I’m a little surprised that there hasn’t been any mention of the state’s current budget woes here on BMG. A deficit estimated between $325m (the governor) and $600m (Mass Taxpayers Foundation) seems to be forming. Maybe we should spend a little time discussing this, since this is the kind of lunchbox economic issue that general election voters tend to dwell on? How did we get here? What is the way out?
Let me recap, at least what I know from Masslive.com:
On November 6, the Patrick administraion announced that there was a $325 million hole in next year’s budget. He attributed that to:
- $70 million lost due to our state income tax automatically being reduced from 5.2 to 5.15% (funny how no one called that “untaxation without representation!”) because of a state law.
- Projections for the economy are about $80 million optimistic.
- A decline in non-tax revenues is projected to be $175 million.
On November 10, both Charlie Baker and Robert Deleo announced that they were not in favor of using the Rainy Day Fund to fill the budget gap.
On November 19, the Patrick administration announced that to close this hole, it was proposing to cut $191 million from the executive branch, includiing
- $25.5 million from local aid
- Cut $40 million from city and town budgets through cuts to regional school transportation, special education reimbursements, vocational school transportation, charter school reimbursements, extended learning time grants and other programs.
- Cut $80 million from the Department of Health and Human Services, which means $111 million once federal matching is taken into account.
- $10 million cut to the Department of Transportation
- $21.8 million in reductions of 1.5 percent at non-executive agencies, such as the attorney general’s office, the court system and the secretary of the commonwealth.
- Clawback of $29 million from quasi-state agencies, funds that were tabbed for economic development such as building projects in Gateway cities, brownfield cleanup, and financing via the MassDevelopment agency.
The Massachusetts Taxpayer foundation said that it estimates the budget gap may be larger – $500 to $600 million.
Today, Robert Deleo announced that he would not cut local aid. Other details reported include:
- Of the $40 million in cuts to local programs, this would include $1 million from grants for extended learning time, $1.2 million in charter school reimbursements, $3.8 million in special education reimbursements and $18 million for regional school transportation.
- $45 million reduction in “MassHealth fee for service payments
- $5m cut to child and adolescent mental health services.
The article linked above gives each line item reduction.
Should we maybe be rethinking the $70m that is going to be given out in income tax reductions? Should we be thinking of bumping the rate up a little bit? Should we be dipping into our $1bn Rainy Day Fund? Should we be chasing more strategic reforms instead of cutting programs to the more vulnerable citizens in the state?
I thought the MA Constitution required the budget be balanced? If not, deficit spending isn’t the worst thing in the world if it can be economically stimulative.
Hence the need to cut spending unless revenue increases.
is required to approve a balanced budget. But the budget, once approved, can get out of balance in the middle of the fiscal year, hence the need for the mid-year cuts.
stupid tax thing. There were sources of revenue that didn’t pan out.
Cutting spending is not the way to go about it. I’ll explain why at lunch.
Is this maybe a good time to re-think the tax credit we give out so that movies are filmed in the state? In 2012, it cost the state $78.2 million to subsidize these movies.
According to an article I read:
Should we be cutting mental health services to get movie stars to spend a few weeks in the state?
Terminology gets frustratingly slippery here.
If the movie thing a $78M “tax expenditure”– meaning that is the size of the tax credit, then removing the credit does not add $78M back into the budget. Moviemaking is transient and easily movable, and will just go somewhere else for the next movie.
That might be a reason never to have given the credit in the first place, but it is more likely than not that the 13 cents is net positive, because the dollar isn’t coming even without the credit.
The state gives a 25% production credit, a 25% salary credit, and a sales tax exemption. In order to qualify, you must spend more than $50k on the film; you must spend more than 50% of the total budget or film 50% of the photography days in the state. The production credit includes out-of-state production expenses. No annual caps, no residency requirements. That’s all from the state’s “sales pitch” page.
