Limited Taxation
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CLT Update
Thursday, June 3, 1999

The Salem Evening News

August 8, 1989

Senator says income tax hike will be approved
A News staff report

... The plan, drafted by House leaders, would raise $793 million by increasing the state income tax by 15 percent, or from the current 5 percent to 5.75 percent, over an 18-month period.

The revenue would be used to close a $375 million fiscal 1989 budget gap, to pay hospitals and nursing homes $484 million in past Medicaid bills, and to compensate hospitals for $50 million lost through a shortfall in federal Medicare funding. ...

"If we let them get away with this, they won't pay their bills next year and they'll be looking for a tax increase again," [Barbara] Anderson, director of Citizens for Limited Taxation, said in a televised interview. ...

The above excerpt came from a 1989 news account of the proposed "temporary" income tax rate hike, a decade ago. What's ironic is that Barbara was right, as usual: but instead of having to come back for another tax increase, the Legislature refuses to keep The Promise and roll back the last one.

Even more galling is that the Legislature in fact doesn't need to impose another tax increase. For more "walking-around money," the Beacon Hill pols intend to simply raid the tobacco settlement fund and steal the taxpayers' reimbursement for past Medicaid costs. [See today's Boston Globe report, below]

More galling, because that $484 million unpaid Medicaid bill [noted in the 1989 report] was used as the excuse to impose the "temporary" income tax rate hike a decade ago!

How many times must we taxpayers pay that bill?

The Boston Globe (below) reports "a raging debate over how Massachusetts should spend the estimated $300 million annual income..." How to spend it?

Spending it should not even be an option.


This political greed has gone from simply disgusting to outright obscene. Over 200 years of state budgets under $10 billion but it took only the last dozen years to double state spending to over $20 billion, and still ... more is never enough. Still the state has "unmet needs" and "deferred projects" -- and it always will.

Today's Boston Herald editorial's got it exactly right!

Chip Ford --

The Boston Herald
Thursday, June 3, 1999

Broken promises litter Beacon Hill
A Boston Herald editorial

Here we go again into the height of the budget season with the Massachusetts Legislature preparing to break more promises.

Senate President Tom Birmingham is not just planting his feet in concrete against Gov. Paul Cellucci's call for a return to the 5 percent income tax rate. Birmingham and his followers won't even accept the small step the House wants to take to lower the rate from 5.95 percent to 5.75 percent.

Not that the House budget deserves a gold star. Like the Senate, the House wants to keep a capital gains tax on the sale of long-term assets, this time with a 2 percent rate.

In our high-cost state, a risk-taking entrepreneurial culture is the foundation of whatever prosperity we enjoy. Risk must be rewarded, and that's why the Legislature agreed five years ago to phase out the capital gains tax. Nothing has changed to justify what Cellucci rightly calls "pulling the rug" out from under investors who've put major sums into Massachusetts on th  assumption that the Legislature would keep its promise to drop the capital gains rate to zero.

But the Legislature is used to breaking promises. When the income tax rate was raised from 5 percent to 5.95 percent a decade ago, the taxpayers were promised that it was a "temporary" measure.

The Legislature is not against a few tax cuts, you understand - just as long as they can be used to reward favored voters.

There is no end to the dreaming up of such favors for (just to mention some others favored by the Senate and the House) renters, indebted students, people caring for elderly parents and elderly low-income homeowners. It's a far better aid to extending the economic expansion to let all earners keep more of what they earn.

Cellucci, who vows a veto of the capital gains provision, plans to lead a ballot fight in 2000 to force through a 5 percent income tax rate. It can't come soon enough.

The Boston Globe
Thursday, June 3, 1999
Business Section

Bill unveiled to aid senior drug costs;
Tobacco settlement would fund proposal

By Alex Pham, Globe Staff

State Senate leaders yesterday unveiled a plan to give relief to seniors facing skyrocketing prescription drug costs by earmarking part of a $7.6 billion windfall from the national tobacco settlement for the cause.

The proposal, which was well received by tobacco control and health care advocates, also called for the state to put aside at least half the settlement in a trust fund to pay for future programs. The plan, presented by Senators Mark Montigny and Richard Moore and Senate President Thomas Birmingham, is expected to be part of the Senate's budget proposal, which will be released later this week.

The move by Senate leaders is the latest installment in a raging debate over how Massachusetts should spend the estimated $300 million annual income resulting from the state attorney general'  settlement of a lawsuit against tobacco companies to recover money the commonwealth spent to treat tobacco-related illnesses.

The legislative House chamber in April proposed setting aside the full proceeds in a trust fund; only the interest income would be used for health care and antitobacco programs. Public healt  and antitobacco lobbyists were disappointed with the House plan because interest income in the first few years would be minimal.

"They came up with a plan on how not to spend the money," said Judy Meredith, a lobbyist for Health Care For All, a patient advocate group. "We were very disappointed that they had not spent any of the principal on any of the urgent health care and prevention needs of today."

Governor Paul Cellucci made his own proposal in January, offering to spend all of the proceeds on health care programs, but no new money in tobacco use prevention. Instead, the governor asked that $500,000 be spent to evaluate the effectiveness of the state's current $31.5 million-a-year tobacco prevention efforts. The omission infuriated antitobacco lobbyists, who said the move was "shocking."

By contrast, the Senate proposal appeared to appease most special interests, from advocates for seniors and AIDS patients to antismoking campaigners.

"We're thrilled. It's the best of both worlds," said Allison Staton of Health Care For All. "It contains the fiscal cautiousness of the House proposal, and it takes advantage of the funds to address urgent needs now."

The Senate plan, among other things, calls for:

  • A $30 million increase in the state's Senior Pharmacy Program, which helps low-income seniors pay for drugs.
  • The creation of a $40 million program that would help seniors with extraordinarily high prescription drug bills.
  • A $33.5 million increase in the state's tobacco control programs, including $6 million earmarked toward programs aimed at minority populations who may be disproportionately affected by tobacco-related diseases.
  • An additional $10 million to allow more individuals who are HIV-positive to qualify for Medicaid coverage.
  • A $1.5 million allocation for medication for low-income children.
  • A $5 million grant to community health centers.
  • A $5 million expansion of school-based health centers.

The centerpiece of the proposal, however, is the program to expand prescription drug subsidies for senior citizens. The proposal by Montigny, a Democrat from New Bedford and chairman of the Senate Committee on Ways and Means, and Moore, a Democrat from Uxbridge and cochairman of the joint Health Care Committee, would double program spending to $60 million a year. It would also double maximum benefits from $750 to $1,500 a year, allow seniors whose income are below 200 percent of the federal poverty level - up from 150 percent - to qualify, and create a program to assist seniors whose drug bills are "catastrophic."

Senior advocates praised the proposal, though they said the details remained somewhat sketchy.

"This proposal spells important relief for low-income seniors," said Geoff Wilkinson, executive director of Massachusetts Senior Action Council.

The House last month passed its plan to subsidize seniors who are struggling with their prescription drug expenses, but senior advocates were unhappy with the proposal, which offered more modest assistance than the Senate plan.

Tina Cassidy of the Globe Staff contributed to this article.

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