different perspective on this challenge. I've
never run for political office before, but I've run a successful business for 27 years. In tough times, I refuse to
balance the books of my company on the backs of my employees, and as governor I would never balance the
books of the Commonwealth on the backs of those in need and those who provide essential
services.
Could the priorities on Beacon Hill be clearer when you see
social workers fired while the state hires a $61,000-per-year golf pro? What are we to make of the fact that the racing
industry receives a $5 million bailout even as court-ordered services to mentally retarded
adults are cut? Why are political pet projects protected, while prenatal care for low-income
women is sacrificed and the acting governor cuts dental care for the poor?
Let's face it, the state is in tough shape. We face a
deficit in the next fiscal year that may exceed $1.7 billion. But the rush to dig into taxpayers' pockets before we've taken
a very hard look at state spending is unnecessary, unfair, and undemocratic.
It's time we started doing business in a fundamentally
different way. Beacon Hill continues to put its own interests and the special interests ahead of the people's interests. I
believe that raising the income tax is the easy way out. There's much more hard work to be done before
we go right back to the taxpayers.
Delaying the tax cut is unnecessary. Without the benefit of
a staff of budget analysts, I've identified more than $1.6 billion that could help us bridge the gap:
Let's withdraw $750 million from the rainy day fund created
to deal with emergencies just like this one.
We can cover $300 million in health care services with $150
million from our annual share of the tobacco settlement and by raising the cigarette tax by 50 cents.
We can save at least $100 million by implementing a bulk
purchasing program for prescription drugs similar to that begun by Vermont, New Hampshire, and Maine.
We can save an additional $70 million by implementing a
"preferred drug list" under Medicaid, encouraging the use of less expensive but equally effective medications.
We could cut $17 million by lopping off patronage jobs in
the court system alone - positions that the Legislature mandated but the judiciary never requested.
Bidding out the state's electricity business could save
around $25 million.
A tax amnesty program that produced $86 million 20 years ago
should generate at least that much and probably more.
Reducing the lottery payout modestly would give cities and
towns an additional $175 million.
We can expect an additional $117 million in new federal
education aid.
That's a first cut, and nothing is set in stone. But this
plan represents a different approach that tries to keep faith with the taxpayers while preserving vital services.
Delaying the tax cut is unfair because a tax cut delayed is
a tax cut denied. Those who say it's not are engaging in semantic quibbling. The law mandates that on Jan. 1, 2003, the
income tax rate will be 5 percent. If those who advocate a freeze in the rollback prevail, the rate will
likely be at least 5.3 percent. I call that a tax increase.
Delaying the tax cut is undemocratic. I agree with those who
argue that we must follow the will of the people by funding Clean Elections. But if we believe that to be true, we must
also support the people's vote for this tax cut. I'm not willing to further undermine the credibility of
the political process when we should be doing everything in our power to earn
back the confidence of every citizen and taxpayer in Massachusetts.
It's time we stopped accepting politics as usual and its
false choices. We need new leadership to challenge old assumptions, demand higher standards and accountability, and
inspire creative solutions. Taxpayers deserve some certainty and our honesty. And those
who rely on state services should never again be held hostage to political agendas.
Steven Grossman is a Democratic candidate for governor.
Return to top
The Boston Globe
Sunday, March 3, 2002
Pressure mounts to cut Medicaid
Rapid expansion reexamined
By Rick Klein
Globe Staff
Under mounting fiscal pressure, Beacon Hill lawmakers are
launching a major examination and retooling of the state's Medicaid program, which is now swallowing up one-fourth of
state spending after generous expansions of the health program during the boom years of the
1990s.
Elected leaders say they hope to avoid major cuts in
Medicaid access and services, but even the most optimistic concede that there may be no other way to significantly rein in
costs of the program, which provides health coverage to the uninsured. Medicaid in Massachusetts
has added 300,000 people in the last four years, and coverage is now offered to nearly 1
million poor, elderly, and disabled residents -- about a sixth of the total state population.