That means if you film 51% of your movie in Massachusetts and your film budget is $300m, the state gives you $75 million. Your $300m budget may be $200m to your actors, $100m on production; your cost to film may be $5m, with $95m back in CA to do all the stuff it takes to make a movie.
The state economy would therefore see only a small fraction of the $300m budget – the stars aren’t spending their money here, the production is taking place in CA. They just spent more than 50% of their time filming here, and we pay them $75m.
That’s my understanding of it, anyway.
They are credits, which means that the state writes a check.
This should be high on the list of things to cut.
to keep filming here. They’ve done so much for our state’s image by showing the rest of the country that we’re all emotionally stunted gangsters and bank robbers.
These exemptions and tax credits are large portion of the states expenditures. The last time I looked at the state budget page 2 years ago the list of these economic tax expenditures were very easy to find and while I did not see a line item list for each individual expenditure at the very least the categories were listed. The last time I checked there was 1.3 billion listed just for economic expenditures related to corporate taxes in the state. I have seen what they look like. In Northampton we gave a small property tax break (tax increment financing is what it was called, or a TIF) to several businesses at the local level based on them expanding their property and also on the premise that they were adding employees to their business. The city awarding the businesses this credit was a requirement to qualify for a much larger state credit. While I understand the rationalization, there doesn’t seem to be supporting statistics for whether these kinds of tax expenditures (whether they are tax breaks for corporation, movie credits or something else) really make our state economy better. There also are no tracking provisions to determine or hold accountable the performance of these economic expenditure over time. They are never subject to review or scrutiny the same way the regular budget expenditures are except for the occasionally in a small sub-committee meeting somewhere in boston by a room with 5 people without the general public watching or even aware. On the other hand we have very public battles over taxes and state spending. These economic tax expenditures are costs to the state and should be on the chopping block for budget cuts just like everything else, but they are not and they are hidden from plain sight unlike school funding.
A list of economic tax expenditures by the state doesn’t seem to be readily available, I am going to contact someone to see if I can find it
Does anyone know if this list of the states economic tax expenditures is readily available, link, anyone?
checks to movie companies to film here, they would be lined up. I don’t think a tax credit involves writing a check. I think that to the extent that the company would owe sales and other taxes to the state, they can reduce those taxes by 25% of their costs of production. I admit I haven’t read it, but that’s my understanding of how tax credits work.
http://www.mafilm.org/mass-film-tax-credit-law-in-a-nutshell/
to a film company for 90% of the company’s taxes paid if the company, for some reason, didn’t take the tax credit. The state isn’t paying the company for 25% of its production costs.
They are transferrable tax credits. So there is a credit applied to taxes otherwise due, thus reducing the tax. If the company that got the credit isn’t going to use it, they can sell it to someone who wants it, and then that person can use it. That’s the transferable part.
If they don’t want to transfer it, they can redeem it for cash, and the state would indeed cut a check for 90% of the value of the unused credits.
Ugh. It is probably the case that it would be more expensive to kill the program than to keep it, because killing the program would mean that people would seek to redeem all of the credits they have at 90%.
I suppose lets hope that the value of the outstanding credits is not building up as time goes by– otherwise 2023 is going to be UGLY when the program expires.
Politicians (as well as other people) like the idea of movie & TV stars walking around our towns, the camera crews, the shots of local scenes appearing on the screen.
In Worcester, every time the monopoly contract with the cable company comes along, the single and only issue the politicians give a crap about is the stupid local access channel that televises local government.
Will you invest in a new studio? Will you pay for better production values? Will we look good on TV?
When Charter decided to bail out and sell the system to Comcast, the only thing they gave a damn about was whether the local access channel would be moved to a “less advantageous” channel than Channel 3.
This for the company that provides TV, internet, and phone service for a significant chunk of the city, and does it poorly and expensively.
