A Ballot Committee of Citizens for Limited Taxation


The Telegram & Gazette
Worcester, Mass.
Sunday, October 22, 2000

Does Question 4 keep a pledge or foster fiscal folly?
By John J. Monahan
Telegram & Gazette Staff 

If it passes on Nov. 7, Question 4 will provide residents with the biggest tax cut in the state's history.

The referendum would roll back the state income-tax rate from 5.85 percent to 5 percent over three years, ultimately saving a family of four with an annual income of $75,000 about $450 a year.

A tax increase was imposed in 1989, when the state was strapped for cash, and proponents of the question want the old figure returned.

Opponents, meanwhile, warn that the measure, although appealing, would reduce state revenues by about $1.2 billion annually and eliminate a rare opportunity to use surplus funds to pay off debt and improve schools and health care.

As Election Day nears, the battle is building.

Advertisements for and against Question 4 began appearing on television last week, and an early poll conducted by the University of Massachusetts indicated that 73 percent of eligible voters supported the proposal.

Area residents interviewed by the Sunday Telegram offered mixed feelings about the effort, and about the elected officials responsible for spending their tax money.

Francis and Rosetta R. Joly, of Athol, said they have lived through good and bad economic times in Massachusetts and would just as soon have the money spent on modernizing schools.

"If you take it off, it is going to put us back in the hole again and we will be right back where we started," Mr. Joly said. He said he doesn't mind the state spending the surplus "if they use it properly -- not on the Big Dig."

"We just got computers in the school system," Mrs. Joly noted. She added that some of her eight grandchildren weren't given all their school books this year and have come home with texts that have been photocopied.

Dante P. Simone, who lives in Worcester, is leaning the other way.

"You have to read between the lines," he said. "I will probably vote for it. I don't really want to pay for the Big Dig."

Michelle J. Simone, Mr. Simone's wife, said she believes she can spend the money more wisely than state officials can.

"Let us spend it how we want to," she said. "I don't want them spending it foolishly, and we already know they don't spend it appropriately."

Deborah J. Keat, who lives in Shrewsbury with her husband and three children, is firm in her intention to vote for the rollback. One reason is that opponents of the proposal aren't clear about how surplus money will be spent if the tax level remains the same.

"If I don't know where the money is going, I would vote to reduce it," she said.

Gov. Paul Cellucci, an active proponent of the cut, has assured voters that the state can live with the rollback without cutting existing services.

"It will keep the promise made in 1989," Mr. Cellucci said. "This is a tax cut that will benefit every income-tax payer. It will help families and small businesses and it will send a message to the legislators that voters want them to maintain the fiscal discipline that has brought the state back financially and economically."

During the past decade, state spending has nearly doubled, with the budget swelling to $22.6 billion this year, and state debt rising from $6.6 billion to $12.4 billion.

Even though annual spending has increased by as much as 7percent annually in recent years, the state's cash reserves are mounting.

In the fiscal year that ended June 30, the state surplus was put at $760 million, while unemployment levels continued to stay low and per-capita income rose. The state has since appropriated $500 million of that surplus to finance unanticipated Big Dig cost overruns, and the rest is to be used for an array of construction projects, including highway and bridge work.

As it stands, the state is on track for a $1 billion surplus by the end of this fiscal year.

Yet opponents of Question 4 point out that taxpayers have seen about $3 billion worth of tax cuts since the state's financial health began improving in 1992.

And Democratic legislative leaders, teachers' unions and the state treasurer dispute the governor's view that Massachusetts could live with the reduction in revenues. Opponents have labeled the tax cut reckless and shortsighted. And some argue that biggest beneficiaries would be the very wealthy.

"This will provide literally thousands of dollars in tax breaks for some of the wealthiest people," said James St. George of the Tax Equity Alliance of Massachusetts, who is also a key player in the Campaign for Massachusetts' Future. The group is opposing Question 4 with a $1.5 million ad campaign, paid for primarily by unions representing teachers and social workers.

Mr. St. George said the wealthiest 1 percent of taxpayers in the state -- those who make more than $360,000 a year and have an average income of $1.3 million -- would save about $5,800 annually if the measure passed. That would amount to more than the savings garnered by 60 percent of the state's taxpayers, he said.

"There is a better way to use the money," Mr. St. George said. He called for funding tax cuts targeted at working families, reducing school class sizes, expanding early childhood education programs, and providing better health care.

"We want people to understand it's a tradeoff," he said. "It's not free money. If voters approve it, they are giving up an opportunity to invest in schools and a healthy, educated work force."

Both Mr. Cellucci and John C. Brockelman, executive director of the Massachusetts Republican Party, say that the rollback to 5 percent was promised when the state raised the income-tax rate to cover the fiscal crisis.

"That is exactly what the Legislature promised -- that it would be returned to when the fiscal crisis was over," Mr. Brockelman said. "This was meant to be a temporary tax."

In addition, he said, the rollback would provide a tax break for working families, cool off the rate of growth of state spending, and make Massachusetts more attractive to business.

Barbara C. Anderson, executive director of Citizens for Limited Taxation, also said that lawmakers made a pledge, and they need to make good on it. Her organization, which has spent four years getting the referendum on the ballot, has been assisted by the Massachusetts High Technology Council business group and Republican Party officials in coming up with about $1 million for the ad campaign in support of Question 4.

"This is not a full-scale tax revolt like Proposition 2 was," Ms. Anderson said. She said the state budget surpluses are now so high that Massachusetts can afford the $1.2 billion cut and still increase spending in future years.

"I don't want to oversell this as keeping government smaller," she said. "This is keeping a promise that they would lower the rate to 5 percent after they dealt with the fiscal crisis.

"By the time that has been phased out and taxpayers save $1.2 billion, the state government will still be growing."

She said that opposition from the state teachers' unions, which cite the need for state funding for education, is not well-grounded.

"I think we have reached a point where people finally understand the educational institutions are using children to get more money and avoid responsibility," she said.

But state Treasurer Shannon P. O'Brien, House Speaker Thomas M. Finneran and state Senate President Thomas F. Birmingham have warned that the passage of Question 4 would make Massachusetts more vulnerable in an economic downturn and would take money away from school and health programs.

In a letter to the governor two weeks ago, Mrs. O'Brien said that in the last two years, the state hasn't realized meaningful debt reduction despite the opportunities provided by the surpluses.

She is arguing that a substantial amount of the budget surpluses should be taken "off the table" to pare down debt, suggesting that $500 million go toward that purpose this year.

Supporting that position is a recent analysis by the  Washington-based Center on Budget and Policy Priorities, which warned that Question 4 and another measure on the ballot, Question 6, could jeopardize the state's financial health. Question 6 calls for toll and excise-tax rebates that would drain about $650 million annually from state coffers.

The center, estimating that the two questions would drain state revenues by nearly $2 billion by 2003, said the measures would "seriously impair the state's ability to weather a recession."

Massachusetts, the center said, is now one of just eight states that could survive a recession without raising taxes. But approval of Question 4 and Question 6 would make Massachusetts one of the country's 10 "least-prepared" states to deal with a significant economic downturn, it said.

In Mrs. O'Brien's view, paying down some debt should be the state's first priority.

"We can have some moderate tax relief," she said, "but we need to make sure we have money left over to focus on the issue of debt.

"Our debt has nearly doubled since 1990," Mrs. O'Brien said. "We now have the third-highest debt in the country."

The governor, for his part, prefers to stress that the rollback would make the state more competitive for business, ensuring stable revenues from a stronger economic base.

"There is a greater danger we won't have money for schools and health-care programs if we don't cut the income tax back to 5 percent," Mr. Cellucci said.

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