IF ANTITAX activists in Massachusetts had a real plan to slash the cost of state government, they’d have put it forward by now — and it would have found a receptive audience. When Governor Patrick and the Legislature raised the state sales tax from 5 percent to 6.25 percent last year, the increase came at a terrible time for many families in Massachusetts, and even many voters who favor an active government and a strong safety net bristled at being asked to kick in more.
But Question 3 on Tuesday’s ballot wouldn’t bring the sales tax back down to its old level; rather, the measure would cut one of the state’s major revenue sources by more than half, to 3 percent — and it would do so without even giving legislators or local officials any tools to bring costs down correspondingly. This isn’t a budget strategy. It won’t magically produce the leaner, more efficient government that Massachusetts needs. It’s a stunt designed mainly to create chaos in state government.
The ballot measure comes from the same anti-tax activists who pushed an unsuccessful effort two years ago to eliminate the state income tax. The theory behind both efforts is that reducing the flow of money into the state treasury will force legislators and the governor to cut unnecessary programs. But the size of the proposed cut is essentially arbitrary. And by shearing $2 billion to $2.5 billion in revenues from the state budget, the ballot measure would force deep cuts in a panoply of vital public services. The Massachusetts Taxpayers Foundation estimates that functions ranging from corrections to education would have to be cut by nearly 30 percent.
The problem is that the factors driving up the cost of government in Massachusetts don’t simply disappear when revenues plunge, and the expenditures that are hardest to justify to taxpayers are also the hardest ones to cut quickly. Question 3 won’t shrink Billy Bulger’s bloated retirement, because various laws and court precedents make it all but impossible to claw back pensions that have already been awarded. Question 3 won’t bring benefits for public-sector workers in line with the private sector, because the ballot measure does nothing to improve state and local governments’ bargaining position in negotiations with unions. Question 3 won’t undo the cost overruns of the Big Dig, and the lingering debt from that project still loom large. Indeed, by producing more frequent, and more severe budget shortfalls, Question 3 will prompt state and local agencies to put today’s expenses on the credit card for future generations to pay off.
The sales tax, at least as it’s structured in Massachusetts, is one of the more equitable options for collecting revenue. Even at 6.25 percent, the rate is lower than in most other jurisdictions with sales taxes. And by exempting food and most clothing items from the tax, the Commonwealth isn’t penalizing residents for tending to their most basic needs.
Backers of Question 3 insist that the cut will improve the economy because consumers will have more money to spend. The reality isn’t so simple. Today, the state’s major growth engines are the dense clusters of highly sophisticated workplaces — such as the Longwood Medical Area, Kendall Square, and high-tech belts along routes 128 and 495 — that depend on a functioning transportation system, predictable municipal services, and the nation’s best public schools. There’s a reason most business interests in the state strongly oppose Question 3.
There is a way for fiscal hawks to use ballot measures to promote efficiency in state government, but Question 3 isn’t it. Last year, the mere threat of a ballot question prompted the Legislature to lift the cap on charter schools. Ballot measures could be similarly helpful in, for instance, adjusting the legal framework for public pensions, giving municipal officials broad authority over copays and other terms of health plans, and moving retired public employees out of municipal insurance and into Medicare — all steps that could yield huge savings for taxpayers over time.
But the antitax activists behind Question 3 have undercut legitimate reformers. If they had restrained themselves to rolling the sales tax back to 5 percent, they could have sparked a meaningful debate. But by cleaving back to 3 percent, they’ve put even the most dedicated budget cutters in an awful bind: Support Question 3 without any rational way to pay for it, or oppose it and appear to be defending the bureaucracy.
The public needn’t take part in this cynical exercise. While taxpayers should demand more reforms from the next governor and Legislature, even fed-up voters should reject Question 3.
In hard times, families and businesses tighten their belts, cutting spending where they must and finding new sources of income where they can. State government isn’t a family or a business, but balancing its budget also requires attention to both sides of the ledger sheet.
Question 3 asks voters to unbalance that ledger sheet, cutting the state’s income at a moment when it needs every penny to maintain critical services. Everyone likes a tax cut, but responsible voters will reject this one.
If you’re going to write the state’s budget, you have to do the math, so here it is, in round numbers:
The arithmetic gets even more daunting when you consider that nearly half the state’s $32 billion budget is legally required, including debt service, pensions and other obligations. The Mass. Taxpayers Foundation, a respected, nonpartisan think tank, estimates that covering the $4.5 billion shortfall out of the remaining funds would require across-the-board cuts of more than 28 percent.
State and local government are already reeling from budget cuts. MTF’s analysis found that, since the revenue crisis hit, $700 million has been cut from local aid and K-12 education and $225 million has been cut from higher education and early education. The budget for human services has been cut by 8 percent, for state parks and beaches by 27 percent and tourism promotion by 92 percent.
Nearly all statewide candidates support bringing the sales tax back down to 5 percent when finances allow it. If the Legislature revisits the issue, we’d suggest putting a cap on the sales tax, taxing the first $1,000, for instance. That would be a boon to all who sell – or buy – big-ticket items like cars, trucks and industrial equipment.
Few reasonable candidates or state officials think the state budget could handle an overnight reduction to a 3 percent sales tax without hurting services and the state’s quality of life. A wide range of services – public safety, education, health care, transportation – would face deep cuts. There would be thousands of layoffs in state and local government. That’s not hysteria, that’s fact.
Tax cut referenda often play on emotions, not thought. Cynical proponents say Beacon Hill will ignore the people’s will anyway, so why not send them a message? But Question 3 is not a non-binding reflection of sentiment; it’s the equivalent of a legislative act.
