Candidates Weigh In On Question 3

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By: Michael C. Bailey
Published: 10/01/10

A new report is warning of dire consequences should Question Three pass, and even some local candidates who support the intent of the proposal think the ballot question itself is flawed.

The report released last week by the non-profit Massachusetts Taxpayers Foundation, “Question Three: Heading Over the Cliff,” predicted massive cuts in local aid, heavy layoffs among municipal employees, a spike in property taxes, and other far-reaching repercussions from the passage of Question Three.

The binding referendum question on the November ballot, backed by the Libertarian-based Alliance to Roll Back Taxes, asks voters to approve cutting the state’s 6.25 percent sales tax – which was increased by the Legislature last year from five percent – down to three percent. This move would reduce state revenue streams by up to $2.5 billion in Fiscal Year 2012, a fact that supporters and opponents alike generally agree on.

Where the two sides part ways is over how the loss of that funding would impact the Commonwealth.

The Alliance to Roll Back Taxes claims that the loss of revenue would simply force state government to tighten its belt and “cut government waste.” This, according to the Alliance, includes duplication of effort among government agencies, exorbitant salaries, paying out pensions to former state employees later convicted of felonies, and local projects funded through the earmark process.

The group claimed that 41 cents out of every dollar spent by state government is “wasted,” but this data comes from a 2008 opinion poll of voters rather than an objective analysis of state spending.

“It’s so unfortunate because they’ve convinced people that this is the right thing to do, that we have all this waste,” said Senate President Therese M. Murray (D – Plymouth).

She said many of the Alliance’s suggestions are already in effect: the Legislature has over the past session consolidated the state’s transportation and economic development agencies; convicted felons are legally barred from collecting state pensions; and the state budget has eschewed earmarks for the past two fiscal years.

The Alliance further claims that by cutting the sales tax, taxpayers would retain on average $688 a year, which they would return to the economy through increased spending and saving, which would in turn generate an estimated 33,000 new private sector jobs.

Reducing the tax would also help Massachusetts reclaim shopping activity currently being lost to tax-free New Hampshire, the Alliance stated.

Carla Howell, a former Libertarian candidate for governor and co-sponsor of the ballot question, decried the Massachusetts Taxpayers Foundation as a “business lobby group” that had nothing but “contempt for the everyday taxpayers.” She called the report itself a “comedy” that overlooked billions of dollars in wasteful government spending.

State Services Decimated

However, according to the MTF report, the revenue loss would in FY12 only compound an existing $2 billion structural deficit, and because the tax cut would go into effect on January 1, 2011, the MTF said the state would have to make about $1 billion in emergency cuts to address the sudden loss of revenue in FY11.

James F. Munafo Jr., Republican candidate for State Representative of the Second Barnstable District, said that the immediate January 2011 implementation date was a serious flaw in the proposal, since it would give the Legislature virtually no time to thoroughly examine the financial impacts and craft a game plan.

Sen. Murray agreed, stating that the “lame duck Legislature” would be unable to agree on a plan of action during the largely unproductive holiday period. That would place the burden on Governor Deval L. Patrick, who would have to issue sweeping “9C” emergency cuts.

About half of the state’s $32 billion in spending – which includes the annual and supplemental budgets – covers legal obligations to Medicaid, the Group Insurance Commission, the state pension fund, Chapter 70, the MBTA, and debt service. The MTF said the passage of Question Three would force lawmakers to eat into the state’s $16.9 billion in discretionary spending, which would “decimate the core services” of state government, particularly in less affluent urban communities.

“Voter approval of Question 3 would result in across-the-board cuts of approximately 30 percent in virtually all state programs,” the report stated, “including local aid, higher education, human services, prisons, courts, environmental protection, and state parks and beaches.”

If the ballot question passes, the Foundation said the state would have to cut discretionary spending across the board by 28.4 percent (based on current spending levels). This would slash human services spending by $1.3 billion, health care spending by $1.2 billion, public safety by $631 million, and local aid by $473 million.

“Thousands would be terminated, programs would be shut down,” Sen. Murray said, and municipal governments would be left scrambling to deal with a loss of anticipated state revenue – money around which they’ve already built their budgets.

As difficult to swallow as the sales tax might be, Sen. Murray said people who receive state-funded services need to be aware that those services need adequate funding to survive. “I think there’s a big disconnect over what people see as services,” she said. “People think that that will stay, all those programs will stay…it’s not going to happen.”

The Foundation noted that any given municipality’s two major sources of revenue are state aid and property taxes, and the loss of the former would likely lead to an increase in the latter, even if the community in question made massive spending cuts at the local level.

F. Randal Hunt, Republican candidate for State Representative of the Fifth Barnstable District, said the MTF report said the financial impact to towns, should the question pass, would not be quite as severe as the MTF maintains.

