The Lawrence Eagle-Tribune
Friday, December 20, 2002
Editorial
Ending the state's use tax
OUR VIEW
Massachusetts' use tax serves no useful purpose
Few Massachusetts residents are aware when they purchase
things in "tax-free" New Hampshire that they owe the Bay State tax man 5 percent of
the tab.
It's called a "use tax" and it's designed to ensure there is
no way for Massachusetts residents to avoid the sales tax the state passed in 1967. The
use tax requires that residents making out-of-state purchases pay the state
the difference between any local sales tax and the Bay State's 5-percent rate.
The border is no escape.
It's fairly easy for the state to track large-scale
purchases made out-of-state by businesses. But it's next to impossible to track individual shoppers.
Not that the state's revenuers haven't tried over the years.
State police and Department of Revenue workers have in the past been sent to the parking lots
of New Hampshire stores to look for shoppers driving cars with Massachusetts
license plates.
It all smacks of Big Brother. Almost no one pays the use
tax. And many do not even know it exists.
Among that number are several local state legislators, who,
The Eagle-Tribune found last month, made purchases for their campaigns in New Hampshire yet
paid no use tax. The amount involved was trivial -- 20 local politicians owed a
total of $993.28 -- but served to illustrate that legislators sometimes
ignore the laws they inflict on the rest of us.
Our report seems to have attracted some attention. State
Sen. Steven A. Baddour, D-Methuen, has filed a bill to exempt Massachusetts residents from
the use tax on purchases of under $500.
"It's a dumb law altogether," Baddour told our reporter.
"People shouldn't have to be looking over their shoulder wondering if the (Department of Revenue) is
coming after you."
It's a good first step but Baddour's bill doesn't go far
enough. The use tax still applies to businesses -- they should get the same protection under the law as
individuals. Nor should the tax apply after an arbitrary threshold like $500.
The Massachusetts sales tax already takes $3.7 billion a
year out of the pockets of citizens and places it in state coffers. That's more than enough. We don't
need a law that lets the state chase down those who make a few purchases
elsewhere.
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The Boston Herald
Saturday, December 21, 2002
CVS to pass new fee onto drug customers
by Jennifer Heldt Powell
CVS said yesterday that it will charge customers $1.30 for
most prescriptions to cover a new state fee expected to kick in Jan. 1.
CVS Corp., the state's biggest drugstore operator, said the
tax would not apply to Medicare or Medicaid prescriptions. The tax, which must be approved by
the federal regulators, will be the focus of a public hearing on Dec. 30.
One open question has been whether pharmacies will charge
consumers who have private insurance, or if the druggists will bill the insurers. CVS officials
said insurers told them they're unwilling to pay more for drugs than previously
negotiated prices.
"As a result we will be charging customers $1.30 for every
non-Medicare, non-Medicaid prescription filled and will forward the tax to the state," said
Todd Andrews, a CVS spokesman.
The chain has about 300 pharmacies and filled more than 30
million prescriptions last year. Of those, 26 million were not covered by Medicaid or
Medicare.
Walgreens Co. officials were unwilling to say yesterday what
they intend to do. Brooks officials didn't return a call for comment.
Independent pharmacists generally plan to collect the fee
from consumers, said Todd Brown, executive director of the Massachusetts Independent
Pharmacists Association.
But, he said, they are concerned because they haven't heard
from the state about how they are supposed to administer the tax.
"We have a lot of questions," he said.
He said state officials haven't yet instructed pharmacists in
his group on how to show that they are collecting appropriate fees.
The tax is intended to raise $36 million over six months.
Next year, with twice the time to raise the same amount of money, the tax is expected to drop to 65
cents a prescription. The fee must get federal approval because state officials
hope to use it to garner matching federal funding for Medicaid.
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The Boston Globe
Sunday, December 22, 2002
Now, an option to pay more state taxes
By Bruce Mohl
Massachusetts residents are being given the option of paying
a higher income tax rate this year if they want to help out their cash-strapped state.
