Limited Taxation
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CLT Update
Monday, June 28, 1999

The heat must be getting to the pols up on Beacon Hill. It's so surreal up there I wonder if we're dealing with the same species. I am baffled when they tell us they are "representing" us.

According to the Department of Revenue, through May tax receipts were up $354 million over the same 11-month period last year, even after factoring in last year's minimal tax cut and before factoring in the $8.3 billion tobacco settlement.

So the Legislature's frantically looking to spend it as fast as they can -- then to raise even more by picking our pockets again, for even more of our hard-earned money.

When is enough enough?

They now want to reimpose Registry of Motor Vehicle fees (see today's Boston Herald editorial, below) to "get a revenue stream for [road and bridge] funds." They hope to reinstate the $35/year fee from registration renewal and $33.50 five-year driver's license renewal fee to further fund road and bridge repair.

But that would be an illegal fee!

In our 1989 lawsuit challenging the Dukakis fee increases, Ford et al. v. Secretary of Administration and Finance Edward Lashman, we pointed out to the state that the definition and proper use of fees was established in a previous case, Emerson College v. City of Boston, 391 Mass. 415 (1984).

That court then noted there are generally two types of fees:

"User fees, based on the rights of the entity as proprietor of the instrumentalities used, or;

"Regulatory fees (including licensing and inspection fees), founded on the police power to regulate particular businesses or activities."

Further, there are "common traits that distinguish them from taxes," as summarized below:

1.  "They are charged for a particular governmental service benefitting the fee-payer in a way that is not shared by others in society.

2.  "They are paid by choice, in that the fee-payer has the option of not using the governmental service and can so avoid the charge.

3.  "The charges are collected not to raise revenues but to pay back the governmental unit providing the services for its expense in providing the services."

Fees charged for licensing and registration clearly cannot then be used to improve roads and bridges within the definition of a fee. Our attorneys argued that the Highway Fund benefits non-drivers via mass transportation projects, and non-state residents who regularly use the state's roads for interstate commerce.

When the Weld administration first took office, it agreed to settle our challenge out of court, to review all fees, and to adjust them to solely the cost of providing the service, as legally required. Thus, the RMV fees were lowered or removed.

How soon the "institutional memory" of government fails ... when it is convenient or profitable to do so.

Fortunately, the taxpayers' "institutional memory," Citizens for Limited Taxation, remains fresh ... and available!

CFord-Sig2.gif (4854 bytes)

Chip Ford

To open today's New Release:
"Taxation Committee, MTF, Propose Illegal Fees

(in Adobe Acrobat Reader format -
click here   for a free copy of the program. )

The Boston Herald
Monday, June 28, 1999

Legislators plan to hit up drivers
A Boston Herald editorial

What could they possibly be thinking, these legislators intent on taking on taking more money out of the pockets of Massachusetts drivers?

Democratic lawmakers are mapping plans to reinstate the drivers' license and registration fees eliminated during the Weld administration.

You'd think that with state coffers filled to overflowing, no lawmaker of sound mind would go near a proposal to raise fees paid by nearly all residents of all income levels. It matters not, after all, whether you're driving a 9-year-old clunker or a new Mercedes; everyone would take the same hit. Registration renewal would be set again at $35 a year and license renewals at $33.50 for five years.

That burden on drivers seems lost on Senate Transportation Committee Chairman Robert Havern (D-Arlington), who said, "We plan to get a revenue stream for [road and bridge] funds . . . It makes it a much more logical process."

Well, one man's "revenue stream" is another man's tax or fee, but then again, they do think a little differently on Beacon Hill.

And so that $100 million in "lost income" to the state also happens to be $100 million in money now residing in the pockets of the state's drivers. Is that so very wrong? Well, you would think so to hear the yammering of legislators who can't wait to get their hands on yet another pool of money no longer theirs to spend.

The reason, they allege, is that the money could go for local roads and bridges. Well, so could any other pool of $100 million. But that might mean cutting back on some legislators' pet projects and we can't have that, now can we?

Gov. Paul Cellucci has said he'll veto any reimposition of the fees. He remains on the right side of this one. Any attempt to bring back license and registration fees ought to bring down the wrath of every driver in the state on those legislators brazen or foolish enough to vote for it.

The Telegram & Gazette
Worcester, MA
Saturday, June 26, 1999

Tax rollback
A Telegram & Gazette Editorial

Ballot initiative is the only route. Interest groups with a stake in keeping the gravy train of Massachusetts tax dollars rolling are lining up to oppose Gov. Paul Cellucci's promise to take his $1.4 billion tax cut proposal to the ballot box.

