DEAR JO, I read in the newspaper that gambling and marijuana revenue is pouring in. Employment in at least the eastern part of the state is very high so income tax revenues must be up. Why are the paved roads on which I drive now turning to dirt roads because of disrepair? The job of government is to provide for the public welfare. The federal government has become ineffective and a sideshow. I think the state has to buckle down and start operating for itself and its citizens. I hope you are working to that end. We live in a frustrating time.
— Paul Abbey, Bernardston
DEAR PAUL: I understand your frustration. And, I agree that as federal government is increasingly paralyzed by partisan gridlock, we must look to state government to lead. I also agree that Massachusetts can and should be doing more to provide for the public welfare.
You raise a good point about tax revenue. It seems like with new marijuana and gambling revenue, combined with high employment, the commonwealth should have revenue pouring in. But let’s look at the numbers.
The state expects it will take in between $93 million and $172 million in revenue from marijuana in fiscal 2020, but because of uncertainty about when retail stores would open, budget writers did not account for any of this revenue in this year’s budget.
About $8 million of that revenue will be used to run the Cannabis Control Commission, which regulates the industry. Revenues on top of that will mostly go back into the state’s general fund to be spent through the budget, with some reserved for spending on substance-use prevention and treatment programs.
On top of the state revenue from marijuana, any towns that have dispensaries and apply a local tax in addition to the state’s tax will get to keep the revenue generated by the local tax. There, too, localities have not been able to account for this revenue in this budget cycle.
The state also expects to take in about $300 million annually from gaming once the Everett Casino is up and running alongside the MGM Grand and Plainridge Park casinos. Money from gaming will be spent in many different ways, including health care costs, community colleges, local building improvements, and, to your point, transportation infrastructure like roads and bridges.
You’re also correct that, with our economy close to full employment, we have significant income tax revenue coming in, but unfortunately revenues from income tax are not rising as you might expect. That’s because the state income tax dropped from 5.1 percent to 5.05 percent on Jan. 1, 2019, and will likely drop to 5 percent on Jan. 1, 2020.
Massachusetts actually has a long history of tax cuts. In fact, since the late 1990s, income tax has dropped from 5.95 percent. And that’s not the only tax Massachusetts has cut since the late 1990s. According to the Massachusetts Budget and Policy Center, cuts to the income tax, the capital gains tax and the dividend and interest income tax — as well as a doubling of the personal exemption — have meant that this year, the commonwealth will miss out on $4.15 billion in income due to tax cuts since 1998.
These tax cuts did not start in 1998. Between 1977 and 2016, Massachusetts reduced taxes more than all but two other states — Arizona and Alaska.
Unfortunately, while taxes have declined, expenses have not, pushing the burden of paying for critical needs on to cities and towns.
And even as revenue from marijuana and gaming begin to come into the state, these two new sources combined still don’t make up for even half the revenue the state has lost due to recent tax cuts. When taxes were cut, $2.79 billion of those savings went to households in the top 20 percent of income.
I sit on the Legislature’s Joint Committee on Revenue. There, I have been proud to support the Fair Share Amendment, which would raise additional revenue from people earning $1 million and above annually and devote much of that new revenue to transportation. As many know, the Fair Share Amendment has a longer timeline because it amends the Constitution and therefore must go through the Legislature twice.
But there are shorter-term actions we can and must take this session to expand the amount of money available to lawmakers to support critical initiatives — from public education to roads and bridges to affordable housing, and beyond. That’s why I’m also proud to join two great House members — Reps. Mike Connolly and Liz Malia — on two additional pieces of legislation to be heard this session. You, can learn more about them here at : https://senatorjocomerford.org/issues/revenue/.
And here’s what you and everyone who cares about fair taxation and increasing our shared investment in the commonwealth can do to transform the status quo agenda: Raise your voices.
People power matters in general at all levels of government, but on the subject of taxes, we in western Massachusetts have a unique opportunity to lead the charge for fair taxation — fair dues we pay for living in a democracy. For living in the commonwealth.
State Sen. Jo Comerford represents 160,000 people living in 24 cities and towns in the Hampshire, Franklin, Worcester district in the Massachusetts Legislature.
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