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Tax watchdog says state too regulation heavy

Michael Widmer, executive director of the nonpartisan government watchdog group Massachusetts Taxpayers Foundation, scored a major victory earlier this year, persuading the Legislature to repeal a 6¼ percent tax on computer services in a record 60 days, but Widmer told a Franklin County gathering Friday, “We can’t rest on our laurels. We have to address the problems ... (or) we will lose.”

Speaking to about 100 Franklin County Chamber of Commerce members at Greenfield Community College, Widmer emphasized, “Massachusetts is positioned better than many of our competitor states” in what he termed a “critical time, slowly coming out of the economic recession.” He credited the state’s educated workforce, its concentrations in higher education, life sciences, venture capital and technology sectors, as well as its overall quality of life.

“We are, I think in a strong position to create more jobs and strengthen our state’s finances than most other states. Through four months of this fiscal year, our revenues are actually exceeding benchmarks. Our forecast is that it will continue through ... next fiscal year. Our job picture had slowed down through much of this year, but it is beginning to pick up,” and job growth over the next year or two should be “at least at the rate of the national recovery, or perhaps better.”

But he added, “The challenges are daunting. And the only way we’re going to succeed as a commonwealth is if we meet our challenges directly.”

Among those challenges are the cost structure in creation of new jobs in Massachusetts, which he said, has the “highest business costs in the country,” in part because of what he called over-regulation in permitting and environmental regulations.

The state’s stagnant population is another challenge, especially since it’s a population that’s aging faster than the nation as a whole.

“Starting in 2015, we’ll see a sharp drop in our working age population,” he said. “It’s difficult to build a growing economy if you’re not adding jobs and workers.”

Widmer also pointed to the inefficiencies of managing state and local government, and “a huge divide” between the ability of the private and public sectors to adopt technological improvements to provide better service.

“That needs to change, especially in an era when we’re going to have limited means and fiscal constraints for years to come,” he said.

A major challenge is what Widmer called “enormous unfunded liabilities” in state and local governments, with pensions and health care provisions for retirees, although Widmer noted there have been some improvements in pensions and an effort by the Legislature to encourage municipalities and school districts to join the state workers’ health-care system.

He said there are $30 billion in liabilities for the state’s cities and towns, with only 1 percent funded statewide.

“Obviously, that’s not sustainable, and it’s tied directly to the question of whether local governments can provide the services that we need them to provide,” he said. “This goes right to the question of our public schools, public safety, public education, infrastructure and so forth.”

He also called for looking at the issue of public employee eligibility for retirement health benefits, which allow for lifetime insurance coverage even if they’ve only worked there for a short time.

“That’s the kind of an albatross that’s around our cities and towns, and needs to be addressed in order for our communities to provide the services that we all depend upon.”

Looking ahead to the election of a successor to Gov. Deval Patrick, Widmer called for a change in the “very troubling” mindset that looks on business as the source of immediate revenues, as the state did this year by taxing the computer service sector.

“There’s, generally speaking, a mindset among policy leaders ... that pervades debate in the Legislature, in which business is not welcomed as the creator of jobs and wealth, and use them for taxes to invest in the things we need to invest in. That simple but absolutely critical fact is lost too often in debate on Beacon Hill, and there’s a view that business has deep pockets and is an immediate source of funding for whatever.”

He said there’s also “a predisposition to solve every social ill through government regulation and intervention ... I don’t believe that government can solve all social problems, and I’ve been around long enough to see the laws of unintended consequences and good intentions where unintended consequences reign supreme over and over and over. I don’t think that’s a lesson that’s been learned on Beacon Hill.”

Widmer criticized a prevailing attitude in this state where, he said, “We’re a little too smug ... We’re in a global competition, and even our great assets ... our great medical schools and universities, the innovation and research ... all of those great strengths, we can’t take for granted, because other places in this country and the world are really beginning to compete, even at the highest level.”

Calling for the commonwealth to pay more attention to the state’s different regions and to invest in public higher education, Widmer emphasizes overall that Massachusetts “has to learn that nothing is guaranteed in this new world.”

On the Web: www.masstaxpayers.org

You can reach Richie Davis at: rdavis@recorder.com or 413-772-0261, Ext. 269

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