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Senate Leaders Vow to Impose $2 Billion in Budget Cuts

Senate leaders have announced that they intend to follow the lead of the Massachusetts House and slash state spending by over $2 billion. Turning a deaf ear to the pleas of local mayors, educators, and community activists, the senators expressed general satisfaction with the House budget rammed through by the Finneran bloc last week. The House budget cut more from state services than the budget proposed earlier this year by Governor Romney.

Senate President Robert E. Travaglini ruled out raising revenues through taxes, borrowing, or expanding gambling. The door remained open to permitting some local option taxes that would be imposed by individual towns. For example, towns could be allowed to impose a local tax on restaurant meals. Such revenue measures are expected to address only a small fraction of the gaping hole in the budget that has been left by the refusal of the Massachusetts Legislature to provide revenues.

In a further indication of the unwillingness of the Senate to reduce the cuts, the Senate adopted a rule that would limit debate on the budget. By a 38-2 vote, the Senate required that all proposals for spending increases must include an equivalent spending cut – and not a revenue enhancement. A similar rule was enacted in the House debate to prevent progressive legislators from saving programs by linkage strategies, For instance, it would be impossible to propose restoring health care coverage to Medicaid recipients by eliminating corporate loopholes.

At a State House news conference, Senators patted themselves on the back for being “fiscally responsible”.

In a now familiar political theatre, the House began restoring a small fraction of the impending cuts in order to reward politically powerful allies, moderate criticism, and generate sympathetic news stories. Cuts to state and community colleges were reduced from 20% to about 15.5% [Metrowest Daily News]. Protesting police unions were rewarded with restoration of $2.7 million to the Quinn bill.

Thousands Rally to Stop the Cuts
– But Legislature Fails to Act

May 1, 2003

On April 30, over 3000 citizens assembled at the State House to lobby the Legislature to close the budget shortfall by raising needed revenues. Signs and stickers said “Stop the Cuts”, “Raise the Revenues”, and “Fair Taxes”. Almost 2000 lobbying packets were handed out to people who went into the State House to meet with their elected officials.

[Note: The Boston Globe’s Rick Klein incorrectly reported that “about 1000 protesters” attended. An actual count of persons at the rally at one point was 2,000 – and this did not include many people meeting inside the State House or people who left earlier or came later.]

A number of speakers addressed an afternoon rally on the Boston Common. Over 30 organizations co-sponsored the Lobby Day. They included advocates for labor, health care, education, human services, housing, public health, senior citizens, the disabled, and the environment. This was a remarkable event since it marked the first time that such a full range of constituency groups had gone to Beacon Hill with a common message. Traditional lobbying often involves asking that an individual program affecting only one constituency be spared by taking money from elsewhere in the budget. But on April 30, the coalition demanded that all vital services be adequately funded – not by shortchanging other worthy programs – but by raising adequate revenues. Lobby Day sponsors saw this as a major development in response to the divide-and-conquer strategy that has been used to push through service cuts despite the widespread pain they cause.

For months, the dominant Finneran bloc in the Legislature had been saying that they would implement massive cuts rather than raise taxes. And sure enough, shortly after the citizen lobbying ended, the Massachusetts House of Representatives rejected a key revenue measure that would have increased the state income tax to 5.95%. The measure would have avoided $735 million in service cuts. It failed by a vote of 37 to 118. The 37 votes for the measure were undoubtedly much higher due to the intensive lobbying of citizen groups.

After the vote, MCHC President Jill Stein said “Let us send our thanks to the 37 representatives who understood the need for a responsible and humane budget. And as for the other 118, they will be hearing more from us in the weeks and months ahead. What started today is going to build in intensity until we bring about a fundamental change in direction on Beacon Hill. This is just the beginning.”

