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Post Office Box 1147 ●
Marblehead, Massachusetts 01945 ●
(781) 639-9709
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
45 years as “The Voice of Massachusetts Taxpayers”
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their Institutional Memory — |
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CLT UPDATE
Tuesday, February 12, 2019
Best Legislature Money Can Buy caught in the act
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The House uses a large electronic voting
board that shows how each representative votes on a roll
call. Members press a button at their desks and their vote
appears next to their name on the board for everyone to see.
When a representative votes “yes,” a green light appears
next to his or her name. When he or she votes “no,” a red
light appears next to his or her name....
Seconds after the roll call on the Jones
amendment began, Acting Speaker Petrolati and Speaker DeLeo
both voted “no” and a red light appeared next to their
names. According to House rules, the acting speaker (Petrolati)
actually casts the vote for the speaker and a court officer
casts the vote for the acting speaker.
As is often the case, many Democrats quickly
took their cue from DeLeo and Petrolati and voted “no” as
well. This is not an uncommon occurrence in the House. In
this case it was at least 63 Democrats who played “follow
the leader” and voted “no.”
As the board began to fill up with “no”
votes, Petrolati apparently took notice and talked into a
microphone he didn’t know was on. “It’s a yes?” “Switch ’em.
Yes, yes, yes, yes yes, Mikey,” shouted Petrolati to
Division Leader Mike Moran. Suddenly, DeLeo and Petrolati’s
votes switched to “yes.” And then all 63 Democrat who had
initially voted “no” suddenly switched his or her vote to
“yes.”
The House’s only unenrolled non-party
affiliated member Susannah Whipps (U-Athol) had also voted
“no” and then switched to “yes.”
There may have been more than 63 Democrats
who first voted “no.” While the “no” votes appeared on the
electronic voting board for a brief time, once the switchers
changed their vote to “yes,” there was no longer a permanent
record of the “no” vote. Beacon Hill Roll Call watched a
video tape of the session in order to see who voted “no” at
the beginning. The camera pans the scoreboard a few times
but there is no guarantee we were able to spot every red
light....
Chip Ford, Executive Director of
Citizens for Limited Taxation: “Captured red-handed on
video doing what The Best Legislators Money Can Buy do best
– mindlessly following the leader. What a real-time votes
tote board exposed through an embarrassing glitch is
revealing of what’s so wrong on Beacon Hill. Good catch
Beacon Hill Roll Call.”
Beacon Hill Roll Call
Friday, February 8, 2018
A Beacon Hill Roll Call Exclusive: Blindly follow the
leader?
By Bob Katzen
Meet the new millionaire tax: It’s the same
as the old millionaire tax that was rejected on
constitutional grounds by the Supreme Judicial Court —
keeping it off the 2018 ballot — with one key difference.
By using a different legislative procedure
this time around, supporters of the measure that would raise
money for education and transportation through a surtax on
Massachusetts’ wealthiest taxpayers are confident they can
skirt the state high court’s objections and place the
measure before voters....
So what exactly is different?
As a legislative amendment, as opposed to an
initiative petition, supporters are confident that even with
identical wording it would not be subject to the relatedness
clause or other legal restrictions on ballot initiatives.
That assessment is not disputed by opponents
of the millionaire tax.
“It’s a different process and I think
they’re right,” said Eileen McAnnenny, president of
Massachusetts Taxpayers Foundation. “Because this is not a
citizen’s petition the prohibitions don’t apply.”
Critics will instead argue against the
measure on policy grounds. Fluctuations in the income of the
state’s wealthiest taxpayers resulting from dividends,
capital gains and other factors would make the tax an
unstable revenue source for the state, McAnnenny said.
Other opponents have said the tax could
steer entrepreneurs and their businesses away from
Massachusetts....
The higher bar wouldn’t appear to be a
problem. In 2017, a joint constitutional convention of the
House and Senate solidly backed the millionaire tax 134-55,
similar to the margin in a 2015 vote.
