Meeting with Jim Marzilli August 2003

(Please note that any and all errors are solely the responsibility of Colleen Kirby.) Our last planned informational meeting for the summer.

Attendees: Colleen Kirby, Barbara Goodman, Francesca Coltrera, Susan Lees, Charlotte Pierce, Emily Snyder, Jan Stetson, wonderful Bishop parent who helped stuff envelopes and I can’t recall his name

Currently the legislature is out of session. Rules have been changed so legislation is now moving slower than it used to, we are just starting to look at bills filed in December 2002. In the fall we’ll be looking at any course corrections and Supplemental budget items. There is a less than 50% chance that there will be tax raising in the near future even though revenues are way down because the people have been quietly bearing service losses without making huge complaints to the legislature. Here in Arlington, as our legislators are the ones who have already supported raising taxes for the services we want and need, it doesn’t even make sense to pressure our legislators as they are already pushing for increased funds. For people to mobilize takes political leadership and that is lacking in the current climate with Finneran and Romney dominating the House and State Government. And with the added backup of the referendum where the people almost voted in a no income tax bill that would have essential shut down our state government. It appears that Finneran’s main interests are business interests and not the well-being of all of the varied residents of Massachusetts and the services that address all of them. In the near future it does not seem that we will see any increase in funds raised or funds available for municipalities or education.

Since 1990 there have been 45 tax cuts, mainly for business interests and the wealthy. In dollar amounts state spending has only increased in the areas of Health Care (Medicaid), Local Aid and education, and Corrections. There have been huge cuts in housing, environment, transportation, poverty programs. There have only been 3 tax increases in that period; increased cigarette taxes in 1992 & 1996/7 and last year’s large $1.2B progressive tax increase. However even with that $1.2B increase we are still down $3.7B in real dollars from 1990. These are real cuts in real programs and it hurts. The full effect of these lost revenues are not even with us yet as the 5.9% income tax has been slowly decreasing to 5.3% and has not yet reached the 5% level as it is slated to do. With inflation, the numbers of dollars don’t seem to be decreasing at the state level, although in real dollars we have been losing money even before this year. In addition, the capital gains boom increased our revenues thus hiding the effects of these 45 tax cuts. Now that the capital gains boom is gone we are left with a permanent shortfall. And a very quick dive: in June 2001 we were in surplus by $563M and by December 2001 we were in deficit by $400M.

Jim, Jay and Anne are all working to change the Chapter 70 formula to take into account the disadvantage felt by communities that are primarily residential. The window of opportunity is the next 5 months. The difficulty is in the way a community’s wealth is calculated, such that only residential property is counted and not commercial property. (Such that Arlington with a lower per capita income than Burlington, pays nearly double the average property taxes of Burlington residents.) The Governor’s task force to deal with this unfortunately is not being held to the deadline to make sure that this change would be politically viable. The idea of filing an amicus brief with the Hancock court concerning this issue would be a help if it could be done easily and cheaply. If Charlie Lyons and the selectmen could form a coalition with other residential communities and using town lawyers author and submit a brief that could be used for discussion of this issue, that would be great although it wouldn’t likely change the formula itself. So go for it Charlie.

To aid those least able to pay property taxes: There is a homestead exemption law already on the state books that allows a fixed $ amount of a residential property to not be taxed. This would shift the burden for property taxes onto the shoulders of houses assessed at a higher value. This would not increase the total amount of taxes collected as it must be revenue neutral thanks to Prop 2.5. This would be an aid for Arlingtonians with homes worth less than the average assessment regardless of age. TM would need to put it on the warrant and adopt it for us to use this. As we are undergoing a revaluation, this would be a good time to institute this.

The $200M which the state got from the Federal Government early in the summer was not earmarked by Congress for any specific purpose. Romney and Finneran have shown no inclination to spend this money until a few months of revenue figures have come in to make sure we can meet the obligations we are already committed to. It is not clear yet, whether this money could be used for other purposes. The supplemental budget in the fall may be able to restore some things.

How could we get back the $3B in lost services that we saw occur this past year? We need a serious tax package. By putting the tax rate back to 5.9% we could raise $1.1B (Only 37 legislators were willing to vote yes on this in the past year.) We could raise $0.5B-$0.8B by closing corporate tax loopholes. We could raise around $850M by increasing the sales tax to 6%. But there is not enough support in the house to do this and Finneran is not inclined to push it. If the people start organizing and pushing to keep the services they want and need then maybe the legislators will follow suit. The time to pressure the State is in January after the Governor releases his budget, then again when House Ways and Means releases their budget. So from late January to July is the time to push for Program Maintenance and Restoration. There are limited policy options to restore local aid and education funding because there are not enough State Revenues. We are looking at a multiyear budget problem. It will not go away next year.

For more information on advocacy groups you could get information from the Mass Budget and Policy Center www.massbudget.org from the Working Family Agenda which is working with Neighbor2Neighbor and is promoting the Stop the Cuts campaign. Within the democratic party there is a group of Progressive Democrats forming (PDM) to put on pressure within the democratic party. There is a group forming to organize communities around school spending issues. Anyone who may want more information about this, can get in touch with me (Colleen) and I can point them in the right direction.

The big question is still How much of a tax increase do we need in Massachusetts and How can we get people and the legislator to support it? There has been a huge amount of anti-tax advertising in Massachusetts for a long time ($8M spent on anti-tax advertisements just last year alone). Massachusetts is 49th/50 states in state and local spending on schools yet our people still think we are Taxachusetts. There is so much anti-tax rhetoric flying it is hard to see what the truth is. We need to put state taxes back on the agenda. How? Slowly by building a network of legislators, new ones if need be, who are willing to vote for the services we want and need.

One worrisome prospect is Finneran’s push for an amendment to cap state growth of the budget with no means for an override. Sort of like a statewide Proposition 2.5. Now that’s scary

Comments from Jim, August 5, 2003

Colleen,

Thanks for the summary of our meeting yesterday. For another view of the fiscal state of the state, I encourage you to read the guest editorial by my friend and former colleague John McDonough which appears in today's Boston Globe http://www.boston.com/dailyglobe2/217/oped/Did_Medicaid_take_all_the_money_+.shtml

I want to make a few minor corrections in your notes, also:

1. I do not think that Speaker Tom Finneran is uninterested in the well-being of the people of the Commonwealth, as you wrote, but that he is paying increasing heed to the ideologically conservative business leaders of the state in determining how to best address our well being. I happen to think that those ideological conservatives do not serve our kids and families well.
2. I think there is a slightly less than even chance that we will consider a tax package in the fall (and many people disagree with me) but I am nevertheless devoting the major part of my time to again push for one. I will report back to this group on our plans by Sept 1, as I have called for a series of meetings among the major institutional supporters of my earlier proposal to restore the state income tax to where it was during the 1990s. I will report back on the details of the homestead exemption by the end of the week, also.
3. The federal government sent about $550 million back to Massachusetts, not $200 million. However, $330 million was earmarked for Medicaid and the remainder is unencumbered (see the McDonough story in today's Globe for more on Medicaid).
4. The task force that was assigned with the task of re-writing the Ch 70 formula and which failed to deliver was a legislative, not gubernatorial, body.

I am afraid that many people have recognized that Romney is off base on a number of budgetary matters and have decided to concentrate on legislators. Don't wait for the budget next year, but understand that the best time to let the Gov know your feelings is when the administration puts together next year's spending plan, which means December and January. It is important to communicate directly to the Romney administration your priorities and then make them known publicly, especially via letters to newspaper editors. The real meaning of Romney's fiscal plans needs to be brought to the public.

Thanks for bringing us together.

Jim