I’ve read (and am too lazy to Google) of other states ending their credits. And remember, one of their biggest boosters was the state senator of Plymouth and Senate President…who is retiring in about 7 weeks.
Primarily insurance companies, financial institutions and other corporations that owe state taxes. Of the $327 million in film tax credits that have been generated since 2006, these organizations have purchased $280 million, or 86 percent. They have paid an average of 89 cents for a dollar’s worth of tax credit and thereby reduced the state taxes they would otherwise have had to pay by $30 million.
in cutting a check for 90% of the value of unused credits, the state is merely refunding money that was already paid to it in taxes. That, I gather, is why it’s described as a refund. So, while these credits do result in a loss of some tax revenue to the state, it would seem that the 10% the state keeps is still a net gain. Whether the state is really getting a lot of economic investment or benefit from the tax credits is another matter.
🙂
Since taxes are the state’s principal revenue source, you could say this about any check drawn on state funds.
The characterization that we are paying film companies to shoot their movies here is correct.
in revenue lost to the state than paying a film 25% of its actual production costs. One of the comments above stated that if a company’s production cost was $300 million, they would get a check back from the state for $75 million under the tax credit. If that was the case, I think we would be facing a deficit this year much larger than $329 million.
So how much of movie’s budget is spent while filming in MA? They’re only doing the shots that need the scenery. So $75m probably means a number of productions getting 3-5m each.
That isn’t true. A refundable credit means that if you can’t offset a tax liability with the credit, you can “cash it out” at 90 cents on the dollar. You get back more money than you paid in taxes.
No. Refundable means that they get 90% of the value regardless of their tax liability in the state.
For example, if they have a $10m tax credit and a tax bill of $15m, they would reduce their tax bill to $5m. However if their tax bill was $5m, they would get a refund of $4.5m – the first $5m gets eliminated 100%, and then the 2nd $5m gets refunded at a 90% rate.
The reason we don’t see films lining up is that many states offer this credit. We’ve raced each other to the bottom.
I’ve not been able to find a concise, legal, explanation of the program. This article in the LA times is interesting as the author and commenters are looking at this from a Californian’s perspective. They complain that their state is losing out because of policies like this in Mass and other states. They think it’s a wise practice. I haven’t made up my mind but I’m not one who is star-struck so it boils down to a financial decision.
I found the link on the mass budget website to the movie tax credit
http://www.mass.gov/bb/h1/fy13h1/tax_13/items/htax2614.htm
and the rest of the list of the states economic tax expenditures
http://www.mass.gov/bb/h1/fy13h1/tax_13/htax2.htm
In reality many of these economic tax expenditures are things like exemptions for non-profits. But some portion of them are definitely non-essential spending in the name of economic development without being subject to the same public scrutiny or review as the general line item budget
There is also a small explanation about the credit on the page
These are really cuts to schools. Here’s how that works.
Special Ed is a mandate. It is absolutely required. So when the state reneges on its commitment to pay for this mandate, schools must shift resources from other programs.
Special Ed is expensive and also unpredictable. A few Special Ed placements can have a severe impact on a small or even medium-sized system.
Fast forward 6 months or a year to hear the legislature say, Why can’t these crummy towns balance their own budgets? We did.
…if the need to be challenged were also considered a special need. Unfortunately enrichment programs are often first on the chopping block when money gets tight.
Merrimack’s opposition to increased taxes, I can’t agree with the reasoning for making cuts.
The idea that we should cut things when revenue is down is often predicated on the false assumption that business is like government. It’s not. Businesses must make profits to survive. Governments don’t make profits. Government revenue comes primarily from taxes, which fluctuate with the economy.
In 1998, the state passed some ill-advised tax cuts. The MBPC reports,
At that time, our bubbling economy made up for the cuts. Since then, the economy has not been very bubbly, and we have a structural deficit largely because the cut added up to about $3 billion a year in revenue shortfalls. That’s close to $50 billion not going to the state. We can argue about our taxation preferences, but budgetarily, that’s a monstrous amount of money.
