With taxpayers' votes on ballot Question 4 ringing in their
ears, Beacon Hill lawmakers face the task of assembling state budgets with up to $1.2 billion less in yearly income-tax
revenue.
"In the short term, it can be managed," said state Rep. Paul
Haley (D-Weymouth), chairman of the House Ways and Means Committee. "The question has always been: Will the economy
remain strong enough that we can cut taxes back this aggressively this quick and still meet the
essential needs of the commonwealth?"
Voters endorsed Question 4 by a 59 percent to 41 percent
margin, with nearly all ballots counted.
The ballot measure forces the state to reduce the income tax
rate to 5 percent over three years from the current 5.85 percent.
According to the Massachusetts Taxpayers Foundation, the
rollback will cut state revenue by $128 million in the current fiscal year and $1.04 billion by the time the measure is fully
implemented in fiscal 2003.
This year, the state expects to spend about $21.4 billion.
Gov. Paul Cellucci, one of the ballot measure's chief
supporters, insists the commonwealth can withstand the cut. He argues that the economy will be strengthened by the tax cut and
ultimately provide a more stable revenue stream to the commonwealth's coffers.
State Treasurer Shannon O'Brien also expressed confidence in
the state's ability to maintain fiscal health post Question 4.
Things will be all right "if the economy remains strong,"
she said through her spokesman.
O'Brien warned, however, that the long-term implications are
unclear. She restated her concern that the state is carrying too much debt -- a situation she sought to address by having
surplus revenue go toward paying down debt rather than giving tax breaks.
Senate President Thomas F. Birmingham, another Question 4
opponent, also said yesterday that the state budget will be all right as long as the economy thrives.
"If the economy doesn't remain strong, all bets are off," he
said.
While the Legislature could raise taxes to bring in more
cash in case of trouble, Birmingham predicted lawmakers would be reluctant to take that step.
Voters also approved ballot Question 7, which will let
Massachusetts residents deduct charitable gifts from state income taxes.
The impact -- estimated at about $190 million -- was already
figured into this year's state budget.
Voters rejected Question 6, which would have provided a tax
credit for tolls and excise taxes. The tally, with nearly all the precincts reporting, was 57 percent against and 43 percent
in favor.
While mounting their final vote drives, ballot question
committees also submitted financial reports with the state Office of Campaign and Political Finance this week.
Including the latest reports, Question 4 proponents raised
about $1.2 million over the past two years and spent $1.1 million; opponents raised about $3.3 million and spent nearly
all of it.
Question 7 supporters raised $103,000 in the final two
weeks. Fidelity Management and Research Corp. contributed $100,000. Over the past two years, Fidelity chipped in $376,570
toward the effort; other donors added less than $50,000 combined. There was little organized
opposition to Question 7.