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From the Executive Director
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from NewsLink, Vol. 6, No. 3, Spring 2002
Feeding frenzy. That’s the best description of how the Massachusetts legislature has dealt with the supposed FY '03 budget crisis. It would be funny if it weren’t so dismaying.
Here’s what has happened: Because of a temporary revenue shortfall, brought about by 9/11, the economic slowdown and a weak stock market, the state would have to cut spending from about $22.80 billion in FY '02 to about $22.65 billion in FY '03, in order to avoid raising taxes. (This calculation assumes that the state would draw on reserves, tobacco settlement money and other funds, as explained on our website: www.beaconhill.org.)
That’s a cut of about 0.7%. For a household that made $50,000 in 2002, it’s the equivalent of having to get by on $350 less in 2003. No big deal, right?
But the Massachusetts legislature, egged on by the media and some business groups, has turned this minor spending cut into a very big deal indeed. Fanning worries about “draconian” budget cuts, the legislature is turning a $150 million spending cut into an excuse for raising taxes by more than $1 billion.
In 2000, Massachusetts voters overwhelmingly approved ballot measures to cut the income tax to 5% and to provide a tax deduction for charitable contributions, both of which the House of Representative overturned in the blink of an eye.
Once they had this tax hike under their belts, our insatiable solons just couldn’t restrain themselves.
Thus we had a proposal to abolish Proposition 2 1/2. Another to raise the sales tax a penny (call this the Southern New Hampshire Economic Revitalization Act). Still another to raise the auto excise tax. Hundreds of amendments to fund pet spending ideas. The list goes on.
It is hard to say which is more depressing: this rush to raise almost every tax imaginable – and to do so well beyond the requirements of the budget–– or the insulting rhetoric with which the legislature has sold the whole scam to the public.
Then there were the demonstrators, arriving with potted plants and cell phones to place their demands before the legislature. Trampled beneath the feet of this throng of special pleaders was the express will of the voters.
Despite all this, the hope for principled government in Massachusetts has not died. Perhaps, indeed, it will turn out that this particularly atrocious exercise in bad government is just what the state needs in order to awaken itself to life’s realities.
There was a sense, after the 2000 election, that all was well in Massachusetts. The tax cuts passed in that election marked the culmination of a process that had eliminated some of the worst anti-growth features of the state tax code. Our own State Competitiveness Report of last year showed that Massachusetts could hold its head high among other states, ranking second, as it did, for its ability to compete for workers and capital.
Now we find that the tax-and-spend beast had only gone into hiding. That it was there all along awaiting a chance to come out of its lair and jump on the hapless taxpayer.
So it’s time to think big. Time to get rid of prevailing wage laws and project labor agreements. Time to get rid of the Quinn bill, additional assistance to local governments and at least a fifth of the Medicaid budget. It’s time to put an effective restraint on the growth of tax revenues. Perhaps the goal should be to drive the state budget down to some really low number, say, $20 billion, and leave it there for a few years to see just how cost effective state managers can be. If the legislature and the various claimants on state funds are going to complain about paltry budget cuts, maybe we should give them some real cuts to complain about?
Stay tuned. This issue will not go away. We will, in any event, do all we can to make sure it doesn’t.
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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