Progressive Massachusetts 2013 Policy Conference March 24, 2013 Lasell College Newton, MA Presentation by Massachusetts Budget and Policy Center
Our State Budget: Building a Better Future Together Massachusetts Budget and Policy Center 15 Court Square, Suite 700, Boston, MA 02108 617.426.1228 www.massbudget.org
Education
Transportation
Libraries, Parks and Recreation
Clean Air and Safe Drinking Water
Public Safety
Prisons and the Courts
Health Care and Public Health
Human Services
What Percent of our Income Funds these Programs? Total Personal Income in Massachusetts
Taxes as Percent of Personal Income, 2010 State and Local Taxes 10.2%
Mass. Taxes are About Average, 2010 State and local taxes as % of state personal income 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% US 10.6% MA 10.2% AK NY WY ND ME VT HI NJ WI CA WV CT RI MN IN MI OH NV U.S. KS IA PA NE DE AR MA MD IL NC MS CO KY LA NM OR MT WA UT FL TX AZ GA VA SC ID OK NH MO AL TN SD
22% Why We are Called Taxachusetts Taxachusetts Fiscal Year 1977 State and local taxes as % of state personal income 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% MA 13.8% US 11.4% 0% AK NY MA VT CA WY MN AZ WI MT HI NE NJ RI DC ND US CO MI MD ME OR SD WA IA CT LA DE PA WV NM IL UT KS NV MS KY GA ID NC VA SC OK TN IN NH TX MO FL AR OH AL
MA Taxes Among Largest Declines: 1977-2010 Percent change in state and local taxes as % of state personal income 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% US 7.0% Decrease MA 26.0% Decrease -30% OH IN AR ND ME WY AK WV CT FL TX HI NJ NV KS NC PA IA KY MO AL DE RI MS IL MI NH U.S. NM OK SC VA WI LA MD GA UT VT NY WA ID OR NE CO TN MN CA MT SD MA AZ
Tax Cuts Have Affected Services
Selected cuts across the state budget Percentage cut FY2001 to FY 2013, inflation adjusted 0% -5% -10% -15% -20% -25% -30% -35% -31% -28% -25% -40% -45% -50% -45% -38% Local Aid Envir. & Rec. Higher Educ. Early Educ. Public Health
A Tax System Should Be... Adequate Stable Simple/Efficient Fair
State and Local Taxes are Regressive % personal income paid in state and local taxes, 2012 10% 8% 6% 4% 2% 0% Less than $21,000 $21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more Income Range: Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1% Source: Institute for Taxation and Economic Policy. Top 20%
The Sales Tax is Regressive % personal income paid in sales tax, 2012 2% 1% 0% Less than $21,000 $21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more Income Range: Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1% Source: Institute for Taxation and Economic Policy. Top 20%
Why the Sales Tax is Regressive Average Income & Average Spending, U.S. 2008 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 Average income before taxes Average annual spending $20,000 $0 Income Group: Lowest 20% Second 20% Third 20% Fourth 20% Highest 20% Lowest 20% Second 20% Middle 20% Fourth 20% Top 20% Source: Bureau of Labor Statistics, Consumer Expenditures Survey, 2008
The Income Tax is Progressive % personal income paid in income tax, 2012 5% 4% 3% 2% 1% 0% Less than $21,000 $21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more Income Range: Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1% Source: Institute for Taxation and Economic Policy. Top 20%
State and Local Taxes are Regressive % personal income paid in state and local taxes, 2012 10% 8% 6% 4% 2% 0% Less than $21,000 $21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more Income Range: Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1% Source: Institute for Taxation and Economic Policy. Top 20%
Investing in a strong state economy
No Clear Relationship Between Tax Levels & Wages, 2010 $21.00 $20.00 MA CT Median Hourly Wage $19.00 $18.00 $17.00 $16.00 $15.00 $14.00 SD AL TN MD WA NH VA CO DE PA IL GA U.S. FL MI OR AZ UT MO NM IA KS NE NV OH SC NC IN OK LA ID TX KY MT AR MS MN RI CA WV WI NJ VT HI ME ND WY NY $13.00 8% 9% 10% 11% 12% 13% 14% 15% State and Local Taxesas a Share of State Personal Income
$20 CT MA $19 NJ MD Median hourly wage $18 $17 $16 $15 $14 WY NV AL ID AR MS AK WV UT OHMO IN IA SC OK LA KY TX SD TN DE MI NM ND MT WI PA HI FL OR AZ ME NE NC WA CA RI IL GA KS MN VT NH NY VA CO $13 20% 25% 30% 35% 40% 45% Percent of Workforce with Bachelor's Degree
Weak Relationship Between Education and Wages 30 Years Ago, 1979 $23 AK Median hourly wage (2009 dollars) $22 $21 $20 $19 $18 $17 $16 $15 $14 $13 $12 $11 WV IN AR KY AL NV MI PA IA OH LA ID NE TN FL NC SC SDME MS WI GA NM RI TX ND WYIL OR WA NJ MN NY DE HI MT MO OK KS NH 10% 12% 14% 16% 18% 20% 22% 24% 26% Percent of Workforce with Bachelor's degree VT AZ UT VA MA CA MD CT CO