Tired of the clamor for more tax revenues, Republicans on
Beacon Hill succeeded in inserting into the state budget this year a measure that would
give those who want state programs to receive more money the option to
provide the cash.
"This is an opportunity for them to put their money where
their mouth is," said Representative Bradley H. Jones, a Republican from North Reading and a
cosponsor of the measure.
The state's official income tax rate is 5.3 percent; the
optional rate is 5.85 percent. Someone with taxable income of $35,000 would pay $192.50 more at
the higher rate. (The higher payment, even though it's optional, would be
deductible on federal taxes for those who itemize, according to the Internal
Revenue Service.)
The idea of letting some taxpayers pay more originated with
Mike Huckabee, the Republican governor of Arkansas, who in late 2001 fended off critics of his
no-new-taxes stance by setting up a "Tax Me More Fund."
The Massachusetts version of the tax-me-more-fund doesn't
have a catchy title. Indeed, the new state tax form being mailed out to nearly 900,000
taxpayers this week treats the optional tax rate with deadly seriousness and
provides no explanation of why it's there, other than a vague reference to
"recent legislation."
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The Worcester Telegram & Gazette
Sunday, December 22, 2002
Editorial
Romney's best shot
As Mitt Romney prepares to move into the governor's office,
it is useful to recall why Massachusetts voters decided to give him the job.
Contrary to the mythology gathering around the late
gubernatorial campaign, the outcome had little to do with his opponent's appearance, demeanor, gender,
debating skill or even the infamous tattoo quip.
Mr. Romney won the support of Massachusetts voters --
Republicans, unenrolled and many Democrats -- because they realized the need for a bold
challenge to the time-worn budgetary assumptions that have driven the state
to the brink of bankruptcy.
To anyone who has been paying attention, the need for bold
action was underscored by the Legislature's costly maneuvers this year to avoid structural
reforms. The decision to levy $1.2 billion in tax hikes and virtually empty the
$2 billion-plus "rainy-day" fund only delayed the day of reckoning.
Incredibly, many lawmakers -- but, thankfully, not Mr.
Romney or House Speaker Thomas M. Finneran -- are hoping to avoid meaningful reforms by
imposing another round of tax hikes in the coming budget. That approach
becomes more dangerously absurd with each passing year.
The longer real reforms are avoided, the bigger the problem
will become. To reach the $25.25 billion business-as-usual benchmark set by state agencies in
their 2004 budget requests would require another huge tax hike, in the
neighborhood of $2 billion. Similar hikes would be required the next year, and
the next, and the next.
Annual budget growth during the late 1980s and 1990s --
routinely double or triple the growth rate of the economy as a whole -- helped set the stage for the
state's current woes. More of the same would only make the situation worse.
Ending the cycle of unsustainable spending growth is what
Massachusetts voters are counting on Mr. Romney to try to do. So far, the signs are promising.
His designated administration and finance secretary, Eric A.
Kriss, already has served notice that the budget gap must be closed "not through gimmicks, but
by fundamentally reshaping state government."
Mr. Romney's other appointments also make good on his pledge
not to recycle political insiders into his administration but to cast a wide net, gathering the
best team possible from the public and private sectors, without regard to party
affiliation.
Even though Mr. Romney faces a years-long challenge, a
gradual, incremental approach is not an option. He will have just one clear shot -- in the next couple
of months -- at implementing the necessary reforms. By the time the next
budget comes around, the entrenched interests wounded by the reforms
willhave mobilized a formidable defense of the status quo.
For the moment, Mr. Romney has the advantage of being a bona
fide outsider, relatively unencumbered by political debts. Unlike political careerists, he need
not assess every move based on how it will affect his re-election prospects.
If doing the right thing seals Mr. Romney's fate as a
one-term governor, so be it. Significant success in recasting state government in a form that is
sustainable for the long haul would be a towering legacy indeed.
