I voted this afternoon for the FY2010 budget which passed with 110 votes in the House and 31 in the Senate, in both branches more than the 2/3 needed to override a possible veto.
Here are some of the key considerations weighing in support of my vote to balance the budget, which includes the controversial increase in the sales tax and expansions of the sales tax base to include alcohol and satellite TV services:
- We have in fact passed substantial reforms of the pension and transportation systems which are now on the Governor’s desk. Ethics reforms (which are not cost-saving) are expected to be ready for vote next week. The legislature has made substantial delivery on its promise of reform before revenue.
- We have not “taxed our way” out of the budget gap — we have used the occasion of a financial crunch, not only to make important reforms, but also to engage in substantial cost-cutting, even to the point of excessive cuts in necessary and valuable programs. Taxes are only about 20% of the gap closing.
- Although there are other taxes that I prefer from a philosophical and policy standpoint, the sales tax increase this year is moderate and not expected to result in any long term harm to business along the state border.
- Next year, the state budget will also be very difficult to balance — we are likely to see some reduction in federal recession aid, continuing weak revenue growth and continuing health care cost inflation. Sales tax revenue has been flat for several years before the recession. I have no concern that we are building an excessive revenue base that will outgrow the state’s needs when the economy turns up.
- The legislature seems committed to continuing to move forward on further reforms in the pension and municipal relief areas.
Ultimately, I believe that almost all of the state’s budget goes to very necessary public services. As members of a Commonwealth, we need to think of our contributions to the support of those services as one of the last things we would want to reduce in times of recession.
The budget now sits on the Governor’s desk along with our pension and transportation reform bills. It will soon be joined by our ethics reform bill. I believe that the Governor should feel proud to sign each component of the package that we have delivered.
But let me know what you think!
For additional perspective, see the comments of legislative leaders in the joint House-Senate press-release below.
Senate, House File Balanced Budget Reflecting State’s Fiscal Challenges
(BOSTON) – Faced with the precipitous decline in state tax collections and the stark reality of building an operating plan on $1.5 billion less than previous proposals, the Senate and House tonight filed a $27.4 billion budget on time that balances the urgent need for additional revenues with necessary relief for cities and towns. The Senate and House expect to approve the budget tomorrow in formal sessions.
The conference budget contains a sales tax increase from 5 percent to 6.25 percent that will generate $759 million in new revenues for fiscal year 2010 and help restore core services and programs for the citizens of the Commonwealth. Even at 6.25 percent, 30 other states will have a higher aggregate state sales tax rate than Massachusetts.
“The Senate and House made tough decisions,” Senate President Therese Murray said. “Even as we faced the unprecedented pressures of this economic crisis, we delivered a responsible budget on time that raises necessary revenues for the state and offers relief to our cities and towns. With a combination of difficult cuts, new revenues and key reforms, we have a balanced budget that will see the Commonwealth through this next fiscal year as we continue to work with the Administration to get through this recession.”
“The House and Senate have passed a responsible budget that balances the needs of our Commonwealth with the stark fiscal realities plaguing not only state coffers, but the global economy,” House Speaker Robert DeLeo said. “In the face of an unprecedented deficit, we have worked to shield our cities and towns and most needy residents from the pain of the current crisis. We believe the revenue plan included within the budget – in conjunction with today’s passage of transportation reform – alleviates the need for a toll increase on July 1.”
“This budget reflects the economic challenges facing the Commonwealth, and stays true to our commitment to live within our means,” said Senator Steven Panagiotakos, chairman of the Senate Committee on Ways and Means. “We are not going to be able to tax our way out of this crisis. We are not going to be able to cut our way out of this crisis, and we are not going to be able to reform our way out of it. It is going to have to be a combination and a balanced approach of shared sacrifice.”
“Our tax revenues are down, and government must take steps to weather the financial storm,” said House Ways and Means Chairman Charles A. Murphy. “As I have said from the very first day of this process, the depth and breadth of our fiscal problems require creativity and a new way of thinking.”
Sales tax revenues will help restore important services that were previously cut, including $10 million for Prescription Advantage, $6.5 million for youth violence prevention grants and $4 million for universal pre-K. The conference budget also generates approximately $80 million from the removal of the alcohol sales tax exemption. That money will be used to restore safety-net services such as substance abuse programs, community health centers, domestic violence prevention, elder care and early intervention programming.
The budget also includes a municipal relief package that allows cities and towns to raise additional revenue locally to maintain essential services provided by schools, police and fire departments. The plan allows municipalities to adopt a local option meals tax of .75 percent and also a 2 percent lodging tax that combined could generate nearly $95 million for cities and towns.
The municipal package also eliminates the property tax exemption on poles and wires located on public property and public rights-of-way that could generate another $26 million locally. It also includes an incentive to develop cost-cutting regionalization agreements to share resources with neighboring communities.
Coming on the same day the Legislature sent landmark transportation reform to the Governor’s desk, the conference budget puts forth a proposal to help sustain and improve the state transportation system moving forward.
The proposal establishes the Massachusetts Transportation Trust Fund, which will receive $275 million annually from sales tax revenues for use by transportation authorities and agencies in all areas of the Commonwealth. This transfer will avoid the need for any devastating increases to the Turnpike tolls, MBTA fares or the gas tax in fiscal year 2010.
The conference budget also raises the so-called Pacheco Law restrictions on private contractors to a threshold of $500,000; allows Massachusetts to participate in the popular multi-state Powerball lottery game which would bring in additional money for cities and towns; and raises health benefit contributions for all state employees by 5 percent, saving $50 million for the Commonwealth.