One of Tom Reilly’s favorite “moderate” riffs is that if the personal income tax were rolled back to 5.0%, the next governor would still have $500 million to play with. And of course, Healey, Mihos — and to an even vaguer extent Gabrieli — go right along, without the specificity. But if you listen to the Massachusetts Taxpayers Foundation or the nonpartisan but somewhat more left-leaning Massachusetts Budget and Policy Center … they don’t see it.
The MTF thinks that even Mitt’s spending too much (my emphasis):
… [I]t is clear that the mounting appetite for new initiatives is on a course that will rapidly overwhelm the stateâs ongoing fiscal capacity. Unfortunately, in all three branches recent actions have fanned the expansionary flames, a trend that is reflected:
- In claims of $1 billion budget surpluses when the reality is much more modest.
- In the proposal to cut the income tax by almost $700 million on a fixed two-year schedule, exactly the kind of approach that exacerbated the plunge in tax revenues in 2002 and worsened the fiscal crisis.
- In calls to spend huge portions of the stateâs surplus revenues rather than deposit them in the stabilization fund.
- In the large increase in education and lottery aid to municipalities, a positive step that nevertheless creates expectations for similar increases in 2008 and beyond that will be difficult to meet.
Got that? According to the MTF, lowering the income tax to 5.0%, thereby giving up $700 million in revenues, could precipitate a fiscal crisis. I want to hear every single gubernatorial candidate asked about this, multiple times, betweeen now and November.
And the MBPC, which explicitly cares about “low- and moderate-income people in Massachusetts”, thinks that neither Romney nor the lege are spending enough. Here’s their sum-up:
In addition, the budget relies on a withdrawal of $550 million from the stateâs Rainy Day Fund. While strong revenue growth could ultimately make the withdrawal from the Rainy Day Fund significantly smaller, such growth is unlikely to be sufficient both to allow the budget to be structurally balanced and to put the state in a position to reverse the deep cuts to education, public health, local aid, and other basic public services that occurred during the fiscal crisis.
For the foreseeable future the state will continue to be forced to make difficult choices in seeking to balance the budget while restoring funding for basic services and investing in priority areas like education (including early education) and health care. This budget enacted by the Legislature does reject a proposal that would have
exacerbated the fiscal challenges ahead: a reduction in the income tax rate to 5 percent which ultimately would have cost the state over $600 million a year.
OK, so let’s sum up:
- We’re not back to FY 2001 levels of spending in any number of areas;
- We’ve had an unexpected and probably fleeting bump in revenues, based on strong business profits (so has the federal government)
- Even so, Mitt and the lege are shortchanging the Stabilization (Rainy Day) Fund and making over-optimistic revenue assumptions for the years going forward. From MTF:
In combination, the supplemental and economic stimulus bills spend a staggering $560 million of the stateâs reserves and surplus revenues â an amount equal to more than 25 percent of the balances available at the beginning of 2006 â and add another $200 million to the stateâs debt via bond-funded capital spending.
We can afford an income tax exactly how? Where is Tom’s $500 million? Is it in the Rainy Day Fund, which is there to ensure we don’t have to go through 2002 again?
Look, I understand the political argument for 5.0% — it’s easy, it’s elegant, it’s populist. But our job is not to simply go along with BS conventional wisdom — “reality-based”, right? New Jersey had been playing these games for years, and finally Jon Corzine had to shut down the government to, yes, raise taxes to get the states finances in order. And they’ve just started filling in the hole they dug for themselves. Is that what we want here?
Some may say rolling back the tax rate is about “trust,” but any government which precipitates a fiscal crisis is unworthy of our trust.
We’re talking about the majority of the voters in this Commonwealth. Why should the opinions of the wonderful people at the MTF and the MBPC be considered more important than those of several million hard-working tax-paying Massachusetts voters. The people have said they want the government to get by on a tax rate of 5.0%. That’s the reality. The public “servants,” always so eager to serve, should figure out how to make that happen. If folks then decide they don’t like the consequences, they can elect representatives who promise to raise taxes again, or put another initiative on the ballot (not that the latter seem to be very effective).
You’re addressing the political argument. This post is to address the substantive argument. The substantive will never penetrate the political unless we ask the right questions. It does us no good to say “Well, figure it out!” if we have no idea what we’ll tolerate in terms of cuts, which nobody, nobody is eager to institute.
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So come on, stop falling back on the CW. How does it work?
As I remember, when the question of cutting the income tax to 5.0% was presented at the ballot, the proponents claimed that there would be no cutbacks in local aid, educational spending, or anything else. And either they were lying or they were completely wrong. Since the Legislature froze the tax rollback in the midst of a financial meltdown, the people have had ample opportunities to vote the legislators out of office who have purportedly thwarted the will of the voters, but the voters have sent those people back into office time and time again. Looks to me like the public has spoken and is alot smarter than some people believe.
