MetroWest Daily News: Taxpayer foundation president sees ‘Big hole’ in state budget

FRAMINGHAM – Facing a “long, anemic recovery,” the state must fix deep structural budget problems, while communities need power to control costs in education and other programs, the head of the Massachusetts Taxpayers Foundation told local leaders last night.

“If we don’t take advantage of this incredible structural (budget) meltdown to make changes to protect public education, then we will never make those changes,” said Michael Widmer, the foundation’s president.

Two years ago, the foundation fought against the ballot measure to abolish the state income tax, arguing that such a move would cripple the state budget.

The Suburban Coalition hosted last night’s meeting on the state’s budget, and included several dozen officials from Hopkinton, Framingham, Wayland, Hopedale, Sudbury and other towns. The coalition is a statewide advocacy group made up of local towns to deal with mutual concerns.

The state’s September tax revenues are expected to fall $200 million short – raising anticipation for mid-year budget cuts – even with rounds of reductions during the previous fiscal year and a recent hike in the sales tax.

Based on their creased foreheads and frowns, audience members didn’t seem surprised by the news, nor did they appear happy to hear it.

“Beyond the (economic) crisis, the state has a structural deficit, and we do need to address it,” said state Sen. Jamie Eldridge, D-Acton, who also attended the meeting.

Widmer said the stock market collapse resulted in a large drop in the state’s capital gains tax revenue: in fiscal 2008, the state brought in $2.1 billion from capital gains. But by the following fiscal year, that figure had fallen to about $500 million, he said.

He said there’s a proposal to split capital gains revenue evenly between the state’s operating budget and rainy day fund to slow spending and build up reserves.

Proposals to bring gambling to the state wouldn’t generate any money for a few years, even if a plan were approved in the spring, said Widmer.

Widmer said lawmakers need to address measures to allow communities to design the health care plans for their employees, similar to the state’s group insurance commission.

“Savings there are potentially huge…and can grow over time,” said Widmer. “From our point of view, the simplest solution is to give cities and towns the same power over health plan designs that the GIC has over state employees.”

Eldridge said the Legislature is close to passing a bill that would make it easier for communities to regionalize some services and engage in group purchasing to help save money.

State Rep. Pam Richardson, D-Framingham, said she’s filed legislation that would limit the amount of money that a charter school gets from the home districts of students enrolled in the charter school.

She’s also filed a bill that would cap the spread of tax-exempt social service groups in communities, as she said communities lose the property tax revenue from properties owned by those agencies.

Framingham School Committee member Andy Limeri said there needs to be a reimbursement for communities that host such groups, or share the costs of supporting those groups across several communities. His town is embroiled in a lawsuit with the South Middlesex Opportunity Council.

Framingham Town Manager Julian Suso agreed.

“We’re happy to do what we can (for) our share of the regional burden…without the relief we’re talking about, it creates antagonisms between natural allies and it can get ugly,” said Suso.

Dorothy Presser, the coalition’s president and a Lynnfield School Committee member, cited a report released yesterday by the Massachusetts Budget and Policy Center, which said the amount of income the state collects in taxes has fallen in recent years.

The state fell from 35th to 38th in the nation in terms of the amount of personal income paid out in state and local taxes: about 10.5 percent in 2007, according to the report. The national average is a little over 11 percent.

Richardson noted that tough financial times make supporting higher taxes difficult for lawmakers.

“It makes it an extremely difficult time to support taxes,”said Richardson.

Eldridge said there is a small group of lawmakers talking about implementing a progressive income tax, but such a change would mean an amendment to the state’s constitution. He said a 1 percent hike to the income tax would generate about $1.2 billion in extra revenue.

“There needs to be a long-term plan. It won’t be fixed next year,” said Eldridge.

Mary Pratt, a former Hopkinton selectman, said communities need to see greater financial support from any income tax hike.

“If you want to increase the income tax, you have to guarantee to the cities and towns they’ll get something back in local aid,” said Pratt.

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