Seeking to quiet voter unease over the governor's tax
referendum, the Cellucci administration says it is preparing a budget for next year that calls for a spending increase of $1.2
billion, the same amount the initiative would give back to taxpayers.
The move is meant to show voters that the state can easily
afford to scale back its income tax rate, while still supporting and even expanding such social programs as education
and health care.
The administration says its budget, due for release in
January, would increase spending by 5.4 percent over this year's level, with the biggest expansions in education and
health care.
Furthermore, Secretary of Administration and Finance Stephen
P. Crosby stressed there would be "no material cuts" in programs or services, even if Question 4 passes and reduces the
income tax rate from 5.85 percent to 5 percent by 2003, sending $1.2 billion in revenue back
to taxpayers.
Crosby said it is coincidental that the proposed additional
budget growth is equal to the amount of the tax cut when it is fully phased in and said he was releasing the figures to quash
rumors among unions and human-service agencies that the administration is already planning deep cuts
on the assumption that voters will approve Question 4.
Crosby stressed that the budget is a work in progress.
"Ordinarily, I would never pass something like this out,
because it's totally an inside working document," Crosby said, handing over charts that broadly outline the fiscal 2002
budget, which would take effect July 1. "But it shows that the secretary of A&F is adding on $1.1 billion to
$1.2 billion in spending. So we're certainly not worried about revenue."
Asked how the state could spend that much while cutting
taxes, Crosby said the tax cuts would stimulate economic activity and generate more revenue.
He also said that despite 40 tax cuts over the last decade
that reduced revenue by about $3 billion a year, the state still has had budget surpluses each of the past five years,
including last year's, which topped out at $900 million.
"So it's precisely the same thing," Crosby said. "When you
cut taxes, you have a stimulating effect."
He said that if taxes are not reduced, the Legislature would
push for far more generous increases in government spending.
"If we didn't have that tax cut, we'd have $2.4 billion in
growth, and the Legislature would spend all of it, rather than half of it," Crosby said. "That's what happened in the 1980s
when budget growth averaged 9.2 percent."
A Boston Globe-WBZ-TV poll taken last week showed voters
overwhelmingly support Question 4, which Cellucci helped put on the ballot. Fifty-six percent of respondents supported
the measure, while 26 percent were opposed.
The state budget has grown between 3 percent and 5.6 percent
every year since 1994. The current fiscal 2001 budget saw a 5.6 percent increase over the previous year's spending.
Cellucci said that returning some of the state's large
surpluses to the voters is only fair. During the late 1980s, to respond to a fiscal crisis, the Legislature raised the income
tax rate from 5 percent to 6.25 percent, in what was expected to be a temporary increase. In 1992,
lawmakers scaled the rate back to 5.95 percent and then last year agreed to gradually
lower it to 5.75 percent by next year. It is now at 5.85 percent.
But unions, educators, and human-service advocates are
battling the initiative, saying the money would be better spent on improving schools, health care, or paying down state debt.
They, too, point to the 40 other tax cuts, but use them as evidence that the state does not need another
one.
Crosby seemed to take aim at those clammoring for more
education and health-care spending, saying he would devote an extra $425 million to Medicaid, an 8 percent increase.
Education funding for those between kindergarten and 12th grade would jump by another $222 million, a
6 percent increase. Most of that money would go directly to local aid and help pay for
smaller class sizes and school building construction.
Medicaid spending will increase, partly because the number
of older residents is growing. The rest of the budget will grow an average of 3.2 percent, slightly more than the inflation
rate.
Rumors about the governor's proposed budget began to roil in
recent weeks as the administration began meeting with department heads to ask for fiscal 2002 spending estimates.
Word got back to Crosby that some human-service providers
were being told their budgets would be reduced by as much as 7 percent, prompting him to release the projected figures to
the Globe.
"Nothing could be farther from the truth," Crosby said.
"This administration is commited to increases in programs that are required or important. The only issue here is how fast
spending should grow. It's not an issue of whether spending should grow."
He also said budget writers are looking for more efficiencies in the budget and striving to find
smarter ways to upgrade services. For example, Crosby said, he is exploring
whether the state pension fund could be leveraged to fund affordable housing projects, without putting any capital
at risk.