Invest in Our Communities

The Act to Invest in Our Communities doesn’t have a snowball’s chance in hell of passing. in the near future. But that doesn’t mean it’s not an important piece of legislation.

After 35 years of declining taxes, the result has become clear. We’re slowly descending into disaster. The increasing cost of health care, our crumbling state infrastructure, and plummeting local aid are all giving us a picture of the future. We are now experiencing the abstraction known as small government.

Massachusetts voters, in my opinion, are not ready to increase taxes, even if it won’t affect the vast majority of us. But it’s time to stop talking about cuts and start talking about investment, not spending, but investment that will require new revenue. This won’t be an easy or popular conversation, but it’s crucial, and An Act to Invest in Our Communities provides us with the opening remarks of the conversation.

Declining Revenue

The problems of infrastructure and health care need little introduction, but the same can’t be said for local aid. In the last fiscal year, my town Granby recieved ” $746,820 in general local aid from the state. Four years earlier, in FY2008—prior to the onset of the state fiscal crisis—it received $1,173,585 (adjusted for inflation).” Think for a minute about what a 36% cut in pay would do to your household finances, and you have a picture of what is happening to our cities and towns.

Affluent communities may be weathering the 36% drop in state aid (over the last 4 years) better than poorer communities, but it will hit them too. In my town departments–police, fire, etc.–have been at level-services or less for several years. Our schools, after making $700,000 in cuts from a $11.2 million budget, have been unable to close the remaining $200,00 deficit due to pension and retiree insurance liabilities. Over the last few years, they had survived on stimulus funding and school choice reserves, both sources are now depleted. The Daily Hampshire Gazette reports on my town:

In the fiscal years 2004 through 2009, state aid to Granby grew 7.38 percent each year, [the finance committee chair] said.

“The state was doing its part to help out cities and towns,” he said.

If those annual upticks in state aid had continued, Granby could expect about $8.7 million for 2013, instead of the $6.2 million it is slated to receive, Libera said.

“These are very difficult economic times,” he said. “No one wants to see their property taxes go up. The Select Board wouldn’t even consider that. So we have no choice but to cut budgets.”

Some of that 36% drop in local aid can be attributed to the economy and the decrease in tax revenue, but it is also due to the drop in tax rates which have dropped significantly. As a percentage of personal income, state taxes have dropped by 29.2% since 1977. Even in a time of low inflation, a structural deficit was inevitable.

The Act to Invest in Our Communities

The Act to Invest in Our Communities is legislation currently stalled on Beacon Hill. In a nutshell, it implements a graduated income tax that would have little affect on most people. A person earning a gross adjusted income of $100,000 a year would pay an additional $100 in personal income taxes. Here’s what does:

1) Restores the income tax rate from 5.3 percent to 5.95 percent while raising the personal exemption enough to hold down increases for middle-class families.

2) Raises the tax rate on wealthy investors, but provides a targeted exemption for middle-class seniors.

3) Raises $1.37 billion in net additional revenue to maintain funding for our communities, schools, health care needs and public safety services.

The bill has sponsors in the House and Senate: Sonia Chang-Diaz, Patricia Jehlen, Ellen Story, Kenneth Donnelly, James Eldridge, Daniel Wolf, Denise Provost, James O’Day, Ruth Balser, Alice Wolf, Kay Khan, Frank Smizik, Carl Sciortino, Marcos Devers, John Fresolo, Patricia Jehlen, Sean Curran, Elizabeth Malia, Angelo Puppolo, Paul Mark.