The services government provides are not seasonal or cyclical. Cuts reduce the ability to address those services. At the very tax, we need more stable tax revenue. At best, we need more tax revenue.
that is indeed my sentiment. It’s a question of priorities. Trickle-up is right that this is a hit to education, because those unfunded mandates hit the schools. In my town it’s one bucket, so by extension it hits the town.
Andover, my town, has a $160M OPEB obligation that currently costs $5M a year, but it is underfunded and should really cost over $10M annually.
So what is more important, Special Ed, or the state mandated commitment to provide lifetime retirement health benefits to part time town employees?
Is it Special Ed or is it the requirement to pay union level wages on every building project? We have three stalled major projects because the numbers are so high. If all three were completed, it’s +$500 for the average home tax bill for the next 20 years. Note that they go up $200 every year anyway.
Even within Special Ed, what is the level required? Currently Andover spends millions in legal costs fighting parents. Why? Because if they gave in every time it would be ten’s of millions. We are already a generous town that does its share, but parents are moving here because of that, and we can’t provide for everyone.
I know the vast majority of people here want higher taxes. There’s just not widespread support for that among the voters, because they view it all as one big pit. Andover already gets shafted on local aid and Chapter 70. Our MCAS scores are dropping. The HS is overcrowded and old. Class sizes are going up. There are fees for everything. People are not happy.
A lot of those sped costs are transportation, which can be an absolute killer expense. You’re right that the districts have to fight them all like hell, or wind up putting all the non-sped kids into unlit, unheated rooms, with 100 kids per class. No one likes being in that position, but the costs are crazy, and can’t be cut by the towns, even when the legislature yanks the funding.
It’s a shame that there isn’t some sort of mechanism, in which all of the people of the commonwealth could weigh in on problems such as these by, say, choosing their representatives in government. The candidates in such a utopian world might mention that problems exist, and express views on how to solve them, thus giving citizens the opportunity to be heard.
It is also a shame that there isn’t some sort of body of representatives from across the state that could hold hearings or something to make sure that the little revenue that the government does get isn’t wasted on graft, so that the candidates wouldn’t always be embarrassed to talk about revenue and spending.
Lastly, it is a shame that our governor couldn’t quite muster the energy to get this report out a little earlier than 2 days AFTER the election.
it seems like you’re half sarcastic, half making a direct point.
MA has a long history of questionable budgeting practices, though they have a lot of company with other states.
If we boil it down, the current system causes a lot of angst at the local level and that would be unnecessary if the legislature did their job. Why do they not? Because they want to stay there and the people that help them stay there like things the way they are.
Or needed an emoji.
I remain frustrated by the extreme dysfunction of our state government. We have just had a protracted trial in which the US Attorney produced extensive evidence that our state government uses a significant portion of taxpayer revenue for what can only be described as graft. These shocking developments provoked zero interest from those charged with legislative oversight of the government, zero interest from state law enforcement officials, and zero attention in a hotly-contested gubernatorial election.
Even so, in that election we had a ballot question, and maybe more than one depending on how you look at it, that squarely raised the issue of government revenues and spending, and it got next to no interest from any candidate for anything.
So now, once again, our Democratic legislature will do something that requires a political WAR in Ohio or Wisconsin when Republicans try the same thing, except here it will be done by Democrats, in a way that ensures no meaningful political consequences, who will later be cheered on as liberal lions because Republicans are icky.
They get a lot of grief (and go through a lot of agonizing) when much of it originates in the legislature.
…that elected school committees should be allowed to raise taxes in their jurisdiction. Sure, the same political calculations will come into play as with other bodies with tax-raising powers, but the option should at least be there.
And such policy discussions could be transmitted to citizens by men and women trained in such discussions, free of attachments and obligations to one or both sides.
