Limited Taxation
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CLT Update
Wednesday, January 27, 1999

The Governor's Proposed Budget:
An Analysis by Barbara Anderson

The Governor's news release, obtained today at his press conference, carries this headline:

"Cellucci, Swift Budget Calls for Fiscal Restraints, Income Tax Cut. $20.4 Billion Budget Boosts Education Funding, Toughens Welfare Requirements."

I just can't get past the words "fiscal restraints" and $20.4 billion in the same headline.

The press release states that "total spending, including off-budget transfers, represents a 2.5 percent increase over anticipated Fiscal Year 1999."

This is the apples to oranges comparison that was used during the Dukakis years -- they compare the final FY'99 budget to the proposed FY2000 budget, and it seems a small percentage, every year. But by the time supplemental budgets are added through the year, the budget grows. So you have to compare the proposed budget with the proposed budget, or the final budget with the final budget, to determine the real annual increases.

Follow this, it's interesting. The final FY'97 budget was 17.86 billion. The final FY'98 budget was $18.89 billion. The Governor's proposed FY'99 budget last January was $19.06 billion, appearing to be an increase of only $170 million over FY'98. The FY'99 budget eventually passed by the Legislature was $19.5 billion.

But the final FY'99 budget, after supplementals, is estimated at $20.06 billion. So the FY'99 budget increase that originally looked like $170 million was in fact an increase of 1.17 billion.

So, the Governor's proposed $20.4 billion budget seems like a $340 million increase over FY'99, but in fact, after the Legislature gets through with it, and supplementals are added through the year, it could be ... anything.

The budget does allow for the beginning of a phase-in of the income tax rollback: the FY 2000 revenue impact would be $219 million. This is offset by the money taxpayers will not be getting from the tobacco settlement, which the Governor is planning to spend, even though it was touted as a reimbursement for the money we taxpayers paid for tobacco-related illnesses.

Incredibly, legislative leaders are accusing the Governor of trying to use the tobacco money for his income tax cut! In fact, he's putting the tobacco money into a "health fund" and taking the tax cut from a tiny part of the estimated $300 million (his estimate) -- one billion dollar (our estimate) surplus.

Fiscal restraint, my assets.

Barbara Anderson --

Associated Press
Wednesday, January 27, 1999

Birmingham calls Cellucci's budget plan "sleight of hand"
By Martin Finucane

BOSTON - Senate President Thomas Birmingham charged Wednesday that Gov. Paul Cellucci was practicing "sleight of hand" in his proposed state budget for next year.

Birmingham, D-Chelsea, said that, under the Republican governor's proposal unveiled Wednesday, as much as $100 million from the state's settlement with the tobacco industry would be used to pay for Cellucci's proposed income tax cut, which would cost $226 million in the first year.

Governor's spokesman Jose Juves defended the proposals for spending from the tobacco settlement, saying, "I think Governor Cellucci stepped up to the plate and committed every single penny of the tobacco settlement to health care. That money is going to go towards new programs or expansion of health care programs."

Cellucci, at a Statehouse news conference, outlined a $20.4 billion budget that rises to $20.6 billion when spending is included from a new fund set up to hold the money from the state's legal settlement.

Cellucci last year proposed a budget of about $19.4 billion.

The new proposed budget might seem to be universally likable, including increases for education, increases for early childhood education programs, increases in health insurance coverage for lower-income people, measures to control state spending, and the first step of a cut in the income tax.

"We are making sure this state can withstand whatever challenges, economic and fiscal, that might occur in the years ahead," Cellucci said.

But leaders in the Democratic Legislature were quick to offer criticisms.

Birmingham argued that Cellucci's proposal for spending from the tobacco settlement trust fund included $100 million in items that should have been funded from the regular budget.

That took pressure off the regular budget and allows Cellucci the ability to propose a tax cut, Birmingham said.

"I don't think the tobacco fund should be raided in that way," he said.

While disagreeing with Cellucci's bookkeeping, Birmingham also was cool to the result: the tax cut proposal that Cellucci estimated would cost $1.4 billion a year when fully phased in.

"I don't have a crystal ball. I don't know where the economy is going to be next year," Birmingham said.

To commit to a tax cut would be "less than responsible," he said.

Asked if the state could somehow afford a tax cut this year, Birmingham said, "We're a long way from being able to give you any number, if there's a number at all."

House Ways and Means Chairman Paul Haley, D-Weymouth, offered a different set of criticisms of the Cellucci budget, saying he believed the state needed to do more to fix up its crumbling buildings and roads and bridges while economic times are good.

"It is very close to being a miracle that we have had this type of economic surge for so long," he said. "When it's timely to make these repairs, you do them."

He also pointed to the decline in federal assistance for the mammoth Central Artery-Third Harbor Tunnel project.

