Bad breaks

NO MORE CUTS - cuts cause or prolong recession (6.00 / 1)

The short sightedness and lack of any coherent plan in the cuts made, many of which seem to me to cost more than what is saved, leads me to say "NO MORE CUTS" and "I think I could do better."  I think Judy or Yawu could plan and choose more effectively, for that matter.

Deborah Sirotkin Butler
AmberPaw dot @aol.com

"Failure to plan is planning to fail."
Proverb

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by: AmberPaw @ Tue Mar 16, 2010 at 19:16:38 PM CDT

What else, then? (0.00 / 0)

Amber, I definitely understand what you are saying. But the bottom line is that without cuts, revenues will need to increase dollar for dollar.

This budget is supposed to eliminate $797 from the state government. If that is not palatable to you, what would be your suggestion? Income tax increase? Toll increase? Sales tax increase? Reduction in spending on something else?

Are you arguing that the cuts are being done broad-based, like "10% from everyone"? I agree, such a plan is not very effective. But I don't know if that's happening.

From what I hear, the education cuts are being made somewhat intelligently, whereas cuts will be avoided if they bring spending below foundation levels. That's probably a reasonable and progressive way to spread them around, though residents of wealthy districts will complain that they are being hit harder than residents of poor districts. Of course, they can generally afford it better.

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by: NoPolitician @ Wed Mar 17, 2010 at 13:39:01 PM CDT

[ Parent ]

No cuts, except slush funds (6.00 / 1)

I agree with the no cuts sentiment. If I were the Speaker, I would go with an income tax increase and start the process of getting a constitutional amendment allowing a progressive income tax. I'd also raise estate taxes.

Sales tax increases as a last resort, starting with imposing candy and soda taxes.

Plus cut the Leg's slush fund, the courts' budget for law clerks and other stupid stuff, similar cuts from constitutional officers, sheriffs, etc. Cut any money DAs are using on enforcement of laws against victimless crimes.

Cut any tax credits that don't demonstrably create jobs, unless they have a worthy non-economic benefit like promoting renewable energy. I haven't gone through and looked at all of our tax credits, but it's quite possible that this one by itself would bring us up to the magic $797 million we need to save.

Throw in some consolidation of redundant agencies here and there, and you've got yourself a budget. And consolidation of redundant school districts. This is something that really could be done at the county level for the same quality and less price.

If I were Governor, I'd do all the above plus offer an automatic pardon to anyone convicted of a victimless crime and close the prisons/jails that became redundant as a result.  

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by: PatrickLong @ Thu Mar 18, 2010 at 18:27:43 PM CDT

[ Parent ]

I'll take that as a compliment.......... (6.00 / 1)

I think Judy or Yawu could plan and choose more effectively, for that matter.

And if we had a magic wand that, with one wave, could mandate a balanced solution to our 3 billion+- budget gap, we would include some significant new revenues, judicious use of the rainy day fund, and another round of federal stimuls money, may we could figure out some "more effective" consolidations and cuts.

Of course we don't have the magic wand and in our representative government we have to deal with a messy democratic process that demands that an elected Governor propose a solution to two different branches of an elected Legislature that has the power to develop their own solutions. And it's in the Legislature's hands now. They know the choices they face. More taxes or more cuts and they say they see no public support for more taxes, so it's more cuts to be announced on April 14.

If you havn't seen it yet, here is an excellent analysis of the Governor's proposed solution from [Mass Budget and Policy Centerhttp://www.massbudget.org/documentsearch/findDocument?doc_id=645}.

Federal Stimulus and Federal Jobs Creation Funding: $1.39 billion

To protect the national economy, and state budgets, Congress included significant state fiscal relief in the American Recovery and Reinvestment Act (ARRA, the stimulus law enacted last year).4 The state is scheduled to receive approximately $786 million from that law to help balance the state budget in FY 2011. This includes $690 million in increased Medicaid reimbursements (FMAP) and $96 million in education and flexible block grant funds. In addition, the Governor's budget, like those of eight other states,5 assumes that Congress will provide additional state fiscal relief that would be worth $608 million to Massachusetts in FY 2011. Because deep state budget cuts and tax increases could cost hundreds of thousands of jobs, this new state fiscal relief was included in jobs creation legislation approved by the U.S. House and pending in the Senate. If Congress does not provide this funding, it would cause significant fiscal problems for Massachusetts and other states, as well as economic problems for the nation.