Because of the setback in the courts, the
earliest it can now reach the state ballot is 2022.
Many Democrats, including some legislative
leaders, say the state can’t wait that long to address
inequities in education or deteriorating transportation
infrastructure. That could result in a discussion on Beacon
Hill of alternative revenue-raising measures long before
voters finally get to decide the millionaire tax.
Associated Press
Monday, February 11, 2019
‘Millionaire tax’ amendment rises again at Statehouse
Gov. Andrew M. Cuomo on Monday announced a
dramatic drop in state income tax revenue of $2.8 billion,
which he says will prompt him to revise his 2019-20 budget
and reconsider spending on schools, health care and repairs
to roads and bridges.
Cuomo, a Democrat, blamed the shortfall on a
federal tax plan backed by Republican President Donald
Trump. Cuomo said the law's cap on deductions for state and
local taxes at $10,000 was to blame and suggested it is,
anecdotally, triggering high-earners to leave New York....
Cuomo blames Trump and his 2017 tax cut
legislation for prompting New York's wealthiest taxpayers to
change their legal address to another state to avoid a big
federal tax hit. He said he bases this on anecdotal stories,
not hard facts yet, but that the behavior of just a few
thousand of these high-earners could have a significant
impact on state revenues....
Some of the lost revenue may reflect early
payments made by some New Yorkers in 2017 seeking to pay
their estimated state income tax early to get the federal
deduction before the federal tax law took effect in 2018.
But the state had already accounted for that effect and
lowered its projection for December 2018 revenues by $2.4
million. The revenue drop reported Monday was from that
lowered projection, said Cuomo budget spokesman Morris
Peters....
Cuomo noted that states dominated by
Democratic voters, like New York, New Jersey and California,
are hit by the loss of deductibility but lower-wage,
lower-taxed states in the Midwest and South — which voted
for Trump — enjoy the tax break unscathed....
Cuomo said that he and his administration
are blameless. He said the continued exodus of residents
from the state and a temporary millionaire’s tax created in
2009 to contend with the Great Recession (but which he’s
extended since then) are not contributing factors.
“We did everything right from a tax point of
view,” Cuomo said.
Newsday
Tuesday, February 5, 2019
As revenue drops, concern about the proposed state budget
rises
Cuomo says he will have to revise his proposed budget
as personal income tax collections drop $2.8 billion.
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Chip Ford's CLT
Commentary
January 30th was just another day on
Bacon Hill – only this
time the sheep got caught obsequiously following their
shepherd. In a blatant episode of "how it works"
in the hallowed legislative chambers of the commonwealth
alleged representatives among The Best Legislature
Money Can Buy were caught on camera then asked to
explain their instant switcheroo vote.
"As
is often the case, many Democrats quickly took
their cue from DeLeo and Petrolati and voted
'no' as well. This is not an uncommon occurrence
in the House. In this case it was at least 63
Democrats who played 'follow the leader' and
voted 'no.'
"As the board began to fill up with 'no' votes,
Petrolati apparently took notice and talked into
a microphone he didn’t know was on. 'It’s a
yes?' 'Switch ’em. Yes, yes, yes, yes yes, Mikey,'
shouted Petrolati to Division Leader Mike Moran.
Suddenly, DeLeo and Petrolati’s votes switched
to 'yes.' And then all 63 Democrat who had
initially voted 'no' suddenly switched his or
her vote to 'yes.'”
You can watch it happen
HERE
Just fast forward on the
counter to 5:35:49 and
watch it until 5:37:39
It happened in a little under two minutes
This was a perfect catch of how so many
legislators vote –
and why. Thank you Beacon Hill Roll Call for your
sharp eyes and diligence, and for bringing it to my
attention!