"By making a few small decisions, we've allowed Medicaid to
expand and expand and expand," said state Representative Harriett L. Stanley, House chairwoman of the
Legislature's Health Care Committee. "We didn't know how much they'd cost."
A special House task force is scheduled to issue recommendations regarding Medicaid
changes by the end of the month, and Acting Governor Jane Swift will look to rework parts
of the program as part of her "Med Reform" package, due to be unveiled in the coming
weeks. Senate budget writers are also taking a microscope to Medicaid, in large part
because it will probably have to grow by more than 10 percent next year to
account for the growing number of people covered and the rising costs of health insurance.
House Speaker Thomas M. Finneran said last week that he's
ready to take on the "holy grail of Medicaid" this year and called on his colleagues to "reexamine their principles, their
ideology, their political philosophy" regarding the popular program. The increased focus on
controlling Medicaid costs has health-care advocates worried that state leaders will look to
balance the budget with vast cuts to services and eligibility.
Many of the approaches state leaders can take are unappealing. By far the easiest way to
save large sums of money is by removing some of the poor children and others recently
added to the program, or to cut benefits. Swift took that route recently when she eliminated
dental care for poor adults to deal with this year's budget gap, triggering outrage among
advocates and recipients.
"Medicaid is under attack whenever there's a state budget
deficit," said Alan Sager, a health-care economist at the Boston University School of Public Health. "But poor people
don't stop getting sick."
Massachusetts is the sixth most generous state in the nation
in Medicaid spending on a per enrollee basis, according to the Kaiser Family Foundation, a nonprofit health-care research
group. That generosity and recent eligibility expansions mean that
MassHealth, the state's Medicaid program, will cost about $5.4 billion this year -- a 50 percent increase over 1998
-- and is expected to grow by close to $600 million next year.
This explosive growth is making Medicaid a tempting target
for budget-cutters, since shriveling state revenues are forcing hundreds of millions in cuts elsewhere in state spending.
Attention has been quickly drawn to a pair of major expansions enacted in 1996 and 1997,
when the state was running huge annual surpluses.
After Clinton administration plans for universal health
coverage failed, Massachusetts moved in that direction by extending its Medicaid program well beyond federal
requirements. The Bay State decided to offer health coverage to all families making up to 133 percent of the
federal poverty level, and all children with family incomes up to twice the
federal standard.
The federal poverty level is $17,650 in annual income for a
family of four. That means that a family of four making $23,475 can qualify for MassHealth and children with incomes of up to
$35,300 in a family of four are eligible.
Those expansions, combined with better outreach efforts and
a simplified eligibility process, have resulted in a jump of 45 percent in enrollment in MassHealth. That increase has come
as health-care costs have risen across the board, especially in the areas of prescription drugs
and services for the elderly and the disabled.
Enrollment is likely to grow more as the state population
ages and unemployment rises in the current economic slowdown. A 25-cent-per-pack increase in the cigarette tax, which was
enacted in 1996 to cover Medicaid expansions, hasn't come close to keeping pace with the
spending growth.
"We currently are in a pretty severe downturn," said state
Representative Daniel F. Keenan, a Southwick Democrat who is leading the House task force studying potential Medicaid
changes. "Sometimes these very difficult times give us the opportunities to take a harder look
at things. We have to determine whether we are utilizing our taxpayer resources
wisely."
Yet, while Medicaid is the biggest individual piece of the
state budget, it's a hard program to cut effectively. For starters, the federal government matches state dollars
dedicated to the program, so any savings of state money will have twice that impact on services.
And if the state throws people off of Medicaid or limits the
services they can use, more people will need more expensive state support when they're sicker. They'll end up going to
emergency rooms for treatment, with the state forced to foot higher bills without federal
assistance.
