Citizens for Limited Taxation & Government
"The Commonwealth Activist Network"
18 Tremont Street #608 * Boston, MA 02108
Phone:(617) 248-0022 * E-Mail: cltg@cltg.org
Visit our web-page at: http://cltg.org
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*** CLT&G Update ***
Thursday, March 19, 1998

CLT&G Lights the Match that Ignites Beacon Hill "Firestorm"

Greetings activists and supporters:

Yesterday the phones never stopped ringing with media calls:

We’ve finally got their attention and they’re all over this story now. It was the front-page lead story in the Boston Globe again today! House Speaker Tom "Imperious Maximus" Finneran has finally been exposed.

What I can’t for the life of me understand is, why are so many Republican legislators so adamantly defensive of Finneran’s raid on our tax surplus? Can’t they find the emergency exit out of the tank, the corral gate out of his pasture?

Rep. Dave Peters (R-Charlton) -- the Republican House "Leader" of the alleged ‘loyal opposition’—calls our effort "the equivalent of swatting mosquitoes when the lions are coming in back door." Will somebody please tell him that when swatting those pesky $800 million mosquitoes (you can almost buy a B-1 bomber for that!), one can’t leave that back door wide open with an "Open House - For Sale" sign posted. But that requires the ability to walk and chew gum at the same time and is probably expecting too much.

It’s a big enough job having to take on the majority Democratic Party machine here in Taxachusetts. But when we’ve also got to fend off Republican apologists, it becomes more obvious that there’s not a whole lot of difference between most of the pols up there on Beacon Hill, regardless of the suffix in parenthesis that follows their names. Again, it demonstrates that the only two political designations that matter in Bay State politics are . . . Them—and Us.

Even the Boston Herald recognized this in today’s lead editorial (below).

Chip Ford—

(PS. Dean Cook, and it didn’t hurt a bit!)
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The Boston Globe
Thursday, March 19, 1998
Front Page—Lead Story
Cellucci vows to battle for a tax refund
Opposes Finneran proposal

By Geeta Anand and Frank Phillips
Globe Staff

With fiscal conservatives and political opponents breathing down his neck, Acting Governor Paul Cellucci vowed yesterday to battle the Democratic leadership on Beacon Hill and return all of the state’s budget surplus, estimated at as much as $800 million, to taxpayers.

Caught up in a furor over a House move to block an automatic tax refund, Cellucci said he will oppose any attempts to spend or withhold the cash overflowing the state’s coffers.

"I intend to cut taxes. That’s what I’m planning to do and that’s what I intend to do," he told reporters at a State House news conference, cautioning that the surplus was still only an estimate. "We don’t know what the surplus is going to be but my intention is to return excess revenues back to taxpayers."

An election-year rebate could return between $200 and $320 to every taxpayer in the Commonwealth.

Cellucci’s comments came amid a firestorm on Beacon Hill over what to do with the extra money that the state will have when it closes the books on the current fiscal year.
Simply put, the options are spend it, keep it, or return it to taxpayers. But it seems things are not that simple.

Under current law, some of the extra money could flow to a rainy day account - the so-called "stabilization fund" - that already holds about $800 million and is the fourth largest account of its type in the nation. The law says that when the fund reaches about $950 million it triggers an automatic rebate to taxpayers. If that occurs, $650 million would be available for rebates when residents file their taxes next year.

But House Speaker Thomas M. Finneran, a Mattapan Democrat, arguing that you can never save too much for a rainy day, has proposed raising the cap on the stabilization fund so that it can hold an additional $500 million. Finneran’s proposal, which was buried in a bill he offered to eventually cut taxes by $500 million, would wipe out chances for a rebate as well as offset his own proposed tax cuts, critics said.

"This is a shell game being played in terms of taxes," said State Treasurer Joseph D. Malone. "This is a way to play keep away with taxpayer money."

Malone, in a bitter fight with Cellucci for the GOP gubernatorial nomination, has been sharply critical of the acting governor and his predecessor, William F. Weld, for striking a deal with the Democratic leadership last year to raise the cap on the rainy-day fund from 3 percent to 5 percent of total state revenue, in effect delaying tax refunds during budget surpluses. Finneran’s proposal would raise the cap to 7.5 percent, and he has said he would like to increase it still further to 10 percent to cushion the state against hard times.

Even the Senate Democratic leaders, strongly supportive of raising the bar for a tax refund last year, expressed skepticism yesterday about Finneran’s latest initiative.

"We just did an increase a year ago. It seems to me we need to settle on a scenario and stick with it so people don’t think we’re moving the goal line. It will affect our credibility on the issue with voters and taxpayers," said the Senate Ways and Means chairman, Stanley Rosenberg, an Amherst Democrat.

Barbara Anderson of Citizens for Limited Taxation and Government accused Democrats of denying taxpayers relief in order to create a huge "slush fund," an accusation Rosenberg strongly denied.

Republican Senator Robert L. Hedlund of Weymouth and other fiscal conservatives argued that the fund is among the easiest for politicians to raid for pet projects. While other states limit politicians from accessing the money with supermajority votes in the Legislature and strict economic guidelines, Massachusetts does not.

If the $800 million estimated surplus were returned to taxpayers, they would save between $207 and $414 when they file their personal income taxes in April of 1999, according to the treasurer’s office estimates. Tax filers would get the tax cut through increased personal exemptions, which would save a single person or married couple filing separately $207; a person filing as a head of household $320 and a married couple filing jointly $414, according to the treasurer’s estimates.

