The money taxpayers will save once the state tax cut is in full effect varies greatly, but a
home-owning family of four making $125,000 a year can expect to reap $875.
Question 4's approval in Tuesday's election will make its official mark Jan. 1 when the tax
rate will drop from 5.85 percent to 5.6 percent. That means up to $140 million less in tax
revenue for fiscal year 2001, which began Aug. 1.
Originally promised in 1989, the cut will give taxpayers a slight savings the first year,
with a home-owning family of four that brings in $75,000 paying about $150 less. An
individual making $60,000 will get to keep an extra $143.
The loss of revenue should not prevent the state from being able to increase spending by
$1.2 billion next year, said administration officials. The state saw that same jump this
year.
Gov. Paul Cellucci, who spearheaded the campaign for the cut, said increased economic
growth will keep revenues high enough to get those lost dollars back into the budget.
"I'm thrilled about Question 4 being adopted," he said. "I think it is the most important
public policy decision we have had to make this year."
The measure got 60 percent of the vote.
Democratic lawmakers, however, said no one can guarantee the economy will forge ahead.
They worry it could come to a halt, causing billion dollar loses for the state.
"Question 4 will require some substantial belt-tightening, and given the fact we have spent
80 percent of our new dollars over the last eight years on education and health care, that
belt-tightening is largely going to occur in those areas," said state Rep. John
Stefanini, D-Framingham.
"The real unknown is the strength of the economy," he said. "If the economy remains robust,
then that won't be a factor."
Revenue losses will amount to $457 million when the rate drops to 5.3 percent on Jan. 1,
2002. The final reduction to 5 percent is official on Jan. 1, 2003, resulting in $883
million less in tax dollars.
The difference between a calendar year and a fiscal year, however, means there will be a lag
between setting the rate and when the state will see the largest loss of revenue.
The 5 percent rate goes into effect before the start of fiscal year 2004, which begins Aug.
1, 2003, and runs until the next July. By the end of fiscal year 2004, the passage of
Question 4 will have reduced state revenue by roughly $1.15 billion.
That money will remain in the pockets of taxpayers, with individuals getting slightly larger
breaks than couples who own a home and have two children.
A family of four raking in $125,000 a year before taxes, including exemptions, will get a
tax break of $875. That same family that makes $75,000 a year will pay $451 less.
"For homeowners who have kids, we've already passed a lot of exemptions," said Cort
Boulanger, spokesman for the Executive Office of Administration and Finance. "But that
(extra money) can do a lot for a family."
Savings for an individual who brings in $100,000 before taxes will be $770; for someone who
makes $60,000, it will be $430; and individuals with incomes of $25,000 get to keep $130
more.
Local officials are split over whether the tax cut will mean a loss of services.
"I'm concerned, but I'm hopeful -- as long as the economy stays strong," said Framingham
Town Manager George King.
"Clearly the past has shown that when the state revenue starts to shrink, one of the first
things it starts to hit is local aid."
Natick's acting town administrator, Paul Cohen, believes municipalities will just have to
get used to level funding.
"I don't anticipate any increases," he said.
Regardless of whether the economy remains strong, thus offsetting the cut, Arthur Vigeant
believes the Legislature will make up the difference because they have no other choice.
"They have oodles of money down there, and they don't know how to spend it," said
Marlborough's City Council president. "I think they need to learn to manage money a little
better than they have."
Cities and towns have nothing to fear, said Dick Gooding, chairman of the Hopkinton Board of
Selectmen.
He calls threats of cuts a scare tactic and added it's the responsibility of the Legislature
to ensure communities get what they need.
"There's no reason to think there should be a threat to local aid, and I don't think it will
have an adverse effect," Gooding said.
Senate President Thomas Birmingham said his budget writers are willing to slash where
necessary, which may mean a slight reduction in health care and education spending.
House Speaker Thomas Finneran agreed, but said he and other House leaders have no plans
to soften the tax cut.
"The voters have spoken," Finneran said. "I'm not going to shed tears over past events. We
will abide by it."
(News staff writer David Caruso contributed to this report)