Tools to Learn More Massachusetts Budget and Policy Center: www.massbudget.org MassBudget Online Budget Browser: http://browser.massbudget.org Commonwealth of Massachusetts Budget: www.mass.gov/budget
The Budget Browser: http://browser.massbudget.org/
Tuition/Fees Grew Sharply While State Support Declined Percent change, inflation adjusted, relative to base year (FY 2002) 140% 120% State Universities, 116% 100% 80% 60% 40% UMass Campuses, 105% Community Colleges, 72% Student tuition and fee growth 20% 0% -20% -40% State Higher Ed. Appropriations, -25%
The Governor s Investment Proposal for FY 2014 $2,000,000,000 $1,800,000,000 $1,600,000,000 $1,400,000,000 $1,200,000,000 Business Tax Changes $483,000,000 Deduction & Exemption Changes (Individual) $204,000,000 $1,000,000,000 $800,000,000 $600,000,000 Income & Sales Tax Rate Changes $1,236,000,000 $400,000,000 $200,000,000 $0 Revenue Spending
The Governor s Investment Proposal for FY 2014 $2,000,000,000 $1,800,000,000 $1,600,000,000 $1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 Available for FY 2014 $1,179,000,000 Revenue Cuts Avoided $581,000,000 Education $367,000,000 Transportation $231,000,000 Spending
Gov's Proposal Increases Education Funding, Early Ed. to College Projected increases over maintenance funding for FY 2014, based upon Governor's press statements $400,000,000 $367 million $300,000,000 Higher Education $200,000,000 Chapter 70 Aid Gateway Cities Schools $100,000,000 Early Education Expanded Learning Time $0 FY 2014
Governor s Tax Reform Proposal Billions $25 $20 $15 $10 Consensus Revenue Estimate $5 $0
Governor s Tax Reform Proposal Billions $25 Income Tax Changes $20 $15 $10 Consensus Revenue Estimate $5 $0
Governor s Tax Reform Proposal Billions $25 Double Personal Exemption $20 $15 $10 Consensus Revenue Estimate $5 $0
Governor s Tax Reform Proposal Billions $25 Sales Tax Changes $20 $15 $10 Consensus Revenue Estimate $5 $0
Governor s Tax Reform Proposal Billions $25 Sales Tax Rate 6.25% to 4.5% $20 $15 $10 Consensus Revenue Estimate $5 $0
Governor s Tax Reform Proposal Billions $25 Other Tax Changes $20 $15 $10 Consensus Revenue Estimate $5 $0
Governor s Tax Reform Proposal Billions $25 $20 Total New Revenue $1.97 billion fully phased-in $15 $10 Consensus Revenue Estimate $5 $0
Governor s Tax Reform Proposal Billions $25 $20 FY14 New Revenue $1.2 billion in first year $15 $10 Consensus Revenue Estimate $5 $0
Individual Wages Increase with Level of Education Median hourly wage in Massachusetts by educational level, 2010 $30 $27.16 $25 $20 $15 $14.81 $15.86 $10 $5 $0 High school Some college Bachelor's or higher
The Property Tax is Regressive % personal income paid in property tax, 2012 6% 4% 2% 0% Less than $21,000 $21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more Income Range: Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1% Source: Institute for Taxation and Economic Policy. Top 20%
Revenue Plunged in FY09 as Recession Hit Total Annual Tax Revenue (billions), in FY12 dollars $25 $20 $22.2 $2.8 billion $19.4 $15 $10 $5 $0 FY09 Consensus Revenue Estimate (July 2008) FY09 Final Collections (June 2009)
Revenue Still Below FY08 Total Total Annual Tax Revenue (billions), in FY12 dollars $25 $22.4 $21.1 $21.1 $21.1 $20 $19.4 $19.5 $21.6 $15 $10 $5 $0 FY08 Actual FY09 Actual FY10 Actual FY11 Actual FY12 Actual FY13 Projected FY14 Projected Source: DOR, Actual collection totals for all budgeted funds, fully comparable with the Consensus Revenue Estimate
Local Aid Billions, Inflation Adjusted, FY14 $ $2.0 $1.8 45% decrease since FY01 $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Early Education and Care Millions, Inflation Adjusted, FY14 $ $800 $700 28% decrease since FY01 $600 $500 $400 $300 $200 $100 $0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Higher Education Billions, Inflation Adjusted, FY14 $ $1.6 $1.4 30% decrease since FY01 $1.2 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Public Health Millions, Inflation Adjusted, FY14 $ $800 $700 25% decrease since FY01 $600 $500 $400 $300 $200 $100 $0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Human Services Billions, Inflation Adjusted, FY14 $ $4.5 Essentially level since FY01 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Mental Health Millions, Inflation Adjusted, FY14 $ $800 15% decrease since FY01 Some costs shifted $700 $600 $500 $400 $300 $200 $100 $0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Environment and Recreation Millions, Inflation Adjusted, FY14 $ $350 38% decrease since FY01 $300 $250 $200 $150 $100 $50 $0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13