As part of its FY 2007 budget, the Senate has passed a rollback of the income tax to 5% – to take effect only if local aid is restored to where it was in 2002, adjusted for inflation. But, according to the Globe, that’s not good enough for Kerry Healey. She thinks it needs to be done immediately, apparently without regard to the consequences for cities and towns.
Not surprisingly, Citizens for Limited Taxation (the main backers of the 2000 rollback initiative) agrees. Kim Atkins at the Herald reports that CLT sees a conspiracy afoot. From CLT’s press release, as reported by Atkins:
We suspect that advocates of local aid shouldnât be celebrating either. They have actually hurt their chances for an increase because legislative leaders will make sure that the amount to municipalities that triggers the rollback is never reached.
I don’t agree with CLT on much. But I can’t say I think this particular hypothesis of theirs is crazy. Put yourself in the legislature’s shoes. You’re almost – but not quite – up to those inflation-adjusted 2002 levels of local aid. Municipalities are generally happy, since they’re getting a lot more money than they were getting before the cuts started coming, and they don’t want anything to interfere with their increased funding. If you boost local aid just a few dollars more, you’ll hit the trigger, and the income tax rate will start to drop, costing the state millions in revenue, and making it more difficult to continue sending those increased funds to the cities and towns without cutting other state spending. So what do you do? Quite possibly, you keep the municipalities at “2002 levels minus $1,” which keeps pretty much everybody happy. Everybody except for CLT, that is.
And this kind of thing is a risk for the Gabrieli plan as well, which (we are told) is also going to depend on economic triggers of some kind. If you never quite hit those triggers, you never have to cut the income tax.
Frankly, I much prefer either the Reilly/Healey position or the Patrick position. Either you’re for the rollback (because taxes should always be lower, because the voters have spoken, whatever), or you’re against it (because property tax relief is more important, because the state can’t afford it, whatever). This kind of technocratic solution – “we’ll roll the income tax back when the square root of the state GDP averaged over the last two business cycles is greater than or equal to the blah blah zzzzzz” – does not strike me as especially smart politics or smart policy. Politics: voters want to know if you’re fer it or agin’ it, and they want to know when their taxes are going down. Policy: the temptation never to quite reach those economic triggers is going to be awfully strong.
I think the CLT hypothesis IS crazy (well, maybe not crazy, but just incorrect…). Given the political salience of the local aid issue, with municipalities up in arms, I think there’s very little chance that local aid won’t get back up to ’02 levels very soon.
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The reason the tax cut won’t happen then is fairly simple. There’s maybe a 99.5% chance that this Senate-passed provision won’t survive conference committee, and so won’t be part of the final budget. It’s just some typical inter-legislature politics between the House and Senate.
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Note that the Senate also adopted an amendment to extend Bunker Hill Day and Evacuation Day to all counties (instead of just Suffolk County). Betcha that won’t make it past conference committee either 😉
The triggers Gabrieli talks about are simple revenue benchmarks, which I don’t think are all that mysterious. If the state’s finances continue to be healthy, they kick in; if not, and local aid and services are in jeopardy, they don’t. Policy-wise, this seems like a no-brainer best of class position to me.
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I offered the reasons I think it’s also the best politics on your recent post regarding his pre-referendum opposition to the rollback.
The link you supply just says that he’s going to tell us his plan sometime. ‘Til then, color me skeptical.
I helped gather signatures in 1998, which were tossed out by the CREATION of the ‘stray mark’ rule. Did it again in 2000, and was Cape Cod Coordinator for Question 4 in 2000. And I am still waiting for the 1989 ‘temporary’ tax hike to be repealed.
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And you wonder why we are suspicious of the intent of the Legislature?
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Imagine for a moment what your property tax bill would look like if the Legislature had felt free to change or disregard the will of the electorate when Prop. 2 1/2 was passed. Wanna talk aobut THOSE local aid obligations?
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Worst, all through the boom years of the 90’s, the Legislature COULD have kept the promise, and repealed the tax increase after the fiscal crisis that triggred the hike was over. Did they do that? No – far better that we pour an extra $10 million into a single school system (the Senate President’s home town, bt who’s counting?) in a futile attempt to boost test scores that haven’t budged. Or any of the innumerable Boston-based sinkholes where our rural tax dollars get swallowed up.
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We will NEVER get any significant school aid or local aid outside of the charmed circle of 128; let us keep our tax moeny to pay our property tax bills instead!
Isn’t it also possible that without Proposition 2.5, we’d be in the same boat as most other states that don’t have restrictions on the local levy?
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Isn’t blindly tying the hands of government to respond to scenarios just really, really bad policy?
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Would this state be bleeding young people if we didn’t have a law that pushes towns to build only super-exclusive and expensive housing?
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Don’t we have things called “elections” that can change the course of how our government works if we’re not happy?
So instead of cutting local aid, they’ll just hack UMASS’s budget (again). Or they’ll tear apart state medicare/medicaid. Or they’ll gut highways… or housing or any number of other publicc work projects.
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A rollback will tremendously hurt our state at this point in time. Let’s fix property taxes, then see where everything goes from there.