If you sometimes hear people refer to state government as “our state government,” that’s partly because it supports our schools and communities but also because it spends our tax dollars.
About 6 cents of every dollar people earn in Massachusetts goes to the state in the form of taxes. That’s not as much as people sometimes assume, but it’s the biggest source of revenue for the state budget. And a recent 50-state analysis suggests that we could be doing more to ensure that our contributions to the “common wealth” are spent wisely.
How do we compare with other states?
Massachusetts is a lowly 37th out of 50 states when it comes to transparent budgeting. That’s according to a report from the Center on Budget and Policy Priorities, a left-leaning research organization with expertise in budget and tax policy.
Being 37th suggests there is a lot of room for improvement, but there are a few areas in particular that stand out.
■ Tax breaks. In almost every respect, tax breaks are just like spending. If you owe $5 in taxes, it doesn’t really matter if the state tells you not to pay (the tax break) or if it collects your $5 and then gives it right back to you (direct spending). Either way, you end up with more money in your pocket, and the state has less to invest in other things. Yet, while spending needs to be reauthorized every year, tax breaks auto-renew. And currently, there is no process in Massachusetts for reviewing tax breaks to make sure they’re working as expected. A 2012 commission recommended that certain tax breaks expire automatically and that all tax breaks get regularly reviewed. To date, though, little action has been taken.
■ Cost estimates. You might like to think legislators know the cost of the bills they’re voting for, but that isn’t always true. Many other states have what’s called a Legislative Fiscal Office, whose job it is to provide estimates of the short- and long-term cost of tax breaks and spending bills. Massachusetts doesn’t. As a consequence, legislative leaders rely on the governor’s team to provide such information, and rank-and-file legislators sometimes can’t get it.
■ Maintenance budget. Even if legislators make no changes to state programs, the cost of government changes from year to year. That’s because the population changes. More seniors, for instance, means greater demand for existing elder care services. To determine how much it would cost to keep existing programs running for another year, given demographic shifts, the administration produces a “maintenance budget” or “current services baseline.” But it doesn’t release the findings, which makes it more difficult to understand the choices being made and to participate in debates about how best to use tax dollars.
Are there any areas where Massachusetts excels?
The state’s “rainy day” fund works quite well. If the economy goes sour, Massachusetts has a substantial cushion to ensure that people’s needs are met. More important, the state has set up a reliable funding stream to keep it that way.
Massachusetts also received high marks from the policy group for its revenue estimates, meaning that the state does a good job of gathering input and reaching agreement about the amount of money likely to be collected through taxes, fees, and other sources.
What does the budget have to do with government transparency?
Concerns about transparency often evoke images of wafting cigar smoke and back-room dealing, but the basic challenge is to ensure that tax dollars are spent well and distributed in a way that best supports our cities, towns, and citizens.
Since most spending happens in the state budget, one place to look if you care about transparency is the budget process. The policy group’s report suggests there may be ways to strengthen that process and improve the effectiveness and accountability of our state government.