CLT NEWS RELEASE
October 13, 1999
Re: State Budget Agreement
Seniors get bribed, teachers union gets paid off,
taxpayers get insult added to injury
It wasn't worth waiting for.
Big deal tax cut to 5.75 percent over three years! Literally, the least they can
do.
That 5.75 percent was supposed to be temporary, Toms. And it will be, as the
Cellucci/CLT petition drive is going well. Also, the tobacco settlement belongs to the
taxpayers who paid the Medicaid bills with that temporary tax.
But instead, the extra income tax revenues are used to pay off the MTA for killing
the rollback petition in 1998. Teachers who have failed to teach need to be fired, not
retired. Good teachers should stay "for the children."
Low-income seniors will get welfare money to help them pay their property tax in
the hope that they will then vote for overrides for the teachers (see MTA paid off, above)
that will cost the taxpayers more (see insult to injury, above).
The legislative leadership is paying off the teachers union that has failed our
kids. Taxpayers must look out for their own interests by signing petitions that roll back
the income tax rate and encourage more parental choice in education.
- 30 -
After Three Months,
Finneran, Birmingham Settle Big Differences
State House News Service
October 13, 1999
www.statehousenews.com
OCT. 13, 1999 ... TH ... Legislative leaders today announced they have reached
compromise on the "major controversial" issues contained in the competing House
and Senate budget proposals, and are close to wrapping up work on the 105-day late annual
state spending plan.
While many specifics, like a bottom line, are still up in the air, the one-year
spending document will contain phased-in income and property tax cuts, increases in
prescription drug coverage fo seniors and a long-awaited plan to reform the MBTA's
finances. Legislative leaders apologize for the delay in finding common ground on
the expected $21 billion budget originally due July 1.
The announcement came after three months of negotiations between the more
conservative House Speaker Thomas Finneran (D-Boston) and more liberal Senate President
Thoma Birmingham (D-Chelsea). The afternoon press conference also ended a day of
wild speculatio and breathless anticipation among Beacon Hill regulars and may break
a logjam on dozens of other bills stalled during the prolonged budget impasse.
"On the major controversial issues, I am very happy and relieved to tell you
we have come to closure," Senate President Thomas Birmingham (D-Chelsea) said at the
press conference. "We had disagreements on deeply held principles. But that is the
nature of negotiating." He added, "We have a document that we can be proud
of."
House Speaker Thomas Finneran (D-Boston) said he was determined this year to
confront majo issues that had been neglected for too long - particularly MBTA
financing and building maintenance. "It was worth the wait, worth double the wait,
worth triple the wait," Finneran said as he and Birmingham smiled and joked with each
other and their top fiscal lieutenants. "This is a winning document. We each gained
something. Everybody gave a little bit."
While the parameters of main agreement were sketched out, the House and Senate
Ways and Means committees face another 10-14 days of negotiating smaller details that were
put on hold while Finneran and Birmingham negotiated major policy and spending issues.
Here's a look at the resolution of some of the major policy differences:
- INCOME TAX CUT: A three-year phased-in cut of the income tax to 5.75 percent from
5.95 percent. When fully implemented, the House-backed plan will save taxpayers $275
million annually. The tax cut begins on Jan. 1, dropping to 5.85 percent;
- EDUCATION FUNDING: The accord proposes $245 million for unrestricted Chapter 70
education funding. The House had proposed diverting $90 million of those funds into early
childhood education programs. The Senate insisted on, and got, the higher number;
- MORE TAX CUTS: The Senate's property tax cut for senior citizens, to be phased in
over two years. It will save low-income seniors a total of $48.5 million. Under the plan,
people 65 or older who earn up to $40,000 individually or $60,000 together and who own a
house worth less than $400,000 would get a $750 annual income tax credit. Seniors with
high rents would als qualify for the credit. That tax cut would begin on Jan. 1,
2001;
- MBTA FORWARD FUNDING: A House-backed plan to revamp the T's finances, which
Finneran said legislators "have been ducking" for 30 years. For years, the T has
spent first and then depended on state subsidies to pay for its operations. Finneran said
the "forward funding" plan is the last obstacle to a bond rating upgrade for the
state and will eventually save taxpayers millions of dollars annually;
- INVESTMENT TAX CREDIT: An extension of the 3 percent Investment Tax Credit for 4½
years. The Senate had proposed allowing the ITC to expire, while the House sought to
extend it for five years. As a compromise, the ITC will be extended, but state Department
of Revenue officials will be required to report how effective the tax credit is at
creating and retaining jobs and stimulating expansions of companies;
- PRESCRIPTION DRUG ASSISTANCE: A compromise version of a plan to help senior
citizens pay the high cost of prescription drugs. Under the deal, single seniors earning
$15,49 and couples earning $20,800 or less annually will be able to each get $1,250
worth of state assistance for lifesaving drugs;
- TOBACCO MONEY: An agreement to put the majority of the state's share of the
multi-state tobacco settlement into a trust fund. Under the deal, 70 percent of funds
received annually wil go into an interest-bearing account. That interest will then
help sustain health care programs if the economy sours. The remaining 30 percent will be
spent on tobacco-related health care programs each year;
- ASSET MAINTENANCE: A long-time House plan to spend more on the maintenance of
state-owned buildings. The House originally proposed spending $67 million on maintenance,
but no further details about the compromise were available Wednesday.
