State and Local Finance

Former Supreme Court Justice Oliver Wendell Holmes taught us that "Taxes are what we pay for a civilized society." The state must collect enough taxes to fund the services we need and do it fairly. For two decades I have led the fight for tax fairness.

Massachusetts faces a revenue crisis caused by more than forty tax cuts during the 1990s that have reduced state revenue by almost $3 billion dollars annually. I led the opposition to the tax cutting movement and fought instead for targeted tax relief for low and moderate income households.

I ran for office in 1990 on a platform of tax fairness. One of my first acts was to initiate the “circuit breaker” program for tax relief for people living on fixed incomes but who pay high property taxes, now state law for seniors. I was the prime sponsor of the Constitutional amendment to create a graduated income tax and the bill that would have implemented it, providing a tax cut for more than two-thirds of the state’s population without reducing state revenues. I wrote the law that increased the Earned Income Tax Credit, most of which goes to single mothers living on limited incomes.

I even appeared before the Massachusetts Supreme Judicial Court as a “friend of the court” to defend the constitutionality of the capital gains tax and my brief, the only one entered in support of the tax, won.

For the last three terms, I have lead the effort to close corporate tax loopholes, filing the legislation and leading the floor fights on these issues. The legislation I have sponsored would generate more than $500 million annually by making corporations pay their fare share.
I support all four parts of the Municipal Partnership Act, and was an original sponsor of two of them (the telecomm property tax exemption and the local option meals/hotel tax).
Pensions: I am a strong supporter of the new law that requires the worst performing local pension funds to join the state system and allows other to join at their own volition. The investing power of the state allows it to earn a better return on investment than all but a handful of the local systems. Since we are legally and morally committed to making sure that every pensioner gets what they were promised, we need to make sure that our investments are sound. My only disappointment is that the new law did not make more of the local pension systems join the state system.
If Lexington’s retirement system had the same return on investment as the state, it would have an additional $10.2 million in its system. Instead, Lexington will have to cut that much plus interest from its future spending to make up for the shortfall.
If Arlington earned the same return on investment as the state, it would have an additional $11.6 million. It too will have to cut services to make up for the shortfall.
The failure of local retirement systems to earn the same results as the state over the past ten years will require a diversion of $3 billion away from our schools and public safety programs, programs that cannot afford further cuts.
Municipal health insurance plans: I worked for the enactment of our new law enabling communities to purchase their health plans through the state Group Insurance Commission, allowing them to take advantage of the state’s purchasing power to buy insurance at a lower cost.
The Telecommunications Property Tax Exemption would generate $78 million in annual property taxes that would go directly to municipal government. I was one of the original sponsors of this legislation.
The Local Option Meals and Hotel Tax would generate another $120 million for local governments if every community adopted a 1% meals tax. I was an original sponsor of this bill, too.