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Massachusetts Liberal

Observations on politics, the media and life in Massachusetts and beyond from the left side of the road.

Wednesday, January 17, 2007

Trouble ahead

The honeymoon is just about over. Inspiring speeches and goodwill can't pay the bills and Massachusetts won't have enough to meet its shopping list -- at least not right away.

Oh, there's more than enough confusion about the state's fiscal picture, But if words paid bills we'd all be richer than our wildest dreams. As Massachusetts Taxpayers Foundation President Mike Widmer noted in yesterday's Globe, the reality has been been awash in political posturing -- from Mitt Romney, Kerry Healey and Tom Reilly.

The saga began more than a year ago when Romney started holding monthly press conferences to announce state tax revenues. He claimed they were rising at a rate that would produce a billion-dollar surplus in fiscal 2006 and called for an immediate income tax cut. During the gubernatorial campaign, Lieutenant Governor Kerry Healey and Attorney General Tom Reilly joined the billion-dollar-surplus bandwagon, using the claim to justify their support of a lower income tax rate.

Unfortunately, Romney's assertions had no basis in fact. Although tax revenues in fiscal 2006 did rise by a billion dollars more than estimated, the budget depended on $600 million in reserves, so the actual surplus was much smaller.

Then we had Romney's presidential campaign-motivated declaration that this year's budget is in tough times, prompting him to cut $429 million, cuts Deval Patrick has since rescinded.

And now we have Patrick and his aides saying we may have to phase-in promises like property tax relief, new police and more local aid -- not to mention cut $735 million in the proverbial waste, fraud and abuse.

(Did anyone besides me think he always meant gradual increases and not overnight fixes? And did anyone believe there really was $735 million in waste? There aren't that many gazebos to fund!)

Now we come to fiscal 2008 and the problems are starting to surface on the horizon.

The problem is slower revenue growth -- from a high of 8.2 percent last year to a gloomy projection of 1.8 percent from Patrick's Department of Revenue. Interesting, the rosiest prediction -- 6.4 percent comes form the supply side works believers at the Beacon Hill Institute who never met a tax cut they didn't like.

The ubiquitous Widmer was probably closest to the mark, offering a 3 percent forecast for FY08 compared to 4.2 percent this year.
"I think it would be an achievement if this administration and this Legislature are able to achieve a balanced budget without gimmicks, without drawing on reserves and maintaining the present level of services."
So we are left with the expectations and blame game. What's Mitt's culpability? Did Deval over promise?

I've often thought revenue projections could be done just as effectively with a dartboard. But I've got to go (as you would expect) with Romney and his GOP predecessors as the culprits here.

Let's go back to former Gov. Paul Cellucci's insistence that we could reduce the income tax to 5 percent and not cut a dime. What happened? The bottom fell out of the economy and the Legislature and Romney cut local aid, education funding, public health and safety and just about anything else they could.

Rose-colored glasses -- the kind that see 6.4 percent revenue growth -- don't work in budgeting.

But then again, a 1.8 percent projection is probably a political ploy too -- low ball it so that when things turn out better than expected you can take credit for the success.

The facts remain clear: Massachusetts is bleeding people and jobs. Romney, who ran on a platform of working to attract new businesses to the Commonwealth, did not do so. Once he hit the campaign trail and started bad-mouthing the state, he made that job even harder.

And as long as we bleed people and jobs, tax revenues will not keep pace with rising costs plus dreams. Fewer people mean less income and sales taxes; lower property tax receipts. It's the proverbial vicious cycle.

And that's really what should be the focus of the budget debate -- not whether promises will be delivered immediately or down the road, but whether we have what it takes to build a stronger Commonwealth where there will actually be people to take advantage of those services.

Budgets are political documents as much as they are financial ones. The real Patrick promises -- and tactics -- will be on display then.

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1 Comments:

Blogger Aaron said...

"Lieutenant Governor Kerry Healey and Attorney General Tom Reilly joined the billion-dollar-surplus bandwagon, using the claim to justify their support of a lower income tax rate."

To be fair, it was not just Healey and Reilly who supported the lower income tax rate, but the vast majority of voters in 2000 as well, who are still waiting for the legislature and the Governor to grant them what they democratically voted for.

January 17, 2007 12:57 PM  

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