When he campaigned for governor, Deval Patrick approached the subject of taxation with apparent intelligence and courage. Since coming to office in 2007, however, the governor has wandered far from his campaign promise to provide property tax relief by restoring local aid to municipalities.
Rather than confront the correlation between lower income taxes and higher property taxes and fees, as he did in his campaign, Patrick first cast his lot with the casino industry in a scheme ostensibly intended to increase state revenue. Now he finds himself pushing another unpopular plan to raise revenue through a proposed 19-cent per gallon gas tax hike.
At a debate in Springfield on Oct. 4, 2006, then-candidate Patrick rejected the idea, pushed by his opponents, to roll back state income tax rates from 5.3 percent to 5 percent. "We roll the income tax back and we pay for it with higher property taxes and exorbitant fees in many cases," Patrick said. "I believe that the tax to cut right now, and to do it immediately, is the property tax and to relieve these exorbitant fees." To cut property taxes, Patrick promised "to restore local aid."
At a debate a few days later, Patrick again tried to focus voters not just on income taxes, which his Republican predecessors had been cutting for nearly 16 years, but the total tax burden. "Look, we focus on the wrong tax," Patrick said. "The tax to cut is the property tax, and the only way to cut the property tax is to take the state surplus right now and return it to cities and towns in the form of greater local aid. And we cannot afford to do that& and at the same time roll the income tax back."
Of course, the surplus is now gone. The economy has collapsed. But the governor still pays lip service to the idea of property tax relief. "With falling state revenues and cuts in local aid, cities and towns have been forced to pass the costs of essential services along to homeowners in the form of residential property taxes," he wrote in support of his proposed Municipal Partnership Act this year. "Homeowners in Massachusetts need real property tax relief, and they need it today."
But how does Patrick propose to provide the relief he believes homeowners so desperately need? At the national level, President Obama proposes to provide tax relief to working families by manipulating the income tax, repealing Bush-era tax cuts and restoring marginal rates to pre-2001 levels. In other words, he looks to a progressive form of taxation, income tax, as a means to raise total revenues—to send more money to the states—while cutting taxes on the middle class.
Patrick, by contrast, proposes no property tax relief nor any restoration of local aid. Rather, through the Municipal Partnership Act, he would allow cities and towns to pass local meals and hotel taxes. His plan, like his proposed gas tax, is not only regressive, hitting the poor harder than the wealthy; it also fails to address the structural deficit that is at the heart of the problem.
A Jan. 14, 2009 report by the Massachusetts Budget and Policy Center, Substantial Surpluses to Dangerous Deficits: A Look at State Fiscal Policies from 1998 to 2008, makes the problem clear. Between 1998 and 2008, the state economy grew at an annual rate of 2.64 percent while state spending grew at an annual rate of only 2.26 percent; the amount of money spent on education, health care, human services, local aid, and the rest of the state budget grew more slowly than the economy as a whole.
"If spending was declining as a share of the economy, why did the state's fiscal condition deteriorate?" the report asks. "During the same 10 years, revenue, which includes state taxes and fees, grew at an annual rate of 1.48 percent& significantly slower than the growth of the economy as a whole. This was because the state made substantial income tax cuts and the sales tax has not kept pace with changes in the economy. If the tax revenue had grown as a steady share of the economy during these past 10 years, Massachusetts would have shown a substantial surplus and would have been in a far better position to weather the current national recession."
Patrick was right to carp at his Republican predecessors for playing a shell game with taxes, cutting income taxes and depriving municipalities of sufficient local aid. Sadly, given his failure to push progressive tax reform, he now looks like a con artist or a coward.
