OK, holiday’s over. It looks like we’re pretty close to having a budget, and while the legislature deserves credit for encouraging the consolidation of health care and pension fund spending, their budget is going to include a lot more gimmickry than Gov. Patrick envisioned:
The budget depends on about $611 million in reserves and one-time revenue sources, more than double the amount the governor’s budget used and nearly $140 million more than the Senate’s did.
Look, I understand it’s a tough year, revenue-wise. And there are a lot of good things to spend money on. That’s why I’m amazed that the lege — the House in particular — has been so allergic to creating new revenue streams for cities and towns, much less itself. Encouraging municipalities to reduce wasteful spending is definitely the first order of business, but why not give them the tools they need to relieve the pressure on regressive property taxes? How many more Stonehams will we see?
Look, even Melrose’s Mike Festa was barking up the wrong tree here:
“You’re not guaranteeing that that money is going to be raised,” said Representative Michael E. Festa, a close administration ally. “You’re only guaranteeing that we take a bad vote.”
As Stoneham’s jcsinclair has explained to us, the local options taxes are not a panacea for many communities. And I understand the lege’s unwillingness to be accused of “raising taxes” — even though they wouldn’t be the ones doing it. But right now, it seems there’s barely a productive tension of ideas in how to solve the problem.
Put it this way: In the next few years, if the property tax/prop 2.5 situation isn’t vastly improved, we won’t be blaming the city councils and mayors. We’ll blame the State Reps and Senators who sat on their hands and didn’t even raise their own revenue, much less let municipalities do it for themselves. Sometimes the “bad vote” is the one you don’t take at all.
Urban Myth:
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From Keller:
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That the statement made was incorrect. The budget crunch in the state isn’t a revenue problem; it’s a cost problem.
That depends on which side you regard as immovable.
Neither side is immoveable. However, if your headcount of your town, and the headcount of your government employees stable, yet costs outpace inflation, then, you’re asking for more money to pay for some costs that are unusual–retiree benefits and healthcare.
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The problem is–and this is why it’s not, or shouldn’t be a revenue issue–is that the same people you’d be asking for revenue also bear the same increasing retiree and healthcare costs.
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That is, you’re saying to the private sector, suck it up and pay for government’s high costs and you also have to deal with your own. Somehow.
Health care costs and a new health care law that does nothing to contain them, and our $1 billion/year backlog in infrastructure, I’d say finances are still tight.
I haven’t tried to crack this nut, haven’t even looked at the claims much less the numbers.
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Shouldn’t the requirement for health insurance lead to less uninsured health care costs being shifted to other parts of the system, and hence to lower costs for insurance?
As Stoneham’s jcsinclair has explained to us, the local options taxes are not a panacea for many communities.
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JCS has made a number of good comments regarding local option taxes, but I’ll merely point out that the few possibilities noted in his (or her) comment hardly exhausts the possibilities.
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I grew up in a suburb of Cincinnati in the 1950s and 1960s. In my experience there, without state permission,
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–The city of Cincinnati could enact a city income tax. They did so to buy the city’s bus service from the private company that was going broke.
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–Hamilton County (which encompasses Cincy) could enact local sales taxes. The county has done that a number of times, most recently to build a brand new stadium for the city’s professional football team (the Bengals).
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–After a “mill levy” (property tax) to support the county parks was defeated, the Hamilton County park district required people to buy stickers in order to legally drive on park property.
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–After a mill levy to support schools was defeated in our (unincorporated) school district, the school district required us to pay for bus service and extra-curricular activities.
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There are a number of forms of “local option taxes” and user fees. The problem appears to be that the state of Massachusetts throttles most of them.
Ryan’s post on his blog is worth reading.
I’m very disturbed at the idea of stripping money from reserve funds in a year when the economy is doing well. What happens when we (inevitably) have a recession?
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Of course, one could argue that it’s a bet that the economy is so good that revenue projections will prove to be low, but I’m not convinced that’s any way to run a railroad.
