Mass. House Approves $1.2-Billion Tax Increase

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Ending several months of inaction on the state's fiscal crisis, the Massachusetts House has approved a $1.2-billion tax increase.

But many educators said last week that the tax hike would not solve the state's school-funding woes.

Passage of the tax bill "is just the opening gambit in what will be a long-running drama on Beacon Hill this year," said Stephen K. Wollmer, chief spokesman for the Massachusetts Teachers Association.

Educators may be forced to lobby for a further tax increase, he added.

In fact, the tax package--which would raise the income-tax rate by one percentage point and almost double the gasoline tax--barely raises enough revenue to erase the deficit, which is currently estimated at $1.1 billion.

As of late last week, the Senate had not acted on the plan, but was expected to address the proposal this week. Some House members expressed concern that the Senate would change the plan's structure, and thus threaten its fragile coalition of support in the House.

Senators reportedly favor broadening the sales tax. But "there wasn't sufficient support for a sales-tax increase in the House," said Al Frezza, a spokesman for Speaker of the House George Keverian.

Nancy Richardson, education aide to Gov. Michael S. Dukakis, acknowledged that even with the new taxes, some education programs will not receive adequate funding.

"But we did the best we could under the circumstances," she said.

School districts are strapped financially as well. More than 9,000 of the state's 63,000 teachers have received layoff notices as a result of the budget crisis, according to the MTA.

Union officials predicted, however, that not all those teachers will lose their jobs. Last year, about 5,000 teachers got notices, and only about 1,500 were eventually laid off.

Mr. Wollmer added that the state's education community is in a politically difficult position.

The new taxes will only eliminate the state's budget shortfall, he noted. Educators will still have to lobby for additional revenue simply to restore cuts made in last year's budget.

"It's a tough sell," he observed. "I guess we'll be whining long after the tax bill passes."

Local-Aid Ruling

Meanwhile, the state's highest court ruled last week that Governor Dukakis had wrongly withheld $210 million in local-aid payments last summer--thus potentially adding to the state's financial burdens.

Some local officials and educators described the Supreme Judicial Court's decision as mixed news.

"To us, it's maybe worth an additional $2 million," said Richard T. Leary, town administrator of Brookline, the lead plaintiff in the suit. The town's total budget is about $98 million, he said.

More than 100 other communities joined Brookline in the suit, which was filed last August after Mr. Dukakis withheld the aid funds because of the state's fiscal crisis.

About 40 percent of such local aid goes to the schools.

The court ruled unanimously that Mr. Dukakis had erred in withholding the money. The funds were appropriated by the legislature, the court said, and the Governor had no right to retain them.

But the decision did not order the Governor to release the money.

"It's not yet clear when this money is going to be forthcoming," said Mr. Leary. "Hopefully, it will be before the end of the next fiscal year."

Stephen Crawford, a spokesman for Mr. Dukakis, said the Governor "would have to sit down with [local officials] and leaders in the legislature. We've got to work out some sort of a solution."

Tax-Override Votes

Mr. Wollmer said the decision "has no teeth" because it does not order the Governor to release the funds. And some local officials said they were worried that the ruling, coupled with the tax increase, might make it more difficult to pass overrides of Proposition 2, the state's property-tax-limitation law.

In the Boston suburb of Needham, for instance, voters last week narrowly rejected a $2-million tax increase.

"I absolutely believe that last week [before the court decision and passage of the tax plan] we would have won," said MaryRuth Perras, chairman of the citizens' group that supported the override.

Override attempts fail about 60 percent of the time, according to the Massachusetts Municipal Association. This spring, the mma has found, at least 220 of the state's 351 cities and towns are attempting overrides--a 22 percent increase over last year.

An analyst for the municipal group said the prospect of increased federal taxes being discussed by President Bush and Congressional leaders would further hamper attempts to override Proposition 2.

Such attempts are especially likely to fail, said Mary Kate Sampson, "if voters are looking at a tax increase at all three levels of government, and the only one they can vote on is the local one."

Vol. 09, Issue 35

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