Finneran’s Task Forces List Possible Budget Cuts
April 11, 2003

Members of budget task forces appointed by Speaker Finneran to explore Education Financing, Health and Human Services, and Local Government released their work products April 9. The ideas are being forwarded to the House Ways and Means Committee for use in preparing the budget to be submitted to the House. According to State House News Service, the menu of cuts include the following items:

— Four-day school week
— Cut local aid 15 to 18 percent
— End local mandate for school transportation
— Examine the opening of new charter schools
— Eliminate the office of Educational Quality and Accountability
— Delay jobless benefit eligibility for laid off teachers
— Eliminate some corruption safeguards to lower costs in municipal construction process
— Exempt small towns from wage-floor protection law
— Eliminate many local mandates
— New early retirement program at local level
— Increase parking fines, towing fees, gun permit fees
— Cut higher education funding by 20 percent
— Create a special commission to study Romney’s higher education reform
— Reject UMass campus realignment
— Maintain foundation level K-12 aid
— Delay changes to formula for education aid
— Create special commission to invent new education aid formula
— Do not cut early education
— Allow continuance of bilingual education despite voter mandate
— Consolidate elder personal care, nursing home care and home health care administration
— Reject Romney consolidation of Executive Office of Elder Affairs and Health and Human Services
— Do not increase state employee’s share of health insurance
— Adopt incentives to change state employees’ use of health care to avoid expense
— Close Fernald Developmental Center
— Close some DMR facilities and move clients to community settings
— Limit participation in Prescription Advantage; increase participant payments
— Form bulk purchasing for Prescription Advantage, state employees and
willing municipalities

Federal Taxes Are Also Flawed
March 30, 2003
Note: While our news coverage is generally focused on Massachusetts, it’s worth noting that lobbyist-directed tax shenanigans are also proliferating at the Federal level. Below are two items that illustrate this point.
A February report by Congress’ Joint Committee on Taxation concluded that Enron Corp.’s tax-avoidance schemes in the 1990s (including 692 partnerships in the Cayman Islands) were, according to a New York Times reporter, “financial maneuvers so complex that the Internal Revenue Service has been unable to understand them.” Even so, the IRS staff consistently failed to challenge Enron’s maneuvers, passively accepting sophisticated opinion letters from Enron’s law firms approving the arrangements (letters purchased by Enron at a typical price of $1 million each). [Reported by Chuck Shepherd based on New York Times articles.]
President Bush’s massive $1.6 trillion tax-cut proposal has been characterized as blowing a hole in the federal budget and pushing Medicare and Social Security to the brink of insolvency. But even beyond its fiscal responsibility, there is the issue of fairness. More than half of the cuts called for in the Bush plan would go to the wealthiest 5 percent of Americans. In fact, the top 1 per cent would receive a generous 40 per cent of the total. Citizens for Tax Justice estimates that families earning more than $319,000 a year would enjoy tax cuts of $46,072, while families earning less than $40,000 would receive cuts below $500 a year. “If you make over $300,000 a year, this tax cut means you get to buy a new Lexus. If you make $50,000 a year, you get to buy a muffler on your used car,” Senator Tom Daschle (D-S.D.) observed. The cuts to federal programs required to fund the tax cuts would, of course, fall most heavily upon lower income taxpayers.

Powerful Legislator Calls for Massive Program Cuts
March 5, 2003

A powerful member of the Democratic Party leadership team has written a letter to his house colleagues calling for them to make over $2 billion in program cuts to the FY04 state budget. In the letter, chair of the House Ways and Means Committee John Rogers dismissed Governor Romney’s claim to have found $2billion in savings through governmental restructuring, and noted that the Governor’s budget contained real service cuts. However, Roger’s criticism of Romney’s cuts did not suggest that the House would be working to avoid similar cuts. He instead noting that “our circumstances are so dire that the House, too, must employ a series of similarly unpleasant measures in the FY04 budget.”

The letter indicated openness to achieving “savings through efficiencies” but did not suggest any effort be made to acquire new revenues to fully fund programs. Roger’s letter closed by pointing the representatives toward “the necessary task of cutting as much as $2 billion in programs, services, and aid.”

