State Fiscal Conditions & Our
                  Future




                    Massachusetts Budget and Policy Center
    ...
% of Personal Income




                                                            5.000%
                              ...
FY 2009: Initial Budget Gap




August 2, 2004
FY 2009: Initial Budget Gap

 40,000,000,000




 30,000,000,000




 20,000,000,000




 10,000,000,000




             ...
FY 2009: Initial Budget Gap

 40,000,000,000




 30,000,000,000




 20,000,000,000




 10,000,000,000




             ...
FY 2009: Initial Budget Gap

 40,000,000,000




 30,000,000,000




 20,000,000,000




 10,000,000,000




             ...
FY 2009: Initial Budget Gap

                                       40,000,000,000
 40,000,000,000




                   ...
FY 2009: Initial Budget Gap

                                       40,000,000,000
 40,000,000,000




                   ...
FY 2009: Initial Budget Gap

                                       40,000,000,000
 40,000,000,000




                   ...
The Governor’s 9C Cuts

                  34,000,000,000

                                              952,000,000



   ...
The Governor’s 9C Cuts

 34,000,000,000                        34,000,000,000

                                           ...
The Governor’s 9C Cuts

 34,000,000,000                        34,000,000,000




 25,500,000,000                        2...
The Governor’s 9C Cuts

 34,000,000,000                        34,000,000,000




 25,500,000,000                        2...
The Governor’s 9C Cuts

 34,000,000,000                        34,000,000,000

                                           ...
FY2010 Preliminary Budget Gap




August 2, 2004
FY2010 Preliminary Budget Gap

$4,000,000,000




$3,000,000,000




$2,000,000,000




$1,000,000,000




             $0...
FY2010 Preliminary Budget Gap

$4,000,000,000




$3,000,000,000




$2,000,000,000




$1,000,000,000




             $0...
FY2010 Preliminary Budget Gap

$4,000,000,000




$3,000,000,000




$2,000,000,000




$1,000,000,000




             $0...
August 2, 2004
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
8.60%
% Total Personal Income




                          6.45%



                          4.30%



                  ...
Spending Has Mostly Stayed
         Constant
                          8.60%
% Total Personal Income




                 ...
State’s Own Spending Has Declined

                          7.00000000000000102%
                                        ...
6.300%
% Total Personal Income




                          4.725%



                          3.150%



               ...
6.300%
% Total Personal Income




                          4.725%



                          3.150%



               ...
6.300%
% Total Personal Income




                          4.725%



                          3.150%



               ...
6.300%
% Total Personal Income




                          4.725%



                          3.150%



               ...
6.300%
% Total Personal Income




                          4.725%



                          3.150%



               ...
State Tax Revenues Have Declined

                          6.300%
% Total Personal Income




                          4...
Chapter 70 Education Aid
                       5,000
                                                                    ...
Chapter 70 Education Aid
                       5,000
                                                                    ...
During the Fiscal Crisis We Cut State
Education Aid More Than Most States




August 2, 2004
Higher Education
                       1,400
                                                                    32%
    ...
Higher Education
                       1,400                                        20.5%
                               ...
Local Aid
                       1,600
                                                                    29%
           ...
Public Health
                       700
                                                                     20%
        ...
Public Health
                       700
                                                                     19%
        ...
Environment
                       350
                                                                     29%
          ...
Filling the FY2010 Budget Gap




August 2, 2004
Filling the FY2010 Budget Gap




                         Cuts and Savings
                               1.63




August...
Filling the FY2010 Budget Gap




                            Cuts and Savings
                                  1.63




...
Filling the FY2010 Budget Gap




                                         Cuts and Savings
                              ...
Filling the FY2010 Budget Gap
                   Federal Recovery Aid
                           0.71




                ...
A Tax System Should Be…




August 2, 2004
A Tax System Should Be…

                 Adequate




August 2, 2004
A Tax System Should Be…

                 Adequate

                  Stable




August 2, 2004
A Tax System Should Be…

                 Adequate

                  Stable




August 2, 2004
A Tax System Should Be…

                    Adequate

                      Stable

                 Simple/Eficient




...
A Tax System Should Be…

                    Adequate

                      Stable

                 Simple/Eficient




...
A Tax System Should Be…

                    Adequate

                      Stable

                 Simple/Eficient

   ...
MA State  Local Taxes are
                       Regressive
                       15.00%




                       11.25...
Sales Taxes are Typically
 Regressive
$140,000



                              Average annual income
$107,250            ...
Who Pays the Sales Tax in MA?

