CITIZENS
for
Limited Taxation
Post Office Box 408     Peabody, Massachusetts   01960     (508) 384-0100
E-Mail:  cltg@cltg.org       Web-page:  http://cltg.org

CLT Update
Friday, January 29, 1999

Now we really do know who's in charge on Beacon Hill, and it isn't the senate president. This legislative session, instead of House Speaker Tom Finneran futilely trying to play us for suckers, it's Tom Birmingham's turn to be the dummy. This time it's Birmingham who insists that there never was a promise made that the income tax rate hike would be only temporary.

Whether it's a ridiculous claim of "fiscal restaint" while introducing an exploding state budget or denying the obvious in the face of exposure, the Beacon Hill Cabal is playing us for suckers and fools.

Chip Ford --

Thanks to those who contacted Rep. Brian Cresta to "clamor" for the income tax rollback. Between the e-mail messages and the phone calls generated by our mailing to his constituents, he called to tell me that he can now honestly say that he has heard a clamor, and will be fighting hard for the tax cut.

He then asked if we could see to it if other legislators hear the clamor too. We must be prepared to generate calls when the issue comes up on the Hill, but this week we saw a media item that gives us someone else to practice on.

The following AP report states:

"House Ways and Means Chairman Paul Haley, D-Weymouth, wasn't very enthusiastic about tax cuts, either.

"'I am increasingly concerned about how we would be able to support a $1.4 billion tax cut over three years,' he said.

"'I don't know that the public is clamoring for a tax cut right now,' he also observed."

Barbara Anderson --

Click to Send State Rep. Haley an Email Message:
Representative Haley's State House Office Phone Number:		(617) 722-2990

Associated Press
Wednesday, January 27, 1999

Momentum slowing for tax cuts on Beacon Hill
By Martin Finucane

BOSTON (AP) - Tax cut proposals appear to be losing momentum on Beacon Hill this year.

Republican Gov. Paul Cellucci proposed a $1.4 billion tax cut in his budget unveiled Wednesday, but Democratic legislative leaders were decidedly cool to the idea.

"One of the sticking points will be the income tax bit," Cellucci acknowledged at the news conference where he summarized his phone-book-sized spending plan.

Senate President Thomas Birmingham, D-Chelsea, first of all, disputed Cellucci's assertion that lawmakers promised to lower the 5.95 percent income tax rate to a 5 percent after the tough fiscal times of the early 1990s were over.

"No such promise was made. ... No such representation was made," Birmingham said at a news conference called to respond to the budget.

Birmingham also said he preferred to cut taxes through increases in exemptions, rather than through rate cuts.

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

Asked if there was a chance there would be no tax cut ultimately produced by the Democratic-dominated Legislature, Birmingham said, "Sure, there's always that possibility."

Birmingham's statements were a far cry from last year when he had already said by early January that he could envision "hundreds of millions" of dollars of tax cuts.

By early February of last year, Birmingham had stepped forward with a proposal for $443 million in tax cuts.  It doesn't seem likely this February.

House Ways and Means Chairman Paul Haley, D-Weymouth, wasn't very enthusiastic about tax cuts, either.

"I am increasingly concerned about how we would be able to support a $1.4 billion tax cut over three years," he said.

"I don't know that the public is clamoring for a tax cut right now," he also observed.

To contribute to the bipartisan "clamoring"
you can reach Rep. Paul Haley (D-Weymouth)
by clicking below.

or by calling:  (617) 722-2990

The state enacted major tax cuts last year, both temporary and permanent, that totaled up to $1 billion and were trumpeted by Cellucci on the campaign trail.

Cellucci had urged the cuts, but they were ultimately designed to the liking of the Legislature, which has a veto-proof Democratic majority.

What's different this year?

The lawmakers say they're worried about the possibility the economy will go bad, they point out that last year's cuts haven't hit fully yet, they point out that the state is seeing major cuts in the federal contribution to the mammoth Central Artery-Third Harbor Tunnel project.

Haley, particularly, argued that the state should prepare for tough economic times like a ship battening down before the storm.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-backed budget watchdog group, said he felt the prospects were "slim" for a significant tax cut.

Still, Cellucci said, he believes he can fund the budget, adding some new programs and, at the same time, begin to cut taxes.

Past estimates have put the value of such a tax cut at $600 to the average family with two working parents.

The tax cut is "right for Massachusetts, right for our economy, and right for our families," Cellucci said.

State House News Service
www.statehousenews.com
January 27, 1999

Legislative Leaders:
Gov's Buget Based on Unrealistic Expectations

JAN. 27, 1999 ... EJB ... Political leaders charged Gov. Paul Cellucci with "budgetary sleight of hand" this afternoon following his release of the largest budget proposal in the state's history. The $20.56 billion budget drew a sharp rebuke from House Ways and Means Chairman Paul Haley, who warned that instead of trying to meet "unrealistic expectations," the state should deal with deferred capital needs and begin preparing for an economic downturn.

"My initial reaction when they suggested they are vicious fiscal watchdogs was - I don't see the bite," Haley said. "In fact, as you cut through the wrapping of the spin that this budget was presented, on clear analysis, I think you can see there are some real concerns as to how, without the stock market continuing to set records for the foreseeable future, that we can sustain all this."