"There is no easy solution here," said Neil Cronin, a policy
analyst for the Massachusetts Law Reform Institute, a statewide health and welfare lobbying group. "Any of the expansion
populations that they cut are going to continue to access care. It's the old
squeezing-the-balloon model: If you squeeze it one place, it's going to pop out another
place."
Those challenges have left state leaders mostly just
tinkering around the edges of Medicaid, at least so far. Besides the Swift administration's move to eliminate adult
dental care, the Department of Medical Assistance, which oversees
MassHealth, will soon take further steps to control prescription drug prices, perhaps through a controversial
system designed to prevent patients from receiving the most expensive drugs unless they are crucial to treatment.
Stephen P. Crosby, Swift's chief of staff, said the acting
governor is interested in finding ways to drive patients to the cheapest health-care options available. Swift is also
interested in adjusting payments to health-care providers, since Massachusetts ends up paying more for
health care because the state has so many teaching hospitals, Crosby said.
"There are not big savings to be had without limiting access
or reducing benefits, and that's something that the governor refused to do," Crosby said. "There are major, major changes
that can save money, but they're not overnight solutions."
On the legislative side, the focus so far is on finding
administrative savings and rooting out waste and fraud. Lawmakers are also considering restructuring the copayment and
deductible structure of Medicaid, with an eye toward forcing recipients to dip into their own
pockets more for routine services, in particular.
But for now, at least, legislators aren't publicly espousing
the types of service or access cuts that would result in quick and significant savings. "People have been given a benchmark,
and it's not right to be changing the rules," said Stanley, a West Newbury Democrat.
Senate Ways and Means Committee chairman Mark C. Montigny, a
New Bedford Democrat who cosponsored the cigarette tax increase that funded the recent Medicaid
expansions, said the state must be careful not to abandon its commitment to reducing the
number of uninsured residents. State leaders should pursue savings with hospitals and
pharmaceutical companies, but should not harm those who depend on Medicaid services, he
said.
"I definitely see it [the risings costs] as a problem, at
least in terms of the short-term, acute budget shortfall, and every rock needs to be turned over," Montigny said. "But if we
cut eligibility and benefits, other costs pop up immediately. They don't have this benefit as a
luxury. It's because they do not have access to health care any other way."
Return to top
The Lowell Sun
Saturday, March 02, 2002
Few plans arrive to cut state budget deficit
By Frank Tutalo
Sun Statehouse Bureau
Staring down the barrel of the tightest state budget in the
last decade, Beacon Hill leaders have repeatedly recited a mantra that now, more than ever, thrifty spending is necessary.
The calls for fiscal discipline have been aired since last
summer. Even liberal rank-and-file lawmakers subscribe.
But while politicians have been long on rhetoric, they've
been comparatively short on concrete solutions.
Meanwhile, the budget deficit -- $450 million for this
fiscal year and $2.3 billion for the next 16 months -- keeps growing.
To date, Acting Gov. Jane Swift has pushed for an unsuccessful early retirement program,
$66 million in program cuts and more than $217 million in spending freezes. Still,
though, the state has already had to lay off roughly 1,000 workers.
Asked when the next round of program cuts would come, Swift
was largely circumspect.
"I'm going to continue to offer solutions to our budget
crisis, which I think is in dramatic opposition to what anyone else in this building has been doing," she said.
House Speaker Thomas Finneran marked his first foray into
the matter last week. His answer --having House lawmakers forfeit eight days pay of their $50,123 salaries -- was
seen largely as a symbolic move that marks a savings of an estimated $250,000. Some
insiders say the move was mere damage control for potential future tax hikes, which could be
necessary to balance sagging tax revenue with increased spending.
"To me, its just a gimmick," said Rep. Christopher
Hodgkins, D-Lee, who is refusing to take the unpaid furlough and will instead donate the same amount of pay directly to a Berkshire
agency that serves sexually abused children. "I think it's window dressing."