                       4.0%
% of Personal Income




                       3.1%


        ...
MA Income Tax is Progressive

                       4.500%
% of Personal Income




                       3.425%


     ...
Who benefits from an Income Tax
                    Cut?
                                                            Tax Ra...
Who benefits from a Dividends  Interest Tax
                   Cut?
                                                       ...
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Mass Budget Briefing 4/1/09

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Mass Budget Briefing 4/1/09

  1. 1. State Fiscal Conditions & Our Future Massachusetts Budget and Policy Center 15 Court Square, Suite 700, Boston, MA 20108 617.426.1228 www.massbudget.org August 2, 2004
  2. 2. % of Personal Income 5.000% 7.575% 10.150% 12.725% 15.300% August 2, 2004 NY AK ME LA DC HI VT NM Total State and Local Taxes, FY 2006 NJ RI WI WV CA NE OH IN ND MN CT UT AR KS U.S. KY DE PA IL NC MD MS WA IA ID MT MI GA MA AZ OR NV FL VA OK SC MO CO TX AL TN MA Taxes Lower Than U.S. Average SD NH
  3. 3. FY 2009: Initial Budget Gap August 2, 2004
  4. 4. FY 2009: Initial Budget Gap 40,000,000,000 30,000,000,000 20,000,000,000 10,000,000,000 0 Spending Revenue August 2, 2004
  5. 5. FY 2009: Initial Budget Gap 40,000,000,000 30,000,000,000 20,000,000,000 10,000,000,000 0 Spending Revenue August 2, 2004
  6. 6. FY 2009: Initial Budget Gap 40,000,000,000 30,000,000,000 20,000,000,000 10,000,000,000 0 Spending Revenue August 2, 2004
  7. 7. FY 2009: Initial Budget Gap 40,000,000,000 40,000,000,000 30,000,000,000 30,000,000,000 20,000,000,000 20,000,000,000 10,000,000,000 10,000,000,000 0 0 Spending Revenue Spending Revenue August 2, 2004
  8. 8. FY 2009: Initial Budget Gap 40,000,000,000 40,000,000,000 30,000,000,000 30,000,000,000 20,000,000,000 20,000,000,000 10,000,000,000 10,000,000,000 0 0 Spending Revenue Spending Revenue August 2, 2004
  9. 9. FY 2009: Initial Budget Gap 40,000,000,000 40,000,000,000 30,000,000,000 30,000,000,000 20,000,000,000 20,000,000,000 10,000,000,000 10,000,000,000 0 0 Spending Revenue Spending Revenue August 2, 2004
  10. 10. The Governor’s 9C Cuts 34,000,000,000 952,000,000 25,500,000,000 17,000,000,000 8,500,000,000 0 Spending Revenue August 2, 2004
  11. 11. The Governor’s 9C Cuts 34,000,000,000 34,000,000,000 952,000,000 25,500,000,000 25,500,000,000 17,000,000,000 17,000,000,000 8,500,000,000 8,500,000,000 0 0 Spending Revenue Spending Revenue August 2, 2004
  12. 12. The Governor’s 9C Cuts 34,000,000,000 34,000,000,000 25,500,000,000 25,500,000,000 17,000,000,000 17,000,000,000 8,500,000,000 8,500,000,000 0 0 Spending Revenue Spending Revenue August 2, 2004
  13. 13. The Governor’s 9C Cuts 34,000,000,000 34,000,000,000 25,500,000,000 25,500,000,000 17,000,000,000 17,000,000,000 8,500,000,000 8,500,000,000 0 0 Spending Revenue Spending Revenue August 2, 2004
  14. 14. The Governor’s 9C Cuts 34,000,000,000 34,000,000,000 952,000,000 25,500,000,000 25,500,000,000 17,000,000,000 17,000,000,000 8,500,000,000 8,500,000,000 0 0 Spending Revenue Spending Revenue August 2, 2004
  15. 15. FY2010 Preliminary Budget Gap August 2, 2004
  16. 16. FY2010 Preliminary Budget Gap $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 $0 Spending Revenue August 2, 2004
  17. 17. FY2010 Preliminary Budget Gap $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 $0 Spending Revenue August 2, 2004
  18. 18. FY2010 Preliminary Budget Gap $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 $0 Spending Revenue August 2, 2004
  19. 19. August 2, 2004
  20. 20. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  21. 21. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  22. 22. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  23. 23. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  24. 24. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  25. 25. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  26. 26. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  27. 27. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  28. 28. 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  29. 29. Spending Has Mostly Stayed Constant 8.60% % Total Personal Income 6.45% 4.30% 2.15% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  30. 30. State’s Own Spending Has Declined 7.00000000000000102% 6.90% 6.80% 7.00% 6.80% 6.60% 6.80% 6.60% 6.70% 6.40% 6.40% 6.60% % Total Personal Income 5.25000000000000077% 3.50000000000000051% 1.75000000000000026% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  31. 31. 6.300% % Total Personal Income 4.725% 3.150% 1.575% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  32. 32. 6.300% % Total Personal Income 4.725% 3.150% 1.575% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  33. 33. 6.300% % Total Personal Income 4.725% 3.150% 1.575% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  34. 34. 6.300% % Total Personal Income 4.725% 3.150% 1.575% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  35. 35. 6.300% % Total Personal Income 4.725% 3.150% 1.575% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  36. 36. State Tax Revenues Have Declined 6.300% % Total Personal Income 4.725% 3.150% 1.575% 0% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 August 2, 2004
