The $18.3 billion House budget for the fiscal year beginning
July fills the state's so-called rainy day fund to the brim -- just in case the economy takes a downturn...
Well, the nature of life on Beacon Hill is that money not
committed to tax cuts early in the legislative cycle will evaporate into programs, patronage or pork.
Boston Herald - Apr. 17, 1997
Editorial: The state grabs every dime
"There's no excuse for keeping the income tax rate higher than
5 percent," Anderson said. "When those bonds are paid off, we should have a mortgage-burning party."
If lawmakers are allowed to spend the money that had been
earmarked for the bonds, [Chip] Ford said, it will be difficult to take it away from them.
"If they're allowed to commit these funds, it will be far more
difficult to cut spending in the future," he said.
State House News Service - Jun. 11. 1997
Pay raise repeal may give way to income tax cut on '98 ballot
Gov. William F. Weld, elected on a pledge to slash state
spending, yesterday signed an $18.4 billion budget that continues the steady climb of cash shoveled into Beacon Hill
bureaucracy.
With Weld's signature, the budget hikes state spending 5.5
percent over last year's plan.
The government now swallows $5 billion more each year than in
fiscal year 1991, when Weld took over. During the past seven years, Weld has upped the budget 30 percent or 50
percent over the inflation rate during the same period.
The usually supportive Massachusetts Taxpayers Foundation
warned the spending plan looks alarmingly like the beginning of the free-spending 1980s. During that decade,
lawmakers allowed the budget to balloon during good times, landing the state in
trouble when the economy soured.
"You're seeing the beginning of a pattern here which, if
unchecked, has the potential to get us in trouble down the road," said Michael Widmer, MTF president.
The Boston Herald - Jul. 11, 1997
Weld signs off on hikes in spending
The problem is not the amount of spending. The problem is the
trend that's getting established. The Massachusetts Taxpayers Foundation says the budget, after the appropriate
bookkeeping adjustments, would actually increase spending by 6.5 percent
instead of the apparent 5.5 percent. That's faster than inflation and revenue growth.
"The concern is that we build in a rate of increase and a set
of expectations about future expansion that cannot be met with reasonable annual growth in state revenues, let alone a
future recession," the foundation said.
"This is the very pattern that ultimately led to fiscal
disaster in the late 1980s."
The Boston Herald - Jul. 14, 1997
Editorial: Our abdicating governor
"When the tax increase passed [in 1989] they promised it would
be temporary. It is now 1998, the crisis has been over for seven years, we've been running a state surplus for three
years, and the state surplus this year is $1 billion," Anderson said. "They should cut the tax
when times are good and then we'll all have a discussion again when times get bad. If they
cut taxes enough maybe times won't get bad."
The Boston Globe - Jun, 4, 1998
Lowering income tax to 5% urged
But ex-state officials say cut should be linked to economy
The $19.6 billion budget -- a $1.3 billion increase over last
year -- was called "the most expansive budget since the fiscal crisis" by Michael Widmer, president of the Massachusetts
Taxpayers Foundation, a fiscal watchdog organization.
Charging that lawmakers were spending wildly to avoid further
tax cuts, Citizens for Limited Taxation and Government's Barbara Anderson predicted: "Government will get bigger and
bigger and there will be another fiscal crisis and another tax increase."
The Boston Herald - Jul. 21, 1998
Money's no object as pols OK $19.6B budget
Enjoy it while you can. The budget now in place for the
remaining 11 months of the fiscal year reflects an acceleration of growth in spending that could be laying the base for a
return to the drunken-sailor 1980s.
The Massachusetts Taxpayers Foundation is right in its belief
that "the sheer size of the new discretionary spending creates a pace of expansion that cannot be accommodated with the
normal growth rate of state revenues, much less a future recession."
The Boston Herald - Aug. 4, 1998
Editorial: Calm before the storm
"It's a difficult task to sit here and convince people that
revenues are going to slow down and that this boom is not going to continue forever at a time when money is coming in hand over
fist," said state Administration and Finance Secretary Frederick Laskey.
State House News Service - Jan. 5, 1999
A&F's challenges: Managing $20B budget, expections, Big Dig,
Y2K
Massachusetts got in trouble the last time because it spent
madly as the economy boomed and tax revenues flowed into the Treasury. If the government expands beyond its means
again, it will face another budget crunch when the economy cools.