Already the insatiable Takers are
back from defeat still greedily lusting for a graduated
income tax. Defeat and rejection may slow them
down but it never stops them. They're back pushing
their so-called "millionaires tax." But starting
over from ground zero, it will take at least until 2022
for it to jump over all the constitutional hurdles
required for a proposed constitutional amendment to make
it onto the statewide ballot. Getting there for
them is a slam dunk. Be assured it will be on the
2022 ballot, but even so they can't wait, are already
planning how to pick pockets quicker.
"Many Democrats, including some legislative
leaders, say the state can’t wait that long to
address inequities in education or deteriorating
transportation infrastructure. That could result
in a discussion on Beacon Hill of alternative
revenue-raising measures long before voters
finally get to decide the millionaire tax."
Beside it being merely the camel's nose
under the tent, a step toward further graduated tax
rates on everyone eventually, the same arguments we and
others have made against it over the past always apply:
"Other
opponents have said the tax could steer
entrepreneurs and their businesses away from
Massachusetts."
If there's any doubt what the
consequences of a graduated income tax in Massachusetts
would be, look no further than across the border to New
York.
Gov. Andrew M. Cuomo on Monday announced a
dramatic drop in state income tax revenue of
$2.8 billion, which he says will prompt him to
revise his 2019-20 budget and reconsider
spending on schools, health care and repairs to
roads and bridges....
"Cuomo said
that he and his administration are blameless. He
said the continued exodus of residents from the
state and a temporary millionaire’s tax created
in 2009 to contend with the Great Recession (but
which he’s extended since then) are not
contributing factors.
“'We did
everything right from a tax point of view,'
Cuomo said."
"We did everything right from a tax
point of view" yet New York state's wealthier taxpayers
have fled and continue their exodus. The Empire
State's revenue has sunk by $2.8 billion and now its
governor scrambles for excuses in full CYA mode.
There are no excuses for Cuomo
– nor for our benighted
Legislature. The evidence has been available for
years. They need only look to Maryland's
experiment in 2007 which
was repealed in 2011 after it
devastated the state's economy.
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Chip Ford
Executive Director |
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Beacon Hill Roll
Call
Friday, February 8, 2018
A Beacon Hill Roll Call Exclusive: Blindly
follow the leader?
By Bob Katzen
The House uses a large electronic voting board
that shows how each representative votes on a
roll call. Members press a button at their desks
and their vote appears next to their name on the
board for everyone to see. When a representative
votes “yes,” a green light appears next to his
or her name. When he or she votes “no,” a red
light appears next to his or her name.
On January 30, the House was debating the joint
rules under which the House and Senate would
operate in 2019-2020. House Speaker Bob DeLeo
(D-Winthrop) rarely presides over a session and
this day was no different as Rep. Tom Petrolati
(D-Ludlow) was the acting speaker and the
presiding officer calling the shots.
As the debate dragged on, House GOP Minority
Leader Brad Jones (R-North Reading) offered an
amendment that would repeal a rule, used for the
first time in 2018, that prohibited the
appointment of a conference committee after July
17, 2018. A conference committee is a six-member
committee appointed by the House speaker and the
Senate president to work out a compromise
version of a bill when the House and Senate
approve different versions of the measure.
Jones spoke in favor of his amendment and no one
spoke against it. His amendment seemed
non-controversial. Rep. Jones said that the new
rule, pushed by the Senate leadership in the
rules adopted for the previous 2-year session,
was designed to have more legislation acted upon
and more transparency. The rule forces lawmakers
to appoint a conference committee well before
July 31 after which the rules basically make it
impossible to appoint a conference committee
because the House and Senate meet only in brief,
informal sittings a couple of days a week until
the annual session ends at the beginning of
January 2019. The rationale was that a
conference committee often takes weeks to hammer
out a compromise bill and any committee
appointed after July 17 would likely not have
time to reach an agreement.
Critics say that the new rule backfired and
failed to accomplish its intent. Each branch had
approved different versions of an important $666
million economic development package but it was
after July 17 – too late to appoint a conference
committee under the new rule. The House and
Senate on July 23 began meeting behind closed
doors and then sending different versions of the
bill to each other until the Senate ended up
accepting a new House version which neither
House or Senate members had any time to read.
