revenue sources

Here's another budget article! [Itemlive.com]

We've just begun the calendar year 2012 and yet our state government is already gearing up for the fiscal year 2013 budget debate.  This still isn't a growth budget in the sense that programs and services cut over the past 4-5 years will not be restored and that more cuts should be expected.  Austerity wasn't a good economic and fiscal plan for growing the economy in Europe.  Why do our political leaders think the same failed economic and fiscal policies will succeed in MA?  That's a head-scratcher, for sure.

... Secretary of Administration and Finance Jay Gonzalez warns that more spending cuts will be needed to balance the [FY2013] budget.  “At the end of the day there are going to be lots of areas that are going to have to live with level funding or reduced funding or eliminated funding.”

“Most of the people coming in to meet with me are coming in saying, ‘Hey, the economy is coming back, the tax revenues are coming back, so can you put my money back,’” Gonzalez said. “What I tell all those people are that those expectations are out of whack with reality.”

Its time for a paradigm shift in the economic, fiscal and tax policies of our country.  We can't cut our way out of the Recession...austerity didn't work for the English the first time and it's not working for them now nor with the countries in fiscal crises in the Euro Zone.  Will the Administration and our legislators have the courage and political will to face down the corporations and the wealthy to help the low income and middle class survive and thrive, to the benefit of the entire country?  Let's hope so.  Let's continue with our advocacy efforts to make this a reality.

As stated in The New York Times editorial, The challenge for Mr. Obama is to translate the plight of the middle class into an agenda for broad prosperity. Congress’s inability to cleanly extend even emergency measures though 2012 — including the temporary payroll tax cut and federal unemployment benefits — underscores the difficulty. The alternative is continued decline.

More jobs. Fewer foreclosures. Less financial risk. Progressive taxation. Those policies will give the middle class a fighting chance. But the list is not exhaustive. The pillars of a healthy middle class also include public education, Social Security, unions, child care, affirmative action and, not least, campaign finance reform, since inequality is reinforced by the political power of the wealthy.

Filmmaker Daniel Adams is being charged with fraudulently selling $4.7 million in MA film tax credits to Wal-Mart and Bank of America so they could reduce their MA taxes.  Supposedly the corporations did not know Mr. Adams had committed fraud by inaccurately reporting the costs of the films he produced, thereby increasing the tax credits he could get.  $4.7 million, that translates into a lot of jobs and services we need to restore to our communities to make them healthier and safer for all of us.

Assistant Attorney General Margaret Parks said the state cannot recover the $4.7 million in lost tax revenue from Wal-Mart and Bank of America because Adams’s expenses had been certified as accurate by an independent accountant, whose name has not been disclosed. The state’s film tax credit law awards to filmmakers tax credits equal to 25 percent of whatever they spend in Massachusetts; the tax credits can be sold back to the state or to a third party. [CommonWealth Magazine]

The economic prognosticators were out in force at a hearing on Beacon Hill, predicting how high/low fiscal year 2013 revenues might be.  Predictions ranged from $21.7 billion, an increase of 3.2 percent (Amy Pitter, commissioner of the state Department of Revenue), to $22.28 billion, an increase of 4.1 percent ( David G. Tuerck, executive director of the Beacon Hill Institute at Suffolk University in Boston), with other predictions in between.  These predictions still leave the Commonwealth with a budget shortfall. [Full Article: Mass live.com]

Sen. Stephen M. Brewer, a Barre Democrat and chairman of the Senate Ways and Means Committee, said that tax revenue growth for fiscal 2013 is unlikely to be enough to compensate for cuts in federal grants and reimbursements or growth in items such as the state's $10.4 billion Medicaid program. Brewer said it will be difficult to avoid some spending cuts in the state budget for the next fiscal year.

"It appears like it's going to be a very sobering year," Brewer said after the hearing. "There may be in excess of $1 billion (gap) between expected revenues and needs. The revenues are growing but not to the needs of the line items. We have a lot of tough choices to make."

Jay Gonzalez, state secretary for administration and finance, said he could not make any commitments to any spending levels in the budget including state aid to communities. He said nothing is sacrosanct at this point...."Everything is on the table again this year," Gonzalez said after the hearing. "It's another challenging year."

from NYTimes.