The Eagle Tribune - Jan. 6, 1999
Editorial: Remember, it's our money
[Barbara] Anderson darkly alluded to the days of former Gov.
Michael Dukakis' "Massachusetts Miracle," when economic good times prompted spending frenzies which then
could not be sustained when the recession of the early 90s hit. Politicians
are "addicted" to spending, she said, and can't be trusted to control themselves.
"All politicians are like the person writing on the bathroom
wall - 'stop me, stop me, before I kill again,'" she said. "They're begging us to stop them before they spend it all
because they know they're going to be in trouble, and yet the Legislature can't bear to give up even the tiny
amount of money that would come from the income tax rollback. And even the
governor can't bear to give up the reimbursements from the tobacco companies, which should be
returned to the taxpayers who pay the Medicaid bills in the first place."
State House News Service - Jan. 27, 1999
Legislative Leaders: Gov's
Budget Based on Unrealistic Expectations
"You just have to be cognizant that things can change," said
[Haverhill City Councilor George Dekeon]. "There's always a cycle of ups and downs. I just hope it stays like this for a
while."
The Eagle-Tribune - Feb. 16, 1999
Towns rolling in cash
The [Mass. Taxpayers] foundation warned that fiscal 2000
spending should not exceed the $20.8 billion that already has been approved by both chambers. Even that amount would
represent a 7 percent increase -- way beyond the rate of inflation....
But unless policy-makers learn to restrict their appetite for
spending, Massachusetts will face an uncomfortably tight fiscal environment in 2000 and beyond.
The Telegram & Gazette - Aug. 15, 1999
Spend, spend, spend
Supplemental budget ignores fiscal realities
The state went through some hard times following the last
fiscal flop. But here we are not 10 years later and once again the Commonwealth is assuming that somehow, this time, the
business cycle has been repealed and there need be no limits....
Massachusetts' taste for champagne and its faith in a
never-ending bull market are going to leave faces more than red when the bubble bursts.
The Boston Globe - Feb. 8, 2000
Editorial: Budget binge
"We're not hitting the panic button, we're just throwing up a
caution flag," said Michael Widmer, president of the [Mass. Taxpayers]
foundation. The nearly 7 percent increase in spending for the current fiscal year is "unsustainable over the long term," he
said.
Boston Herald - Aug. 16, 2000
Taxpayers foundation says state budget spending risky
Yet, all is not well. The taxpayers foundation's new budget
analysis sets the final spending plan for fiscal 2001 at more than $21.5 billion. That is up $1.37 billion -- 6.6 percent --
over the initial spending figure for fiscal 2000....
Flush times notwithstanding, Massachusetts will pay dearly in
years to come for unsustainable government growth.
The Telegram & Gazette - Aug. 28, 2000
Editorial: Fiscal Erosion
Sustainable growth eludes state government
The looming fiscal crisis is of the Legislature's own making,
again -- just as it was in the late-80s. And as they did back then, the Beacon Hill pols will wait until there's "no
alternative" to their tax increase.
As usual when they want more of our money, they threaten budget
cuts not in lard but in areas that most taxpayers agree are essential: local aid, public safety, etc.
And some say they don't know what they're doing? They know
exactly what they're doing; they've done it before.
CLT Update - Nov. 10, 2001
Legislators delivering fiscal crisis to taxpayers
Are there any across the commonwealth whose memory is so short
that they don't recall how the Legislature created the fiscal crisis of the late-'80s; who don't recall our numerous
warnings over the last decade; who didn't see the writing on the wall during the economic
boom of the '90s when pols were squandering the annual billion dollar surpluses -- our
"temporary" tax overpayments -- like there was no tomorrow, unable to say "no"
to any special interest, only to taxpayers who unfairly paid the freight?
Are there any across the commonwealth who don't recognize the
current ploy for what is: the same ploy that worked the last time we taxpayers were burdened with paying off the
excesses of a profligate Legislature when the good times inevitably soured?
