BOSTON (AP) Just like the average person who sees an increase in his
or her paycheck, the state has been spending more and socking more away for a rainy day.
With tax dollars gushing in to state coffers because of the booming
economy, the state has now piled up mountains of money in trust funds that are meant to
help the state if times turn bad.
The state now has:
$1.8 billion raised through the unemployment insurance tax to pay for
unemployment benefits for laid-off workers;
$1.4 billion raised through general taxes in the state's "rainy
day" fund; and
$131 million in reserve funds in case the welfare caseload grows.
And the state will soon be filling up another trust fund, with 70
percent of the money flowing in annually from the state's $8 billion share of the national
tobacco settlement.
"Not only do we have balanced budgets now, not only do we
maintain fiscal discipline, we have built up reserves," said Republican Gov. Paul
Cellucci. "These are significant cushions should there be an economic downturn,
should there be a significant shortfall unexpectedly of federal revenues."
"That's something we've worked very hard on and we are
well-protected," he said.
Both the rainy day fund and the unemployment fund were empty when
former Gov. William F. Weld and then-Lt. Gov. Paul Cellucci took office in 1991.
Cellucci administration officials point with pride to a national
study from earlier this year that said Massachusetts was one of only eight states in the
nation that could weather a recession of the same length and severity as the recession of
the early 1990s.
The report, "When it Rains, it Pours," was issued by the Center for
Budget and Policy Priorities in Washington, a liberal budget think tank in Washington.
Governments are faced with tough problems in recessions because tax
receipts decline just as the demand for services such as welfare or unemployment checks
increases. Rainy day funds are designed to get the state through those times.
Cellucci administration officials say that, beside being handy for
tough times, the trust funds show Wall Street that the state is in good financial shape
and could help get the state better bond ratings.
To anti-tax activist Barbara Anderson,
the existence of the trust funds is just more evidence that the state's taxes need to be
cut.
"They've got more money than they
need so they're trying to stash it in places where it will be if they ever come up with a
bright idea to spend it," she said.
Cellucci has joined Anderson in the drive for a $1.4 billion tax cut
proposal on the November ballot.
But Jim St. George, executive director of the liberal Tax Equity
Alliance, said it's the wrong time to pass a tax cut.
Taxes have already been slashed last year and this year by a total of
more than $1.3 billion, he said.
He also doubted whether the unemployment insurance trust fund had
enough money in it.
"The last thing anybody wants is a situation where people are
losing their jobs through no fault of their own and there's no money in the trust fund to
pay their benefits with," he said.