Instead, we have hacks reporting on non-issues and poll numbers. A state where the political expert is a third-grade embarrassment who couldn’t find the front door of a half-decent political science lecture hall nor understand a budget without counting on his fingers named John Keller.
your opinion, but disagree.
I’m chairing our school building committee right now and very much feel the pinch of prevailing wage. I do believe, though I’m not totally persuaded by the research on the subject, that union wages drive all wages up.
The hard SPED costs to swallow are kids who go out of district. At best you’re talking $60,000 per year per kid. Double that for a residential program. The circuit breaker isn’t enough.
I agree that people don’t want higher taxes. But the one big pit thing is at least partly a canard. Most people just aren’t that well-informed. In my experience, very few people understand how the state budget works. They don’t understand how money is spent or why it’s spent that way.
Almost no one realizes that we are where we are because of tax cuts. If $3 billion a year were put back into the budget, things would be much different. Andover has seen major cuts in local aid, just like every other community. That’s due to the 1998 tax cuts.
If you cut every time revenue drops, you’ll eventually have no services. You won’t add them because you know eventually taxes will drop and you won’t be able to afford them. If eliminating services is the goal, that’s fine. I don’t agree, but it’s a matter of goals and opinion. People need to understand the whole picture, not just cutting taxes feels good. I know many, if not most people, wouldn’t like to see their taxes raised, but they should understand what it means.
Andover is a rich town. I don’t know if it still holds true, but it seems like the population was fairly transient. It also seems like there were some growing pains in the last 15 or 20 years. The average price for a home is $550,000 and the average tax bill is $8,300. Per capita income is $66,653. That’s about on par with Longmeadow–the richest community in Western Mass. The per capita income in Granby (my town) is $27,512. I do have some sympathy for you. People with more money feel the same pains, even when the stakes are different. Move to Lawrence and your costs would drop considerably. Our property taxes rise, at least in part, because we don’t pay taxes at the state level.
It seems to me that tax cuts and tax hikes affect budget balance in the short run, but the state of the economy matters more in the long run. For instance, the state was facing a budget deficit of about $1 billion during the budget crisis of 1989-1990, and the Legislature helped solve that crisis by raising the income tax rate from 5% to 6.25%. At the time, the total budget was about $12 billion.
But since 1990, the income tax rate has dropped to a level close to where it was in 1989. Yet, revenues grew throughout the 1990s and into the 2000s, and the total budget was over $34 billion as of FY 2013.
So, I’m not sure that tax cuts enacted in the late 1990s are really the reason for where we are today. I’ve posed this question to the folks at the MBPC and never gotten a satisfactory answer to it.
This is a logically tenuous assumption:
Tax revenue is the product of tax rate time taxable income. Clearly, either factor or both can effect revenue. Accounting for inflation, $!2,000,000 would be about $23,000,000 in today’s dollars. That’s omits the increased costs of health insurance, which has taken up a larger and larger percentage of the state budget.
I don’t know much about the economic history of 1989, but it was two years after the 1987 stock market crash when the stock market value 22% in one day. Tax revenue, I assume, must have dropped precipitously as well. Proposition 2 1/2 had also gone into effect 7 years earlier, beginning what I think was a slow shift from local to state funding
At issue is revenue stability. The economy goes through cycles. If the rate is cut in good times, as it was in the bubble of 1990s, revenue seems to be unaffected. When the economy takes the inevitable downturn, however, revenue drops. The idea is to keep the “surplus” during good times and use it during bad times. It’s hard to do that when you cut the surplus during good times and don’t know how bad the bad times will be.
that it may not be a good idea to cut taxes when the economy is booming because it may leave less to work with when the downturn comes.
But even adjusting for inflation, the state budget grew more than 50% in the 1990s while the income tax rate was dropping. I’m not a supply-sider because I don’t believe the drop in the tax rate had anything to do with the growth in revenues during that time. It was the economy that drove it.
