Limited Taxation
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CLT Update
Thursday, October 14, 1999


"Finneran and Birmingham ripped the $1.4 billion income tax cut (to 5 percent) that Cellucci is pushing to put on the 2000 ballot."

And so the Legislature finally has produced a budget agreement, or at least Birmingham and Finneran have. It might be over 100 days late but as The Best Legislators Money Can Buy say, "Better late than never, fool."

The State House News Service reported (below) that "... most of the people who packed the afternoon press conference appeared pleased with the compromise plan." As you can see from CLT's news release (below), we were not among them.

In a dog-bites-man report, the SHNS noted that the teachers union is quite satisfied. They get their outrageous $60 million taxpayer-funded early retirement package, $245 million in additional education spending, and another $20 million to help pass students who failed to learn the first time we paid for their education. This brings the state's total education budget to $2.8 billion. "The kids are the big winners," said Massachusetts Teachers Association Vice President Cathy Boudreau. Yeah ... especially the kids of the teachers' parents -- them.

Meanwhile, we taxpayers who are being overcharged over a billion dollars every year under the "temporary" income tax rate increase of 1989, will get a ridiculously insignificant $66 million tax cut next year ($250 million when the rollback is "fully implemented" all the way down to 5.75 percent -- in three years, no less!). That amounts to $60 a year for a family of four earning $42,300. And we'll be reimbursed not one cent of the $8.3 billion tobacco settlement taxpayer reimbursement.

But what sums it up and puts the official stamp of absurdity on it is, according to the State House News Service: "Even the fiscal watchdog group Massachusetts Taxpayers Foundation appeared happy with the compromises."

When is Truth in Advertising going to be enforced against those frauds at the so-called Massachusetts Taxpayers Foundation? "Foundation" ought to at least be changed to Fraud!

If you haven't gotten your petition package yet, you've only got 34 days left before the absolute deadline! Click below while you still have time to save yourself from rapacious greed and limitless self-interest -- or you'll have nobody to blame but yourself!

CFord-Sig2.gif (4854 bytes)

Chip Ford

PS. Thanks to those of you who are more than pulling your own weight getting signatures already!

Get your petition package -- while there is still time!

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

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 4 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.


FY '00 Budget Pact:
Compromises Spread Policy Victories Around

By Michael P. Norton

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 4-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.

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