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| TALKING POINTS FOR A BETTER BUDGET |
March 19th, 2010
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Greetings!
As an active member of our community, you know that the things that make Massachusetts a great place to live - good schools, clean water, safe streets - are only possible due to our shared, ongoing support.You may have noticed that staff and members of the ONE Massachusetts network talk a lot about finding a more-balanced and stable way to gather that fiscal support. That is because a decade of tax cuts and declining revenue has left Massachusetts with a multi-billion dollar structural deficit - forcing our elected officials to make difficult decisions in order to balance our budget.
We thought that today, as the Legislature studies Governor Patrick's solution to our FY 2011 state budget, and works towards their own version, we'd take a closer look at what a balanced solution could really look like.
In short, that solution could involve taking a more balanced approach to balancing our budget - relying not solely on cuts, but pushing for more federal funding, using the Rainy Day Fund, streamlining public structures where overlap and waste occur, analyzing the value of tax credits we give to corporations, and pushing for more progressive, broad-based revenues - so that we can all work together to build a better Massachusetts!
 This newsletter is designed to provide you with talking points to speak effectively with your legislators and neighbors about taking a balanced approach to our fiscal crisis. You can also download these Talking Points on Our Revenue Options [PDF].
Not sure how to get that meeting with your legislators lined up?
Download this handy guide to Organizing
Legislative Meetings [PDF] from the Massachusetts Community Action
Network!
Keep reading for more information on these building blocks to a stable fiscal foundation, and feel free to contact me to get involved or to receive a free, in-depth training on our options!
Sincerely,
Yawu Miller Project Director, ONE Massachusetts
yawu@realclout.org | 617-275-2918 |
EVALUATE ALL REVENUE OPTIONS
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Instead of relying solely on cuts and temporary solutions, we have the option to build a more stable long-term fiscal foundation for our state. This would mean both looking to new ongoing revenue sources, and increasing our current revenue streams in ways that are progressive and stable.
These are just some of the revenue options that are possible to implement in the near future that some of our members support:
- Film Tax Credit: Repealing this credit would save as much as $150 million per year, according to the governor's budget. [Governor Patrick's Proposal]
- Dividends and Interest: Restoration of this income tax rate to 12 percent would raise an estimated $500 million, according to the Mass. Budget and Policy Center. An exemption could be added for the first $5,000 of income.
- Life Sciences Tax Credits: Limiting this credit would save Massachusetts $5 million
per year, according to the governor's budget. [Governor Patrick's Proposal]
- Aircraft Sales Tax Exemption: Repealing this exemption can save $4.5 million per
year, according to the governor's budget. [Governor Patrick's Proposal]
- Cigars and Smokeless Tobacco Sales Tax Exemption: Removing can earn $10 million per year, according to the governor's budget. [Governor Patrick's Proposal]
Other revenue options that could be implemented over the next several years include:
- Implementing Services Taxes: Currently, Massachusetts exempts all services from the Sales Tax, forgoing $9 billion dollars in revenue, according to the state's Tax Expenditure Budget. By carefully selecting certain services for taxation, we can add an additional, progressive source of revenue.
- Increase the Income Tax Rate: A one percent increase in the income tax rate would raise $800 million, according to the Mass Budget and Policy Center. Combined with an increase in personal exemptions, increasing the income tax can allow us to raise revenues without increasing taxes on families earning under $100,000 a year.
As we push for change in our revenue structure, it is also important that we take the time to thank our legislators for their support of the Sales Tax increase last year. Without the $750 million in revenue that it raised, Massachusetts would have seen even more devastating cuts.
Your friends and neighbors across the state also worked hard to defeat Question 1 in 2008, which would have cut the income tax and taken away 40 percent of the state's revenue. This year there are two sales tax questions on the ballot that could cut as much as $2.5 billion out of the state budget. ONE Massachusetts members and allies are already organizing a campaign and will work hard to defeat the ballot questions.
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Federal Stimulus Grants Awarded in Our Area
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A direct response to the economic crisis, the Recovery Act has three immediate goals:
- Save existing jobs as well as create new jobs
- Spur economic activity and invest in long-term economic growth
- Foster unprecedented levels of accountability and transparency in government spending
But while Stimulus Funds continue to help fund jobs in our state, we must face the reality that Federal Stimulus Funding was a short-term solution to a long-term issue in our state, and that any projects, programs, or jobs supported by these grants will need to seek funding in the year or two it takes for the ARRA support to run out.
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Background Info:
The Stabilization Fund - often referred to as the "Rainy Day Fund"- is a cushion for when the economy turns down. It is like a "savings account" for the state to turn to when there is not enough money in the General Fund (the "checking account") to fund the state's operations. Over the past decade, the balance in the Rainy Day Fund has fluctuated as it was put to use in times of economic hardship. With the start of the current recession in FY 2008, the Rainy Day Fund has once again helped balance the state's budget: $315 million taken out in FY 2008, $1.39 billion taken out in FY 2009 and $235 million taken out so far in FY 2010. The Governor, in his Fiscal Year 2011 proposal, balances the budget in part by withdrawing $175 million from the Rainy Day Fund. [More info at MassBudget.org]
Currently at $400 million dollars it is important that we utilize our rainy day funds wisely. Like Federal Stimulus Funding, there is only so much built up in this cash reserve, so this cash should not not be counted on for long-term financial commitments. But also like the ARRA funds, this account was built for a rainy day, to offset the need for unhealthy cuts to our state budget. So the question to ask yourself - and your legislators - about the Stabilization Fund is: Is it raining yet? |
For more information about how you can use the information
provided in this newsletter together with tips on how to set a meeting
with your legislators and talk more effectively about government and
taxes visit the following links:
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