Haley said the governor "wants to have it both ways" by promising an across-the-board tax cut, while proposing dozens of spending increases, absorbing a huge cut in federal highway funding, and paying for the most intensive phases of the $10.8 billion Big Dig.

"I'm increasingly concerned about how we would be able to sustain a $1.4 billion tax cut over three years when there's a suggestion that we can improve education, afford better health care access for all of our citizens, and provide a day care benefit for all those we are forcing off welfare," Haley said. "These have enormous spiraling costs into the future, and to suggest we can do all that and cut taxes and still absorb the hit we've taken from the federal government is just unrealistic."

Senate President Thomas Birmingham and his Ways and Means Chairman Mark Montigny joined the budget-bashing, claiming Cellucci "raided" the tobacco settlement fund for about $100 million to free up enough money for an income tax cut. The $100 million, they claim, was put toward programs that have historically been paid for out of the general fund.

"They (the public) expect the tobacco settlement to be ... a huge windfall that will be used exclusively to expand health programs," Montigny said. "The numbers that we've looked at, at least to date, show that a major portion of that is supplanted and used elsewhere."

Cellucci says the tobacco settlement money will be used only for health care programs.

Birmingham disputed Cellucci's claim that he fully funded the final installment of the Education Reform Act. The Senate president said the budget siphons off $30 million by using reform funds to pay for programs that have been funded separately in the past - such as MCAS remediation and charter school reimbursement.

For instance, Birmingham said, "His claim that he's got a $20 million expansion for MCAS remediation is not true. What the governor has done is take $20 million that otherwise would go to education reform and pushed it over to MCAS. I think you can make a case that that (and moving charter school reimbursements) represents a $30 million diversion of Chapter 70 Education Reform money."

Barbara Anderson, executive director for Citizens for Limited Taxation and Government - typically a Cellucci fan - was livid this morning minutes after seeing the new budget plan. She called it "out of control" state spending and blasted Cellucci for talking about fiscal restraint, while proposing a budget that's $900 million fatter than last year.

"The governor's budget shows the need for the governor's tax cut," she said. "The only way to restrain state spending is to cut back on taxes - to not give them the money in the first place. The income tax rate should have been rolled back years ago, and they should roll it back now immediately to keep themselves from spending again."

Anderson darkly alluded to the days of former Gov. Michael Dukakis' "Massachusetts Miracle," when economic good times prompted spending frenzies which then could not be sustained when the recession of the early 90s hit. Politicians are "addicted" to spending, she said, and can't be trusted to control themselves.

"All politicians are like the person writing on the bathroom wall - 'stop me, stop me, before I kill again,'" she said.  "They're begging us to stop them before they spend it all because they know they're going to be in trouble, and yet the Legislature can't bear to give up even the tiny amount of money that would come from the income tax rollback. And even the governor can't bear to give up the reimbursements from the tobacco companies, which should be returned to the taxpayers who pay the Medicaid bills in the first place."

Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the foundation supports the fiscal safeguards the budget proposes, but he echoed Haley's concerns about unsustainable budgetary growth, coupled with deferred maintenance and capital spending.

"The budget appears to not take advantage of the strong economy and revenues to address the capital problem - far and away our number one problem," he said. "The state doesn't have enough money to both live within its $1 billion bond cap, pay for the Central Artery with major federal cutbacks, and, at the same time, invest in a long list of important capital initiatives."

In contrast to the quick round of denunciations from political types, the constituencies that stand to get the goodies appeared to be pleased with Cellucci's proposal.

• Massachusetts Teachers Association - Spokesperson Laura Barrett said, "Our preliminary analysis is we give a thumbs-up to his education spending priorities. Many of them mirror our education spending priorities, with an emphasis on reducing class size, early child education and school modernization." The teachers union is concerned, however, about the proposed income tax cut, the plan to eliminate the cap on charter schools, and an outside budget section calling for a study on establishing charter-type schools within the public higher education system.

• Coalition to Adequately Fund and Improve Human Services - Michael Weekes, executive director of the Massachusetts Council of Human Service Providers, said, "The $15 million salary reserve continues the commitment of the Cellucci administration to address the unprecedented hiring and retention issues that the industry faces in this strong economy. This is an initial positive step to begin the budget process and debate."

• Environmental League of Massachusetts - Amy Lucky, director of the Massachusetts Environmental Collaborative, said, "We commend the governor for the increases for a variety of land use and protection programs. We particularly applaud the funding included for the biodiversity protection and the agricultural preservation programs."

• Home Health Care Association of Massachusetts - Patricia Kelleher, executive director of the association, said, "(We) are pleased the governor has recognized the crisis and stepped up to the plate and committed state funding to compensate for the federal Medicare policy changes. The additional $20 million included in the budget will allow home health agencies to continue to provide services to the frail elder population in Massachusetts who are no longer covered under Medicare."

• AIDS Action - Larry Kessler, executive director, applauded the expansion of Medicaid coverage and said, "This state has done an outstanding job of reducing AIDS mortality well below the national average. With Medicaid expansion, we'll be able to bring comprehensive health care and life-extending drugs to poor people with HIV before they get deathly ill."

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