If you want to send a message, pick up the phone and call your local legislator. Write a letter or send an e-mail. Vote for candidates who reflect your positions. But don’t throw Massachusetts’ shaky finances into chaos simply to prove a point.
Vote ‘No’ on Question 3.
When voters faced a ballot question to repeal the state income tax six years ago, tax supporters dismissed it as an outlandish idea and spent just $4,600 to oppose the question. So they were stunned when it collected 45 percent of the vote.
This time, Question 1 opponents say, they are taking no chances. They formed the Coalition for Our Communities to raise money and make the case for keeping the income tax, the elimination of which they say would wipe out funding for schools, public safety, and other services and create turmoil for the Massachusetts economy.
By Oct. 15, they had spent more than $3.5 million to make their case on television and in print, as well as through door-to-door campaigning and phone banks, compared with less than $400,000 by the Question 1 backers, the Committee for Small Government, which is led by Carla Howell, a Libertarian.
A new poll released last night suggests that the anti-Question 1 investment is working. In a survey of 400 voters conducted Monday through Wednesday, 59 percent said they oppose the question and 26 percent support it, according to a 7News/Suffolk University poll.
A Suffolk poll conducted in August showed 50 percent opposition and 36 percent support.
“That’s telling me the arguments on the no side actually have traction,” said David Paleologos, director of Suf folk University’s Political Research Center. A majority of Republicans polled opposed the question, as opposed to a majority who supported it in August, he said.
Steve Crawford, spokesman for the Coalition for Our Communities, said the coalition has “mounted an aggressive campaign that includes all the components that modern campaigns utilize.”
Crawford declined to address the polls directly, but said, “We’re not taking anything for granted.” Advertising will increase up to Election Day, Nov. 4, he said.
Kamal Jain, spokesman for the Committee for Small Government, said ballot questions are difficult to predict. Polls failed to predict the support Question 1 received in 2002, when the economy weighed less heavily on people’s minds, he said.
Each side has received a majority of its donations from out of state, according to analysis by the state Office of Campaign and Political Finance, which collected finance reports through Oct. 15.
Almost 52 percent of the Coalition for Our Communities’ $4.5 million in cash and $520,000 in in-kind contributions, including use of office space and staff time, came from out-of-state donors, overwhelmingly from labor organizations. The National Education Association contributed $1.5 million, and its state affiliate, the Massachusetts Teachers Association, gave almost $1.6 million in cash, plus another $225,000 donated in-kind.
Jain said the millions in opposition funding “from the people who make their living off of tax dollars” illustrate why the tax must be abolished.
“They represent the special interests that lobby for spending,” said Jain, a former Libertarian candidate for several offices. He said repealing the 5.3 percent tax – which would range widely but amount to roughly $3,700, based on average income – would help middle-class families afford to live in Massachusetts and force government to spend more efficiently and with more transparency.
Jain, a Lowell resident who works for a software start-up, gave $4,600 to his own group, though on state disclosure forms he alternately declined to list his occupation and employer or gave them as “hard working taxpayer” and “not the government.”
The Committee for Small Government had collected $431,489, almost 54 percent of which came from outside Massachusetts. The donors were mostly individuals, like software executive Craig Franklin ($25,000) and investor Jason Hommel ($10,000), both from California. The committee received one in-kind contribution, a free magazine ad, worth $1,900, from Dartmouth-based SoCo, which covers Southeastern Massachusetts.
Crawford said out-of-state donors to the other side “are using Massachusetts as an experiment.” The national unions, he said, all have members here with a stake in the outcome.
The $1.5 million from the National Education Association presents a significant piece of the tens of millions that the union is spending on ballot questions and political campaigns across the country, said Karen White, director of campaigns and elections for the Washington, D.C.-based organization, which represents more than 3 million educators and school staff.
“We spend money when we know we need to win an issue, and this is one of the most critical issues to our members,” said White, adding that the money comes from political donations by members. “It’s an important contribution to a reckless initiative that we hope to defeat.”
The question, brought by a voter petition organized by the Committee for Small Government, would become law if approved. It would reduce the state’s income tax from 5.3 percent to 2.65 percent on Jan. 1 and eliminate it entirely one year later. That would cut about $12.5 billion, or roughly 40 percent of the state’s revenues, based on last year’s budget.
Those figures are enough to unite labor and business interests that ordinarily might clash on Beacon Hill. It has also generated opposition for Question 1 from many public officials.
On Monday, the Lexington firm Global Insight released a report commissioned by Associated Industries of Massachusetts, Greater Boston Chamber of Commerce, Massachusetts Business Roundtable, and Massachusetts Taxpayers Foundation that said Question 1 “goes too far.”
Eliminating the income tax, particularly during a global financial crisis, would ruin the ability of the state and its cities and towns to borrow money, drive up other taxes and fees – like property tax, public college tuition, and tolls – and spoil the state’s attractiveness to companies, the report said.
Also this week, the Boston City Council became the latest official board to pass a resolution opposing Question 1; the list includes selectmen in Wayland, where Howell, a former Libertarian gubernatorial candidate, runs the pro-Question 1 effort from her home.
Yesterday, some of Boston’s city councilors joined leaders from a host of social service and community activist organizations at an anti-Question 1 press conference downtown.
“Passing Question 1 would be a disaster,” said Councilor Chuck Turner, predicting a loss of $300 million in state aid to Boston, which would trigger thousands of layoffs and eliminate or reduce all manner of services.