Sunday, March 28, 2010

Let's talk taxes

Guest editorial by Jim Pierce

Harvey is a good friend of mine. Counting his ears, he’s about six feet tall. He’s very busy around Easter, but, he tends to be invisible especially around Town Meeting and local elections. After making a movie with Jimmy Stewart in 1950 and playing on Broadway for several years with Art Carney, Harvey retired to Sandwich. His property is assessed at about $315K. As a result he pays about $4,000/year in property taxes. When you put those numbers together with the invisibility, Harvey is pretty much an average Sandwich taxpayer.

Harvey collects about $1,500/month from Social Security and has a pension from his theater days of about $3,500. The household income of $60K per year is about average for Sandwich. He pays Uncle Sam about $6,000/year. When sales tax is added to Harvey’s state income tax, Uncle Robin Hood up on Beacon Hill gets about $3,500. Harvey’s on Medicare, so health insurance hasn’t been a problem so far.

Like many of us, Harvey gets very excited when he gets to be one of more than 100 million votes to send someone to the White House. He even gets reasonably excited if a special election comes up and he can be one of a couple million votes sending a senator to Washington. When he can be one of 100,000 votes electing a congressman or one of ten to twenty thousand sending a representative to Beacon Hill, he pays some attention. But, it’s totally ho-hum when he could be one of less than 500 at Town Meeting or one of a few thousand at the local ballot box.

Harvey’s enthusiasm for voting is in proportion to the potential influence of the candidate. It’s hard to convince Harvey that it makes more sense to participate when his vote can have the most influence.

But, this was supposed to be about taxes. Harvey should never be discouraged from voting in elections that influence how much money flows to Capital Hill or Beacon Hill. Once the money is over the hill, so to speak, Harvey has little control over how it is spent. However, he needs to exercise the leverage he has locally with care. There is even a little solace to be taken from the fact that on average every dollar in property taxes is 20 cents (for Harvey it’s only 10) that doesn’t go to Washington.

In fiscal year 2011 Sandwich will raise about $45 million from property taxes. That money will be spent locally. Town Meeting determines how it is spent. It’s tempting to vote against everything. Please don’t do that! There is a useful rule of thumb. The way the math works, every million dollars added to the operating budget adds about $100 to Harvey’s tax bill. So, if there is a $250,000 appropriation on the warrant, it will cost Harvey $25. The question then becomes; is the proposed service worth $2/month?

Bond issues are different. If a warrant article proposes borrowing $6 million to be paid back over ten years, then at today’s rates the annual interest and principal would be about $700,000. The impact on Harvey’s tax bill is about $70/year or $6/month. One can argue against taking on that debt on the grounds that it costs Harvey $700 over ten years. Or, one can do like the children’s charities on TV: “For a mere twenty cents a day you can…” Harvey is smart enough to sort that out and vote based on the value received for his tax dollars.

Will Harvey do some homework and come to Town Meeting on May 3rd? Will he get to know the candidates and cast a ballot on May 6th? I see Harvey quite often, I’ll ask. Hmmm, maybe this selectman gig is more stressful than I thought. Or, maybe I need to lay off the red wine.

Jim Pierce
Sandwich, MA

Tuesday, March 23, 2010

3-step process to single-payer health care

Last year, I argued that the health care reform bill being peddled by the U.S. House of Representatives, which incorporated a “public option,” was the first step to implementing a single-payer health care system. I wasn’t alone. Here’s Barney Frank saying just that:

When the public option disappeared from the proposed bills, President Obama declared it a nonissue. A nonissue, I thought? How could that be?

I had reasoned that a public option, subsidized by the U.S. Treasury, could offer health insurance at below market rates with no need to produce a profit and no danger of going under. That would eventually result in the demise of health insurance companies and thereby convert the nation to a de facto single-payer health care system.

I now see where I went wrong. There’s no need for a public option to transition to government-managed health care. All we need to do is to subject the nation to the failing Massachusetts experiment.