The letter was the latest indication of the closeness in budgetary philosophy between the Governor Romney and the Democratic Party leadership under Speaker Thomas Finneran. While the Democratic leadership’s strategy has been to publicly bemoan “the Governor’s cuts”, they quietly implement them once the political blame has been shifted to the Republican governor. Such a strategy was successfully used to blame Acting Governor Jane Swift for cuts the Legislature enacted in the previous two years. Earlier this year, the Legislature voted to give Govenor Romney the unprecedented power to define $600 million in additional cuts to balance the FY03 budget. When Romney cut less than $500 million, leaving the remainder to be cut by the Legislature, the Boston Globe reported that Democratic leadership was furious, claiming that he had broken a promise to make all the cuts himself.

The close philosophical agreement between Romney and the Democratic leadership team was openly acknowledged by Speaker Thomas Finneran in a radio interview on the David Brudnoy show in January. Brudnoy asked why the Govenor and the Democratic Party leadership now seemed to be in such agreement after months of a gubernatorial campaign in which both sides portrayed each other as political opposites. Finneran replied that such rhetoric was just part of a campaign, but that after the election was over you could “come out of the closet”. Finneran went on to say that after he heard a speech by Romney aide Eric Kriss outlining Govenor Romney’s fiscal philosophy “I sent him a note telling him that I felt I had found my ideological soulmate.”

To read the full text of Chairman Roger’s letter to his colleagues Click Here.
[Note: To view this letter, you must have Adobe Reader installed.]

MCHC ACTION NOTE: Write your representative and tell them that making $2 billion in program cuts is unacceptable to you, regardless of whether a Republican or Democrat picks where the cuts fall. Let them know that you know that the Democratic Party leadership team in the Legislature really writes the state budget, and the leadership team must accept responsibility for solving the budget crisis in a fair way. Ask them to stop the partisan game of redirecting the blame and to show leadership in finding the revenue to maintain vital services.

Romney Budget is Mostly Cuts, Fees, and Wishful Thinking, say Experts
March 1, 2003

In announcing his proposed FY04 budget, Govenor Mitt Romney claimed to have found ways to make $2 billion in savings through elimination of “waste and inefficiency”. This would allow him to honor his “no new taxes” pledge without cutting services. However, knowledgable budget experts have concluded that most of the savings will never be realized. Richard Widmer of the Massachusetts Taxpayer’s Foundation commented that the actual savings might be only a little more than $100 million – about 5 per cent of what Romney claimed. A later MTF analysis showed that two-thirds of the claimed “savings” would come through increased fees and one-time measures, such as selling state-owned land.

The use of one-time measures to avoid tax increases was cited by MTF as an indication of the unwillingness of political figures to address the so-called “structural deficit”. Because the one-time measures cannot be used in subsequent years, they may only postpone the day of reckoning in which further revenue increases or deeper program cuts must be adopted.

The Romney budget calls for collecting over $600 million in increased fees from Massachusetts residents. Included in this are $90 million in tuition increases in the state college system, $60 million in general fee increases, and $230 million in increased registry fees. Health benefits for state employees are also being cut, with employees being made to pay more for their health insurance.

Jill Stein, President of Massachusetts Coalition for Healthy Communities, noted that “Most of Governor Romney’s fee increases – especially those proposed for education and health – are really regressive tax increases , designed to wring more money from average people in order to protect the loopholes enjoyed by the well-connected. Our tax system is already skewed in favor of the rich, and this just makes it worse. We are calling upon the Legislature to reject the fee increases that fall mostly upon ordinary taxpayers, and to raise needed revenues by fairer means.”

Romney Delivers “State of the State” Address
February 26, 2003

On February 26, Governor Mitt Romney delivered his State of the State address. Romney presented an upbeat vision of how he would cut $1.9 billion from the state budget without eliminating any essential services. The governor said that simply reorganizing state agencies and eliminating duplication would be enough to address the budget problem without seeking new tax revenues.

Romney’s claims for savings were not considered credible by most budget experts. Richard Widmer, director of the conservative Massachusetts Taxpayer’s Foundation, said after the speech that the savings might be “tens of millions but not billions”.

Romney carefully avoided calling his budget reductions “cuts”. He called them “savings”.

