From: Randy Hunt
Sent: Tuesday, May 05, 2009 7:14 AM
Subject: 9-C (Local Aid) Cuts
I’ve been predicting since mid-March that the MA capital gains and income taxes collected in April would probably fall a billion short this year. Yesterday, the announcement was made that April’s tax collection were a billion under last year’s April collections. This is primarily fueled by capital gains which, for the 2007 tax year, were extraordinarily high (market peaked in October 2007) and for the 2008 tax year were extraordinarily low (market crashed in 2008). No rocket science here. The real problem, looking forward, is that many people now have capital losses that will offset future capital gains as well as non-MA bank interest and dividends. Don’t be surprised if the legislature proposes to change the capital loss carryforward rules, putting a cap of the offsettable amount, or eliminating the ability to offset non-MA bank interest (or both).
I am very encouraged, however, that Therese Murray’s website http://www.theresemurray.com/) continues to lead with this headline: Reform Before Revenue: Senate Passes Bill To Dramatically Restructure And Simplify State Transportation System. “This is an important piece of legislation for the Commonwealth,” Senate President Therese Murray (D-Plymouth) said. “We need to consolidate and restructure first so we don’t throw money into a broken system that no one has confidence in anymore. I’m proud of all the work here in the Senate, especially by Senator Steven Baddour and his staff, to deliver on the sound principle of Reform before Revenue.”
She has embraced the concept of correcting some of the hugely expensive structural, hierarchical and systemic aspects of state government before succumbing to the urge to crank up taxes. This is leadership we need at this difficult time. I’m confident that she will lead the senate in overturning the house of representatives’ brazen and regressive 25% sales tax hike and deliver on her promise of Reform Before Revenue. Thank you, Senator Murray.
Back to the big surprise: Today, according to the news reports, the governor will assemble a gaggle of economists to create a new revenue forecast in the aftermath of the billion dollar shocker. Dear Governor: The big surprise is having the economy kick you in the butt while your head is firmly buried in the sand.
Needless to say, more 9C cuts affecting FY09 are likely on the way, leaving us practically zero time to adjust [town and city] budgets to accommodate for them. Keep your antenna out and let our legislators know how tenuous our situation has become.
Randy Hunt, CPA and Town of Sandwich Selectman
When the state senate voted for the 25% increase in sales tax and expanded it to the already heavily excise-taxed beer, wine and liquor, I followed up with the next open email:
From: Randy Hunt
Sent: Wednesday, May 20, 2009 6:55 AM
Subject: Reform Before Revenue? (The Two R’s)
Remember that email I sent out on May 5th about the “Reform Before Revenue” thingy?
Apparently, the order of the two R’s got reversed.
Shocked, I tell you.
By the way, does it bother anyone that our state senate district isn’t represented in most of the senate votes? Senator Murray usually votes PRV (president rarely votes). Is that why the sales tax vote was 29 to 10?
Today, I received a nice letter from Senator Murray explaining the trials and tribulations of establishing the state’s fiscal year 2010 budget. Read it here.
I feel better.
Copyright 2009 Randy Hunt