Visions of 1990 dance in the heads of opponents of Question
4, Governor Paul Cellucci's tax rollback plan. That year, labor unions, liberals, human service providers, and local officials
joined to turn back a similar tax-cutting initiative petition.
But that was then; this is now, and much has changed. That's
why Cellucci and his allies are likely to prevail Nov. 7 in their campaign for a three-year stepdown in the state's income
tax rate, from 5.85 percent to 5 percent. Though many voters are predisposed to vote "no" on
ballot questions, there are several reasons why Question 4 will probably pass. Here are
"The promise." This is the tax-cutters' sales hook, that the
big income tax hikes of the last fiscal crisis were "temporary." It's partly true - the 1989 increases were to be
for 18 months; there was no sunset provision for most of the additional hikes passed a year later. But it's
hairsplitting. Clearly the boost in the income tax rate was to cope with the
state's fiscal crisis, and that's long gone.
The politics. A decade ago, the plunging economy produced a
combustible atmosphere of anger and anxiety. Voters swept away many incumbents but heeded the "It Goes Too Far"
battle cry of opponents of 1990's Question 3. There was palpable fear that a
$2 billion tax cut, as the 1990 measure proposed, would cause more damage and chaos. It went down by a 3-2
ratio. Today, the electorate is contented, even docile. Most incumbents face no
opponent. Moreover, in 1990, opponents outspent the tax cut forces 3 to 1. The rollback fighters will
spend more again this year, but the margin won't be nearly as great.
The economy. Ten years ago, Massachusetts was pulled under by
a riptide recession. Unemployment soared, the real estate industry was crushed by bankruptcies and loan defaults.
Banks failed; credit dried up. Today, the economy may be slipping sideways. But after a long
recovery, stability prevails, and the longer-term fundamentals appear sound.
State finances. In 1990, state government was awash in red
ink, borrowing heavily to stem enormous deficits. State revenues are economy-driven, and the boom now has produced five
consecutive years of surpluses totaling $3.55 billion, an average of $711 million per year, with
no signs of a slowdown. Revenue collections for the first three months of this fiscal
year are running $244 million ahead of budget estimates, and the Massachusetts Taxpayers Foundation
projects it could reach $900 million for the year. State reserves are now a
recession-proof $1.5 billion in the general "rainy day" stabilization fund, and at least $2 billion in the
unemployment compensation fund.
The impact. The rollback plan is often described as a $1.2
billion cut, fully implemented after three years. It's really about $1.04 billion, the taxpayers foundation says. (The $1.2
billion figure includes already approved trims in the rate to 5.8 percent next year and 5.75 percent in
2002.) Compared to the 1990 tax cut petition, which would have slashed revenue by
12 to 15 percent, Cellucci's plan would trim revenue in large but manageable bites, by 4.8 percent of
what's now a $21.6 billion budget. And that doesn't factor in a mildly stimulative
effect. In the past decade, about three-dozen long-term tax cuts, worth $2.64 billion annually, tilted
significantly toward the wealthy and businesses. In total dollars, the well-to-do
will get much more back with a cut in the flat rate, but everyone receives proportionately what he or she has
already paid in. That's fair.
The pruning argument.
There's an endless appetite for state
funds. In some areas, like housing and infrastructure, the needs are undeniable and pressing. But since 1992, state
spending has soared about 70 percent, much higher than inflation. The debt load has grown even more.
There's little external pressure on the Legislature or Cellucci to innovate or
be more efficient. Tax cuts force government to hack back the weeds, to be creative. Governors Weld and
Cellucci long ago ceased their hollow "entrepreneurial government" chant. Except
for bleating about being steamrolled on veto overrides, they've gone along and gotten along with the
The wild card is Question 6, the biggest threat to Question
4 because the opponents lump them together. It's an ingenious bit of political mischief, mandating $623 million a year in tax
rebates for tolls and local auto excise taxes. But it will strain local aid. The toll credit is an invitation for
tax cheating, and it will be an auditing nightmare for the state. Imagine the toll plaza gridlock as
motorists stop for receipts.
It's no wonder Cellucci opposes Question 6, but doesn't talk
about it. He should, though. It's a drag on his Question 4.