A Boston fiscal watchdog group is warning that passage of a rollback of the state's sales tax could reduce state aid to a city already struggling with tight finances and require cutbacks in basic city services.
A Boston Municipal Research Bureau special report issued today sketched out a possible scenario for the impact of a $43 million cut in state aid to the city, a number developed in a simulation by the Massachusetts Municipal Association, the group that represents the state's cities and towns.
Such a reduction would "require all departments to share in the burden, impacting basic city services," the nonprofit research bureau wrote.
Question 3 on the November ballot would reduce the state sales tax from 6.25 percent to 3 percent, effective Jan. 1. It would result in a loss of $1 billion in state sales tax revenue over the last half of fiscal 2011 and a total of $2.5 billion in fiscal 2012, which begins July 1, 2011, the bureau said.
Question 3 proponents say the tax rollback would force politicians to cut wasteful spending, would create new jobs, and would give back hundreds of dollars a year to taxpayers.
Carla Howell, chairwoman of the Alliance to Roll Back Taxes, the sponsors of Question 3, argued that the proposal did not require any cuts in local aid.
"They like to pretend it all has to come out of local aid," she said. "They absolutely do not have to" take money away from local aid, she said. She said the state could make cuts elsewhere – "rooting out the waste" -- in its budget if it wanted to.
Even if Question 3 supporters conceded that the size of the Boston cut estimated by the MMA was accurate, she said, the savings to individual residents would far outpace the cuts.
She said that, with each resident saving an average of $355 a month from the rollback, the residents of Boston would save a total of $231 million.
"If the government of Boston cares about the people of Boston, they'll ask for a sales tax roll back every year!!" she said in a statement.
But critics say the rollback would have a calamitous impact on state government and would impact local aid. And none of the four candidates for governor support the proposal.
Samuel Tyler, president of the Boston research bureau, said the city's state aid has been cut for two years in a row and further cuts are already expected, even without counting any cuts required by Question 3.
"It's a manageable challenge if you don't have Question 3. With Question 3, it becomes a much bigger problem. It's like Question 3 is piling on to an already difficult financial situation for cities and towns," he said.
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