Limited Taxation
Post Office Box 408     Peabody, Massachusetts   01960     (508) 384-0100
E-Mail:       Web-page:

CLT Update
Wednesday, January 20, 1999

"I don't think there's any debate as to the impact they've [tax cuts] had on our commonwealth. It spurs economic growth. It takes money off the table that might otherwise be spent. We think it argues more for the tax cut than ever."

Cellucci administration spokesman

Greetings activists and supporters;

I don't think the above response is exactly what the Massachusetts Taxpayers Foundation had in mind with its latest doomsday scenario!

I wonder what really has brought on the sudden flurry of the-sky-is-falling Chicken Little MTF panic attacks lately? Last week, you'll recall, it was its plea for dramatic fee and toll increases.

By next week, the so-called "taxpayers" foundation will probably call for a hike in the income tax rate to ten percent and, for good measure, an increase of the sales tax too, just to head off any "irrational exuberance"!

Chip Ford --

Associated Press
Tuesday, January 19, 1999

Budget watchdogs warn of too much 'euphoria'
By Martin Finucane

BOSTON (AP) - Watch out for the budget busters!

That warning was issued Tuesday by the fiscal watchdogs at the business-backed Massachusetts Taxpayers Foundation.

The foundation said policymakers needed to "contain the euphoria" brought on by a strong economy and hefty flow of taxpayer dollars into the state treasury.

In a report on the state budget, the foundation warned that employee health insurance, Medicaid spending, debt service, and the Massachusetts Bay Transportation Authority budget could again threaten the state's fiscal stability.

The foundation said the four "budget busters" - which were identified as villains in the state's fiscal troubles in the early 1990s - were increasing again in an "ominous trend." Pension costs, another area of concern, were likely to remain under control, the foundation said.

It is a "particularly volatile time" for the state's finances, said Michael Widmer, president of the foundation.

This year's $19.9 billion budget is 6.4 percent - or $1.2 billion - higher than the previous year. But in the previous four years, growth was more modest, averaging 4.4 percent, the foundation reported.

The foundation predicted a surplus this year of up to $500 million. But it said the current budget growth will be unsustainable in future years.

And it said the outlook was cloudy because of a potential economic slowdown and because the state's revenue flow this year will be constricted by major tax cuts enacted last year.

The state also has increased spending needs for capital projects, particularly because Congress has saddled the state with a greater portion of the bill for the multibillion-dollar Central Artery-Third Harbor Tunnel project in Boston, a topic the foundation addressed in a report last week.

Sen. Mark Montigny, D-New Bedford, the newly appointed chairman of the Senate Ways and Means Committee, didn't immediately have a comment. Neither did Rep. Paul Haley, D-Weymouth, the chairman of House Ways and Means.

But Joe Landolfi, a spokesman for the Executive Office of Administration and Finance, said the report was nothing new.

"We're glad we're not the only voice crying out here about the need for restraint," he said.

Landolfi said the state budget being readied by Republican Gov. Paul Cellucci would address most of the concerns raised by the foundation.

"We're going to be looking to rein spending in," particularly in the budget buster areas, he said.

"The tough job is holding the purse strings tight when your coffers are full," said Landolfi.

Cellucci has already painted himself as the man who will try to stand in the way this year of any overspending by the Democratic-dominated Legislature.

With the economy booming, people are making more and spending more. And the state is collecting more taxes. The debate over what to do with surplus money resulted last year in a combination of tax cuts, one-time spending on capital projects, and contributions to the state's "rainy day" fund.

Cellucci launched his first full term two weeks ago by proposing a cut in the income tax that would cost the state $1.2 billion.

Asked if the state could afford such a cut, Landolfi pointed to the 28 tax cuts signed by Cellucci and his predecessor, former Gov. William F. Weld, since 1991.

And he focused on the argument that tax cuts boost the economy, rather than on the decline in state revenues that would occur.

"I don't think there's any debate as to the impact they've had on our commonwealth. It spurs economic growth. It takes money off the table that might otherwise be spent. We think it argues more for the tax cut than ever," he said.

NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to:

Return to CLT Updates page