…does it have to be said: the economic outlook when that rollback was on the ballot was we had a brilliant boom – that went bust soon after.
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Facts:
1. Situation changed from when it was passed, and who knows, if it was on the ballot today, maybe it wouldn’t.
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2. Just like the legislature changing one of the laws it itself previously passed, it can change a law from a ballot initiative and I do not see the two as morally different.
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3. The people do not always know their own best interest (look at how the religious right poor and lower middle class keep voting the kleptocrats into office) and the people send legislators into office for the purpose of making those choices that we the people do not have time to study carefully (good example: the English immersion ballot init – WTF did I know about which way to vote on that??)
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This dogmatic atttitude on ballot initiatives is why I think they’re stupid (if they are binding) in the first place.
Like most voters, I want lower taxes, but I also want other things too. (Recall that on the early 90s voters adopted by referendum a law, since ignored, for local aid in the early 90s.) Also, things change.
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The 5% bloody shirt thing obviously works well politically for the drown-govt-in-a-bathtub crowd. But how do you figure that votes taken five or twenty years ago constitute an unbreakable contract with the people of Massachusetts?
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I dispute that the statements of some state leaders in the 1980s, to the effect that an increase in the tax rate at that time was “temporary,” has any legitimate claim on us today. That legislature adjourned; those leaders have been replaced by others; many of the voters who voted for those legislators have passed or moved away.
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In the mean time underfunding has created a fiscal crisis at the local level; there are a ton of new unfunded federal mandates, and the state is trying to meet challenges unknown before September 11 of 2001.
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That is why we have a legislature–to balance competing claims and evaluate things that have changed.
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You might prefer a different system, in which laws passed by referendum have a special status that cannot be amended by the legislature. But that is not what the Mass. Constitution says.
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The people speak at the ballot box, but not by referendum only. They also elect the legislature and under our system of government that election is the one that counts. On that score, the 5% crowd has not done very well. Maybe the services that those mean old state taxes provide are popular after all.
People who claim that the tax increases in the late 1980’s were “temporary” aren’t really informed. Yes, there was an initial tax increase that was meant to be temporary, but that was followed by one or more even higher tax increases that were clearly responses to the economic mess and never alleged to be temporary by any of their supporters. That’s not what happened.
but the legislature has ballooned the budget once more and has skimmed the rainy day fund for $500,000. Anyone can make a confusing theoretical argument about the budget with statistics and blah, blah, blah, a confusing salad of ideas.
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But in order for a democratic candidate to attract the independent voters he must position himself as a fiscal conservative and not in bed with the spendthrift legislature. Simple, simple framing of a position , standing by it,and packaging it correctly is what it takes to be elected. Reilly he has been a very wise candidate to consistently take this position and sticking to it. It will serve him well with both moderate democrats and independent voters .
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Shouldn’t your concern also apply to spending increases?
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Why not simply propose a fairer debate test: ask each candidate how they’ll finance any tax cut OR spending increase he proposes?
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2. For example, DP covers several issues on his website. Let’s look at one: education. He has a number of proposals. They include: a) universal early childhood spending, b) longer school day (teachers earn overtime), c) smaller class sizes (more teachers hired). (Here’s DP in pdf).
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a. CA just considered a $2.4 billion universal early childhood proposal (it was rejected). Pro-rate for MA, and that’s $300 million per year.
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b. Let’s say we extend the school day just of poor kids in MA. Each teacher in a high-poverty school would work 2 more hours per day and gets overtime of $40 per hour, or about $15k per teacher per year, times about 10,000 teachers. That’s $150 million.
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c. A class size reduction of just 10% (just 2 or 3 kids fewer per class; small potatoes) would require 10% more teachers statewide. There are 70,000 teachers in MA. So 7,000 new teachers. That’s $350 million per year.
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We’re three planks deep, on a single issue (education), and $800 million in the hole. Of course none of this counts pension implications, the need to build more classrooms, etc.
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But let’s arbitrarily shave it all down, to targeted initiatives. Now we’re at, say, $400 million? $200 million? $100 million? Pick your number, we’re just getting started….
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…now add in the rest of the educaiton planks. Then work thru health care, environment, job training, housing….you get the picture. I’m not sure precisely how Gabs and TR differ, btw. Healey doesn’t even seem to have a platform, at least not on her website.
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3. In fact, Charley, with all respect, what’s stopping you from having your dream? Here on BMG, have “every single gubernatorial candidate asked about this, multiple times, betweeen now and November.” Simply have MTF do back of the envelope estimates for each platform, including tax rollbacks (property or sales), and then interview each gov candidate how he’ll pay for it.
Fine points, all. And yes, I included both MTF’s and MBPC’s view of the budget because they have different perspectives on whether more or less should be spent.
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As non-partisan orgs, I wonder if MTF or MPBC would be willing to do estimates of candidates’ platforms … but you’re right. It would be very helpful and informative.