Are they any across the commonwealth who don't remember what
the Lawrence Eagle-Tribune back in early-1999 termed "an embarrassment of riches" when city and town
governments too were rolling in more surplus taxpayer money than they knew what
to do with?
CLT Update - Feb. 5, 2002
Same old tax-hike scam, 13 years later
The Boston Herald
Tuesday, July 2, 2002
Lawmakers miss deadline for state budget - again
by Elisabeth J. Beardsley
The new fiscal year dawned yesterday without a state budget
- again - with nary a blink from the Beacon Hill leaders who blew off the constitutionally mandated deadline.
While state government limped into the new year on a
four-week stopgap outlay, acting Gov. Jane Swift was enjoying the first day of a two-week vacation in an undisclosed spot.
Senate President Thomas F. Birmingham was plotting political
strategy at his gubernatorial campaign headquarters in Chelsea.
And House Speaker Thomas Finneran, while present at the
State House, was cloistered behind closed doors as his lieutenants presided over debates on bilingual education and
the Pledge of Allegiance.
Democratic legislative leaders view the July 1 deadline as a
mere "guideline," despite the fact that the state Constitution mandates it, said House Republican Leader Francis Marini
(R-Hanson).
"Here we are, supposedly under new leadership, making the
same old mistakes and running the same old railroad late," Marini said.
Tardy budgets are hardly new phenomena - the last five in a
row have been late, including last year's five-month debacle and a similar impasse two years earlier.
Over the past 20 years, in fact, lawmakers have only managed
to meet the deadline three times - in 1983, 1996 and 1997.
This year, the six conferees sat down for the first time
last week to begin hammering out differences on the branches' $23 billion spending plans, while coping with a $2.5 billion
deficit.
Swift's Administration and Finance Secretary Kevin Sullivan
said nobody really cares about a little bit of lateness, as long as government programs keep rolling forward on temporary
funding.
"I think people view it as inside baseball," Sullivan said.
"We would rather have a budget that reflects reality than a hastily passed spending plan that may not fit the reality of
the fiscal times."
The procrastination approach has become so thoroughly
institutionalized on Beacon Hill that lawmakers this year didn't even try to meet the July 1 deadline.
Instead lawmakers have aimed right from the start for July
31, the last day of formal legislative sessions and therefore the last day they can override gubernatorial budget vetoes.
Birmingham, a gubernatorial candidate, spent the day in
campaign-related "meetings," including a pre-endorsement session with members of the powerful Boston Carmen's union,
aides said.
The Senate president, who was unavailable for comment, was
no more than "a phone call away" if State House business needed addressing, said spokeswoman Alison Franklin.
With an interim budget in place, Franklin said there was
nothing wrong with Birmingham squeezing in some political work on the side.
"Government is not shut down, and that's an important thing
for everybody involved to recognize," Franklin said.
Senate Ways and Means Chairman Mark Montigny (D-New Bedford)
blamed the missed deadline on the House, which dallied for a month to push tax-hike votes off until after the
election challenge deadline.
House Ways and Means Chairman John Rogers (D-Norwood) did
not return calls seeking comment.
While Beacon Hill leaders took a laissez-faire view of the
late budget, others tried to make a bit of hay from the campaign trail.
Republican lieutenant governor candidate James Rappaport
demanded that lawmakers forgo their salaries until the budget is done.
"I can think of no other position in which employees receive
a paycheck for neglecting to do their work," Rappaport said.
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The Springfield Union-News
Monday, July 1, 2002
Mass. not alone in raising taxes
By Dan Ring
BOSTON -- Rhode Island raised its state gasoline tax to almost
10 cents more than Massachusetts' gas tax.
Connecticut is planning to increase taxes on corporations
and repeal tax breaks for some businesses. New York approved a dramatic expansion of casino gambling and hit people
with increases on numerous fees and licenses.
Indiana, Kansas, Nebraska and North Carolina are hiking
sales taxes.
It's not only Massachusetts politicians who are raising
broad-based taxes and fees to close state budget shortfalls. Governors and state legislators around the country are turning
to new taxes and fees to deal with budget deficits created by drops in tax collections.
"Massachusetts is certainly not alone in looking to revenues
to balance the budget," said Kevin D. Carey, an analyst at the Center on Budget and Policy Priorities in Washington,
D.C., a nonpartisan research organization on fiscal policies.