Economists will probably wince at this, but budget revenues seem to act a little like a wood stove. The stove will only run for any length of time at a good, hot temperature if the wood is dry, seasoned, etc. The wood in this possibly questionable analogy is the economy. Putting paper in the stove is like raising taxes. It will boost the flame temporarily, but ultimately, the wood takes over as the long-term fuel for the stove, and the amount of paper you put in at the start ceases to be a factor.
I realize this analogy is probably questionable partly because the paper in the wood stove disappears, but higher tax rates do remain, presumably bringing in higher revenues. Or do they? I keep coming back to the notion that no matter how much you raise taxes, revenues will not stay up for long if the economy continues in a downturn.
$550K sounds like a big house but that doesn’t buy you much in Andover (that’s 3/2 needs work) and maybe you didn’t pay that and you’ve got some appreciation, but regardless $8000 is a lot, and it’s not like you’re getting that much for it, especially when you factor in future liabilities.
I have some experience with state government, specifically in budgeting. The problem here is a complete abdication of the Administration and the Legislature to properly manage and oversee their own budgetary and revenue projections. The spending levels, at least on the operating side of the budget (“operating” meaning the part of the budget that includes all agency appropriations for state employees and the provision of services) had already been budgeted for back in July / August with the passage of the GAA (the General Appropriations Act).
As already noted, the GAA is required by law to be “in balance”. But the biggest open secret on Beacon Hill is the fact that “being in balance” is always a moving and amorphous target. The budget is only required to be “in balance” on the actual signing of the budget. Everyone knows that beyond that, the budget is (almost) always not in balance because of a variety of assumptions that may or may not pan out. Some years it may be more manageable than others. Clearly this year, it is not. So what makes this year different?
Sure the trigger for the automatic income tax reduction plays a part of it. But this year, it was clearly aggravated by the economic development bill that was passed in the late summer by the Legislature that was clearly based on faulty assumptions about tax and non-tax revenue. The chronic problem with the Legislature is a fundamental inability to pass dedicated forms of revenue for spending for fear of being called “tax hikers”. It’s cowardly, it’s pathetic, and most importantly, it borders on fiscal malpractice. So the Legislature always wants to have its cake and eat it too. It wants to fund spending projects (often with a political intent, as the economic development bill for the Gateway Cities clearly shows), but it also lacks the political backbone to actually fight for real and tangible sources of NEW revenue to pay for it. Hoping for “above benchmark” tax revenue isn’t it.
The Governor’s administration (regardless of party) doesn’t help things either. A&F (Administration and Finance) is the Governor’s budget office (i.e. the state equivalent of the President’s OMB) but it also serves as the de facto budget office for the entire state. The problem with this “Dr. Jekyll / Mr. Hyde” role is that it often serves competing and often dichotomous roles: on the one hand, it serves to advocate for the Governor’s fiscal agenda on a political level, but it also has to manage and ultimately balance the budget the Legislature passed (which is often a budget the Governor never really approved of in the first place). As a result, you don’t really have any real autonomy or oversight. Where was the Patrick Administration and A&F in the summer when the bill was passed? They could have clearly said this bill was built upon faulty economic premises. But with the gubernatorial and statewide elections in full swing, there was literally no incentive to call out the Legislature for a shaky bill that would ostensibly benefit the most disadvantaged parts of the state right in the middle of election season.
Bottom Line:
State spending, which had already been painstakingly crafted in the six-month long budget process, shouldn’t bear the brunt of fiscal “course correction” via 9C cuts when the real problems are as follows:
• Poor revenue forecasting
• Systemic inability of the Legislature to enact new forms of
dedicated, real revenue (i.e. taxes)
• The above factors being aggravated and exacerbated by political
concerns and lame duck syndrome on the part of the Patrick
Administration
The solution to this has already been suggested by various entities such as The Globe and most recently endorsed by Martha Coakley and Deb Goldberg in their respective campaigns: a truly independent state budget office in the vein of the Congressional Budget Office (CBO) that can effectively call out and check the Legislature AND the Administration’s often wildly off-base fiscal projections. It needs to be funded from a revenue source that is independent of the Legislature (so that it can’t be underfunded or de-funded) and it also needs to insulated from the perpetual campaign cycle (i.e. it can’t be staffed by the Governor’s own people).
