Every tax is a pay cut. Every tax cut is a pay raise.
Citizens for Limited Taxation
|Mass. is called No. 1 in fee hikes||Thursday, July 24, 2003|
|Rick Klein||Boston Globe|
This time it's fees, not taxes. Still, Massachusetts may have
enhanced its reputation as "Taxachusetts."
A survey of states grappling with spending crises has found that Massachusetts imposed more fee hikes than any other state in the nation this year -- at least $500 million.
Governor Mitt Romney and the Legislature, faced with a multibillion dollar shortfall, made it more expensive to get a marriage license or a divorce, file a court case, buy a house, renew a driver's license, or tap into a host of other state services.
The governor points out that he helped avoid a broad-based tax increase and says the targeted fee increases for specific services. But taxpayers still feel the bite, even if it's not in the form of taxes.
"I'm not surprised we're number one,"said state Representative Paul C. Casey, a Winchester Democrat and chairman of the House taxation committee. "Our approach was to hit every fee in sight."
The study by the National Conference of State Legislatures found that Massachusetts was one of 30 states that enacted fee increases this year. The organization found that 17 states enacted significant tax increases, unlike last year, when many states were hesitant to turn to taxes because it was an election year in most places.
Of the 30 states to raise fees this year, only nine are bringing in $100 million or more from those fee hikes. Massachusetts reported $501.5 million in fee hikes; the second-biggest fee increaser was New York, with $367 million, though New York has a much larger budget.
"Fees have been the name of the game in the past year," said Corina Eckl, the NCSL's fiscal program director. "In Massachusetts, the sheer number of fees stood out."
The study included tax data from the 42 states that were far enough along in their budget process for their officials to respond to survey requests. It does not include data from California, which has the nation's largest budget gap and has not completed a budget, or New Hampshire and Connecticut, which were not far along enough in finishing their budgets to respond to the survey.
Romney makes a distinction between taxes and fees by describing fees as charges that are levied in return for specific services. Since the amount of the fee often covers the cost of a service, the governor has said he views fees as distinct from -- and preferable to -- broadly applied taxes on income or the sales of goods.
Eric Fehrnstrom, Romney's communications director, criticized the study for lumping together fees that were increased during the last fiscal year, which ended June 30, and ones that were increased for this fiscal year, which began on July 1.
He said because the group did not offer detailed documentation, it may be presenting a misleading portrait of the scope of fee increases in Massachusetts. He said the governor's office has calculated the additional fees for the fiscal year that began July 1 to be about $313 million.
"We used the occasion of the fiscal emergency to look at our fee schedule and make adjustments," Fehrnstrom said. "Yes, fees did go up, but taxes did not."
But fiscal watchdog groups say the avoidance of taxes in Massachusetts was driven by political considerations and didn't take into account the best way to pay for essential state services. Many of the fee hikes enacted this year raise money for general state operations, not a particular service, leading an outside budget analyst to complain that their broad impact means they're essentially taxes disguised under less offensive names.
"These are just indiscriminate, broad-based fee increases because of a reluctance to raise taxes," said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. "It's been disingenuous to say there's no new taxes, in the sense that there's very little connection to the fee increases and the cost of services that the fees are supposed to represent."
Noah Berger, executive director of the Massachusetts Budget and Policy Center, said the state definitely had room to maneuver in terms of raising the fees; US Census Bureau data released this year showed Massachusetts had the second-lowest fees in the nation as a share of personal income.
Still, he said the state would have been better-served to close the budget gap with taxes that affect everyone, such as the income tax. Such taxes spread the burden more equitably across the population than fees, and are generally more dependable sources of revenue, Berger said.
"The important question to ask is what's the right thing to do, not what's allowed politically," Berger said.
Even with the fee increases, Massachusetts lawmakers have had to cut spending on K-12 education, forcing teacher layoffs, push 10,000 legal immigrants off Medicaid, and force rape crisis centers to close, along with a host of other state services that have been scaled back.
Casey, the House taxation chairman, agreed that new taxes probably would have made more sense than across-the-board fee hikes as a means of supporting state programs. But taxes were political kryptonite this year on Beacon Hill, and Romney's veto threat meant tax votes would have required two-thirds votes of the House and Senate -- impossible in the current climate, he said.
"There's less political fallout for fees," said Casey. "The general public isn't conflicted. They just say, `Oh good; you didn't raise our taxes.' "
Some lobbyists and activists are still pushing on the tax front. About two dozen demonstrators -- many of whom were arrested at a protest last month for refusing to leave the State House when the building closed -- waited out the rain and navigated the wind to symbolically "raise revenue" on Beacon Hill yesterday morning.
And so, a balloon-lifted, 50-foot white canvas banner with "REVENUE" written in red briefly hovered over Beacon Street. But the message seemed to have fluttered away with the banner: New taxes still appear unlikely to be on state lawmakers' agenda this year.
Lawmakers who want to raise taxes say they are realistic about the political climate, but still want taxes to be on the Legislature's agenda. The Legislature should have considered the fact that while state taxes are deductible on itemized federal tax forms, fees aren't, said state Representative Anne M. Paulsen, a Belmont Democrat.
"We really need to measure what happens when we raise taxes and what happens when we raise fees," Paulsen said.
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