  37. 37. Chapter 70 Education Aid 5,000 15% decrease from FY02 4,125 Millions of $ (FY10) 3,250 2,375 1,500 FY01 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Adjusted Using the Inflation Factor Identified in Chapter 70 August 2, 2004
  38. 38. Chapter 70 Education Aid 5,000 11% decrease from FY02 4,125 Millions of $ (FY10) 3,250 2,375 1,500 FY01 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Includes ARRA funding Adjusted Using the Inflation Factor Identified in Chapter 70 August 2, 2004
  39. 39. During the Fiscal Crisis We Cut State Education Aid More Than Most States August 2, 2004
  40. 40. Higher Education 1,400 32% decrease 1,250 Millions of $ (FY10) 1,100 950 800 FY01 FY03 FY04 FY05 FY06 FY07 FY08 FY09 August 2, 2004
  41. 41. Higher Education 1,400 20.5% decrease 1,250 Millions of $ (FY10) 1,100 950 800 FY01 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Includes ARRA funding. August 2, 2004
  42. 42. Local Aid 1,600 29% decrease 1,200 Millions of $ (FY10) 800 400 0 FY01 FY03 FY04 FY05 FY06 FY07 FY08 FY09 August 2, 2004
  43. 43. Public Health 700 20% decrease 600 Millions of $ (FY10) 500 400 300 200 100 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 August 2, 2004
  44. 44. Public Health 700 19% decrease 600 Millions of $ (FY10) 500 400 300 200 100 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Includes ARRA funding. August 2, 2004
  45. 45. Environment 350 29% decrease 300 Millions of $ (FY10) 250 200 150 100 50 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 August 2, 2004
  46. 46. Filling the FY2010 Budget Gap August 2, 2004
  47. 47. Filling the FY2010 Budget Gap Cuts and Savings 1.63 August 2, 2004
  48. 48. Filling the FY2010 Budget Gap Cuts and Savings 1.63 Revenues 0.59 August 2, 2004
  49. 49. Filling the FY2010 Budget Gap Cuts and Savings 1.63 Stabilization Fund 0.59 Revenues 0.59 August 2, 2004
  50. 50. Filling the FY2010 Budget Gap Federal Recovery Aid 0.71 Cuts and Savings 1.63 Stabilization Fund 0.59 Revenues 0.59 August 2, 2004
  51. 51. A Tax System Should Be… August 2, 2004
  52. 52. A Tax System Should Be… Adequate August 2, 2004
  53. 53. A Tax System Should Be… Adequate Stable August 2, 2004
  54. 54. A Tax System Should Be… Adequate Stable August 2, 2004
  55. 55. A Tax System Should Be… Adequate Stable Simple/Eficient August 2, 2004
  56. 56. A Tax System Should Be… Adequate Stable Simple/Eficient August 2, 2004
  57. 57. A Tax System Should Be… Adequate Stable Simple/Eficient Fair August 2, 2004
  58. 58. MA State Local Taxes are Regressive 15.00% 11.25% % of Personal Income 7.50% 3.75% 0% Less than $18,000 Lowest 20% $58,000 - $97,000 Fourth 20% $526,000 or more Top Eect of Federal Deduction TOTAL TAXES Top 20% Source: ITEP, 2006 data August 2, 2004
  59. 59. Sales Taxes are Typically Regressive $140,000 Average annual income $107,250 Average annual expenditures $74,500 $41,750 $9,000 Lowest 20% Third 20% Highest 20% Source: Bureau of Labor Statistics, 2004 data August 2, 2004
  60. 60. Who Pays the Sales Tax in MA? 4.0% % of Personal Income 3.1% 2.2% 1.3% 0.4% Less than $18,000 Lowest 20% $58,000 - $97,000 Fourth 20% $203,000 - $526,000 Next 4% Top 20% Source: ITEP, 2006 data August 2, 2004
  61. 61. MA Income Tax is Progressive 4.500% % of Personal Income 3.425% 2.350% 1.275% 0.200% Less than $18,000 Lowest 20% $58,000 - $97,000 Fourth 20% $526,000 or more Top Top 20% Source: ITEP, 2006 data August 2, 2004
  62. 62. Who benefits from an Income Tax Cut? Tax Rate Cut From 5.95% to 5.3% $12,000.0 $10,226 $9,002.5 Average Tax Cut $6,005.0 $3,007.5 $1,776 $751 $377 $214 $76 $0 $10.0 Less than $19,800 Lowest 20% $63,800 - $105,200 Fourth 20% $218,000 - $562,500 Next 4% Top 20% Source: ITEP, April 2008 August 2, 2004
  63. 63. Who benefits from a Dividends Interest Tax Cut? Tax Rate Cut from 12.0% to 5.3% $12,000 $10,057 $9,000 Average Tax Cut $6,000 $3,000 $959 $242 $109 $55 $27 $2 $0 Less than $19,800 Lowest 20% $63,800 - $105,200 Fourth 20% $218,000 - $562,500 Next 4% Top 20% Source: ITEP, April 2008 August 2, 2004

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