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OPINION

Cutting state and local services in the middle of the coronavirus pandemic doesn’t make fiscal sense

While it may seem counterintuitive to talk about new revenue in the midst of an economic crisis, we must recognize that it would be unprecedented not to.

Now is not the time for harmful, draconian cuts. The Massachusetts Legislature needs to raise new revenue.
Now is not the time for harmful, draconian cuts. The Massachusetts Legislature needs to raise new revenue.John Tlumacki/Globe Staff/file

COVID-19 has presented us with an unparalleled global crisis whose total effect on Massachusetts has yet to be fully felt. The state revenue shortfall is about $6 billion, and local and state leaders have been told to prepare for the worst as they develop budgets for the new fiscal year. Mayors and superintendents are faced with unfathomable decisions over what they are going to cut in order to help their cities, towns, and schools survive the current economic crisis. On the state level, we have been forewarned of the tough budgetary choices and program cuts to come.

There is a better way. Rather than myopically cutting our way out of this dilemma, we must instead make significant investments in our residents and our communities. We call on our colleagues in the Legislature, the Baker administration, and in Congress to commit to these four concrete actions to limit the damage of the current fiscal crisis and equip us for a faster, stronger, and more equitable economic recovery:

▪ We call on our federal delegation to focus, with all urgency, the next federal relief package squarely on bailing out states so that we can fulfill our obligations to education, local aid, and protecting our children, seniors, and our environment.

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▪ The Massachusetts Legislature needs to use no less than $1.5 billion of the Massachusetts Rainy Day Fund.

▪ The Legislature needs to raise new revenue through targeted, progressive means, including taxes.

▪ If necessary, the state should borrow to fill state budget gaps.

While it may seem counterintuitive to talk about new revenue in the midst of an economic crisis, we must recognize that it would be unprecedented not to. Massachusetts has raised new revenue following every recession of the last few decades. As outlined in an open letter to Massachusetts leaders supported by dozens of well-regarded Massachusetts economists, “Economic theory and historical experience show that spending cuts are more harmful than tax increases during recessions.” And finally, not everyone has been hurt by the coronavirus pandemic. Billionaires across the country have seen their wealth grow by over $584 billion since March alone, and a number of corporations have seen record profits during this time.

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We call not for broad-based taxes but, rather, for progressive revenue that targets existing loopholes and those corporations who have profited handsomely in these last few months. These targeted reforms include recapturing taxes from those who move their income offshore by recoupling with the federal Global Intangible Low Tax Income (GILTI) provision, eliminating the single-sales factor for mutual fund companies, delaying implementation of the state charitable tax deduction, and raising and tiering the Corporate Income Tax. Taken together, these actions will generate an estimated $1.3 billion in revenue for Massachusetts, without economically harming our middle and working-class residents or our small businesses.

If the federal government fails to provide necessary relief for states, Massachusetts should borrow. Ordinarily, borrowing is reserved for capital investments, not to cover operating costs. However, education and other essential services in the midst of a global pandemic is a vital investment in our human capital.

In the Student Opportunity Act, legislators promised to bring transformative educational funding to under-resourced communities. To now deny these students the significant investment that was promised would be a triple blow to low-income residents and communities of color, who have already been so disproportionately affected by both the public health and economic crises of these last few months, both caused and exasperated by the longstanding inequities and injustices facing them. We cannot rob yet another generation of young people from the high-quality education and opportunity to which they are entitled.

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Earlier this year, the Massachusetts House showed our willingness to take the necessary votes for the future of our Commonwealth in passing a vital transportation investment bill. We urge our Senate colleagues to approve it, and Governor Baker to quickly sign it into law. However, the revenue it raises will not be enough to meet the needs of our new reality. We must do more.

Now is not the time for harmful, draconian cuts. We see the devastating impacts of this sudden and current crisis on families, and it is imperative that all elected leaders refuse to choose which segment of working-class America to harm and instead require that the wealthiest among us step up and do their part. While this moment of crisis poses a great challenge to all public officials, we are committed to doing what’s necessary to fully fund our essential state and local programs and to provide the support our residents need to weather this crisis.

Tricia Farley-Bouvier represents the Third Berkshire District and Jack Patrick Lewis represents the Seventh Middlesex District in the Massachusetts House of Representatives.