Despite that, on July 31, the House approved the
package 151-0 and the Senate passed it 36-0.
Gov. Baker signed the bill after vetoing several
sections.
Seconds after the roll call on the Jones
amendment began, Acting Speaker Petrolati and
Speaker DeLeo both voted “no” and a red light
appeared next to their names. According to House
rules, the acting speaker (Petrolati) actually
casts the vote for the speaker and a court
officer casts the vote for the acting speaker.
As is often the case, many Democrats quickly
took their cue from DeLeo and Petrolati and
voted “no” as well. This is not an uncommon
occurrence in the House. In this case it was at
least 63 Democrats who played “follow the
leader” and voted “no.”
As the board began to fill up with “no” votes,
Petrolati apparently took notice and talked into
a microphone he didn’t know was on. “It’s a
yes?” “Switch ’em. Yes, yes, yes, yes yes, Mikey,”
shouted Petrolati to Division Leader Mike Moran.
Suddenly, DeLeo and Petrolati’s votes switched
to “yes.” And then all 63 Democrat who had
initially voted “no” suddenly switched his or
her vote to “yes.”
The House’s only unenrolled non-party affiliated
member Susannah Whipps (U-Athol) had also voted
“no” and then switched to “yes.”
There may have been more than 63 Democrats who
first voted “no.” While the “no” votes appeared
on the electronic voting board for a brief time,
once the switchers changed their vote to “yes,”
there was no longer a permanent record of the
“no” vote. Beacon Hill Roll Call watched a video
tape of the session in order to see who voted
“no” at the beginning. The camera pans the
scoreboard a few times but there is no guarantee
we were able to spot every red light.
You can see the story unfold by watching the
video of the January 30 House session at
https://malegislature.gov/Events/Sessions/Detail/3297
Fast forward on the counter to 5:35:49 and watch
it until 5:37:39. It all happened in a little
over two minutes.
To the reader and viewer, this appears that
these 63 Democrats simply watched how DeLeo and
Petrolati voted and blindly followed their lead
and voted “no.” And then switched to “yes” when
DeLeo and Petrolati switched to “yes.” Did these
63 even know what they were voting on? Did they
care? What would cause them to switch their
votes other than they decided to follow the
“suggestion” of the speaker?
Beacon Hill Roll Call set out to find the
answers and over the course of three days, sent
two e-mails to each of the 63 Democrats who had
flip-flopped. The only response was from Rep.
Paul Donato, a member of the leadership team who
also usually acts as the acting speaker and
presides over the sessions. Donato gave a brief
explanation basically saying that there was
confusion surrounding the vote and some members
mistakenly voted “no” and then had to switch to
“yes.” Not a single one of the other 63
representative responded to our e-mails.
Here are the 63 Democratic representatives and
one unaffiliated non-party member who switched
their votes from “no” to “yes.”
