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From the Executive Director |
from NewsLink, Vol. 2, No. 2, Winter 1998
As it did last year, House 1, which outlines the Governor's budget for the next fiscal year, appears in a handy, single-volume format. Like last year's version, you won't need two hands or a shopping bag to carry the fiscal year 1999 budget down the State House steps.
Trimming down the pages of House 1, however, doesn't translate into smaller government. That's because state spending increases by 3.4% over last fiscal year - running ahead of the inflation rate for the first six months of the current fiscal year.
In his budget message, acting Governor Paul Cellucci outlined a shopping list of new initiatives: fully funding education reform, expanding health coverage for uninsured children, hiring new teachers, prevention programs for juveniles and programs that fight domestic abuse. In addition, the Governor is pledging even more aid to cities and towns. The bottom line for Fiscal 1999 adds up to $19.06 billion.
To his credit, the Governor reaffirmed his commitment to two choice tax cuts: reducing the rate on earned income from 5.95% to 5% over three years; and reducing the rate on "unearned" income from 12% to 5% over five years. He also called for a number of "targeted" tax credits.
"The debate about the Fiscal 1999 budget should begin and end with an honest and open discussion about cutting taxes," declared the acting Governor. We agree. But as is often the case in Massachusetts, political reality sets in. Worried about inevitable downturns in a growing economy, leadership in both the House and Senate are less than enthusiastic about the sweeping tax cuts.
To invert a sensible Weld-Cellucci dictum, it appears the Legislature has concluded that there is no such thing as taxpayers' money, only government money to be spend on any unmet desire. In the parlance of activist government: today's desires - spending on education and health care access for all children - become tomorrow's unmet needs. 'If you funded human services programs at the levels that are needed, you wouldn't have a surplus," according to the state chapter of the National Association of Social Workers on the day the budget was announced. "Instead you would have a humanitarian state which cares for vulnerable people." If we accept this logic, tax cuts will always be "unaffordable."
In a budget of $19.06 billion, surely some programs can be cut without compromising responsible government.
This year's budget may make for good election year outreach. But for those of us who've studied tax policy, House 1 is a risky gamble - not because of its tax cuts but rather its spending.
Our second State of the Household Survey
If given the chance to apply tax credits against their tax bills, Massachusetts voters would be more inclined to give to charities that help the poor. According to BHI's second State of the Household survey, 69% would support the idea of a tax credit.
BHI has studied a charitable tax credit for more than two years now and the State of the Household survey allows us to test aspects of this exciting policy idea with voters. According to the poll, 59% of respondents would give to a charitable organization that helps the poor if government cut back on welfare spending.
It appears that voters would welcome the idea of "devolving" welfare spending to the point that it's taxpayer controlled rather than government directed.
According to our survey, more than 38% of voters would prefer to give money to a local food pantry or homeless shelter if they were to donate $100 to help the poor. This finding is significant because it underscores the wisdom of making welfare taxpayer directed.
We include results of all survey questions in this issue of Newslink. Results are also available on our web site at www.beaconhill.org.
Ohio's Sales Tax Debate
We couldn't be happier that BHI's tax analysis provided crucial evidence as the Ohio Legislature debated a proposed sales tax increase. The proposal went down to defeat. Now Governor Voinovich wants to try again and take the measure directly to voters: "Let's get it done and put it on the May ballot! We can do it!" Should this happen, we invite voters to look at our numbers as they make up their minds on this important issue.
NewsLink is the quarterly newsletter of the Beacon Hill Institute for Public Policy Research at Suffolk University. © 1996-2002. All rights reserved.
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