A PROMISE TO KEEP: 5%
A Ballot Committee of Citizens for Limited Taxation

 

State House News Service
Friday, October 20, 2000

ADVANCES
(Week of Oct. 23, 2000)

"What a difference a decade makes"


STATE HOUSE, BOSTON ... What a difference a decade makes. The last time voters were asked if they wanted to roll back the income tax was 1990 and they answered with a resounding "no." If current polls are accurate, voters ten years later will just as resoundingly answer "yes" to the same question.

The ballot proposals -- Question 4 in 2000 and Question 3 in 1990 -- are not identical but are very similar.

The 1990 initiative would have rolled back the income tax - along with several other tax and fee hikes raised in the late 1980s to bail the state out of a fiscal hole. It was rejected by a 60-40 percent margin, with 1.4 million voting against and 935,000 in support. If the polls in 2000 are accurate, the electorate this fall will reverse itself and vote in the same numbers to reduce the income tax by 14.5 percent over three years.

There are several reasons for the change of heart that has apparently hit Bay Staters. By 1990, the robust economy that Gov. Michael Dukakis made the linchpin of his 1988 presidential campaign had unraveled. National attention on the state's sagging fiscal fortunes was an embarrassment and lawmakers had spent 1989 and 1990 debating the need to raise taxes and cut spending as budget deficits grew and grew. In the end, the taxes hikes were approved and pre-election debate swirled around the campaign to remove them from the books.

With continuing daily headlines about the state's precarious fiscal health, opponents of the tax cuts then were able to make their case that government services couldn't absorb deep cuts and the state couldn't afford any more fiscal chaos. Even though voters were already feeling the pinch of the new taxes and fees and William F. Weld was campaigning for governor with anti-tax fervor, Weld was elected while the proposition he championed went down in flames.

While major budget cuts were still required, the question's failure made it easier to make fiscal ends meet and meant that a fiscal 1991 budget shortfall approaching $1 billion could be eliminated. The state had to borrow $1.4 billion to do that. Gov. Weld and Lt. Gov. Paul Cellucci spent years reissuing the call to send the income tax rate back to 5 percent where it resided before 1989 but the effort didn't become serious until the second half of the '90s, after the state had paid off the bonds issued to retire the 1990 deficit.

In addition to retiring the "deficit bonds," the growing prosperity during the 1990s allowed for dozens of taxes to be lowered or eliminated. Even the income tax has been shaved down to 5.85 percent. The flurry of tax cuts already on the books is an argument used by those opposing any further cuts and intent on retiring debt and further shoring up the state's reserves to protect against future economic reversals.

But Gov. Cellucci and others now fighting to drop the income tax rate all the way back to 5 percent point to yet another budget surplus -- this one totaling a billion dollars expected when this fiscal year ends in June of 2001. Question 4 would take $1.2 billion from the revenue stream by the year 2003. But rather than confronting a billion dollar budget deficit as it did in 1990, the Commonwealth this year may have a surplus of that size with no signs of the economy cooling significantly.

There is no gubernatorial race this year and Gov. Cellucci is dividing his time between working for GOP Gov. George W. Bush of Texas and campaigning for Question 4.

He and other backers of the tax cut may have been frustrated when a similar question was ruled off the 1998 ballot but that loss may, in fact, have worked to their advantage.

Barbara Anderson of Citizens for Limited Taxation, a force in tax-cutting efforts of the past two decades, said labor unions may have inadvertently done tax-cutters a favor two years ago by convincing the courts to disqualify the ballot question then. The economy has grown even stronger during the past two years and voters have spent another 24 months listening to Cellucci and Anderson complain that the 1989 promise that the tax hike was temporary should be honored now that the state's finances have stabilized and the money borrowed back then has been repaid.

The campaign against Question 4 is being led and financed by public employee and other unions while big business fuels the coffers of those seeking the rollback.

Both sides spend the next two weeks spending down campaign coffers on paid media spots, holding events to attract "free media" and debating each other at forums across the state. The governor has already taken on two top Democrats who oppose Question 4 and may oppose him two years from now if he seeks another four-year term. His conversation with House Speaker Thomas Finneran airs Saturday, Oct. 21 at 8 pm on Ch. 56. Cellucci and Finneran are more in sync on the income tax cut than are Cellucci and his other debate opponents.

For the past two years, the speaker and the House have endorsed a plan to drop the income tax rate to 5 percent as long as state revenues continue to grow and the rate of decline is reasonable.

Next week (on Monday, Oct. 30), Cellucci will do battle with Senate President Thomas Birmingham with whom his differences are more stark. Then it's up to the voters to decide whether 2000 is the year to roll back the income tax.


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