Limited Taxation & Government
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CLT&G Update
Tuesday, June 3, 1998

Greetings activists and supporters;

It was another difficult decision to make when Treasurer Malone's office called and asked Barbara if she'd attend a news conference with Joe calling for a return of the $1 Billion surplus. Barbara's been doing her utmost to keep neutral in the Republican gubernatorial primary, as both Governor Cellucci and Treasurer Malone have in the past been friends of the taxpayers, and she has repeatedly made that clear.

But our mission is to "keep the promise" and return all of that surplus to its original owners, the hard-working taxpayers who earned it. With that in mind, and with an agreement that it would be an issue event and not a campaign event, she accepted and participated in yesterday's news conference, and again called for the promised "temporary" income tax rate hike to be restored to 5 percent, so the "problem" with what to do with the surplus would . . . well, just go away as it was intended to do back in 1989.

I believe it was economist Milton Freidman who was once asked, "Isn't it a good thing when government runs a revenue surplus?" He replied, "Good? It means government was taking too much away from the taxpayers." Never has there been a more clear example!

Chip Ford

PS. The senate budget debate continues, and as of now I have no further information on Sen. Bob Hedlund's amendments. As soon as I do, I'll get it out to you.


JUNE 2, 1998

Telephone: (617) 367-6900


State Treasurer Joe Malone and Barbara Anderson, executive director of Citizens for Limited Taxation and Government, today called on the Legislature to take a step toward making Massachusetts more affordable by returning the entire $1 billion 1998 surplus to the taxpayers.

Malone said it was only fair that the entire surplus go back to the people since last year's $800 million surplus was eaten up by government. He also said the permanent tax relief currently under consideration by the Legislature does not go far enough.

"With a combined surplus of $1.8 billion over two years, we think it's fair that approximately half that amount go back to the people of Massachusetts," said Malone.

"If the Legislature had kept it's promise on returning the income tax to 5 percent we wouldn't have a $1 billion surplus today," Anderson said. "That's a good reason to give the money back now."

State House News Service

SHNS . . . JUNE 2, 1998 . . . State Treasurer Joseph Malone today criticized acting Gov. Paul Cellucci's plan to return a $350 million budget surplus to the state's taxpayers.

Malone, who is challenging Cellucci in the GOP gubernatorial primary, told reporters that taxpayers deserve the total surplus for FY 1998, now estimated at $1 billion.

"This year we have a billion-dollar surplus and table scraps are being sent back to the people of Massachusetts," the treasurer said.

Last week, Cellucci outlined a plan for the surplus, $200 million of which has already been spent by Cellucci and the Legislature. The plan would provide for an additional $200 worth of supplemental budgets, add $150 million to the state's "rainy day" fund and reserve $100 million for capital projects.

The remainder, some $350 million, would be used for tax relief.

Citizens for Limited Taxation and Government's Barbara Anderson, who joined Malone in his office, pronounced herself "confused" about Cellucci's tax policies.

Anderson, a vocal supporter of Cellucci's now-defunct bill rolling back the income tax rate to 5 percent, said Cellucci's plan for the surplus is inconsistent with his position as a tax-cutter. The budget surplus, she reasoned, comes from a too-high tax rate, and should therefore be returned to taxpayers.

But Anderson stopped short of endorsing Malone in the governor's race, much as she has many times before.

"I am pretending there is no Republican primary," she said. "I'm going to vote in the Democratic primary against Scott Harshbarger."

The Boston Globe
Wednesday, June 3, 1998

Tax activist calls for bigger tax cut
By Martin Finucane, Associated Press

BOSTON - Faced with an embarrassment of riches -- a budget surplus of $600 million or $1 billion, depending on how you slice it -- acting Gov. Paul Cellucci has proposed a big tax cut.

But it's small potatoes to anti-tax activist Barbara Anderson.

Anderson weighed in Tuesday against Cellucci's proposal to send $350 million back to the taxpayers in the form of tax cuts.

"I think the least we can do is try to get the $1 billion they owe us," she said.

Cellucci, a Republican who is leading the pack in the governor's race, announced Friday that the state would finish the year with a surplus of $600 million.

He proposed that $350 million of that surplus should go back to the taxpayers, with the remainder going to capital projects and the state's "rainy day" fund.

His tax cut would mean a $196 boost for a family of four earning $50,000 in wages per year, the administration said.

But critics like Anderson and Treasurer Joe Malone, who is trying to grab the GOP nomination for governor from Cellucci, say the entire $600 million should go back to taxpayers.

They also say the $600 million that Cellucci considers "surplus" does not include another $400 million in end-of-fiscal year spending, which is being planned by the administration.

That spending is unnecessary, they argue, and that money, too, could be used for a tax cut.

The $1 billion tax cut proposal would give a family of four a one-time tax reduction of $580, Malone aides estimated.

Other gubernatorial candidates also had ideas on what to do with the surplus.

  • Democratic Attorney General Scott Harshbarger said he would press for $276 million in tax cuts; $80 million for school building and fixup projects, including indoor air pollution remediation; and $120 million to help government-assisted child care programs. That adds up to about $476 million. The remaining $574 million could be used for the rainy day fund, capital projects and any other priorities, said Harshbarger spokesman Dwight Robson.
  • Phil Hailer, a spokesman for Democratic candidate Brian Donnelly, said "a third to a half (of the $1 billion) could certainly go to tax relief," while the remainder should go to programs such as support for public higher education, secondary education and fixing up the state's cities.
  • Former state Sen. Patricia McGovern, the third Democratic candidate, has called for using $117 million of the surplus for a worker training and adult education program intended to update workers' skills. She issued a general statement, saying the surplus was "an opportunity that should not be wasted. . . . The state should use the surplus to pay its bills, add to the rainy day fund, return some money to the taxpayers, and invest in the future."

The one-time tax cut proposal is generally separate from proposals for permanent tax cuts that are being debated at the Statehouse, with Cellucci proposing $1.6 billion in cuts and the Democratic Legislature leaning toward more modest packages of about $500 million per year.

But the state Senate's proposal calls for moving money from the fiscal 1998 surplus into a special fund so it could be used to start paying for permanent tax cuts.

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