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The day after Question 3 passes

Posted by Jesse Singal  September 27, 2010 11:56 AM

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There have been a lot of big numbers and concerns thrown around during the debate over Question 3, which would cut the state sales tax from 6.25 percent to 3 percent. There's been less discussion of exactly what the process would be, if the measure passed, to get the state's finances in order.

To get a better sense of this, I spoke with Mike Widmer of the Massachusetts Taxpayers Foundation (which has come out strongly opposed to Question 3).

Some of the budgeting and accounting specifics are, not surprisingly, a bit complicated. But here's the basic rundown: Widmer explained that the very first step would be to make midyear cuts to the current fiscal year's budget on the order of about $1 billion. If Charlie Baker were elected, Patrick could decide during his lame-duck period to either make this call himself, leave it to his successor, or come to some sort of mutually acceptable agreement with him.

If Patrick were re-elected, then the cuts would be his to make, and "he would presumably institute some immediate emergency mid-year cuts," said Widmer, and would possibly ask the Legislature for the authority to make local-aid cuts (which he does not currently have). Widmer said this would be similar to 2009, when, faced with a revenue collapse, Patrick did just that.

After the mid-year cuts were sorted out, the next step would be to get the next fiscal year's budget in order. According to Widmer's organization, the budget shortfall there, if Question 3 passed, would be between $4.5 and $5 billion.

On the executive side, the governor would have to put together a budget with some combination of budget cuts and money-saving reforms—obviously, with so many billions that would need cutting, it would be a drastically different budget from what we've seen in recent years.

But the Legislature wouldn't need to wait. In the meantime, it could start navigating the new budgetary landscape on its own. The key question would be whether and how the Legislature would respond to the ballot question, since it would have the authority to vote to phase the tax cut in more gradually, undo it and keep the rate at 6.25 percent (or 5 percent, which was the rate before it was raised in 2009), or stand aside, allowing the cut to be enacted. If it did allow the cut to go through, some members would likely put revenue-raising ideas on the table to try to make up the shortfall, like increases to other taxes.

Whatever the Legislature ended up decided, sorting all this out would be a time-consuming endeavor.

"I think the size of the problem would be so great, that you'd have a flurry of proposals and claims and counterclaims," Widmer said. "I think you'd have a two to three month period of political chaos."

"I think this will engulf the Legislature if this passes" and take 60 or 90 days to sort out, he predicted.

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ABOUT THE ANGLE Online commentary and news analysis from the Boston Globe. The Angle is produced by Rob Anderson and Alan Wirzbicki. You can follow Rob on Twitter at @rcand.

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