It’s admittedly an issue that is decidedly un-sexy and makes most people’s eyes glaze over, but if we’re committed to a Commonwealth that is fiscally capable of supporting and investing in robust and sustainable progressive policies, it is absolutely vital.
Congress? I’m not sure there is such a thing as a truly independent budget office, but I agree that Massachusetts Legislature lacks a fiscal analysis office comparable to the CBO at the state level. The Connecticut Legislature has one — the Office of Fiscal Analysis — which does everything from assess the accuracy of the administration’s revenue forecasts to analyze the fiscal impact of proposed bills. I think all of those duties fall to the staff of the House and Senate Ways and Means Committees in Massachusetts, which don’t have resources anywhere near to the task.
In a system where the legislative body (be it Congress or the Massachusetts Legislature) controls the power of the purse, I guess nothing is truly independent.
However, there are ways to make a fiscal watchdog more insulated and immune to political cycles and political pressure. When I was referring to the CBO previously, I was speaking more about the CBO’s ability to score, in a non-partisan way, bills that come out of Congress. Ideally, the hypothetical Massachusetts fiscal watchdog would also have the ability to score such bills that come out of the Legislature.
But the other organization that comes to mind is the Government Accountability Office (GAO), which has the function of auditing and evaluating the performance and financial integrity of federal government programs. The US Comptroller-General is the head of the GAO and is appointed to 12-year terms. Having such a long term arguably increases the GAO’s ability to transcend political cycles and really audit and analyze government programs with a more long-term focus.
So ideally, the Massachusetts fiscal watchdog would be a blend of both the CBO and the GAO.
And as an addendum: It’s both A&F and the Senate and House Ways & Means Committees that do have the informal “role” of assessing the fiscal impact of bills or legislation. But considering the high turnover, low pay, and often political nature of their jobs, it’s fair to say that those entities don’t do nearly enough to ensure the right kind of scoring and analysis takes place.
in the form of the Inspector General’s Office. The IG is appointed to two four-year terms, I believe. So, in that respect, there is an auditing entity in this state that is comparable to some extent to the GAO. Massachusetts also has a state auditor, which is an independent constitutional office.
The budget of the Inspector General’s office is very small and only looks at a small fraction of state programs, usually ones that are focused on procurement and purchasing fraud. Laudable goals, no doubt, but it doesn’t have quite the same scope as the GAO.
Same goes with the State Auditor. Yes, it’s “independent” in the sense that it is independent from the executive branch, but it’s still an elected position that is still susceptible to four year political cycles. The GAO and CBO differ in the sense that neither head of each agency holds elected office and each head serves a much longer period of time than just 4 years.
And neither the Inspector General’s office or the State Auditor’s office do any fiscal scoring or analysis of the budgets or bills that come out of the Legislature or the Administration.
GAO and CBO certainly aren’t perfect and everything in government is influenced by politics, in one way or another. But the patchwork of budget / oversight agencies we have here in Massachusetts leave much to be desired.
if there’s one entity that DESERVES to be audited, it’s the Legislature. But since it has the power of the purse, it is always exempt from oversight, except from its own “internal” bodies.
I don’t think there’s any precedent anywhere else in other states about external government entities auditing their own state Legislatures, but in my ideal world, there absolutely must be.
The same goes for the federal government but to my knowledge, the GAO doesn’t have that authority to directly audit Congress.
…but it seems the State Auditor would have the legal authority to, you know, AUDIT the General Court.
