For a statewide campaign that didn’t engage very deeply on the question of taxes, Massachusetts voters certainly made themselves heard. They said no to a tiny automatic increase in the gasoline tax, no to an expansion of the bottle bill that opponents branded a consumption tax, and no to repealing casinos, touted as a “voluntary” alternative to higher taxes.
And they said yes, albeit narrowly, to Charlie Baker, the governor-elect who appealed directly to middle-class voters tired of “being nickel and dimed” by taxes. Baker’s formulation is more accurate than he may have realized, since the amount individual voters will save by rejecting the ballot questions is literally pocket change. But nickels and dimes add up to real money when billions of them are taken out of the revenue stream.
Despite the flinty mood of the voters, there is some reason for optimism for those who believe state government provides important services that are worth paying for. For one thing, Baker is a numbers guy, and the numbers are compelling. Despite a strong economy in Massachusetts, revenues are not keeping up. The current state budget relies on $250 million in one-time fixes and a $140 million draw from the rainy-day fund to close a revenue gap, and a new $325 million shortfall cropped up last week (the budget already counts projected casino revenues). Under a complicated formula adopted in 2002, the state income tax rate will automatically decline in January to 5.15 percent, slicing another $150 million annually out of the budget.
Unexpected expenses and unknown knowns abound. Debt service and state employee pensions are both growing faster than revenues. Some 300,000 residents were shifted onto a “temporary’’ Medicaid plan when the state’s health exchange rollout collapsed, and it isn’t clear when the federal government will reimburse the state or for how much. “The state could be on the hook for hundreds of millions” in that fiasco, said Michael Widmer, director of the Massachusetts Taxpayers’ Foundation.
And Baker has his own commendable spending priorities. He wants to do more for substance abuse education and treatment. His support for increasing the earned income tax credit will help working poor families, but it, too, has a price tag. And let’s not forget the state’s 493 structurally deficient bridges (according to the American Society of Civil Engineers) and 341 high-hazard dams in desperate need of capital investment.
In other words, the state’s budget gap is going to be too big to fill with efficiencies alone.
Reopening the tax reform debate may seem like a nonstarter in these circumstances. But at the risk of donning rose-colored glasses, I would suggest that voters are not so much anti-taxes as they are anti-unfairness. There is legitimate reason for working families in Massachusetts to feel squeezed by increasing prices and decreased earning power. Real wages haven’t gone up since the late 1970s. Income inequality is worsening. And Massachusetts is now the most expensive place to buy a four-bedroom house (outside California) in the country. No wonder voters didn’t want to spend even a few pennies more on the one commodity — gasoline — that seems to be getting cheaper.
Meanwhile, the state’s tax system only widens the gap for struggling families. A bipartisan legislative commission on tax fairness issued a major report this spring showing that the lowest 20 percent of Massachusetts workers pay a much larger share of their income — more than twice — in state and local taxes than those in the top one percent. “I think you can have a conversation about fairness,” said representative Jay Kaufman, chairman of the House revenue committee. “There’s a real sensitivity to the consequences of the wealth and income divide.”
Renée Loth’s column appears regularly in the Globe.