What started out to be a workable solution to Beacon Hill’s desire for universal health insurance got passed in 2006 sans cost containment measures and plan choices. That guaranteed budget busting premiums for individuals and employers and out-of-control costs for the commonwealth.

For the facts and figures regarding the Health Connector’s budget woes, see America's Consolidation of Healthcare by Outlawing Options (ACHOO).

Step 1 – Pass a national version of Massachusetts’ health insurance mandate; just make sure that it, like our law, includes no cost control measures. Spiraling upward costs are a key component on the path to a single-payer system.

The next problem is to clear the way for this bill—passed by the House on Sunday—to become law and withstand the certain challenges to its constitutionality by several states’ attorneys general and other Constitution-loving organizations.

I’m starting to believe that the delayed timing of implementing this bill is less tied to building the necessary bureaucratic infrastructure than it is to allowing adequate time for Obama to appoint a Supreme Court justice or two.

I know this is a bit of a stretch, given that three of the four liberal judges are all up there in years—Stevens will be 90 next month—but Scalia and Kennedy are both in their mid-70s. However, to seal the deal on “Change You Can Believe In” (I’ve always enjoyed the bad grammar of this slogan), you need to move the High Court to a majority of justices willing to interpret the Constitution to suit the White House’s wishes.

Step 2 – Shift the right leaning Supreme Court to a left leaning body by adding one more liberal justice.

With the first two steps accomplished, the rest is easy.

Step 3 – Watch this grand experiment blow a hole right through everyone’s wallet and bring hundreds of companies and scores of states to the brink of bankruptcy.

The only option that will then be available would be to go to a single-payer system. After all, who in their right mind would want to go back to the evil free market system after this colossal failure showed that the “new and improved” system didn’t work either?

If we don’t put the brakes on this 1-2-3 process, we’ll suffer with this unworkable bill for about a half dozen years, starting in 2014, and be crying “uncle.” By then, all of this will be 2020’s hindsight.

Copyright 2010 Randy Hunt

Tuesday, March 16, 2010

Can I please have my Congress back?

Guest editorial by Jim Killion

We have certainly all seen it before. As one door is closing, inevitably another one starts to open. This became evident recently with the announcement that the 10th Congressional District’s entrenched representative was retiring. As taxpayers, we can only hope that along with the door closing on this mediocre career, by extension it will bring an end to the tired and bloated old habits of our deficit-spending government. When the current Congressman arrived in Washington in 1997, the national debt stood at around 5 trillion dollars. Today the debt is rapidly approaching 13 trillion.

It is time to open a new door in Washington.

We can only hope that when the door opens to a new Congress in 2011 behind it will stand elected representatives who are committed to governing according to the will of the people and to securing the financial future of every American. Representative Jeff Perry of Sandwich has spent every one of his four terms on Beacon Hill working to make our government more accountable and more efficient. He must now take his strong leadership skills and conservative values to Washington as our Representative in Congress in the 10th Congressional District so that he can secure America’s return to being the economic leader of the world.

Most Americans love their country and would be willing to make tough sacrifices if the result is a more secure future for our children. The Herculean challenge currently facing our elected officials is to convince us that they can be trusted to do what is in the best interest of the people. For far too long our government seems to have existed to satisfy its own appetite for power and control. What currently exists is what our Founding Fathers feared the most; a powerful and unwieldy central government that seeks to make itself even stronger despite the overwhelming objections of the people.

As we begin the second decade of the new millennium, perhaps the sleeping giant known as the American electorate has awoken from its slumber. Less than two months ago these informed voters tried to send the Washington elitist a message with the election of Scott Brown. Unfortunately, our Congress chose to ignore it. The elections in November will give everyone an opportunity to help usher in a new era of responsible government which can begin with the election of Jeff Perry as U. S. Congressman for 10th Congressional District.

Jim Killion
Sandwich, MA

Monday, March 15, 2010

U.S. Census 2010: Counting on 300+ million psychics

Got my 2010 census today.