James Arciero (D-Westford), Brian Ashe
(D-Longmeadow), Bruce Ayers (D-Quincy),
Christine Barber (D-Somerville), John Barrett
(D-North Adams), Jennifer Benson (D-Lunenburg),
David Biele (D-South Boston), Antonio Cabral
(D-New Bedford), Daniel Cahill (D-Lynn), Daniel
Carey (D- Easthampton), Gerard Cassidy
(D-Brockton), Michelle Ciccolo (D-Lexington),
Claire Cronin (D-Easton), Daniel Cullinane
(D-Boston), Mark Cusack (D-Braintree), Marcos
Devers (D-Lawrence), Daniel Donahue
(D-Worcester), Paul J. Donato (D-Medford),
Michelle DuBois (D-Brockton), Carolyn Dykema
(D-Holliston), Lori Ehrlich (D-Marblehead),
Dylan Fernandes (D-Falmouth), Carole Fiola
(D-Fall River), Sean Garballey (D-Arlington),
Colleen Garry (D-Dracut), Kenneth Gordon
(D-Bedford), Jim Hawkins (D-Attleboro), Stephan
Hay (D-Fitchburg), Jonathan Hecht (D-Watertown),
Kevin Honan (D-Boston), Louis Kafka (D-Sharon),
Mary Keefe (D-Worcester), John Lawn
(D-Watertown), David LeBoeuf (D-Worcester), Jack
Lewis (D-Framingham), David Linsky (D-Natick),
Jay Livingstone (D-Boston), Elizabeth Malia
(D-Boston), Ronald Mariano (D-Quincy), Paul Mark
(D-Peru), Christopher Markey (D-Dartmouth),
Joseph McGonagle (D-Everett), Rady Mom
(D-Lowell), Frank Moran (D-Lawrence), James
Murphy (D-Weymouth), David Nangle (D-Lowell),
Harold Naughton (D-Worcester), James O’Day
(D-West Boylston), Jerald Parisella (D-Beverly),
Smitty Pignatelli (D-Lenox), Dave Robertson
(D-Tewksbury), Paul Schmid (D-Westport), Alan
Silvia (D-Fall River), Theodore Speliotis
(D-Danvers), Thomas Stanley (D-Waltham), Jose
Tosado (D-Springfield), Paul Tucker (D-Salem),
Chynah Tyler (D-Roxbury), Andres Xavier Vargas
(D-Haverhill), Aaron Vega (D-Holyoke), John
Velis (D-Westfield), RoseLee Vincent (D-Revere),
Thomas Walsh (D-Peabody), Susannah Whipps
(U-Athol)
Beacon Hill Roll Call sent an e-mail to and
asked the opinion of the 94 representatives who
had not switched their votes and seemed to vote
“yes” from the beginning and to the three
members who were absent from the vote. Only
three of those members responded. Beacon Hill
Roll Call also asked some lobbying groups what
they thought.
Here are some responses:
Rep. Russell Holmes (D-Boston): “Welcome to the
House of Representatives. This is exactly how
the House runs itself and the members should be
ashamed. The speaker is like a shepherd leading
a flock of sheep.
Some members may have known what they were
voting on and may have even agreed with Brad
Jones. However, agreement with Brad does not
matter if it conflicts with the speaker. This is
particularly the case in the rules debate as the
speaker has given orders to all Democrats that
he wants no changes and that he is taking notice
for consideration of leadership and committee
assignments. We term the statements and speeches
in rules debate as ‘community auditions’.
The public is well informed. Many know that the
only reason these Democrats changed their votes
is because they await their instructions on all
votes from the speaker. Members do not think of
what is in the best interest of their districts
but instead they consider what is in the best
interest of themselves by voting with the
speaker. This disenfranchises the voters who
sent them to the Statehouse. I refuse to arrive
in the building and hand over the voice and
power of my constituents to the speaker.
The best way to eliminate this hypocrisy is to
bring pay equity to the building and pay all the
members the same regardless of positions in
leadership or committee. I was a ‘yes’ vote and
voting with Brad before seeing how the speaker
voted. Ideas should rule the day.”
Rep. Joe McKenna (R-Webster): “I think that
every representative has had the experience at
one time or another of casting a vote only to
have a colleague come and talk to them and
explain an issue perhaps in different terms
which may cause them to change their mind. I
think that is okay. Unfortunately, what we saw
during the rules debate is entirely different
and is something that we have seen numerous
times in my two plus terms. It’s simply a
‘follow-the-leader’ mentality where members seem
to take their sole direction from the color of
the light next to the speaker’s name with
apparently little awareness or concern for the
matter being voted on or its content. Leaning on
colleagues for guidance and advice is okay; but
the type of blind following we saw takes it too
far.”
Rep. Shawn Dooley (R-Norfolk): “Thanks for doing
a story on this. Seen it happen quite a few
times during my tenure. I think the fact that
this happened during the rules debate, while
only a handful of legislators were fighting for
greater transparency and communication, was
quite ironic.”