Romney has stated that he would not cut K-12 education. But he announced a $242 million cut in local aid. This is state aid that towns rely upon for funding local schools. Romney characterized his position as one of asking local communities to participate in the finding of “savings”.

The budget proposals of a Republican governor in Massachusetts are not the final word, since the magnitude of the cuts that will actually be enacted will be determined by decisions by the Massachusetts Legislature in which Democratic Party incumbents hold 85% of the seats. Romney’s proposals are just the initial round in the struggle to influence legislative decisions.

Senate President Discusses His Budget Priorities
February 13, 2003

Senate President Robert Travaglini spoke about the Massachusetts budget crisis in a speech before the Greater Boston Chamber of Commerce on February 12. According to a State House News report, Travaglini said that “We will not support, and I hope we do not receive, proposed reforms that target and punish unpopular constituencies, or ones designed to gain popularity in the media but not to generate real efficiencies and saving to the taxpayers.” Travaglini aids later defined “unpopular constituencies” as “anyone without a voice, including the poor, elderly, and homeless.”

Travaglini said that new taxes would be a “last resort”. He seemed more comfortable pitting local aid against assistance programs, stating that the Senate would not “shirk at our responsibility” to the state’s most vulnerable, even if it means cutting further from local aid. “If we have to make some difficult decisions on the local aid side, to continue necessary and vital programs for people in crises, we’ll do it. That would be my priority,” Travaglini said.

Travaglini commented favorable on reducing lottery payoffs and approving casino gambling, measures that analysts believe will have minimal effect upon this year’s budget deficit.

Romney issues gag order
January 19, 2003

Should we hear directly from state workers about how the Finneran-Romney budget cuts will affect their ability to provide services to state residents? Apparently, Governor Romney doesn’t think so. Threatening memos have gone out to state agencies telling employees that they are not to talk to the press.

One memo to the Environmental Police stated “Under no circumstances shall any member of the agency speak with or provide written statements to the media regarding any activities that this agency is engaged in or may be engaged in . . . Failure to comply with this directive could result in disciplinary action.”

Romney communications director Eric Fehrnstrom explained that “The governor places a premiumonspeaking with a single voice.”

Reference: Boston Globe, State workers chafe at press ban, 1/19/03

Budget Cutters Attempt to Split Political Opposition
January 14, 2003

Using an old Beacon Hill strategem, incumbents intent on cutting state services have begun efforts to split their opposition groups and get them to support cuts for each other in return for slight decreases in cuts to their own core programs. The lastest example of this occurred when the Legislature handed Governor Romney authority to cut local aid to cities and towns. Romney promptly held a press conference with selected advocates for public health, the disabled, the elderly and the mentally retarded. He urged them to support the cuts to towns saying that this would leave more money for their own constituencies.

Not everyone bought it. Phil Malber, president of the Massachusetts Senior Action Council, called it a “divide and conquer” strategy and said the most of the advocates wanted to see the problems solved with increased revenues, not cuts.

Reference: Boston Globe, House members want details of Romney’s power request, 1/14/03

Legislature Ducks Responsibilities – Gives Budget Axe to Romney
January 14, 2003

In January, Massachusetts legislators returned from a five-month vacation from formal sessions during which time almost nothing was done to address the state’s mounting budget crisis. One of their first acts of the new year was authorize Governor Romney power to address shortfalls in the fiscal 2003 budget by making deep cuts to local aid to cities and towns. Mayors from towns across Massachusetts said that these cuts would impact heavily upon local schools and result in layoffs of teachers, police, and firefighters.

Giving Romney the power to cut local aid was viewed by some as a clever political move by House Democrats since it allows them to blame the cuts on the Republican governor.

The authorization for the cuts was not debated in open session. It was discussed in a secret House session or “caucus” that was not open to public scrutiny. Speaker Finneran emerged from behind the closed doors to brief the waiting State House press corps, which seemed to accept that this was how momentous legislative decisions were made in Massachusetts.

This legislative act marks the end of a period in which the legislature has steadily increased state aid to schools.

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