“It is very effective to argue that your ‘Yea’ vote will overcrowd classrooms, requiring the fire marshal to be called (who just got fired), necessitating a police officer to respond to the commotion (who is in line at the DUA with the teacher and fire marshal),” wrote in a position paper on Question Three.

Using the MTF’s figures, Mr. Hunt – a certified public accountant – said he calculated a $3.9 million loss of local aid to the towns of the fifth district (Barnstable, Bourne, Mashpee, and Sandwich). To compensate for this loss, assuming voters approved a necessary Proposition 2 ½ override, Mr. Hunt said homeowners would see on a home valued at $350,000 an average property tax increase of $66 per year.

“This ignores the fact that there are probably other ways to replace the lost aid without resorting to an override,” he added.

Sen. Murray regarded Mr. Hunt’s analysis as an over-simplification, pointing out that municipalities derive revenue through multiple state sources, not just standard local aid, Chapter 70 education aid, and Lottery Aid: regional school transportation, Payment in Lieu of Taxes (PILOT) payments for state-owned property within town borders, and various state trust funds.

“There’s so many ways cities and towns get money, I just can’t imagine that [Mr. Hunt] thinks it would just be $3.9 (million),” she said.

“It Goes Way Too Far”

Some local candidates for elected office oppose the question outright, while others support the general intent, but think going to a three percent sales tax is unreasonable.

“Voters are angry that state government raised taxes instead of tightening its belt. I share that frustration but I am not convinced cutting the sales tax to three percent is the right answer either,” State Representative Susan D. Williams Gifford (R – Wareham) said.

“It goes way too far,” Sen. Murray said. “Going back to three percent would have a devastating impact on state revenues.”

She added that she would “love to see it go back to five percent” when the economy improves. “Nobody wanted to raise taxes.”

“I’m opposed to the three percent rollback,” David T. Vieira, Republican candidate for State Representative of the Third Barnstable District said. “I know everybody’s all excited about the ballot question -- I’m opposed to that. I think that’s too small of a revenue source to be able to provide the critical services necessary to meet the needs of the folks in the Commonwealth.”

Mr. Vieira instead supports a five percent sales tax, as does Mr. Hunt, but Mr. Hunt said the ballot question is as much about sending a message to legislators as it is about reducing taxes.

“It’s time to send a message to Beacon Hill that we are tired of our legislators not listening to the electorate,” he said, recalling the voter-approved 2000 referendum question to reduce the income tax rate from 5.95 percent to five percent. The phased decrease was frozen by the Legislature in 2002 at 5.3 percent to deal with that year’s fiscal crisis.

State Representative Matthew C. Patrick (D – Falmouth) said that cutting the sales tax – at all, much less to three percent – posed a serious threat. In a recent position paper he said that even smaller cuts of the sales tax and the state’s 5.25 percent state income tax would “decimate public funding for schools, roads, emergency services and all that is needed to keep our communities safe and positive places to live.”

“Without those funds, local aid will dry up and towns will be forced to cut essential programs or raise property taxes to make up the difference,” he said. “It’s an impractical proposition with dire consequences.”

James H. Crocker Jr., candidate for State Senator of the Cape and Islands District, expected there would be impacts on both state and local governments, but questioned whether anyone knew the true extent of those impacts since mid-year supplemental budgets skew the data on what the state truly spends in a given year.

Thomas F. Keyes, a Sandwich Republican challenging Sen. Murray, said in a statement to the Enterprise he supports Question Three, and if it passes at the ballot box “I will honor the wishes of the voters.”

Rep. Gifford echoed that sentiment, stating she would “support the position taken by the voters...I hope the message of the voters will he heard by my peers, since too often they seem to forget who has elected them.”

Mr. Munafo, who said he supports a five percent sales tax, also decried the Legislature’s habit of ignoring the will of the voters on similar issues such as the income tax rollback.

Although question opponents believe poorer urban communities would suffer more for the loss of state aid, Mr. Munafo said Cape Cod historically has received a proportionately smaller share of aid, and could take a harder hit than similar communities.

“It’s a social contract we have with one another that we distribute aid evenly and fairly,” he said, “but that’s no longer the case, and I think we will have to really fight for our fair share.”

Gov.Patrick, Republican gubernatorial candidate Charles D. Baker Jr., and unenrolled gubernatorial candidate Timothy P. Cahill have all spoken out against Question Three, but all three men have also vowed, if somewhat grudgingly, to support its enactment if voters approved the question.

A Boston Globe poll revealed that voters are so far leaning toward repealing the tax; 46 percent of those surveyed said they support the measure, 43 percent oppose it, and the rest are undecided.

The Libertarian-backed Center for Small Government has twice attempted to eliminate the state income tax, once in 2002 and again in 2008. In 2002 45 percent of voters supported the proposal, but in 2008 only 30 percent backed the question.

The full report may be viewed online at

The Alliance to Roll Back Taxes website is at

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