- MCAS: A $20 million Senate proposal funding additional help for students who do
poorly on the MCAS test;
- HOUSING TAX CREDIT: Speaker Finneran's plan to create more affordable housing by
granting tax credits to developers;
- TEACHER RETIREMENT: Early retirement sweeteners for teachers. Gov. Paul Cellucci
says he'll veto this item, which the administration says will cost $60 million a year.
Among those issues still unresolved are additional tax cuts for low-income
workers, funding for limited voter-approved voluntary public campaign financing, and the
levels of spending on courts and higher education.
After hearing the big-picture details, Cellucci said he was more interested in the
bottom line; Cellucci's budget proposal for the year was about $20.56 billion, about $440
million less than th expected compromise plan. Emerging from his office to comment,
the governor sounded underwhelmed, and Administration and Finance Secretary Andrew Natsios
said, "I might be even more underwhelmed once the details come out."
Natsios and Cellucci have repeatedly criticized the Legislature for spending too
much money. Cellucci said he will veto the teacher retirement provision. He and Natsios
also said the proposed tax cut is too small, and that their drive for a tax rollback
referendum will continue.
White smoke from the Senate balcony," Cellucci said as he walked out of his
office. "What we haven't seen yet is what's the bottom line on spending. It's my job
to impose fiscal discipline ... I'll have my veto pen ready."
Said Natsios: "What they seem to have done is added everything together from
both sides instead of compromising." Cellucci praised the effort to rationalize the
MBTA's budget. He also cheered the tobacco settlement trust fund and the senior pharmacy
provisions.
But, Cellucci said, the investment tax credit should be made permanent, not merely
extended, and the capital gains phase-out should continue. Cellucci's criticisms aside,
most of the people who packed the afternoon press conference appeared pleased with the
compromise plan.
Finneran described education as the "big winner." The teachers unions
agreed. Said Massachusetts Teachers Association Vice President Cathy Boudreau: "The
kids are the big winners."
MTA is still waiting to find out how much funding is allocated for higher
education, Boudreau said. The Senate proposed expanded funding, but the House left it at
last year's levels.
Kathleen Kelley, president of the Massachusetts Federation of Teachers, said her
organization is pleased legislative leaders settled on the more generous education numbers
in the Senate proposal. And with the stakes in education quickly increasing, Kelley said
the $20 million MCAS remediation grant is critical. "That's going to be a huge, huge
boon for school districts, particularly urban districts," she said.
Municipal representatives were also pleased -- and relieved -- about the full
funding of the Education Reform Act. Massachusetts Municipal Association Executive
Director Geoffrey Beckwith said money for schools is a "top priority" for local
officials.
"The ironclad guarantee for full funding of education aid is a terrific step
forward," he said, adding that municipal officials are still watching for the verdict
on how financial reforms at the T would impact their coffers.
Advocates for senior citizens cheered the inclusion of the Senate's expanded
senior pharmacy program. Phil Mamber, treasurer of the Massachusetts Senior Action
Council, said the plan wil begin to relieve "tremendous distress" among
housands of elderly people.
"It's (the budget plan) a lot better than we have now," Mamber said.
"Now, we have couples making decisions on which one will live and which one will die
because they can't afford pharmaceuticals for both."
Even the fiscal watchdog group Massachusetts Taxpayers Foundation appeared happy
with the compromises. MTF had criticized more expansive plans put forth by the House and
Senate.