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More important than the local options for increasing revenues (which I completely support) are the corporate tax loopholes, which account for a huge half a billion or so of foregone revenue (to which the state is “entitled” under the logic of the original intent of the tax code writers).
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If we can get these loopholes closed this year, the new revenue will kick in beginning with the January start of the new tax year. It’s time we insisted that our corporate citizens pay their fair share. We need the revenues to create jobs and stimulate the economy.
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I blame them now.
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When the Globe reported:
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I just wanted to throw up my hands. There’s no librarians or FT nurses in the elementary schools, the libraries are open fewer days and nights every year, public works is on deferred maintenance, people are shelling out for these dishonest rotten fees–but if there’s a surplus the legislature is gonna fund shiny science and technology gee-whiz stuff.
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Talk about not getting it.
Towns and Library Trustees should seriously step back and take a hard look at their library and its traffic and use stats. The commonwealth has a statutory protection that roughly causes library budgets to increase at the same rate as all other town departments or else risk decertification.
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But, the 19th and 20th century role of the library as a central depository of knowledge might be a little threadbare. Maybe the library is the place to save some taxpayer bucks.
If the state legislature, in its wisdom, has decided not to permit cities and towns to seek approval of local options taxes, are there any state limitations on municipalites issuing municipal bonds to help pay for their financial shortfalls in public education and other city services that could be removed or modified? I understand that normally municipalities issue bonds for capital improvements such as school buildings and that the state promises to subsidize a significant portion of the principal and interest due on these municipal bonds.
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I appreciate that increasing the short-term or the long-term debt load of a municipality should not be considered a particularly fiscally prudent solution to the fiscal crunch towns like Stoneham find themselves struggling to manage. These towns still will still need a dedicated revenue stream to pay off the approximately 5% interest due to the municipal bondholders over a 7, 10, 20, or 30 year period.
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Nevertheless, if a municipality can demonstrate that it has wrung all the wasteful spending it can out of its budget and has made provisions to dedicate a certain percentage of its projected annual revenues to paying off short- or long-term municipal bonds that raise the necessary revenue to maintain critical or basic public services, I would hope that the state would, at least, permit towns like Stoneham to issue municipal bonds to pay for the educational programs and services its parents, students, and teachers deserve to maintain.
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Finally, I would urge Gov. Patrick to recall that, during the campaign, he promised all property taxpayers in Massachusetts some significant relief from this onerous financial burden. If he does not work to address this overarching problem, then the “brain drain” from the Commonwealth will become more pronounced, reducing the property tax base further and jeopardizing his ambitious economic development plans in areas such as biotechnology. In his effort to search for new revenue streams and cost savings, I hope the Governor will consider privatizing certain state programs and services such as the Massachusetts Lottery, the Massachusetts Turnpike, the dreadful state prison system, and other inefficient, low quality, and bloated state programs and services. Finally, the Governor needs to make a critical decision soon about whether to negotiate a casino gambling compact with the Wampanoag tribe and possibly permit other casino gambling operators to open up shop in the state in order to increase state and local revenues. If the Legislature will not step up and meet its fiscal responsiblities, then it falls to Gov. Patrick to provide the leadership and make the persuasive political case to the citizens of Massachusetts to support these possible new revenue streams and budgetary cost savings mechanisms. If Gov. Patrick buckles to the narrow interests of the state employee unions or the local NIMBY groups, then I would have no objections to the Governor making another call to his friends at Ameriquest to inquire about the availability in 2011 of a prime corporate counsel job with his favorite sub-prime mortgage lender.
I would hope that the state would, at least, permit towns like Stoneham to issue municipal bondsto pay for the educational programs and services its parents, students, and teachers deserve to maintain.
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Bonds should be used only to pay for capital projects, not for recurring expenses. It was the usage of bonds to pay for recurring expenses that got the state of MA and the federal government (which never had a capital vs. current funding strategy in place) into trouble. Bonds should never be used for recurring expenses.