Rep. Mike Connolly (D-Cambridge):“I cannot speak
for anyone else’s decision-making process, but I
am proud to say that I immediately voted in
support of this amendment based on its merits
and therefore was one of the few Democrats who
voted in support of it before the speaker
changed his position.”
Chip Ford, Executive Director of
Citizens for Limited Taxation: “Captured
red-handed on video doing what The Best
Legislators Money Can Buy do best – mindlessly
following the leader. What a real-time votes
tote board exposed through an embarrassing
glitch is revealing of what’s so wrong on Beacon
Hill. Good catch Beacon Hill Roll Call.”
Paul Craney, Executive Director of the
Massachusetts Fiscal Alliance: “Even during the
important rules debate, when issues of
transparency and process are supposed to be
debated out in the public, some lawmakers don’t
even have the interest in knowing what they are
voting on and instead rely on the speaker for
instruction. This type of blind voting by some
lawmakers is how the Legislature finds itself as
the least transparent legislative body in
America.”
Jonathan Cohn, Chair of the Issues Committee of
Progressive Massachusetts: “Too often, House
Democrats will vote in lockstep with the
speaker, whether he’s right or wrong, without
doing their own due diligence about what they
are, in fact, voting on. Legislators should come
to their own conclusions about bills and
amendments based on their own promises and
principles and the input from advocates, policy
experts, and their own constituents -- not just
on how the speaker chooses to vote ... The House
had a long debate about its rules, but for the
rest of the session, there needs to be a serious
debate about the norms by which the chamber
operates and how badly they are in need of a
change.”
Associated Press
Monday, February 11, 2019
‘Millionaire tax’ amendment rises again at
Statehouse
By Bob Salsberg
Meet the new millionaire tax: It’s the same as
the old millionaire tax that was rejected on
constitutional grounds by the Supreme Judicial
Court — keeping it off the 2018 ballot — with
one key difference.
By using a different legislative procedure this
time around, supporters of the measure that
would raise money for education and
transportation through a surtax on
Massachusetts’ wealthiest taxpayers are
confident they can skirt the state high court’s
objections and place the measure before voters.
A closer look:
HOW WE GOT HERE
Dubbed the Fair Share Amendment by its backers
though often referred to as the millionaire tax,
the proposal required a change in the state
constitution. That’s because of the current
stipulation that income taxes be levied at a
“uniform” or flat rate — unlike the graduated
income tax on the federal level.
The amendment seeks to add a 4 percent tax on
the portion of an individual’s annual income
that exceeds $1 million.
Using the initiative petition process, the
organization Raise Up Massachusetts collected
more than 150,000 voter signatures to bring the
measure before the Legislature. It qualified for
the November ballot by winning sufficient
support from lawmakers in two successive
biennial sessions.
The high court, deciding a lawsuit brought by
several business-backed groups, ruled last May
that the proposal violated the “relatedness”
clause in Article 48 of the constitution, which
established the rules for citizen-initiated
ballot questions.
In the 5-2 decision, the justices said the
surtax and the language directing revenues to be
used for transportation and education were not
“mutually dependent,” thereby creating a
possible conundrum for voters. If, for example,
someone favored the tax but opposed earmarking
it for specific purposes, that voter would be
“in the untenable position of choosing which
issue to support and which must be disregarded.”
NEW APPROACH
Disappointed backers of the surtax blamed a “few
wealthy corporations and their lobbyists” for
blocking the amendment and the potential $2
billion in new revenue it would generate.
“As we said at the time, the court’s narrow
ruling does not change the fact that
Massachusetts desperately needs major
investments in our public schools and colleges,
our roads and bridges, and our public
transportation systems,” Raise Up Massachusetts
said in a statement. It also announced that 40
Democratic legislators were sponsoring a
proposed constitutional amendment with the same
wording as the earlier one.
So what exactly is different?