On Beacon Hill, the state House and the Senate approved five
tax increases to help close an estimated $2 billion shortfall in the $23.3 billion state budget for the fiscal year that
starts today.
While there are some minor differences, the House and the
Senate have agreed to increase the cigarette tax by 75 cents to $1.51 per pack, freeze the state's income tax at 5.3 percent,
increase the capital gains tax on the sale of stocks and investment properties, cut the personal
exemptions by 25 percent and abolish a voter-approved deduction for contributions to
charities. The package is designed to raise $1.2 billion a year.
The House is also calling for hiking the five-year renewal
fee for obtaining a driver's license from $33.75 to $40 and the two-year renewal fee for a registration from $30 to $36.
A House-Senate conference committee will develop a compromise tax plan as part of the
state budget. Sometime this month, the final package is expected to be sent to the desk of
acting Gov. Jane M. Swift.
The acting governor will veto all the tax increases, because
she believes that lawmakers failed to examine alternatives, said spokeswoman Sarah E. Magazine. But the new taxes were
approved in both legislative branches by more than the two-thirds margin needed to override
Swift's vetoes.
Scott D. Pattison, executive director of the National
Association of State Budget Officers in Washington, D.C., said Massachusetts is among only a handful of states raising income
or sales taxes.
"You're not seeing the general tax increase proposals,"
Pattison said. "That's very rare for states. That seems to be fairly unique."
In New England, Massachusetts stands by itself in tapping
general income taxes.
In Connecticut, lawmakers and Republican Gov. John G.
Rowland last week agreed on a plan to balance the state's $13.5 billion budget. Rowland vetoed a bill by the
Democratic-controlled General Assembly to create a special 1 percent surtax on people who
earn more than $1 million. Earlier this year, Rowland signed an increase in the cigarette tax
and he is also agreeing to raise about $120 million through new business taxes. Lawmakers
in Rhode Island in June approved a 2-cent-a-gallon hike in the state's 28-cent-a-gallon gas
tax to close a budget deficit. Rhode Island also shelved a phase-out of a tax on motor
vehicles, increased the cigarette tax and agreed to force retired state workers to pay higher
health insurance premiums.
Massachusetts this year left alone its 21-cent-a-gallon gas
tax, which was nearly doubled in 1990 during a prior budget crisis.
In northern New England, Vermont also raised the cigarette
tax and imposed a minor increase in the estate tax to help close a relatively small $30 million budget deficit.
With a $180 million shortfall, Maine Gov. Angus S. King
approved a freeze on hiring, tight restrictions on travel by state employees and a 2 percent spending cut in each state
agency.
New Hampshire, facing just a $50 million shortfall, approved
a hiring freeze and spending reductions.
State Sen. Louis C. D'Allesandro, D-Manchester, the chairman
of New Hampshire's Senate Ways and Means Committee, said he was very surprised at the number of tax increases
approved in Massachusetts.
"That's a big hit for the people of Massachusetts,"
D'Allesandro said. "That's not a very good sign."
Many other states, including Rhode Island, Illinois,
California and West Virginia, are planning to borrow against future proceeds from their shares of a settlement from a
national lawsuit against tobacco companies.
Massachusetts lawmakers opted against such a move. Critics
said borrowing against future tobacco lawsuit settlement proceeds might help fill the budget hole this year, but it
would not provide a permanent source of money for future budgets.
The budget crisis in Massachusetts also may be worse than
most other states, largely because state spending during the 1990s was built on a stock market bubble. Revenues from
capital gains taxes in Massachusetts skyrocketed during the market boom
and now are plummeting in the 2-year-old bear market.
The National Governors' Association in Washington reports
that the four states hit the most by declining tax collections through April were California, New York, Connecticut and
Massachusetts.
In addition, while Connecticut and other many states are
increasing corporate or business taxes, Massachusetts left alone extensive tax breaks given over the past decade to
manufacturers, bankers, insurance companies and mutual funds.
Also, the state is only postponing a scheduled drop in the
income tax to 5 percent next January. A decade ago, the state's income tax stood at 6.25 percent, still almost a full point
more than the current rate.
