Emerging issues mark 2005 State of the Household Survey

Confidence in the Massachusetts economy appears once again to trail the confidence some Bay State residents have in the improving national economy according to The Beacon Hill Institute's State of the Household Survey 2005. And few see their own economic standing moving in sync with whatever improvement takes place in the Massachusetts economy.

Amidst the gap between the outlook for the national and Massachusetts economy are key divisions that are quickly emerging among fiscal conservatives on issues likely to go before the state legislature this year.

As with last year's survey, marked divisions on key issues such as tax breaks for industry, outsourcing and casino gambling emerged as trends to watch in the coming year. Moreover, fiscal conservatives' support for drug reimportation and higher tobacco taxes show that broad support exists for such policies.

These particular positions stand in stark contrast to the otherwise mainstream conservative views on taxes, regulation and government reform. The State of the Household Survey reveals that a majority of respondents continue to believe that low taxes and less regulation are better for the economy than are spending programs.

The mail-in survey, sponsored by BHI, has been conducted each January since 1998. More than 425 individuals responded to this year's survey, which has a margin of error of +/- 5 percentage points. The survey represents a sample of fiscal conservatives in Massachusetts who support free-market policies and the candidates who espouse them.

Respondents to the survey are more optimistic about the national economy than about the state economy and more optimistic about the state economy than about their personal finances.
While 64% believe that the national economy will improve this year, only 50% are similarly hopeful about the Massachusetts economy in spite of the fact that for December 2004, the Bay State's unemployment rate of 4.6% was lower than the national average of 5.4%. These findings are generally in line with other surveys that show a gap between confidence in the Massachusetts economy and the national economy. Economists suggest that the Bay State's economy is still lagging behind the expanding national economy even as more revenues pour into the state's coffers. Any growing confidence in the state's economy might be offset by weak job creation.

Fifty percent (50%) see their household finances as neither improving nor worsening with only 34% anticipating improvement this year. Only 21% believe that their own economic standing and that of the state are improving as they enter 2005 -- a decrease of 13 percentage points from last year.

Reflecting support for his fiscal and economic policies, respondents overwhelmingly believe that Governor Mitt Romney (82%) is performing well in his job -- a seven-point increase from last year.

Respondents to the survey also:



• support tax reduction (84% want the personal income tax rate cut to 5%);
  

• want to abolish the state excise tax on cars (62% would favor this measure);
  

• would accept a plan that allows landlords to charge tenants for water use (75%);

• support reforming Social Security by establishing private savings accounts (69%); 54% favor reforming Social Security by means other than private accounts. Only 4% believe that Social Security should be left alone;

• oppose any proposal that would cap the number of charter schools (59%); and,
  support a proposal to create an independent commission to redraw legislative and congressional districts (70%).

Thinking out of the box

However, the survey identified several surprises. The survey identified divisions on emerging issues such as drug reimportation and what to do about health care.

Sixty-two percent (62%) believe that states, cities and towns should be free to purchase drugs from Canada, a ten-point drop from last year. Only 24% agree with the state's biotech industry that the public sector should not be allowed to buy drugs from Canada.

Forty-four percent (44%) favor a proposal that would require employers to provide health insurance or pay into a funding pool while 43% opposed. Thirteen percent (13%) were undecided. Last year 51% opposed any kind of law mandating universal health care in the Bay State (down from 56% in 2003).

Fifty-two percent (52%) favor raising tobacco taxes to expand health care coverage.

Fifty percent (50%) oppose the establishment of casino gambling, while 38% favor it. Twelve percent (12%) were undecided.

Thirty-six percent (36%) favor limitations on the ability of the Commonwealth to contract with firms that outsource jobs overseas, while 50% oppose such measures with 14% undecided.

Respondents sent mixed signals on how best to use tax policy to help businesses create jobs in the Commonwealth. An equal number opposed targeted tax cuts for the biotech industry (35%) as supported them (35%). However, 30% expressed no opinion on the question; one of the largest undecided blocs of any policy question in the survey. This response, along with the sentiment on drug reimportation, suggests that the state's biotech industry is still struggling to gets its message across to the public.

Tax incentives for manufacturing continue to tell another story. Respondents appear to be attached to the notion that the Commonwealth needs to hold onto manufacturing industries even while most of the state's economy evolves around services.

Seventy-six percent (76%) believe the state should be actively involved in preserving manufacturing jobs with tax incentives if necessary. Only 17% opposed the idea. Only 32% support tax breaks for both biotech and manufacturing.

Eighty-seven percent (87%) of respondents overwhelming support a measure to cap medical malpractice jury awards, one of the largest majorities received for any of the policy questions.

Fifty-three percent (53%) favor a proposal to build wind turbines on Nantucket Sound while only 24% voiced opposition. Thirteen percent (13%) expressed no opinion.

As with previous findings, respondents continued to demonstrate support for local government even though they favor abolishing a source of revenue to localities, the excise tax. Sixty-six percent (66%) opposed cutting local aid to cities and towns and only 17% favored cutting local aid with 17% holding no opinion. Fifty-three percent (53%) of respondents expressed confidence in Governor Romney's performance and opposed cutting state aid to local cities and towns.

Those who bemoan the decline of printed newspapers as a source of information may take some solace in the findings of the BHI survey. The survey indicates that picking up the newspaper appears to be the preferred method of obtaining information among fiscal conservatives in Massachusetts. Sixty-five percent (65%) disagreed when asked whether they agreed or disagreed with the following statement: "I get more of my news from the Internet than from newspapers." Whether these respondents recycle their newspapers is another matter.

Posted on 08-Mar-2005 3:15 PM
Format revised on 08-Mar-2005 4:10 PM