Like Birmingham, Haley was lukewarm on tax cuts, saying, "I am increasingly concerned about how we would be able to support a $1.4 billion tax cut over three years."

Anti-tax activist Barbara Anderson criticized the growth in the budget.

"If they want to do fiscal restraint, they should simply do fiscal restraint and come in with a budget that does not exceed inflation," she said.

Anderson, however, lauded the tax cut proposal, saying, "There is no way to restrain government spending unless you take the money away."

Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-backed fiscal watchdog group, calculated the increase in the Cellucci budget proposal at about 5.5 percent.

"It's not alarming, but it is on the high side," considering inflation has been hovering at about 2 percent, Widmer said.

Once the Legislature mixes in its priorities, Widmer said he believed the ultimate budget increase could reach 7 percent.

He also said that, given legislative leaders' concerns about the possibility of economic troubles ahead, "The prospects are slim for any significant tax cut."

The release of the state budget for fiscal 2000, which begins July 1, is the first step in the legislative dance. The House and Senate now will release their budgets and then a compromise version will emerge and head to the governor's desk for his signature, hopefully by the beginning of July.

Highlights of Cellucci's budget proposal

Here are some highlights of Gov. Paul Cellucci's state budget proposal for fiscal 2000, which was released Wednesday.

  • Total cost: $20.4 billion or $20.6 billion with tobacco settlement trust fund spending included, compared with an original submission by Cellucci last year of $19.5 billion.

  • Proposes spending $3.5 billion on K-12 education, which includes a $260 million increase in aid to local schools. The total number is up by $1.6 billion since the 1993 education reform law was passed.

  • Eliminates county governments in Plymouth and Bristol.

  • Calls for a cut in the income tax from 5.95 percent to 5 percent that would be phased in over three years and eventually cost $1.4 billion.

  • Sets up a tobacco settlement trust fund and calls for spending of $200 million for new or expanded health care programs, including programs to expand health care coverage for lower-income people, to help the mentally retarded, and to help the elderly pay for prescriptions.

  • Toughens welfare work requirements, but includes increased spending for child care for welfare mothers.

  • Proposes new measures to control state spending, including requiring a spending cap, five-year estimates for new programs, and a two-thirds vote before the state's "rainy day," or stabilization, fund can be raided.

  • Calls for consolidating the Department of Environmental Management and the Metropolitan District Commission.

Associated Press
Wednesday, January 27, 1999

Welfare administration budget goes up, caseload goes down
By Leslie Miller

BOSTON - Massachusetts may be spending less taxpayer money on welfare recipients, but it's spending more of it than ever on the bureaucracy that administers the program.

Since Nov. 1, 1995, the number of welfare recipients in Massachusetts has dropped by 35 percent. The cost of running what is now called the Department of Transitional Assistance, however, has increased from $116 million in 1995 to $134 million this year.

On Wednesday, Gov. Paul Cellucci proposed giving another $4 million to the DTA -- a 14 percent increase since the state's tough welfare reform bill took effect a little over three years ago.

Cellucci said the state needs to spend more money to help welfare recipients find work. Many lost their cash assistance in December, when the state's two-year limit first kicked in.

"We're not just cutting people off without providing help, we're providing a roadmap in how you should do it," Cellucci said.

Although the caseload fell from 91,344 on Nov. 1, 1995, to 58,961 at the end of December, the number of caseworkers has not dropped correspondingly.

On Nov. 1, 1995, there were 1,199 full-time caseworkers. By the end of December, there were 1,087 -- a 9 percent decline.

"While the caseload has gone down, the role of the caseload workers has changed dramatically," said Dick Powers, DTA spokesman. "Since 1995, that role has changed to that of job placement facilitator, so their jobs have changed dramatically over the years."

Each case worker deals with fewer cases, but puts much more time into job counseling, he said.

"That's not true," said Grace Ross, executive director of Alliance for Women, a Framingham-based advocacy group.

"What is true is that they put in a whole bunch of regulations when they passed the welfare reform, to punish people, and they all take a lot more time because all these people have to fill out all this paperwork that they didn't have to fill out before," she said.

Since welfare reform, the department must produce monthly data on caseloads, benefits and cost-savings.

Melissa Howard, a Fall River college graduate prone to seizures, has been on welfare for 11 years. She sees no difference in her caseworker since welfare reform.

"My social worker doesn't help me in the least bit," said Howard. "She acts like my welfare check is coming out of her pockets."

Howard said the only job assistance she receives is from the Department of Employment and Training.

But a newly published book, "Is Welfare Working? The Massachusetts Reforms Three Years Later," argues the DTA's front-line workers' jobs have changed dramatically. Instead of enforcing eligibility, they are now job coaches, said the book's co-author, Thomas J. Main, an assistant professor at Baruch College.

"Welfare reform was a tremendous earthquake for the department," he said.

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