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Advocacy Executive Director's Reports Income tax vital to communities, economy, future
Over the next two months local officials will be asked if the repeal of the state income tax would have any impact on municipalities.
The answer is clear and resounding: Yes.
First, it is understood and accepted as fact that passage of Question 1 would reduce state revenues by $13 billion, a cut of 40 percent in the state’s annual revenue base. If the governor and Legislature responded to the November ballot question by firing every single state employee, the savings would be $5 billion, meaning that the state would still have to cut $8 billion from its budget. That’s because most state spending is for health care for Massachusetts residents, human services, local aid, and other vital programs. Most state spending is actually a pass-through to residents who depend on essential services, communities that depend on billions in local aid, and our economy, which depends on education, infrastructure, workforce training, public safety, thriving families, healthy communities, vital amenities, and much more.
Question 1 would create a fiscal crisis unmatched in our state’s history, and it is certain that this crisis would have a staggering impact on cities and towns. The lead article in this month’s Beacon outlines the MMA’s analysis and findings that implementation of the income tax repeal could eliminate $3 billion or more in local aid.
Reductions of this magnitude would make the harmful cuts of 2003 and 2004 seem like child’s play. Adjusting for inflation, the local aid reduction that came during the last state recession totals $560 million (comparing fiscal 2002 local aid levels with fiscal 2009, and indexing for inflation). Question 1 would threaten immediate cuts that would be six times as deep. Every city and town would be thrown into fiscal chaos. Reliance on the property tax would spike, even as local programs and services would be slashed.
A survey of state ballot questions that will be before voters nationwide this fall, available from the National Conference of State Legislatures (www.ncsl.org/statevote), reveals that Question 1 in Massachusetts is by far the most radical state tax reduction initiative in the U.S. Maine will be voting on whether to keep the state’s beverage tax. Oregon will be voting on whether to allow individuals to deduct their federal taxes from their state tax obligations. North Dakota could reduce its personal income tax by 50 percent, and Nevada may end up voting on a property tax limitation law similar to our own Proposition 2½, but these questions may not even make it to the ballot. Many states have questions that would actually increase state revenues to pay for programs and services.
At a time when our state economy is balanced on the edge of a recession, passage of Question 1 would do great harm to our ability to hold on to jobs, businesses, employers, workers, residents and families.
Things are already tough here. Unemployment is up, housing values have fallen, savings and consumer spending are down even more. But so far, Massachusetts is holding its own compared to many other states. A state and local fiscal crisis would plummet the state into an economic freefall at precisely the wrong time. Then again, there is no good time for an economic freefall.
The advocates behind the question refuse to explain any plans or cuts that would total $13 billion or protect local aid. Instead, they simply say that voters should back the question to send a message to state and local officials about taxes, and to usher in an era of smaller government.
But this is not a symbolic ballot initiative that would simply send a message. It would be binding. It would become the law, it would trigger a fiscal crisis, and it would harm our economy.
Speculation that lawmakers would simply reinstate the income tax should be set aside. Instead, it is important to take this ballot question seriously and to examine it on its merits.
Can we afford to cut state revenues by 40 percent? Can we afford a local aid reduction of up to $3 billion? Can we afford the impact on our economy? Can we afford to take such a risk on our future?
The MMA’s position is clear and resounding: No.
Advocacy Executive Director's Reports Income tax vital to communities, economy, future
Income tax vital to communities, economy, future
Over the next two months local officials will be asked if the repeal of the state income tax would have any impact on municipalities.
The answer is clear and resounding: Yes.
First, it is understood and accepted as fact that passage of Question 1 would reduce state revenues by $13 billion, a cut of 40 percent in the state’s annual revenue base. If the governor and Legislature responded to the November ballot question by firing every single state employee, the savings would be $5 billion, meaning that the state would still have to cut $8 billion from its budget. That’s because most state spending is for health care for Massachusetts residents, human services, local aid, and other vital programs. Most state spending is actually a pass-through to residents who depend on essential services, communities that depend on billions in local aid, and our economy, which depends on education, infrastructure, workforce training, public safety, thriving families, healthy communities, vital amenities, and much more.
Question 1 would create a fiscal crisis unmatched in our state’s history, and it is certain that this crisis would have a staggering impact on cities and towns. The lead article in this month’s Beacon outlines the MMA’s analysis and findings that implementation of the income tax repeal could eliminate $3 billion or more in local aid.
Reductions of this magnitude would make the harmful cuts of 2003 and 2004 seem like child’s play. Adjusting for inflation, the local aid reduction that came during the last state recession totals $560 million (comparing fiscal 2002 local aid levels with fiscal 2009, and indexing for inflation). Question 1 would threaten immediate cuts that would be six times as deep. Every city and town would be thrown into fiscal chaos. Reliance on the property tax would spike, even as local programs and services would be slashed.
A survey of state ballot questions that will be before voters nationwide this fall, available from the National Conference of State Legislatures (www.ncsl.org/statevote), reveals that Question 1 in Massachusetts is by far the most radical state tax reduction initiative in the U.S. Maine will be voting on whether to keep the state’s beverage tax. Oregon will be voting on whether to allow individuals to deduct their federal taxes from their state tax obligations. North Dakota could reduce its personal income tax by 50 percent, and Nevada may end up voting on a property tax limitation law similar to our own Proposition 2½, but these questions may not even make it to the ballot. Many states have questions that would actually increase state revenues to pay for programs and services.
At a time when our state economy is balanced on the edge of a recession, passage of Question 1 would do great harm to our ability to hold on to jobs, businesses, employers, workers, residents and families.
Things are already tough here. Unemployment is up, housing values have fallen, savings and consumer spending are down even more. But so far, Massachusetts is holding its own compared to many other states. A state and local fiscal crisis would plummet the state into an economic freefall at precisely the wrong time. Then again, there is no good time for an economic freefall.
The advocates behind the question refuse to explain any plans or cuts that would total $13 billion or protect local aid. Instead, they simply say that voters should back the question to send a message to state and local officials about taxes, and to usher in an era of smaller government.
But this is not a symbolic ballot initiative that would simply send a message. It would be binding. It would become the law, it would trigger a fiscal crisis, and it would harm our economy.
Speculation that lawmakers would simply reinstate the income tax should be set aside. Instead, it is important to take this ballot question seriously and to examine it on its merits.
Can we afford to cut state revenues by 40 percent? Can we afford a local aid reduction of up to $3 billion? Can we afford the impact on our economy? Can we afford to take such a risk on our future?
The MMA’s position is clear and resounding: No.
Written by MMA Executive Director Geoff Beckwith
