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Our members are the local governments of Massachusetts and their elected and appointed leadership.
In an address to his City Council last night, Beverly Mayor and MMA President Bill Scanlon warned that an initiative to cut the state sales tax could force the elimination of more than 50 jobs in his city — and many more in communities throughout Massachusetts.
Scanlon argued that the small savings that residents would see at the cash register if Question 3 passes on Nov. 2 would be more than offset by a marked decrease in the state’s quality of life as well as property values.
Question 3 would cut the state sales tax rate from 6.25 percent to 3 percent, which would reduce state revenue by an estimated $2.5 billion.
The mayor’s address was broadcast to residents over Beverly’s local access cable station.
The following is the full text of Scanlon’s address:
In less than a month the citizens of Beverly and all the other communities throughout Massachusetts will go to the polls to cast their votes. Included on the ballot is Question 3 which, if passed by a “yes” vote, would roll back the state sales tax from 6.25 percent to 3 percent. Tonight I wish to talk to you about Question 3.
Almost everyone would like to have his or her taxes reduced. That is clear. It is also clear that many of Beverly’s citizens and folks across the state and the nation are hurting financially. Thus a “yes” vote on Question 3 has real appeal, very real appeal.
I am also aware that at every level, there are inefficiencies in government operations. Every one of us can cite examples of such inefficiencies. While I believe that there should be a constant, steady pressure to cut the expense of government and to make it as efficient as possible, we must be careful not to take a major step backward.
The current state expenditure budget is supported by $2 billion in one-time revenues from the federal government and the state’s rainy day fund. That means that $2 billion of the revenues in the current budget simply will not be there next year. A “yes” vote on Question 3 would further reduce state revenues by another $2.5 billion annually. Thus, in total, the state would have to operate with $4.5 billion less next fiscal year. Where would that come from? Nearly all of it would have to come from job reductions and a drastic reduction in services at the state and local levels.
As many of you know, local aid, which is the return to Beverly of some of the taxes we pay to the state, is our second-largest revenue source, second only to real estate taxes. Despite recent reductions, local aid still amounts to $12 million annually. If Question 3 passes, our total reduction in local aid could exceed $2.5 million for fiscal 2012. On that basis, if we assume that each job reduced saves $50,000, that would mean a reduction of more than 50 jobs. These would be firefighters, police, teachers, public services employees, etc. In Beverly, we would certainly have to close a fire station and reduce the number of police officers on patrol at all times. All services would be negatively impacted, from snow plowing to fixing broken water pipes.
Beyond the loss in all our public services, we need to realize that similar actions would be necessary in communities all across the state. That would make it very unattractive for people or businesses to move to or remain in Massachusetts. What would that mean to the value of your home? For all of you who own real estate, be it your home or business, I anticipate the value of your property would drop markedly, thus destroying your hard-earned equity.
If the sales tax reduction were to save you $325 per year, assuming you expend $10,000 annually subject to the tax, you might lose 10 to 100 times that in equity. I admit this is only my opinion, but I have given a lot of thought to this issue.
My advice is simple. Vote “no” on Question 3 and convince everyone you know to do the same thing. At the same time, continue the pressure on making government better. There are many opportunities – pension reform, better health care cost sharing, combinations of functions, regionalization, part-time benefits for part-time work, etc. Constant, steady pressure to reduce expenses is important, but drastic knee-jerk reactions such as the sudden elimination of $2.5 billion in state revenue will cause many unintended, unfortunate consequences and in the end cost you money while impacting your safety and quality of life.
If you agree with me on this issue, please talk to everyone you can and get them to understand how important this matter is and get them to vote “no” on Question 3.