In these difficult times, families and businesses alike have been forced to adjust their finances to meet current economic challenges. Individuals have lost their jobs, their homes and their life savings; businesses have had customers, profits and credit lines suddenly disappear.
The federal government has borrowed and printed trillions in order to prevent an implosion of the financial and automotive industries that could have resulted in insurmountable hardship for the average American family and small business.
The newly elected Obama Administration has orchestrated a plan to help create a soft landing and a renewed momentum for the nations largest banks and two of the big three U.S. automakers. In addition, a stimulus plan has been implemented with the goal of creating new jobs, placing a safety net under those that have lost their jobs and preparing the economy for future expansion.
Amidst this backdrop, state and local governments are faced with the challenge of maintaining essential services to families and businesses in a manner that will enable communities to weather the current economic storm and prepare for a brighter future.
In 2007, the newly elected Patrick Administration submitted a fiscal 2008 budget that proposed a series of revenue generating reforms and actions. These proposals included local option sales taxes on meals and lodging, the closing of corporate tax loopholes, the payment of real estate taxes by telephone companies and the licensing of up to three resort casinos. Each of these proposals were rejected by the legislature; replaced in part by more aggressive revenue assumptions and ultimately the use of a good portion of the state’s $2.5 billion rainy day fund.
Bad Planning
Now that the businesses that were protected from incremental taxes during record expansion have no profits and are contracting, the Legislature has backed into a sales tax that will add an additional burden on families and businesses alike at a time that they can least afford it.
Nevertheless, the commonwealth does need additional revenue. In real dollars, the proposed 2010 budget is $1.8 billion less than the fiscal 2007 budget adopted under the fiscally conservative presidential aspirant, Mitt Romney. The 2007 budget did not reflect the added costs for universal healthcare. Even in these difficult times, there remains a need to keep neighborhoods safe, educate children and provide access to affordable healthcare.
Without these ongoing investments those good paying jobs that are needed to create better times are unlikely to return. Unlike the federal government, the state can’t print money or borrow to finance its deficits. The commonwealth has already overextended its borrowing capacity as a result of decades of mishandling transportation funds and issues.
Given recent disclosures regarding lobbying, ethics and pension abuses, why would any family or business want to dig deeper into their pockets to preserve a system that they do not trust? The region desperately needs the services and infrastructure investment that only government can provide. Therefore, it is imperative that this governor and this Legislature come together at this moment to restore confidence in government’s ability to be responsible guardians of the public’s funds.
Patrick needs to stand firm in his push for transportation, ethics and pension reform as a down payment for the broader changes needed in the way state conducts its business. Legislators and their leaders need to suppress their individualistic and parochial tendencies as they make big picture decisions that will restore confidence in government.
The public needs to hold both the executive and legislative branches accountable, while recognizing the difficult choices that need to be made to build a stronger commonwealth.
Ronald Homer is chief executive officer of Access Capital Strategies LLC in Cambridge.