Legislative leaders say Swift, who wields the power of the
corner office, should have already made more cuts. As proof, they point to February's state tax revenue collection numbers,
released Thursday afternoon, which rang in at $81 million less than expected.
"She needs to stand up, revise her revenue growth estimates,
her budget assumptions, and she needs to start invoking her (gubernatorial) powers earlier in the fiscal year, so it
wouldn't be more and more painful now," said the Senate's budget point man, Ways and Means
Chairman Mark Montigny, D-New Bedford.
With more layoffs imminent, Swift has pushed an early
retirement program that, by practically all accounts, has fallen well short of its goal. Legislators had expected some
4,000 people to take advantage of the plan, yet only 3,000 did.
Swift has also lobbied for $134 million in savings by
putting off pension payments for another 10 years, to 2028. But the Legislature rebuffed that, saying it would add $8 billion
in costs over the long run. Swift counters that it will cost $1.5 billion more.
And, Swift's proposal to decrease lottery payouts (scratch
tickets) has been met with a lukewarm response from the Legislature, though it could save the state $250 million
annually.
Of all five constitutional offices, State Treasurer Shannon
O'Brien, a candidate for governor, has been the hardest hit, absorbing a 3 percent cut for this fiscal year and a 1 percent
increase in the lottery, which see oversees. Unlike anyone else, O'Brien recommended her
office receive the cuts before Swift even thought about it.
But, other offices, like Attorney General Thomas Reilly, who
has been granted a 5.45 percent increase, have seen their budgets increase or stay the same.
More than one month ago, Swift cut $66 million from such
line items as tobacco cessation programs, the capital needs investment trust fund and the Department of Correction. At the
same time, she froze an additional $90 million in spending, moves that would net the state an
estimated $217.4 million in savings this fiscal year.
Return to top
The MetroWest Daily News
Sunday, March 3, 2002
Editorial
State spending and state taxes
The Commonwealth is no longer "Taxachusetts." State voters
and officials cut taxes more than 20 times in the last 10 years. Most of those tax cuts made sense at the time,
especially with the state running healthy surpluses.
But only an ideologue would argue that you can't have too
many tax cuts. The state has services it must provide and bills it must pay. Revenue coming in must match expenditures
going out. With revenues now running $500 million below spending for the current fiscal
year, a deficit that may rise as high as $2 billion for the next fiscal year, it's reasonable to ask
whether we adopted more tax cuts than the state can afford.
The list of possible tax increases outlined by House Ways &
Means Committee Chairman John Rogers this week, while painful to contemplate, is helpful in launching a responsible
discussion of options for closing the budget gap.
That discussion should distinguish between tax cuts enacted
by the Legislature and those approved by voters. Given our oft-stated support for the Clean Elections Law, we cannot
comfortably support other attempts by the Legislature to subvert the stated will of the
electorate. We're inclined to think the income tax rollback, approved in very different
circumstances in 2000, should be frozen, but we'd prefer the Legislature adopt a budget
contingent on voters approving the freeze by referendum this November.
But taxes are just one side of the equation. The Legislature
steadily increased spending as the revenue flowed in through the '90s. Before raising taxes, it must demonstrate that it can
ratchet it back. Acting Gov. Jane Swift has made a start, reining in spending even on human
service programs that should have been protected. The Legislature must do more.
The cuts must go beyond the symbolism of an eight-day
furlough for legislators. The stories this week of high-profile executives in state agencies padding their pensions with early
retirement benefits as they leave for six-figure salaries in the private sector underline what
voters already know: The patronage culture on Beacon Hill is alive and eating well at a
depleted public trough.
We have yet to see a serious assault on waste in government
administration. Nor have we seen a serious attempt to reduce the scope or rein in spending on the Big Dig. We doubt
even the best effort to trim fat and reduce patronage will, by itself,
close the budget gap. But lawmakers who haven't bothered to try have no business asking the voters for new taxes.
Return to top
