Revenue Committee in Worcester

The Legislature’s Joint Committee on Revenue made the first of its six stops on its listening tour yesterday, hosting a session on taxes and municipal budgets at the Academy at Worcester Polytechnic Institute.

Revenue Committee Co-Chairman Rep. Jay Kaufman, who convened the meeting, said the aim of the listening tour is to facilitate a conversation about how best to structure the state’s tax system and end the cyclical budget crises that lead to program cuts like those likely to come from the governor’s next round of 9c cuts.

The meeting, titled Tax Policy and the Challenges of Local Government, featured a presentation by Massachusetts Municipal Association Executive Director Geoff Beckwith.

When asked about whether Massachusetts needs to increase taxes due to a possible $1 billion deficit in the fiscal year 2010 budget, and an even larger deficit next year, Beckwith noted that while there is no consensus on any new revenue proposals at his organization at this time, the group has consistently supported revenue measures put forward by the Legislature or Governor.

There are a wide variety of revenue options to look at, he said, including broadening the sales tax to include services and increasing the income tax rate.

Other options discussed at the meeting included a call for a local income tax option for Massachusetts communities. Virginia McIntyre of Concord said her town’s over-reliance on the property tax has made it difficult for the 40 percent of households there who earn less than $60,000 a year. The average property tax bill there is $12,000 a year.

Worcester Research Bureau CEO Roberta Schaffer said the dual tax rate that allows Worcester to tax commercial property at a higher rate than residential property has driven businesses to suburbs and argued for a single rate. Worcester taxes commercial property at $29/sf, while neighboring Shrewsbury taxes property at $9/sf.

Al Hartheimer, an economist from Lanesborough, argued on behalf of a land-based tax that values vacant land higher than buildings.

Kaufman opened the meeting with a review of the criteria through which the Legislature commonly views taxes – adequacy, fairness, stability, congruency with state policy goals, efficiency, transparency, simplicity.

Kaufman’s slide show illustrated the balance Massachusetts has struck between the income tax, property taxes, corporate taxes, the sales tax, fees and other revenues.

Beckwith followed with his own presentations, showing how cuts in local aid have forced cities and towns to rely more and more on the property tax.

An over-reliance on the property tax is dividing Massachusetts communities, Beckwith said. The wealthier communities can continue to provide higher levels of service because their residents can afford to pay higher property taxes while lower-income communities will face greater cuts.

“It’s a really regressive policy,” Beckwith summed up. “The more we divide Massachusetts, the harder it will be in the future to have equity.”

Beckwith also noted that many towns are struggling with unfunded mandates — like the Quinn Bill, SPED and charter schools — that he says have become the equivalent of earmarks on communities property taxes.

At the same time, according to Beckwith, the number of communities seeking overrides has dropped from 22 percent in fiscal year 2008 to 13 percent in fiscal year 2009 and just 4 percent in the current fiscal year.

Also in attendance at the meeting were Revenue Committee Co-Chairman Sen. Ben Downing and reps Alice Peisch, Lew Evangeledis, Jay Barrows and James Arciero.

Kaufman stressed that the listening tour is a forum to share ideas.

“This is not a progressive issue or a Democratic issue,” he said. “We all know something is amiss. We have to think outside the box.”

Committee Co-Chairman Sen. Ben Downing said the comments received in the listening tour will be helpful to legislators as they make difficult decisions on revenue.

“Talking to folks like you helps guide us through this process,” he said.

The next stops on the Revenue Committee’s listening tour are:

Framingham - Tax Policy and Vulnerable Populations
October 13th
10:00am to 12:00pm
Framingham Senior Center

Pittsfield - Tax Policy as a Tool for Economic Development
October 21st
10:00am to 12:00pm
Berkshire Community College

Fall River - Tax Policy and the Taxation of Property
October 28th
6:00pm to 8:00pm
City Hall (pending confirmation)

Cambridge - Tax Policy and Working Families
November 5th
6:00pm to 8:00pm
Harvard Kennedy School of Government – JFK Jr. Forum