In The News

"'It's a good first step, but it's highly likely that the governor is going to need to use these emergency powers to make cuts later this year to avoid draining all of the state's cash reserve funds,' said foundation president Michael Widmer.

"The group had warned of a potentially sharp drop in capital gains tax collections that accounted for almost $2 billion in the last fiscal year."

"'It's an ugly scene to say the least,' said Michael Widmer, president of the Massachusetts Taxpayers Foundation.

"Patrick vetoed $122.5 million from the pork-packed budget yesterday, but financial watchdogs say the reduction isn't nearly enough to stave off additional cuts in a few short months.

"'We called for cuts of more than double this,' Widmer said."

"The proposed budget has prompted some analysts such as Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, to refer to the current budget as 'very risky.'"

"The current level of spending is unsustainable, and there is no plan to deal with the economic and fiscal challenges ahead," according to a budget warning sent out by the taxpayers foundation.

One of the biggest threats to the state's financial stability is a potential drop in the capital gains tax revenue, said Michael Widmer, president of the taxpayers group.

Projected capital gains revenue accounts for roughly $1.7 billion in the proposed state budget. But capital gains revenue, high when Wall Street is surging, typically dries up during a downturn.

Capital gains tax revenue, for example, plunged 75 percent in 2001 during the previous recession.

While Widmer is not predicting another 75 percent plunge, even a drop of 25 percent would wipe out $400 million in projected revenue, he said.

The Massachusetts Taxpayers Foundation wants Gov. Deval Patrick and State Legislators to cut hundreds of millions of dollars from the recently approved fiscal 2009 state budget to avoid what it said will be "an enormous threat" to state finances.

In an analysis released on Thursday, the MTF said it was worried the shortfall would affect Medicaid and ongoing efforts to expand health insurance coverage under the state's new law mandating coverage.

But while cutting wasteful government spending may be an admirable goal, Mike Widmer, Belmont Town Moderator and president of the Mass. Taxpayers' Association, said that is not what will happen if the income tax is repealed.

"Eliminating the income tax will have a dramatic impact on every program and service," he said. "Everything. Prisons, higher education, local education, human services, transportation and roads, infrastructure. Everything."

At the same time, Widmer said, towns would be forced to raise property taxes exponentially, and the repeal would probably result in a statewide property tax. The burden of that tax would fall disproportionably on the lower and middle-income residents.

"The income tax is much fairer than the property tax," he said. "The rate isn't graduated, but if someone makes more money, they pay more in taxes. They may have a more expensive home, but the property tax they would pay on it is nothing like what they pay in income taxes."

It's more than possible, said Michael Widmer, president of the Massachusetts Taxpayer Foundation. He estimates the budget is at least $1 billion out of balance. He worries the shaky economy, plus what he sees as rosy predictions about tax revenues, could make the gap even worse.

"It's a billion dollar problem, and that may be the best case," Widmer said.

"It's a very risky budget," said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded budget watchdog group. "This is certainly the time when we should be limiting state spending to the absolute most essential items. It's one thing to add projects during a boom time. It's quite another when we're in fiscal peril."

But Michael Widmer of the Massachusetts Taxpayers Foundation estimated the budget already is $1 billion out of balance and urged Patrick to freely wield his veto pen.

Besides the $310 million spending from reserves, plus about $90 million in lost interest, Widmer said lawmakers underfunded major accounts, such as health care and snow and ice removal, by $400 million. He also said lawmakers overestimated business tax revenues by about $100 million and failed to account for a $100 million film tax credit.

"I think (lawmakers) are just hoping for the best, but I think it's a very risky course," Widmer said.

"'It's one thing to have it a few days late,' said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. 'It's another to have it several weeks or months late.'"