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The Boston Globe
Thursday, December 26, 2002
Legislative pay raise a political hot potato
Wisdom questioned during budget crisis
By Rick Klein
Globe Staff
Members of the state Legislature are scheduled to return to
work Jan. 1 with a holiday gift that virtually no one else in state government is getting: a pay
raise.
It's the result of a little-noticed state constitutional
amendment, approved in 1998, that ties legislative pay to the average household income in
Massachusetts. That provision handed lawmakers 7 percent raises last year,
and some estimates suggest that the 200 members of the House and Senate
could get pay hikes of at least that amount next week, to be set by the
governor.
But Acting Governor Jane Swift, who leaves office the day
after the raise is to take effect, is considering ignoring the issue altogether, which would leave the
decision to Governor-elect Mitt Romney.
"We may just not want to touch this one," one high-level
Swift administration official said this week.
A pay raise for state lawmakers, while approved by voters
and mandated by the state Constitution, could be politically controversial this year, given the
state's budget crisis. At least 5,800 state workers have lost their jobs over the
past year-and-a-half, and more layoffs - not to mention deep service cuts - are
likely in 2003.
Many of those who have kept their jobs have seen their
salaries frozen since 2001, and the state has even reneged on contracts signed with
public-employee unions, including 13,200 employees of public colleges and
universities.
Romney's aides could not be reached for comment yesterday,
but any raise that he approves for lawmakers would probably be retroactive to Jan. 1.
Talk of the pay increase has already brought fresh rounds of
criticism from groups that oppose the concept of automatic wage adjustments for state
lawmakers.
Barbara Anderson, executive director of Citizens for Limited
Taxation and Government, said that voters were "tricked" into approving the constitutional
amendment because they thought they were simply preventing lawmakers from increasing their own
salaries.
"It's outrageous," Anderson said. "It's a pay raise every
two years, constitutionally guaranteed, unlike the rest of us, who could never imagine
something like that."
Under the amendment, legislative salaries are adjusted by
the governor every two years, in accordance with the rise or fall of the state's median household
income over the previous two-year period. But because median household
income rarely if ever decreases, legislative pay will probably increase in
perpetuity, Anderson said.
Swift aides have been wrestling internally for months over
how to proceed with the raise, and their frustration stems, in large part, from the fact that they can't
determine how much of a raise lawmakers are due.
The most reliable data on median household income come from
US Census Bureau surveys, but numbers for 2002 won't be released until the fall of 2003,
said Stephen P. Crosby, Swift's chief of staff.
There has been talk of picking an extremely small number for
2002, to pull down the average raise. But some administration officials have been hesitant to
release a number that is likely to be proven wrong.
"The law is really misdrawn, because it's a pay raise
effective the first of the year, based on data that aren't available for eight or nine months," Crosby said.
"There's no possible way that anybody can know what the median household
income for '02 is. We're trying to figure out what to do."
The same problem arose in 2001, the first year that the
amendment was in effect. Then-governor Paul Cellucci solved the conundrum by having his
economic advisers make an educated guess of the median household income
change, based on other economic indicators.
Those raises boosted the base salary for the state's
full-time lawmakers to about $50,000 a year.
But that action was taken in a much different political and
economic environment. For one, Cellucci was staying in office into the new year, meaning
he couldn't just ignore the issue. Besides, the state's coffers were still brimming
with cash, so the chance of public outrage was slim.
Another 7 percent pay increase next year would boost the
average legislator's salary to about $53,500, though some committee chairmen and members of
the leadership team receive tens of thousands more.
The total additional drain on the state treasury could
approach $1 million - a small sum in the context of a $23 billion state budget, but precious cash in the
current budget-cutting climate.
Anderson said that regardless of how the raise is handled by
Swift and Romney, lawmakers could show compassion by giving back their pay increases
next year, either to charities or to preserve state jobs and services.
"It would be good to see them do that," she said.
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