Cuts and Savings: $797 million (net savings of $670 million because some cuts reduce federal reimbursements)

This includes cuts in most areas of state government and other savings initiatives such as debt restructuring and having quasi-public agencies pick up costs previously paid for in the state budget. These cuts and savings are described in the subject area sections of this Budget Monitor.

New Revenues: $230 million (net revenue to close the budget gap is $199 million)

This includes several initiatives, the most significant of which are capping the cost of tax subsidies for the motion picture industry at $50 million (for a savings of $75 million) and eliminating the sales tax exemption for candy and soda, which will generate $61.6 million. It also includes a number of smaller tax changes, departmental revenues and administrative provisions related to tax collection. These are described in the revenue section of this Budget Monitor. The net available to close the budget gap is less than the total new revenue because some of the revenue is dedicated to specific purposes (tobacco taxes to health care, revenue for the expanded bottle bill to recycling, and a portion of the sales tax reforms to school building).

Other Temporary Revenue and Savings: $489 million

This includes a $175 million withdrawal from the Commonwealth's Stabilization Fund (the "rainy day" fund), $100 million from shifting debt payments from FY 2011 to future years (which is in addition to $200 million in savings from a similar shift to smooth out a spike in debt payments that would have occurred in FY 2011), and $160 million that the state hopes to receive from the federal government as repayment for costs that were billed to the state Medicaid program that should have been paid by the federal Medicare program.

 

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by: Judy Meredith @ Wed Mar 17, 2010 at 11:40:47 AM CDT

Laid out nicely (0.00 / 0)

When it is laid out like this, it is a very good case. The sacrifice is being shared. Although no one could love a budget like this, it is worthy of at least respect for trying.

Unfortunately, most people do not want to even try and understand the budget. They just like to yell and complain. Sadly, they often vote for people who yell and complain just like they do.

I think we owe it to the governor to, when people complain about cuts or taxes, to make them tell us what they would do instead. For example, if you don't like the candy/soda tax, then tell us what you would get rid of to save the $61.6 million that will be lost by eliminating it.

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by: NoPolitician @ Wed Mar 17, 2010 at 13:33:57 PM CDT

[ Parent ]

6 6s for that paragraph my friend (0.00 / 0)

I think we owe it to the governor to, when people complain about cuts or taxes, to make them tell us what they would do instead. For example, if you don't like the candy/soda tax, then tell us what you would get rid of to save the $61.6 million that will be lost by eliminating it.

And if you got an idea of where to find 100 million or so starting July 1,2010, tell it to the House and Senate.  They have announced they don't want to remove the exemption from the sales tax for candy and soda, they don't want to count on unconfirmed federal dollars, are quesy about suspending the film tax credit, and finally they want to restore some of the cuts in human services.

And so they will be cutting local aid and chapter 70. All of this in broad transparent daylight.  

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by: Judy Meredith @ Wed Mar 17, 2010 at 14:28:29 PM CDT

[ Parent ]

How did you come to the conclusion (6.00 / 2)

the sacrifice is being shared?

The corporate tax cuts and tax cuts to financial institutions that went into effect in January are clearly tax cuts we cannot afford if we are discussing ways to make up that revenue. It also flies in the face of the concept of shared sacrifice. Why not start with taking back those tax cuts? That would more than cover that $61.6 mil.
www.massbudget.org/documentsearch/findDocument?doc_id=694

Those who have lost their jobs have already been sacrificed. Is it fair to ask them to sacrifice again with regressive sales tax increases, (candy/soda), before requesting some give from those who are still making 6 figure profits? There is a case for an increase in a progressive income tax hike.

What about eliminating the wasted with those investment credits that the Globe highlighted last weekend.

Maybe get creative. Home foreclosures in Massachusetts rose this February over last February. How about a tax on foreclosed homes? How about a 90% tax on credit card revenue on interest above 10%.

Let's really share the burden.

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by: Sue Kennedy @ Thu Mar 18, 2010 at 07:50:53 AM CDT

[ Parent ]

Shared sacrifice (0.00 / 0)

Who are the players concerned with the state budget?

* Taxpayers

* State employees

* Service recipients

* Businesses

* Cities/towns

Maybe there are others, I'm not sure. I suppose you could break things down into "wealthy" and "poor".