As a legislative amendment, as opposed to an
initiative petition, supporters are confident
that even with identical wording it would not be
subject to the relatedness clause or other legal
restrictions on ballot initiatives.
That assessment is not disputed by opponents of
the millionaire tax.
“It’s a different process and I think they’re
right,” said Eileen McAnnenny, president of
Massachusetts Taxpayers Foundation. “Because
this is not a citizen’s petition the
prohibitions don’t apply.”
Critics will instead argue against the measure
on policy grounds. Fluctuations in the income of
the state’s wealthiest taxpayers resulting from
dividends, capital gains and other factors would
make the tax an unstable revenue source for the
state, McAnnenny said.
Other opponents have said the tax could steer
entrepreneurs and their businesses away from
Massachusetts.
WHAT HAPPENS NEXT
The new proposal has been referred to the
Legislature’s Revenue Committee for a public
hearing.
Approval by a majority of lawmakers would be
needed in two successive Legislatures, in
contrast to the earlier initiative petition
procedure in which the support of only 25
percent of lawmakers was required to advance the
measure to the ballot.
The higher bar wouldn’t appear to be a problem.
In 2017, a joint constitutional convention of
the House and Senate solidly backed the
millionaire tax 134-55, similar to the margin in
a 2015 vote.
Because of the setback in the courts, the
earliest it can now reach the state ballot is
2022.
Many Democrats, including some legislative
leaders, say the state can’t wait that long to
address inequities in education or deteriorating
transportation infrastructure. That could result
in a discussion on Beacon Hill of alternative
revenue-raising measures long before voters
finally get to decide the millionaire tax.
Newsday
Tuesday, February 5, 2019
As revenue drops, concern about the proposed
state budget rises
Cuomo says he will have to revise his proposed
budget as personal income tax collections drop
$2.8 billion.
By Michael Gormley
ALBANY — Gov. Andrew M. Cuomo on Monday
announced a dramatic drop in state income tax
revenue of $2.8 billion, which he says will
prompt him to revise his 2019-20 budget and
reconsider spending on schools, health care and
repairs to roads and bridges.
Cuomo, a Democrat, blamed the shortfall on a
federal tax plan backed by Republican President
Donald Trump. Cuomo said the law's cap on
deductions for state and local taxes at $10,000
was to blame and suggested it is, anecdotally,
triggering high-earners to leave New York.
“At this point there is no doubt that the budget
we put forward is not supported by the
revenues,” Cuomo said at a State Capitol news
conference. “It’s as serious as a heart attack.”
Cuomo said he’s not certain what areas might
need to be cut, but said the biggest spending
areas now are education, health care,
infrastructure and another phase-in of a
previously approved middle-class tax cut.
The hole in revenues in December, which some
analysts have called a December surprise, and
continued poor performance in January have
created a $2.3 billion drop in anticipated
revenues, according to the Cuomo administration.
Add that to the $500 million drop in revenues
for December that the Cuomo administration had
previously projected and the revenue hole is
$2.8 billion, according to Cuomo Budget Director
Robert Mujica.
Those details had been previously outlined in a
Jan. 24 report by Moody's Investor Services,
which monitors state government finances.
“I fear it’s going to get worse before it gets
better,” state Comptroller Thomas DiNapoli said
in a rare news conference with Cuomo. “It’s not
all gloom and doom, but it’s a matter of very,
very serious concern.” Tax revenues could
rebound, he said, but he agreed with Cuomo that
early indicators are not good.
Cuomo has until mid-February to submit
amendments to his budget, which came in at
$175.2 billion when he unveiled it Jan. 15.
The announcement also serves notice to the
legislature, which for the first time in most of
a half-century is controlled by Democrats.
The Democratic majorities in the Senate and
Assembly have several proposals to add to the
budget. Cuomo will no longer have Senate
Republicans as an ally for fiscally conservative
measures. The Republicans lost the majority in
the November elections.
