Don't feed the monster; State income tax hike not the answer.
Worcester Mayor Joseph C. O'Brien's community meeting Monday night to promote a state income tax increase got one thing right: Worcester faces big deficits on both the municipal and school sides of its budget.
We also largely concur with Mr. O'Brien's assessment that most everything has been done that can be done to control costs on the city side of the budget.
But the mayor's endorsement of the tax hike proposed by state Rep. James O'Day, D-West Boylston, is grounded in faulty assumptions.
Worcester, along with the rest of the state, is not in financial difficulty because the rich aren't paying enough taxes. It's in a bind because of the convergence of a recent steep recession with the maturing of demographic and historical trends that are putting relentless pressure on local budgets.
The recession has forced cuts to the state budget, and thus to local aid. Federal stimulus dollars are gone, as scheduled, although some budget-writers are reluctant to admit it. Health care costs continue their relentless rise. Retirees' health care and pensions must be paid for, and the city must try, as well, to make some progress in funding pension liabilities attributable to those public employees still on the payroll.
Add in years of overly generous pay hikes to teachers, police officers and firefighters - which have yielded a system with scores of public employees pulling down six-figure salaries - and you have a prescription for ongoing fiscal meltdowns.
To its credit, Worcester has done a great deal of cost-cutting and prudent fiscal management on the municipal side of its budget, largely due to the efforts of City Manager Michael V. O'Brien, who has trimmed both budgets and expectations in preparation for the disappearance of stimulus money and the dwindling of local aid. That means a lot fewer City Hall workers, cops and firefighters.
Unfortunately, those efforts have not been matched with sufficient fiscal discipline on the school side of the budget, whose budget, accounting for inflation, has risen 6.15 percent in five years. Even as enrollment in the public schools has fallen by more than 3 percent, full-time equivalencies have increased slightly. The schools, in short, have not seen anything like the cutbacks seen on the city side of the budget.
Moreover, until and unless current contract talks with teachers are settled in a way that holds the line on salaries and gets all teachers to pay 25 percent of their health care costs, the city as a whole is in no position to make a case to taxpayers that it has done all that is possible.
One of the enduring lessons of the recent recession is that many states - and, by extension, their municipalities - grew overly dependent upon taxpayers in the upper income brackets. The incomes of the rich yield a bumper crop of tax dollars in good times, but evaporate rapidly during recessions. The coffers of government never run dry, but fluctuating tax revenues are not always sufficient to provide the kinds of services the public comes to expect during good times.
Tax increases are certainly one option, and if enough voters come to accept Mayor O'Brien and Mr. O'Day's versions of history and economics, they may soon enough see rates rise. They may also see more businesses and residents pick up and leave Massachusetts for greener pastures. Those left behind will labor on, but the revenue that comes from tax increases will never be enough to balance the budgets we have now, never mind satisfy the cravings of public-sector apologists for still more government.
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|Publication:||Telegram & Gazette (Worcester, MA)|
|Date:||Apr 6, 2011|
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