Next Tuesday, voters will have the option to vote on three ballot measures that may greatly impact the Massachusetts budget if they pass. Advocates for all three measures promise increased personal budgets and spending ability, while opponents warn that thicker wallets may come at the expense of the state’s essential programs including substance abuse treatment, housing and education.
Question 1: Sales tax on alcoholic beverages
This ballot measure would remove the existing sales tax on alcoholic beverages and alcohol, only if it has been previously subject to state excise tax.
Proponents of this measure urge a YES vote, arguing that this tax is a double-tax since all alcohol is already subject to an excise tax: Spirits are now taxed at a rate of $4.05 per gallon; table wine is taxed at $0.55 per gallon; and beer is taxed at $0.11 per gallon.
According to The Tax Foundation, a nonpartisan research foundation based in Washington, D.C., 29 states have a higher alcohol excise tax compared to Massachusetts. As it is now, Alaska, Delaware, Montana, New Hampshire and Oregon are the only states that do not charge sales-tax on top of excise tax.
New Hampshire has reportedly seen increased sales of alcohol since this law went into effect in 2009, at the expense of in-state stores across the border.
Opponents to this measure urge a NO vote, arguing that the tax is directly tied to behavioral health programs including alcohol and substance abuse prevention and rehabilitation. This tax now generates $110 million per year, providing assistance to 100,000 Massachusetts residents.
Opponents also argue that the potential loss in revenue is only part of the problem. “The alcohol tax serves as a deterrent to underage drinking,” said Deborah Milbauer, public health consultant with Roxbury/Jamaica Plain Substance Use Coalition, “the more alcohol costs, the less youth have access to it.”
In effect, Question 1 opponents argue, an alcohol tax can be a preventative measure against the problems that stem from underage drinking, including a higher likelihood of substance abuse in adults.
Question 2: Comprehensive permits for low- or moderate-income housing
This ballot measure would end a law that allows organizations who apply to build government-subsidized housing to apply for one comprehensive permit from a city or town’s zoning board of appeals (ZBA). As it is now, separate permits from each agency overseeing the housing-project.
Proponents of this measure urge a YES vote, arguing that the comprehensive permits system for low- or moderate-income housing, otherwise known as Chapter 40B, is broken.
Leading the campaign against 40B is Inspector General Gregory W. Sullivan. His interest in 40B housing began in 2006 during a year-long review of seven communities in Massachusetts where 40B properties were approved.
He testified before the Massachusetts House of Representatives in October 2007, sharing his findings of nepotism in the ZBA review process, misappropriation of funds and lack of oversight. He found five of seven communities had “significant problems” costing more than $4 million in taxpayer dollars.
Sullivan further explained that the largest problem is that the bank and the developer together determine the size of the project and the size of the profits for each project. The developer chooses the certified CPAs who audit the project, and the state rarely audits these projects.
“I have yet to meet a single member of the House or Senate who says the intent of 40B is that the proper limits would be defined by the developer and the bank and not the state governments.” Sullivan testified. “How can you have a program with the developers and the bank determine and review the property?”
Opponents to this measure urge a NO vote, arguing that the law is responsible for 58,000 homes or 80 percent of the affordable housing built outside of major Massachusetts cities. Without this law, the elderly, young professionals and other lower- to middle-income families and community members may be economically pushed out of their cities and towns.
There are now 12,000 units pending approval which could be adversely affected if this law is repealed. The ZBA consults with multiple boards in order to approve a project as well as holds public hearings to get resident input, streamlining the otherwise lengthy review process. More than 1,600 community leaders in Massachusetts stand behind 40B as is, including all four gubernatorial candidates and the Boston City Council.
Question 3: Sales use and tax rates
This ballot measure would reduce the state sales and use tax rates from the current 6.25 percent to 3 percent, or the lowest level possible to cover state debts, effective Jan. 1, 2011.
Proponents of this measure urge a YES vote, arguing that it will increase jobs and personal spending while forcing the government to eliminate waste.
Suffolk University’s Beacon Hill Institute (BHI) recently released a study that found that the reduction in tax would so greatly impact spending that it would allow the creation of 27,199 private-sector jobs. The increase of hiring would lead to $60.49 million in new income tax revenue as well as $33.43 million in new property tax revenue. The study also predicted that neighboring states would be drawn to Massachusetts to shop as the sales tax in most states is higher than 3 percent: 4 percent in New York; 6 percent in Connecticut and Vermont; 7 percent in Rhode Island.
The most common argument in favor of a cut in sales use and tax rates is that in hard times, everyone needs to cut-back, including the government.
BHI Executive Director David G. Tuerck urges voters to think about the upside of budget cuts to the state economy: “Opponents utterly ignore how the sales-tax reduction would help staunch the outflow of business to New Hampsire and bring in new business as well from neighboring states that impose higher sales taxes.”
Opponents to this measure urge a NO vote arguing that Massachusetts would lose $2.5 billion per year in tax revenue, leading to a budget shortfall of $4.5 billion in 2012.
In Boston alone, an estimated $48.5 million loss has been predicted by the major opposition campaign, VoteNoQuestion3.com. They argue that the greatest cuts will be in Chapter 70 or school funds and state aid for public schools. The Massachusetts Taxpayers Foundation predicts that teachers, police and fire employees would be among the first to lose their jobs, most likely leading to an increase in property taxes to keep a balance in state services.
Because this law would come into effect in January 2011, mid-term budget cuts would be inevitable. The BHI recognized that Massachusetts would need to cut 985 positions to realign the state within its budget and even with their predicted revenue increases a $2.05 billion gap would remain.
“Question 3 would be devastating to our schools and all of these questions are ‘pay me now or pay me later’ situations,” Boston City Councilor John Connolly said. “We all end up losing in the long run if any of these questions pass.”