Barbara C. Anderson, director of Citizens for Limited
Taxation, said the state's income tax was 5 percent before the 1990 fiscal crisis and increases approved that year were
supposed to be temporary. Anderson said lawmakers went on a spending spree during the 1990s and
now taxpayers are paying the price.
Massachusetts voters in 2000 overwhelmingly approved a
phased reduction in the income tax. The income tax was supposed to drop to 5 percent in January, but lawmakers voted to
keep it at 5.3 percent.
There are provisions in the new tax package to allow the
income tax cut to proceed, bring back the deductions for charity contributions and again raise the personal exemptions
once the economy improves. James R. St. George, executive director of the Tax Equity Alliance
for Massachusetts, said the new taxes in Massachusetts will raise money for many important
programs and services. "This is a pretty good package," he said. "I give legislators credit for
being responsible in an election year when it's not easy to do that."
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Associated Press
Tuesday, July 2, 2002
State blindsided by fiscal collapse
By Steve Leblanc
BOSTON -- No one expected things to get this bad, this fast.
When Massachusetts' shining economic bubble finally burst
this year, the speed and fury of the collapse caught nearly everyone off-guard.
In its starkest terms, the implosion can be measured in the
gap between how much state officials anticipated raising in tax revenues during the 2002 fiscal year, about $16.7 billion,
and the actual take, about $14.3 billion.
On paper, $2.5 billion had evaporated, a loss that officials
were still grappling with yesterday as they faced a new, equally uncertain, fiscal year.
The 15 percent loss was the deepest in at least 50 years
and, in dollars, the largest ever in state history. It was also vastly more dramatic than last year's dire warnings of a coming
fiscal "perfect storm."
"It's a disaster. It's far worse than anyone ever expected,"
said Senate Ways and Means Chairman Mark Montigny, D-New Bedford. "It's just an impossible balancing act. There's
still a lot of pain to go."
The search for suspects first focused on the terrorist
attacks of Sept. 11.
Although the image of two hijacked jetliners crashing into
the World Trade Center towers may have contributed to the decline, the true culprits were far more complex, observers
say.
Perhaps the single biggest factor was the dizzying drop in
tax revenues from capital gains, the taxes people pay on the money they make from selling investments, including stocks or
real estate.
Of the $2.5 billion in lost revenue, nearly $1 billion was
lost to disappearing capital gains tax collections.
The capital gains revenues had soared along with the high
tech industry during the late 1990s. When the high-flying economy sputtered, so did revenues from capital gains, stock
options and bonuses.
"The wealth was created on the way up with the internet
bubble and the stock market bubble. When that bubble burst, all the taxes from those sources of wealth cratered," said
Michael Widmer of the Massachusetts Taxpayers Association.
The second biggest culprit are tax cuts, Widmer said.
In 2000, voters approved a ballot question cutting the state
income tax rate from 5.95 percent to 5 percent over three years.
That meant a loss of about $500 million in tax dollars
during the 2002 fiscal year, about a third of the total decline in revenue when combined with other, smaller tax cuts.
What truly shocked nearly every fiscal observer in Massachusetts was the speed of the
decline.
The state has had to revise down its revenue estimate five
times in the past 12 months.
House and Senate lawmakers trying to hammer out differences
between their two budget proposals are having trouble keeping up with the declining numbers and are grappling with
the latest revision -- a loss of between $400 and $600 million.
That's after already voting to cut some state services and
hike taxes by about $1 billion.
The huge capital gains revenues of the late 1990s aren't
coming back anytime soon, said Administration and Finance Secretary Kevin Sullivan, acting Gov. Jane Swift' budget chief.
"It's a much different world and this is not an aberration.
These are not one-time valleys. This is a long process, maybe three or four fiscal years," he said. "The next governor is not
going to have an easy time."
The next governor will also have fewer reserves to fall back
on.
Of about $3 billion in savings built up during the past
decade the state has already spent about $1.8 billion, according to Widmer.
Even as the state is struggling with a historic drop in
revenue, ordinary residents may not be feeling the pinch as deeply.
During the recession of the late 1980s and early 1990s,
unemployment in Massachusetts soared to nearly 10 percent.
The most recent unemployment numbers are about 4.4 percent
and below the national average.
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