ASSOCIATED INDUSTRIES of Massachusetts, the state's principal employer organization, has found itself opposing proposals to raise the gas tax and sales tax. Its position is that set forth by Governor Patrick yesterday in a letter to the Legislature: "Before we consider any broad-based tax increases, we must first regain the public's confidence in government's ability to steward public funds wisely."
AIM really does believe in "reform first" - its members live it every day.
Across the Commonwealth, employers are making painful decisions to curtail expansion plans, defer critical expenditures, and drop product or service lines to focus on core businesses. AIM surveyed 145 Massachusetts employers during February and found that 46 percent had conducted a layoff or were preparing to do so. They are turning to pay freezes (55 percent), reduced work hours (42 percent), and altered staffing plans (86 percent).
A significant number are also instituting a salary reduction program, and many are modifying their retirement plans. Three-quarters are seeking ways to stave off increases in employee contributions to health-insurance premiums - which also involves hard decisions.
Private-sector employers - and employees - simply do not see state and local government facing up to choices like this. Of course, cutting public budgets is unpleasant work, and some decisions - to preserve investments in education, for example - have been commendable. Pay has been frozen and furloughs imposed. But we have seen too little reconsideration of core priorities, too little structural reform, too much resistance to reining in health insurance costs and to reforming pensions (at a time when the benefits prevalent in the public sector have become virtually unsustainable in the private sector).
What we have seen, beyond the bobbing and weaving, is some egregiously bad fiscal policy, notably a huge increase in business taxes that has increased the Commonwealth's dependence on highly cyclical revenues and made its finances more vulnerable to recession, while damaging its economic competitiveness. The state has failed to address, even in good times, its structural budget deficit; and rather than reduce fiscal uncertainty it has transferred it to taxpayers.
We in the business community are not simply naysayers. We have supported judicious tax increases in the past. We recognize that the Commonwealth may need new revenues - among other things. We believe, however, that increasing revenues should be a last resort.
A gas tax increase, as proposed by the governor, can make sense, but only if it is tied to reform and to a restructuring of state transportation agencies. (Indeed, until we know the structure and how the bonding works, we cannot know what kind of revenue is needed.) A sales tax increase, as the governor says, can be considered only after "final and satisfactory action on the several reform proposals" now pending.
What is at issue here is the credibility of government - and not just within the business community. The governor says that the people of Massachusetts deserve "real reforms and real change"; legislators are evidently well aware of (shall we say) a limited tolerance for tax increases among their constituents. The public, too, wants reform first.
Richard C. Lord is president and CEO of Associated Industries of Massachusetts. 
