Four views on whether there have been enough reforms to justify Patrick’s proposed tax increase
Globe Correspondents | The Boston Globe | February 17, 2013
Yes: Pair revenue, reform
Since 1998, the Commonwealth has reduced personal and corporate income tax rates, costing the state $2.5 billion a year — leaving little to pay current bills or deal with $80 billion in past unfunded liabilities, let alone make critical education and transportation investments for our future. Yet with the public demanding reform before revenue, the governor and Legislature have been hesitant to increase taxes.
Reform is precisely what the Commonwealth has been doing. Major changes to the public employee health-insurance system and public pensions will save billions of dollars over the next 30 years. Accountability in our K-12 schools will enhance classroom quality. The Turnpike Authority was merged into the Massachusetts Department of Transportation, and the “Fast 14” project has sped up bridge repairs.
Thousands of other efficiencies, big and small, have been implemented, from replacing police officers with civilian flaggers to moving 3 million Registry of Motor Vehicle transactions online. Operating under a new strict statewide performance management system, every executive office has been cutting costs. With this focus on efficiency, state government employment has grown by just 0.3 percent over the past two years, while total non-farm employment has grown by 1.9 percent. State government is shrinking as a share of the state’s economy.
Governor Patrick has put forward a tax package to pay for critical state needs. It can be tweaked to even better meet the criteria of sufficiency, stability, equity, predictability, and transparency. It will not undermine our competitiveness in the short-run. It will be strongly pro-growth over the long-term. Now is the time to pair revenue with reform to ensure a prosperous future for the Commonwealth. — Barry Bluestone
Barry Bluestone is the director of the Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University.
No: This isn’t real reform
To date, Governor Patrick’s most significant reform is allowing municipal employees to purchase state health insurance. It’s a big deal, annually saving municipalities over $100 million.
Unfortunately, the governor’s 2014 budget abandons all pretense of authentic reform. Here’s why his argument that reforms during his tenure warrant massive new tax increases fails:
The governor’s reform record is mixed. Passed with promises of $6.5 billion in savings, the 2009 transportation reform law has yielded a tiny fraction of that. Even with a sales tax boost (over $600 million annually) to support transportation reform, we still pay hundreds of employees with borrowed money.
By requiring project labor agreements and so-called “prevailing wages,” even for civilian flaggers, the governor continues to inflate transportation construction costs.
What about public pension reform? The governor’s 2011 pension reforms promised $5 billion in savings over 30 years. Some elements were desirable, including lifting the retirement age for most state workers. But the “reform” also refinanced our pension debt, paying it off by 2040 instead of 2025, costing taxpayers tens of billions of dollars.
Worse, it forces the state to postpone paying down another huge unfunded liability — our $15.6 billion liability for retired state employees’ health care coverage.
The new spending blueprint is unwise. We cannot build new rail lines with low ridership even as the MBTA confronts an $8.9 billion debt and a $3 billion maintenance backlog. And can we take seriously a $1 billion a year transportation spending plan that doesn’t fund operations, maintenance, and debt service for planned expansions?
A year ago, the governor announced that he had fixed the “structural deficit.” Today, we know that’s not true: 2014 state revenues are a billion dollars shy of programmed spending. That’s the hole any new revenues will fill. Forget the promised transit lines, bike lanes, and education funding.
The well is dry. Between 2005 and 2011, state spending has grown at almost twice the rate of personal income and more than three times faster than GDP. That is the best evidence that Patrick’s record doesn’t justify massive new tax increases. — Jim Stergios
Jim Stergios is executive director of The Pioneer Institute.
Yes: Help people thrive
SEVERE ECONOMIC downturns, such as the one we have experienced since 2008, force human services leaders to make extraordinarily tough choices. While the demand for services increases dramatically, budgets are slashed; inevitably the most needy people get hurt. In Massachusetts, health and human services programs have been cut by $2.5 billion, and 10 percent of the workers delivering care have lost their jobs. Agencies providing critical services to the poor, the elderly, abused and neglected children, and the physically and mentally disabled have been decimated. For example, the Department of Public Health budget is now 36 percent below pre-recession levels, which may in part explain recent management issues in that agency.
The Patrick administration reduced these services reluctantly; the money to fund them had disappeared. But the administration went further than simply reducing budgets. The governor understood that health-care costs were growing at an unacceptable clip, consuming dollars badly needed for infrastructure, education, and human services. He worked closely with the Legislature and the business community to produce Chapter 224, landmark legislation to save billions in health costs over the coming years, while maintaining the state’s commitment to universal health insurance. In social services, the administration’s policy of placing children and adults in community settings, if at all possible, rather than in expensive, outdated institutions, means better outcomes at lower cost.
The reality is that the Patrick administration has led major reforms within state and private human services agencies. Now the governor is challenging us with a crucial decision we must make about our state’s economic future. We must decide either to invest once again in people who are fully capable of becoming independent, self-sufficient, tax-paying members of society or to continue the dismantling of the services designed to help them to thrive in our state.
As we debate Patrick’s revenue proposals, the stakes will be very high for those who rely on human services, often for their very survival. But the stakes are high also for the rest of us, because we all benefit when a family escapes poverty or when a disabled person finds a job. The governor’s plan will permit Massachusetts to move forward with safe roads and bridges, public schools that make us proud — and it will maintain our state’s historic role in providing a helping hand to those who deserve and need it. — Philip W. Johnston
Philip W. Johnston is the former Massachusetts secretary of human services and New England administrator of the US Department of Health and Human Services. He is CEO of Johnston Associates.
No: Get fiscal house in order first
GOVERNOR PATRICK’S budget proposal perfectly illustrates one of the perils of big government; there is no incentive to rein in wasteful spending when you are using other people’s money. You can always demand more from taxpayers in the name of “shared sacrifice” or “fairness.”
There is nothing fair about the sacrifices being imposed on the working class families of Massachusetts. In addition to raising the income tax and myriad other taxes, fares, and fees, struggling families are in danger of losing 45 tax deductions they have counted on and budgeted for.
Families will sacrifice with the elimination of tax credits for their dependents, child care, foster care, and adoptions. Students will suffer when they lose tax credits for tuition, commuter fees, scholarships, and employer-provided education assistance.
We all lose with the elimination of tax credits that incentivize certain behavior, such as lead-paint removal, septic system repair, clean-fuel vehicles, renewable energy, and charitable contributions — all eliminated under this plan.
Health savings accounts allow people to save (tax free) for future health care needs. The governor wants these tax savings eliminated.
Missing in this plan is any meaningful talk of spending cuts or reforms. Apparently, we have learned nothing from the Big Dig, because under the governor’s plan, the Massachusetts Department of Transportation will be rewarded for bad fiscal behavior. The Department of Transitional Assistance lost track of 47,000 families receiving taxpayer-funded benefits and gave nearly $30 million in food stamp money to ineligible recipients. Where are the reforms? And it is safe to say the state health department warrants some reform after the state drug lab scandal.
Governor Patrick, the people of Massachusetts are taxed enough already. It’s time to get you own fiscal house in order. — Christine Morabito
Christine Morabito is president of the Greater Boston Tea Party.