I said that the sacrifices are shared because people from all those groups are being directly affected. Taxpayers are paying somewhat higher taxes. State employees are getting somewhat less raises and benefits. Service recipients are getting somewhat less services. Businesses are paying slightly higher taxes. Cities and towns are getting somewhat less state aid.

We can argue about whether the sacrifices are being shared in the correct proportion, but I think that everyone is being directly affected.

The last time we had a fiscal crisis -- 2003 -- not all parties chipped in. We did not raises taxes in 2003 (just fees). We did not close corporate tax loopholes. We did cut state aid to cities and towns. We did cut services. I'm not sure if we gave state employees less raises and benefits, I don't think we did though.

The corporate tax cuts you referenced were part of a corporate tax restructuring. My impression -- which could be wrong -- is that overall, this was an increase in the overall taxable amount that corporations would pay, though the rate might now be lower. Please correct me if I'm wrong on that. The article you referenced seems like there was a loophole that was left open, and it makes sense to explore closing it, particularly if it benefits just 128 companies. I don't know the rationale for this deduction, and the article didn't explain it well.

I'm not seriously concerned about candy/soda taxes being regressive, since those food items are fairly discretionary, and there's not much rationale for exempting them from the sales tax.

I do think that the tax credit stuff should also be explored. It sounds like a shell game to me. Springfield just exempted 12 years of property taxes to the Titeflex corporation to save 100 jobs, 33 of which are in Springfield. The break is supposed to cost the city $300,000 -- so that 67 non-residents can keep their jobs. It would make sense if the state picked up part of that because 2/3 of the direct benefit goes outside the city.  Was that worth it? I have no idea? It would have been politically and psychologically bad for the city if the company moved, as threatened. Would they have moved for $300,000? Seems a little doubtful, not quite sure. Was it a winning proposition? Again, no way of knowing.

Yes, there are other things which could have been done. They should all be explored. That's what government is supposed to do. But overall, although I'm not happy about reductions, I'm happier than if the deficit was closed on just a few of the players.  

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by: NoPolitician @ Thu Mar 18, 2010 at 14:03:38 PM CDT

[ Parent ]

Here's another one (0.00 / 0)

Here's an idea that I'm sure would be controversial.

The Community Preservation Act allows for an increase in the property tax that has been approved by a city or town. The state then kicks in a matching amount to increase the city or town's pot.

The money must be spent on a combination of open-space acquisition, historical preservation, and/or affordable housing. A minimum of 10% must be spent on each category.

Look at the list of communities that have adopted the CPA. Lincoln. Wellesley. Longmeadow. Wilbraham. Lexington.

Look at the list of communities that have not adopted the CPA. Lawrence. North Adams. Springfield. Holyoke. New Bedford.

What is the reason? Because poor communities are not going to vote to tax themselves higher, and wealthy communities will.

So the matching funds represent the state giving rich communities money for being willing and able to charge themselves more in taxes. That's a little like giving a tax credit to the homeowners that install marble fountains on their lawn. Or, to be precise, giving matching state aid to communities that override Proposition 2.5. If you like basketball metaphors, that would be like giving the top pick in the NBA draft to the team that wins the championship.

It's not a huge amount of money, but it was $31 million last year.  The money is generated from "primarily from surcharges on fees charged for recording various documents with the Registry of Deeds or Land Court."  They are a flat fee, apparently $10-$20 per transaction.

That means larger, often poorer cities are providing the bulk of the money to fund projects in wealthier communities. If a million dollar home sells in Lincoln, the owner pays $20 (which eventually comes back to Dover), and if a $50,000 home sells in Springfield, the owner pays $20 (which goes to Dover).

There have been rumblings (bill filed by Sen. Cynthia Stone Creem of Newton) that the fee should be increased, perhaps to $75 from their current $10 to 20, so that the state matching amount can be guaranteed to be 75%.

Don't get me wrong -- I think the idea of preserving communities in those ways is important. But when you look hard at this program, it is a naked transfer from the poor to the wealthy using a regressive fee. I think that when times are tough and things are being cut, this is something which can afford to be eliminated, and I think that when times get better, the fee to fund this should either come from the income tax, or from a deed-based fee that is tied to the value of the property, and not a flat fee.  

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by: NoPolitician @ Thu Mar 18, 2010 at 15:12:55 PM CDT

[ Parent ]