The latest group to threaten all-out war on Bay State taxpayers is the Tax Equity Alliance for Massachusetts, an inveterate advocate of ever higher state spending that never met a tax increase it didn't like.

Cellucci wants to cut the state income tax from 5.95 percent to 5 percent, as the Legislature pledged to do when it passed a "temporary" increase to bail out the red ink left behind by the Dukakis administration.

This spring both the House and Senate rejected the idea and the governor pledged to put the tax cut on the ballot in the fall of 2000.

TEAM led the coalition of public employees unions, vendors and providers that defeated an income tax rollback in the depths of the 1990 fiscal crisis, so they know the ropes.

This time around, however, the state has massive tax surpluses from the booming economy, and -- despite government spending growth several times the rate of inflation -- taxpayers' cash continues to pile up in state coffers.

There is no excuse for sitting on the surpluses -- or, worse, frittering them away -- instead of returning the money to the taxpayers who anted it up.

The governor should press ahead with his grass-roots campaign to force the Legislature to make good on the promises it made more than a decade ago.

State House News Service

June 25, 1999


CAPITAL SUPP BUDGET ... Dueling versions of how to dispose of yet another budget surplus are also in a House and Senate conference committee and will likely surface at about the same time the fiscal 2000 budget is unveiled. Both branches, and Gov. Cellucci, agree that most of the surplus will be spent on capital projects the state would otherwise pay for with borrowed money. The House bill calls for the state to spend $243 million, including $80 million for statewide road and bridge projects. In the Senate's $458 million bill, there is $275 million allocated for those projects - mirroring the infrastructure request of Gov. Cellucci. Both branches devote significant dollars to library projects but then branch off from each other with dueling items for favorite college, court and environmental projects.

REVENUES ... The House and Senate have loaded up capital projects bills to spend the anticipated FY 1999 surplus, but state finance officials won't know exactly how much is available to spend until after the fiscal year ends Wednesday. The effects of last year's major tax cut package are showing as actual tax receipts are surpassing but no longer wildly exceeding estimates - a scenario that contributed to last year's $1 billion surplus. The fiscal year closes out Wednesday, and following a lapse to close out payroll issues, the numbers will become more exact. Look for the Department of Revenue late this week to issue June and year-end tax receipt figures that will paint a more vivid picture of state finances. Through May, tax receipts were up $354 million over the same 11-month period last year. The state's biggest money generator, the income tax, was up $38 million, or just .5 percent. The size of the surplus may well determine how many projects survive as lawmakers advance the surplus spending bill. And on Monday, the Massachusetts Taxpayers Foundation plans to release an analysis of major quandaries facing House and Senate conferees. The MTF has spent the past several months asking how the state can possibly cut taxes to the degree sought by Gov. Cellucci, grow accounts for education and health care programs and, at the same time, spend surplus dollars on projects for which the state would otherwise have to borrow.

OTHER FY 1999 SUPPLEMENTALS ... Legislators and Gov. Cellucci have already approved bills that add to the bottom line of this year's budget in order to keep the state's computers on track toward Y2K compliance ($20 million) and to permit Department of Environmental Management pools to open early ($145,000). Another supp budget that became law appropriated more than $130 million to shore up accounts that were running dry as the end of this fiscal year approached and to fund collective bargaining agreements. Both branches will have to approve yet another supplemental budget before the books officially close on the fiscal 1999 year.

LEGISLATIVE PRIORITIES ... Most hope the fiscal 2000 budget will reach Cellucci by the third week of July. Lawmakers will then act on other matters deemed pressing while they await Cellucci's vetoes and decide which ones they will attempt to override. Meanwhile, House and Senate leaders have not yet announced what other major bills they hope to move before taking a summer recess in August. Backers of a hike in the minimum wage here and an overhaul the managed care industry hope the House will act on those bills in July, and the timing of action on other bills is critical to protect promised federal dollars or to keep important projects on track. They include proposals to toughen laws applied to sex offenders and drunk drivers and to place a massive new transportation bond authorization on the books. The sex offender bill that has already cleared the House may even surface for Senate action this week. While most eyes are trained on the above bills and on the conference committee struggling with the fiscal 2000 budget, another batch of negotiators are working on widely different versions of legislation to spend this year's leftover money once fiscal 1999 ends at midnight Wednesday.


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