CITIZENS
for
Limited Taxation
Post Office Box 408     Peabody, Massachusetts   01960     (508) 384-0100
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CLT Update
Thursday, February 10, 2000


 

The third component to Cellucci's plan is freezing the planned elimination of drivers license renewals and the $33.75 fee. Registrar of Motor Vehicles Director Daniel Grabauskas has already been told to institute the freeze, which preserves $45 million that could be used to pay for local projects or for borrowing up to $500 million if necessary, Cellucci said....

Massachusetts Taxpayers Foundation President Michael Widmer described retaining license fees and refinancing debt as "very positive steps." ... He added that the state should also reinstate auto registration fees "so that the money doesn't just go to the Artery."

State House News Service
Wednesday, February 9, 2000


CLT NEWS RELEASE
February 10, 2000

Contact:
Chip Ford - (781) 631-6842
Barbara Anderson - (508) 384-0100

Drivers license fees for "infrastructure needs" illegal

We support using the state surplus and state slush funds to help fund the Big Dig, and would include revenues from the tobacco settlement which apparently isn't going to be properly used to reimburse state taxpayers anyhow. But we cannot support all of Governor Cellucci's new debt reduction plan, which proposes "maintaining the current driver's license fee and setting aside the nearly $45 million in annual revenues for future infrastructure needs."

Fees can be used to fund only the cost of the regulatory service provided; anything else is clearly unconstitutional. State Supreme Judicial Court, 1984, Emerson College v. City of Boston [391 Mass. 415, 462 N.E.2d 1098].

Chip Ford, Barbara Anderson and other taxpayers sued the Dukakis administration over its unconstitutional fee increases in 1989 [Ford v. Lashman, Suffolk Superior Court #89-2288]. We settled out-of-court with the Weld administration in 1992 with the agreement that all fees would be reviewed and would not exceed the cost of providing the service.

Administration & Finance administrative bulletin 92-4 (Apr. 13, 1992) recognized:

"It is important to set fees and charges so they are not construed as taxes. The Supreme Judicial Court has determined that 'fees share common traits that distinguish them from taxes.'

These characteristics are:

1.  Fees are charged for particular governmental services which benefit the parties paying the fees.

2.  Fees are paid by choice, in that one can forego the service and thereby avoid the charge.

3.  Fees are collected not to raise revenues but to compensate the governmental entity providing the service for its expenses."

The Registry of Motor Vehicles already is an illegal cash cow, with annual revenues of $375 million yet a budget of only $60 million.

If the drivers license fee is reinstated, CLT will return to court and continue its challenge of Registry fees, and the rest of the state fee structure as well.

-30-


State House News Service
Wednesday, February 9, 2000

Gov Offers "Last Resort" if State must Swallow Big Dig Costs
By Elisabeth J. Beardsley

STATE HOUSE, BOSTON, FEB. 9, 2000 ... Gov. Paul Cellucci today unveiled a Big Dig "insurance policy" that involves refinancing old debt, spending the entire fiscal 2000 surplus, and calling off the implementation of the promised drivers-licenses-for- life.

The administration has been scrambling for the last week to come up with a plan for managing a $1.4 billion overrun at the Central Artery/Tunnel project, the price tag for which is now expected to run up to at least $12.2 billion. Big Dig officials are working on updating their financials and expect to have a plan -- beyond just hiking tolls a year early -- within a few months.

In the meantime, Cellucci said he and Lt. Gov. Jane Swift have cobbled together a "last resort" plan in case project officials can't "fill the gap" and the state has to pony up some money.

"In essence, the Cellucci/Swift plan is an insurance policy as we work with the Turnpike Authority as they develop an updated financing plan," Cellucci said. "I'm not sure that the gap can be closed (by Big Dig officials). That's why we need this kind of flexibility."

The keystone of the governor's plan involves using $150 million from the state's capital reserve fund to pay off some of the state's highest-interest debt. Cellucci has already issued those marching orders to Secretary of Administration and Finance Andrew Natsios.