In reality, it is unclear how much money will be available for a tax break. Finneran says a maximum of $200 million will be left over to put in the rainy day fund and the rest will be used for other expenditures.

The Cellucci administration previously said there might be $350 million left to return to taxpayers when negotiations over spending the surplus are completed.

The ease with which the Finneran plan to eliminate a refund this year sailed through the House angered some fiscal conservatives yesterday and they strongly criticized the House Republican leadership. Indeed, the House minority leadership did not object to the increase in the rainy day cap last week during debate on the tax plan. The entire 29-member Republican delegation voted for Finneran’s plan, although the GOP leadership tried to make further cuts in the income tax and eliminate the proposed capital gains hike.

House Minority Leader David M. Peters, of Charlton, defended himself yesterday, saying Finneran’s plan to raise the bar for a tax refund was inconsequential compared to the fight to cut the income tax permanently to 5 percent.

"The stabilization fund issue, while important, is the equivalent of swatting mosquitoes when the lions are coming in back door," he said. "This debate should be about real tax relief for the people of Massachusetts."

Anderson angrily disagreed and accused Peters of abandoning the Republican tax-cut cause.

"Dave Peters should wake up to the fact that every change in the stabilization fund is stealing from taxpayers," she said. "And he should stop supporting Finneran’s plan to do that. He’s supposed to be the opposition party."
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The Boston Herald
Thursday, March 19, 1998

Lead Editorial
House GOP drops the ball

By now we all know that House Speaker Tom Finneran would rather have his fingernails pulled out than let the taxpayers of Massachusetts keep the maximum amount of their own money. But what’s wrong with the Republicans in the chamber that they let him get away with what could be a hidden tax increase when he says he’s cutting taxes?

Last year Finneran led the charge to find ways of using a surplus. It now turns out that his "tax cut" legislation, passed by the House unanimously after the Republican alternative was predictably voted down, would raise the cap on the rainy-day fund from 5 percent of state tax revenue to 7.5 percent.

That would prevent the automatic setting of a higher personal exemption in the state income tax, another instance of the Legislature going out of the way to break its word to the taxpayers. It could salt away so much money that the net effect of Finneran’s bill could be an increase of $148 million, according to Citizens for Limited Taxation and Government.

Finneran is entitled to believe that this reserve fund should be larger. We strongly disagree. Massachusetts is believed to have the third largest reserve fund in the country. The tax cutting plan announced last week by the Massachusetts Taxpayers Foundation, certainly as cautious and tight-fisted an advocacy group you can find anywhere, saw no reason to tighten the current provision.

But the point is, this point was not discussed in the floor debate on the tax bill. It’s the fault of the Republicans that the Democrats weren’t forced to defend it. Rep. Francis Marini (R-Hanson) recognized Finneran’s maneuver for what it was and spoke against it, but no one backed him up.

Acting Gov. Paul Cellucci says he’ll veto this provision if it survives. We hope the Senate shortstops it first.
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Associated Press
Thursday, March 19, 1998

BOSTON (AP) - Call it the somewhat unexpected $600 million.

Debate has swirled at the Statehouse for months over proposals advanced by the acting governor, legislative leaders and gubernatorial candidates for tax cuts in the future, some of which would kick in as late as next January.

But quietly all along the state treasury has been hauling in the cash more quickly than expected.
Now a surplus estimated at $600 million or more by some experts could be arriving pretty soon: by the end of the current fiscal year on June 30.

So now begins the debate over what to do with that chunk of money—spend it, save it, or give it back to taxpayers.

Treasurer Joe Malone charged Wednesday that acting Gov. Paul Cellucci would spend it. He said it should be returned to the people in a tax cut.

"It’s a choice between either government spending it or people getting their money back," said Malone, who prefers to estimate the surplus at $800 million. "Give the $800 million back to the people of Massachusetts."

Cellucci, who is being challenged by Malone for the GOP gubernatorial nomination, responded: "My intent is to return surplus revenues back to the taxpayers."

"I don’t intend to spend the surplus. I intend to cut taxes," he said.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, a budget watchdog group, said that only in the last 60 days has it become clear that the surplus could grow to as much as $600 million.

Until recently, the focus has been on "looking longer term," he said.

If the state keeps its purse strings tight and does not spend the surplus money, it could automatically trigger a tax cut.

The surplus money would flow into the state’s rainy day fund, which is holding about $800 million, and, when that reaches a certain cap, currently set at about $950 million, an automatic tax cut would happen.

House Speaker Thomas Finneran, D-Chelsea, however, has proposed to increase the cap on the rainy day fund so that it could essentially hold another $500 million before overflowing and triggering the automatic tax cuts. Finneran says the idea is to protect the state in case the economy—and tax revenues -- stumble.

The move by Finneran, who’s the first major figure on Beacon Hill to draw attention for his plans for the surplus, has stirred a hornet’s nest of controversy.

Anti-tax activist Barbara Anderson said the money "should be given back to the taxpayers."

Cellucci promised to veto Finneran’s proposed increase in the rainy day fund cap, while Malone criticized it as "a way of playing ‘keep-away’ with the taxpayers’ money."

Finneran couldn’t be reached for comment Wednesday.

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