ALBANY — Gov. Andrew M. Cuomo and legislative leaders on Tuesday announced that they had reached an agreement to raise taxes on New York state’s wealthiest residents as part of a deal to overhaul the state’s tax rates.The leaders, seeking simultaneously to make the state’s income tax system more progressive and to boost tax collections during a down economy, announced their agreement as lawmakers began to arrive at the Capitol for an expected special session of the Legislature later this week.

Matt Murphy in the State House News Service reports here on the message from the Admininstration -- delivered on Thanksgiving Eve.

THE STATE HOUSE — Heavily into planning for next year’s state budget, Administration Finance Secretary Jay Gonzalez on Tuesday said the Patrick administration plans no new broad-based tax increases in fiscal 2013, and will have to find ways to cover surging demand for social services that is expected to outpace revenue growth.

“Even though tax revenues are growing modestly, and we may have more resources next year, the demands in our safety net programs and health care costs generally, the rate of growth in those areas exceeds the growth in resources,” Gonzalez told the News Service during a 20-minute sit-down interview in his office.

Through mid-November, tax collections of just over $7 billion since the start of the new fiscal year in are up 5.8 percent over the same period in fiscal 2011 indicating that the Massachusetts economy continues to rebound from the recession that began in 2008 and forced rounds of budget cuts.

“Tax revenues have been growing and we expect them based on economic forecasts to continue to grow so I think next year’s budget will be bigger than this year’s budget, but probably only modestly,” Gonzalez said.

Cities and towns are now beginning their FY 2013 budget planning and estimation processes.  There's no more federal stimulus dollars, and the economy hasn't bounced back as everyone hoped it would.  The state hasn't been able to provide much financial relief...it has reduced local aid and other program funding for the past handful of years.  When will the Administration and leaders in the State House come to fully understand that we need new revenues to invest in our communities for the health, education and safety of all our people?

One concerning trend is the decreasing level of revenue from economic growth, such as permit fees, commercial tax growth and excise taxes. The amount of that revenue has gone down two years in a row.

"Those are reflections of economic activity," Walters Young said. "When economic activity slows, the amount of money the government collects goes down. [Full Article: Wicked Local Natick]

The casino legislation is now in conference committee.  One point to reconcile is how to distribute some of these casino revenues to fund public education in communities throughout the Commonwealth.  It's important what the formula will be.

Both the House and Senate versions of the casino legislation would devote 14 percent of all casino taxes to schools. The House bill would distribute that money statewide, based on a formula Massachusetts uses in doling out money to cities and towns.

But a Senate amendment that was overwhelmingly approved last week would put a priority on distributing the casino money to 165 of the state’s 400 school districts that are considered underfunded, based on a plan the state passed five years ago to help suburban districts...Schools in some of the state’s wealthiest communities, including Wellesley, Lexington, and Dover, would get millions of dollars in casino money while some of the poorest districts, including Boston, Brockton, and Holyoke, would get nothing...  [Full Article: The Boston Globe]

Paul Krugman writes - class warfare, says who?  We benefit from participating in this society in which the government is at its center; the wealthy could not have garnered its wealth without being part of this society.  They clearly have benefited greater than the lower and middle class folks.

... big cuts in top income tax rates,...there has been a major shift of taxation away from wealth and toward work: tax rates on corporate profits, capital gains and dividends have all fallen, while the payroll tax — the main tax paid by most workers — has gone up.   According to new estimates by the nonpartisan Tax Policy Center, one-fourth of those with incomes of more than $1 million a year pay income and payroll tax of 12.6 percent of their income or less, putting their tax burden below that of many in the middle class.  [Full OpEd: The New York Times]

It seems Massachusetts is at the middle of the pack, nationally, when it comes to taxes on casinos.  And, we're on the low end for the Northern states.  Why is the tax revenue aspect of the casino gambling bill not being debated in the House this week?  Is MA leaving money on the table?  What are the true reasons for allowing casino gambling in MA?

[Economic development secretary, Gregory P.]  ]Bialecki said the state must look at casinos primarily for their ability to create jobs and long-term economic development...Tax money has to be a secondary concern, he said, emphasizing the importance of debating the bill outside the pressures of budget season, when the need to plug short-term holes in spending could cloud discussion about economic development.  [Full Article: The Boston Globe]