“Our analysts have seen the same troubling
trends in revenue, but we need to look at more
information before any drastic decisions are
made,” said Senate Democratic spokesman Mike
Murphy.
“I think it’s still a little too early to
determine what we can and can’t do,” said
Assembly Speaker Carl Heastie (D-Bronx). “Is
this just a blip? Is this just a delay? I think
that once we find out what’s the real cause
behind reductions in revenue then I think we can
make a formative opinion on where we go from
here.”
Cuomo blames Trump and his 2017 tax cut
legislation for prompting New York's wealthiest
taxpayers to change their legal address to
another state to avoid a big federal tax hit. He
said he bases this on anecdotal stories, not
hard facts yet, but that the behavior of just a
few thousand of these high-earners could have a
significant impact on state revenues.
Trump's legislation provides tax cuts for most
Americans, but caps the federal deductibility of
state and local taxes at $10,000. That means
high-income, high-tax areas such as Long Island
can no longer deduct their full state and local
taxes on their federal income taxes, which can
be a major added cost.
Cuomo said the loss of federal deductibility
greatly affects the 1 percent of taxpayers who
pay almost half of New York’s taxes and he notes
they are highly mobile, able to move their legal
residence out of New York easily.
Moody's noted that New York taxpayers were
encouraged to pay their 2018 taxes early, by
Dec. 31, 2017, before the new federal deduction
cap became effective. That provided New York
with an increase in tax revenue in December 2017
but also partially explains the drop in December
2018 when fewer people had to pay estimated
taxes, Moody's said. It didn't provide a
specific estimate of the 2018 revenue hit.
“Lower December results often lead to reduced
expectations for receipts in the current fiscal
year and in future years,” Moody’s said in its
Jan. 24 report.
Some of the lost revenue may reflect early
payments made by some New Yorkers in 2017
seeking to pay their estimated state income tax
early to get the federal deduction before the
federal tax law took effect in 2018. But the
state had already accounted for that effect and
lowered its projection for December 2018
revenues by $2.4 million. The revenue drop
reported Monday was from that lowered
projection, said Cuomo budget spokesman Morris
Peters.
Cuomo noted that states dominated by Democratic
voters, like New York, New Jersey and
California, are hit by the loss of deductibility
but lower-wage, lower-taxed states in the
Midwest and South — which voted for Trump —
enjoy the tax break unscathed.
“The change fundamentally restructures the
economy,” Cuomo said of the federal tax
legislation.
Moody's said other factors include a volatile
stock market that hurt tax revenues and some big
federal aid cuts to health care and other areas.
Cuomo said that he and his administration are
blameless. He said the continued exodus of
residents from the state and a temporary
millionaire’s tax created in 2009 to contend
with the Great Recession (but which he’s
extended since then) are not contributing
factors.
“We did everything right from a tax point of
view,” Cuomo said.
In January, Cuomo proposed to cut aid to
municipalities, keep spending level for most
agencies and extend the temporary millionaire's
tax from 2007, which is scheduled to end at
sunset Dec. 31, for another five years.
While Cuomo said he has met his self-imposed cap
of 2 percent spending growth, not everyone
agrees.
State operating funds spending will grow by 3.4
percent — the third year in a row that Cuomo
exceeded his 2 percent cap, said David Friedfel,
director of state studies at the independent
Citizens Budget Commission.
“The state's rainy-day funds grew slightly to
$2.3 billion, but fall far short of what would
be necessary to contend with an economic
slowdown or recession,” said CBC president
Andrew Rein. He said Cuomo uses “gimmicks” in
accounting such as reclassifying some spending
to be exempt from the spending total used for
the cap and shifting costs to other fiscal
years.
Cuomo’s budget spokesman maintains that spending
is within the 2 percent cap.
“While anyone can contrive selective adjustments
to get to a higher number and tell a different
story, we’ll stick with a fully transparent
financial plan showing spending growth within
two percent for a ninth consecutive year,” said
Peters.
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