…the State Auditor does not have the ability to audit the Legislature. Not surprisingly, it is entirely dependent upon the Legislature for funding through the appropriation process. In fact, Auditor Bump has had to ask the Legislature to expand its powers to audit corporate tax returns in order to examine whether or not tax policies and incentives offered to businesses statewide are effective. However, her office needs access to DOR tax returns to do this, which requires the Legislature to pass a law to enable this.
This request has been made before by the Auditor and is still pending. But it just goes to show you just how much power the Legislature has, even over other “independent” bodies, with its “power of the purse”.
It’s ultimately an imbalance that has to be corrected in some form or another. Unfortunately, it’s usually corrected only where there’s such evidence of gross corruption and malfeasance on the part of legislators that it can’t possibly be ignored. But what kind of governance is that?
…that one of the perks of being independently and directly elected by the people was that you didn’t have to ask anybody’s permission to do your job.
powers.
but, having worked there, I would say its purview goes beyond procurement and purchasing. Much of the the office’s review sand analysis concerns performance on public projects and programs and drafting and monitoring of state contracts and contractors. You can argue that the IG’s budget should be larger, but I would still say its mission and independence are comparable to the GAO.
That said, I agreed with you that the Legislature needs an Office of Fiscal Analysis, similar to what the Connecticut Legislature has, to analyze the fiscal impact of proposed legislation.
What the heck is that?
Everyone here goes directly to tax hikes, but the numbers nopolitician posted there, if accurate, seem to indicate that the lion’s share of the shortfall isn’t related to reduced tax revenue, whether because of bad tax cuts or as a function of a sluggish economy.
I would have thought that “non-tax revenue” might be a little more predictable, because perhaps it might not be so dependent on economic factors over which, in reality, governments have little control.
I guess not.
That does seem to be the largest reason for the shortfall. The article is vague on this, only adding “like fees” to describe this bucket.
Googling “Massachusetts non-tax revenues” brings me to this state page, which seems to outline $15bn in non-tax revenues. They fall into two categories: Federal and Departmental (i.e. fees/charges raised by the state).
The largest Federal bucket is “Health and Human Services”, of $9.1bn. It dwarfs the next highest number, which is “Education” at $194m.
The largest Departmental bucket is again “Health and Human Services”, $1bn. Next up is “Administration and Finance” of $988m, which I assume means “fees”, with “Transportation” being next at $592m.
Drilling down into “Admin & Finance” shows that $718m comes from the GIC (health insurance) bucket, and next highest $132m comes from fees.
Is this issue getting any press in the east?
…is pretty much a catch-all term for all revenue that isn’t directly taxed. That includes all fines, fees, levies, and assessments that state agencies and departments collect. Some are directly earmarked for specific funds or purposes, i.e. RMV fees for transportation (until very recently *cough*) or fines for excessive speeding, which goes into a state trust fund to help treat head injuries in accidents, for example.
Non-tax revenue also includes the settlement money that the Attorney General often collects when the office successfully concludes litigation. However, any budget official worth their salt would wisely not rely too much on this type of spending, because it is most often one-time in nature and sporadic at best.
All other no-tax revenue (a lot of which is collected by the Secretary of State, think filing fees and registration fees) go into the general fund. CentralMassDad, you’d THINK that this type of revenue would be more easily projected because it’s not dependent on economic cycles. Unfortunately, you’d be wrong. How the state tracks non-tax revenue or “departmental revenue” as it’s called elsewhere, is painfully outdated, cumbersome, and often at the whim of whether the agencies even keeps accurate records.
This is of course all tied to the (very sad) condition of the state’s IT and data sharing infrastructure, but alas that is a topic worthy of an entire post unto itself.
That makes sense.
That just makes me wonder how you miss by that much, even if you have no IT at all.
I guess what I am saying is that I suspect that original number was probably BS, used to make things look peachy and deflect attention until after the first Tuesday of November.
Casinos are here and they will save us all.
Stay on script boys.