The capital reserve fund receives 40 percent of whatever remains of the annual surplus a/ter appropriations. It currently contains about $150 million. In past years, the state has fallen back on the reserve fund for capital projects that would exceed the $1 billion annual bond cap.

The second part of the plan depends on cooperation from the Legislature. Cellucci proposed dedicating the entire fiscal year 2000 surplus -- estimated at between $200 million and $500 million -- to further debt retirement.

With the $150 million from the reserve fund and if a full $500 million in surplus money is dedicated to debt, the state could save up to $800 million in future principal and interest payments, Cellucci said. The savings could then be plowed into the Big Dig and statewide infrastructure projects, he said.

The third component to Cellucci's plan is freezing the planned elimination of drivers license renewals and the $33.75 fee. Registrar of Motor Vehicles Director Daniel Grabauskas has already been told to institute the freeze, which preserves $45 million that could be used to pay for local projects or for borrowing up to $500 million if necessary, Cellucci said.

Natsios adamantly denied, however, that the administration is planning to issue new bonds to pay for the Big Dig overruns. "We are not proposing that," Natsios said. "Our intent is not to propose debt pay-down in order to borrow more money."

Natsios has been huddling with Turnpike Authority Chairman James Kerasiotes and said they will continue to meet weekly until a plan is finalized. Natsios declined to divulge details of the plan or the timeframe for its release. "We'll show you the plan when we're finished," he said. "There are some very interesting options."

The sharp-tongued Kerasiotes has been taking heat all day over a Wall Street Journal story in which he called Cellucci campaign director Rob Gray a "moron," called Massport Director Virginia Buckingham a "reptile," and claimed that Cellucci fears him. Earlier today, Kerasiotes emerged briefly from the governor's office to say he regretted that his remarks made it into print.

At this afternoon's press conference, Cellucci said Kerasiotes phoned him last night to warn him that the story was coming. The governor praised Kerasiotes as a "tough, hard-nosed manager," and said he favors "strong personalities," even though they sometimes "clash." Nevertheless, Cellucci said, "I don't like reading about it in newspapers. I don't expect to read about it again."

Reaction to Cellucci's debt refinancing plan came quickly from officials most concerned about the cost overruns. State Treasurer Shannon O'Brien congratulated Cellucci for "taking this first step" toward correcting a serious problem and for "putting a revenue stream on the table."

As treasurer, O'Brien has to sign off on bond offerings for the Big Dig and other state projects. She recently refused to do just that out of concern over Big Dig overruns, concerns that she says have since been allayed. "I have personal liability on this and that's why I take this responsibility so seriously," O'Brien said today.

The next step is for representatives of the 'Pike, the administration, the Treasurer's office, and the Legislature to work together for a long-term solution, she said. "It's very important to take the politics out of this and make the numbers add up," she told reporters late this afternoon.

Massachusetts Taxpayers Foundation President Michael Widmer described retaining license fees and refinancing debt as "very positive steps." Freeing up extra money should give the state some breathing room and allow more investment in the statewide road and bridge program, he said.

"As we go forward, I hope some of those funds will be directed to other critical capital investments that otherwise have been sacrificed because of the Central Artery project," Widmer said. He added that the state should also reinstate auto registration fees "so that the money doesn't just go to the Artery."

House Ways and Means Committee Chairman Paul Haley (D-Weymouth) issued a release congratulating Cellucci for doffing his "rose-colored lenses." Haley, an outspoken proponent of reinstating all auto fees, criticized Cellucci for not listening to him three years ago when he began pushing for Big Dig dedicated revenue streams to take pressure off local projects.

"Setting aside insufficient amounts of cash to float bonds to pay for ongoing needs is no way to run a statewide highway, road and bridge program," Haley said. "Paying for our debts cannot be a funding afterthought."

In other news today, Cellucci for the first time openly opposed a ballot question granting full tax credit for tolls and auto excise taxes. The governor said he made up his mind after a sobering presentation by Widmer made him realize that the toll question wouldn't be phased in gradually.

"I think it threatens our ability to get the income tax back to 5 percent," Cellucci said. "I reluctantly concluded that we can't do both at the same time."


NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml


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