The voters of Massachusetts have shown a nice discrimination
in judgment by approving Question 4, the income tax cut, and rejecting Question 6, the tax credit for highway tolls. The
governor and the Legislature must now show equally good judgment with some real spending restraint.
Since the fiscal crisis that brought Bill Weld to the
governor's office in 1991, Massachusetts has exercised relatively strict control over spending -- relative to our
drunken-sailor history, that is.
In relation to the size of the economy, spending has not
increased much. But outlays have grown at an average annual rate of 6.2 percent since 1992. Even the governor's budget
request has grown at an average rate of 5.7 percent -- faster in the last two years.
Soon we won't be able to afford it. Nationally, the economy
grew at an inflation-adjusted annual rate of 2.7 percent in the third quarter. Annual growth that slow has not been seen since
1994.
Slower economic growth slows revenue growth no matter what
the tax rates are. The Massachusetts Taxpayers Foundation says the state can still run surpluses as revenue growth slows if
spending growth is held to 4.5 percent. Health care demands will make this difficult, but it can be done -- certainly if
the Legislature reforms some costly state practices liked "filed sub-bid" construction contracts with the same
wisdom that it showed in taking away the MBTA's notorious no-limit credit card. Budget requests grew at a
slower rate form 1994 to 1998; a 4.5 percent increase is a reasonable target for the
next budget round.