After the Ways and Means committees complete their negotiations and proof-reading
of the final document, legislators must then approve it and send to Gov. Paul Cellucci for
his review. Cellucci then has 10 days to reduce or veto spending. The Legislature will
then have until the Nov. 17 end of formal sessions to take up and possibly override any
vetoes.
Birmingham said the Senate was amenable to overriding its internal rule to meet
past Nov. 17 to take up vetoes if that was necessary. Finneran said he wasn't so sure the
House would be willing to do that. Both reiterated their hope to complete work before Nov.
17.
ANALYSIS:
FY '00 Budget Pact:
Compromises Spread Policy Victories Around
By Michael P. Norton
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, OCT. 13, 1999 ... In the end, after more than three months of
impasse, they did what negotiators are supposed to do -- compromise. As a result, the
state budget deal hashed out in private by Democratic legislative leaders, while
unfinished, offers a little something for everyone, even the Republican governor.
And it left many Beacon Hill observers wondering why Senate President Thomas
Birmingham (D-Chelsea) and House Speaker Thomas Finneran (D-Mattapan) needed until the
fall to settle difference in budgets passed by both branches back in the spring.
The House got its top priority, a reform of backward and expensive MBTA finances.
House members say this is the most important reform the state can undertake, one that
waited in the wings for 30 years, and a change that will almost guarantee a state credit
rating boost. It also won a reduction in the income tax rate, over three years, from 5.95
percent to 5.75 percent. The House secured a 4½-year extension of the 3 percent
investment tax credit, and a tax credit designed to generate construction of thousands of
new affordable housing units. And it convinced the Senate to invest most of the state's
$8.3 billion state tobacco settlement share.
The Senate won the battle over education financing. The budget accord pours $245
million into the 1993 education funding formula to make good on the last year of promised
funding. Senators took a compromise on their ambitious plan to help low-income seniors
with the high costs of prescription drugs. The latter effort will be funded, along with
expanded coverage o catastrophic health problems and tobacco control efforts, with
30 percent of the tobacco pot. And the Senate also was granted a property tax cut designed
to help elderly homeowners.
What did the negotiators give up?
For one, the House and Senate were able to spend more initially because
negotiators agreed to delay the full effect of several tax cuts in the budget. The House
didn't get the MBTA reforms in the same form that they were passed. It's not clear whether
the Legislature is truly divorcing itself fiscally from the MBTA or whether the new deal
will necessitate fare hikes. The House also gave in on plans to expand statewide education
programs and early childhood education, and its plans to put all tobacco settlement
revenues in a trust fund. The Senate has not been a big fan of the MBTA reforms, but those
big changes will begin moving ahead on July 1, 2000.
The Senate also may have given up something else -- time. With the budget not
expected to be finalized for up to two weeks, lawmakers are running out of time before the
scheduled Nov. 17 closing date for 1999. There will probably be time to take up some
gubernatorial vetoes, but the Senate is concerned that House Speaker Thomas Finneran's
insistence on sticking to the legislative schedule will mean forgoing policy decisions in
favor of adhering to legislative rules Finneran said today he's willing to consider
bending, but would not commit to an extension.
Gov. Paul Cellucci got four of the six budget priorities outlined recently by his
fiscal aides. He secured a much smaller income tax cut than he wanted. The 3 percent
investment tax credit, a favorite of businesses, will be extended. Cellucci advocated, and
got expanded prescription drug assistance. And he has also been pushing for the reforms at
the MBTA.
Two Cellucci priorities were not granted. Lawmakers are going ahead with an early
retirement sweetener for teachers. The administration says the plan will cost $60 million
a year, although other experts put the cost at just under $50 million. The budget
negotiators also agreed to stick with House and Senate plans to stop the planned phase-out
of the capital gains tax. While he hasn't seen the budget - no one has because it's still
far from done -- Cellucci indicated he will likely veto both the capital gains tax freeze
and the teacher retirement reforms.
Ironically, the chief negotiators, House Speaker Thomas Finneran (D-Mattapan) and
Senate President Thomas Birmingham (D-Chelsea), seemed most animated today while
discussing a major battle ahead and one in which they will be allies. Finneran and
Birmingham ripped the $1.4 billion income tax cut (to 5 percent) that Cellucci is pushing
to put on the 2000 ballot. In the year ahead, debate over that petition will likely
replace the now-finished state budget talks. Birmingham today referred to Cellucci's
fiscal chief, Andrew Natsios, as "Nasty-os," a prelude to what will likely be a
battle royale over tax cuts and all the programs funded by tax receipts.
