CLT&G Update 4/9/98 - "We are not stealing taxpayers’ money," said House Ways and Means Chairman Paul Haley. Nope, just spending it, like that's any different.

Citizens for Limited Taxation & Government
"The Commonwealth Activist Network"
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Phone:(617) 248-0022 * E-Mail: cltg@cltg.org
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*** CLT&G Update ***
Thursday, April 9, 1998

Greetings activists and supporters:

The feeding frenzy is on to spend our tax cut before they have to give it back! Last year the Legislature poured it into the "Rainy Day Fund" until it overflowed then raised the ceiling and poured more in. This year they’re trying to raise the ceiling again, but in the meantime the best they can do to keep that extra billion dollars of revenue out of our hands is -- spend it as fast as they can!

"We are not stealing taxpayers’ money," said House Ways and Means Chairman Paul Haley.

Nope, just spending it, like that’s any different.

And this time it’s not only us that is objecting; even the "fiscally responsible," business community-funded Massachusetts Taxpayers Foundation is crying foul too, imagine that!

Chip Ford—
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The Boston Globe
Thursday, April 9, 1998
Metro Section

House backs spending $280m of surplus on capital projects
By Geeta Anand
Globe Staff

A new element, spending, has entered the debate about what to do with the state’s projected $800 million surplus this year.

The House yesterday overwhelmingly approved the expenditure of $280 million of this year’s surplus on capital projects around the state, from renovating the Boston Public Library to repairing old courthouses.

Tax-cut advocates and a state business-funded watchdog group are crying foul, accusing lawmakers of trying to spend off the surplus before some of it can be channeled into a tax cut. Until this week, debate over the surplus has centered on the question of whether to save it in the state’s rainy day fund or return it to taxpayers.

"This has the effect of using up a chunk of the surplus this year," said Michael Widmer, president of the Massachusetts Taxpayers Foundation, the watchdog group funded by business interests.

"They need to use it up before somebody can claim it’s available for a tax cut," said Barbara Anderson, director of Citizens for Limited Taxation & Government, the state’s leading tax-cut advocacy group.

The House leadership, however, has been selling the spending plan as fiscally prudent, designed to improve the state’s bond rating and shore up crumbling roads, bridges and buildings. The state has a below average bond rating, partly because of its huge debt for capital spending. And the state faces a big backlog in capital projects because the Legislature has authorized $12 billion in spending but set a cap of $1 billion annually on borrowing for new projects.

"This is something that’s in the taxpayers’ best interest because the state has a significant and compelling challenge on the capital side," said House Ways and Means Chairman Paul Haley, defending the House vote. "We are not stealing taxpayers’ money."

But Widmer was not so sure that all of the projects approved yesterday were crucial. He said about half of them, such as $50 million in road and bridge building and $20 million for upgrading the state’s computers, are vitally needed, but others, such as $10 million to renovate the library, could wait their turn.

Widmer said he approved of the Cellucci administration and the Senate’s proposals to spend about $130 million of the big surplus this year for capital projects. The House plan includes that $130 million and doubles it, which is premature considering final revenue figures are not yet in, Widmer said.

Besides, Widmer said, the capital spending plan would not help the bond rating. Indeed, an analyst at Moody’s said the spending plan would only help the bond rating if it meant the state would borrow less money this year for capital projects.

"This is in addition to the bond cap so it would make no difference," Widmer said. "This is simply a way to spend money on projects that would not otherwise get funded right away."

Until this week, lawmakers and Republican gubernatorial candidates had feuded over whether to save the surplus or give it back to taxpayers. Haley and the House leadership initially proposed diverting more of the surplus into savings, called the rainy day fund. Republican gubernatorial candidates criticized the plan, with Treasurer Joseph Malone saying all of the surplus should be put toward a tax cut and Acting Gov. Paul Cellucci advocating $150 million of the surplus be returned to taxpayers.

The House capital plan now goes to the Senate for discussion. If approved, Widmer said it would likely preempt any tax cuts out of the surplus.

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