Let me ask you something: How many people came to your party two weeks from now?


So was I.

Here’s the message from the U.S. Census Bureau Director:

Note that it says, in bold type: Please complete and mail back the enclosed census form today. (I’d argue about the need for the word “back” in this request, but I digress.)

Now look at Question 1:

In case you can’t see it, it reads: How many people were living or staying in this house, apartment, or mobile home on April 1, 2010?

If I complete and mail this form today, as requested, just how am I going to answer Question 1 without the benefit of clairvoyance?

Copyright 2010 Randy Hunt

Sunday, March 7, 2010

How balanced is this state budget?

The Federal budget deficit is frightening the bejeebers out of me.

Good thing we have a law requiring a balanced budget in Massachusetts. Yes, it's a really good thing…

Let’s take a look at this fiscal year’s state budget, which runs from July 1, 2009 through June 30, 2010. The total budget is $26.9 billion (by the way, this figure does not include the $11 billion of “off budget” expenditures, making the real total budget around $38 billion, give or take a billion—we’ll save that discussion for another day), against which we are projected to spend $27.5 billion. Click here for the detail.

I don’t know about you, but that doesn’t exactly seem balanced to me. By my calculations, it looks like we’re $600 million out of balance.

When did we find out about this problem? Would it surprise you to learn that the writing—in big, fat red letters—was on the wall on April 15, 2009, when the governor’s budget gurus forecasted an April (one-month) shortfall of $497 million? That should have been enough to send the revenue projectionists back to their booth to mull over the impact this trend would have on the fiscal year 2010 budget.

But they were wrong.

April 2009’s actual revenues fell short a whopping $953 million. That’s pretty close to being 100% off on a prediction made when half the information was already available. See the CNN Money report here.

In the ensuing eight weeks, the House, Senate and Conference Committee crafted a fiscal year 2010 revenue projection that again overestimated revenues in an effort to “balance” the budget.

The governor signed the FY2010 budget on Monday, June 29, 2009, and one month later we found out that July revenue collections were already $24 million below forecast. See that press release here.

By the end of September, the state’s first quarter, revenues had missed the wishful-thinkers’ projection by $139 million. That’s when the $600 million full-year shortfall was announced by the governor, who was quickly given authority by the legislature to slash spending so that legislators wouldn’t have to do the heavy lifting and take the blame for an unrealistic budget.

The governor whacked cities and towns with so-called 9C cuts and special town meetings were held all over the state to approve lower budgets and to lay off teachers, firefighters and police. But, to his credit, the governor said he would let go some 2,000 of the nearly 5,000 people he has plugged into the state payroll since taking over the corner office.

At the time, State Treasurer Tim Cahill, now candidate for governor with a self-professed ignorance of where the state might be wasting money (that is, until he gets elected, at which time he’ll be able to sort all that out), said that the budget shortfall would be more like $1.4 billion, rather than $600 million.

Cahill said, “Our budget is built on phantom figures and based on a hope and a prayer.” Gov. Patrick’s Secretary of Administration and Finance, Jay Gonzalez, disputed State Treasurer Cahill’s figures, “I don’t know where the treasurer is getting his estimates.”

Quite frankly, I don’t know where any of them are getting their estimates. And that brings me back to my main point. Balancing a budget on unrealistic revenue forecasts may satisfy the statutory aspects of Chapter 29 of the Massachusetts General Laws, but it does not deal with the real problem: unsustainable spending.

In Sandwich, we took on the exercise of showing how the town could close its structural deficit over three years, without additional state aid. The difficult, but necessary, cuts are called out in the plan in terms of personnel reductions and other spending restraints. Unlike the state, which can simply slash local aid to “balance” its budget, towns and cities have nowhere to go except to reduce payrolls and cut services.

With that in mind, the governor and legislature must elevate the priority of local aid in its budget discussions, start estimating revenue in a realistic way, and implement a top down reorganization of state government where the focus is on us, not them.

Copyright 2010 Randy Hunt