3 questions await voters on Tuesday

Sunday October 31, 2010

Question 1: Store owners call the state's new sales tax on alcohol an example of double-dipping. Health advocates say beer, wine and liquor aren't necessesary dietary staples, and the tax is a much-needed state revenue stream.

And if you're a voter, you'll decide on Tuesday whether to repeal the new 6.25 percent sales tax on alcohol on Jan. 1. It is Question 1 on the general election ballot.

Local liquor retailers oppose the sales tax because, they say, nearly all their products already carry state and federal excise taxes.

Alcoholic beverages became subject to the state sales tax for the first time in August 2009, when alcohol was included in the general increase of the state's sales tax from 5 percent to 6.25 percent.

A number of health care organizations in the state oppose the repeal, saying alcohol does not deserve a special tax exemption because it's not a necessity like food, clothing and prescriptions. They say keeping the tax in place is also important because the revenue from the tax funds -- an estimated $100 million annually -- goes toward prevention and treatment programs throughout the state. Question 2: On Tuesday, you'll be asked to decide the fate of the state's main affordable housing law, credited with creating tens of thousands of new homes, sometimes without the backing of local officials. It is Question 2 on the state ballot.

The law has had a contentious history, in part because it gives private developers more power to bypass local zoning laws if they promise to include a certain percentage of affordable units in their projects.

State lawmakers originally adopted the law, known as 40B, in 1969. At the time, big cities, such as Boston, were shouldering a disproportionate share of the state's affordable and public housing units. One goal of the law was to pressure the suburbs to pick up some of the slack.

To do that, the law sets a goal of 10 percent affordable housing for each city and town. If a community falls short of that goal, and is failing to make steady progress, a developer can invoke the law and seek a comprehensive building permit, provided it promises to set aside 20 to 25 percent of its development as affordable housing.

The comprehensive permit gives developers a stronger hand to skirt zoning laws that could block the project.

While affordable housing activists see the law as one of their strongest tools, some local officials have bristled at the measure over the years, arguing that it undercuts control over growth.

Those pushing to repeal the law say they also support affordable housing, but argue the law is inefficient and has failed to create enough affordable homes, particularly rental units.

Backers of the law say it's paved the way for about 58,000 units of new housing in the past four decades, including 30,000 affordable units.

The law also has been a boon to the economy, they say, employing construction workers and helping those with limited incomes find a home or apartment. Doing away with the law would end that progress -- and put a stop to 12,000 more units in the development pipeline.

They also reject the idea that repealing the state's main affordable housing law would help create more affordable housing.

Question 3: One of the key questions Massachusetts voters face when they head to the polls is whether to approve a measure that would let them keep more money in their pockets when they go shopping.

Question 3 would lower the state sales tax rate from 6.25 to 3 percent. The tax rate had been 5 percent until lawmakers approved the hike last year. Gov. Deval Patrick signed the measure.

The question's backers say the only way to force the state to live within its means is to cut taxes -- a move they say will also boost the economy and create jobs. Foes say it will force the state to slash $2.5 billion in services, including local aid to cities and towns.

There is little the two sides agree on -- starting with the true size of the state budget.

Carla Howell, whose Alliance to Roll Back Taxes is pushing the question, says the state's annual spending tops $50 billion.

"It is absolutely irrefutable," Howell said.

Michael Widmer of the business-backed Massachusetts Taxpayers Foundation said the budget is closer to $30 billion. He said Howell is counting it as spending every time the state shifts money from one account to another or pays out a Lottery prize.

"It's mostly double counting," he said of Howell's estimate. "It's utterly fictitious."

The size of the budget is critical to understanding the impact of the sales tax cut.

Howell says cutting $2.5 billion out of a $50 billion budget amounts to a 5 percent cut that won't touch local services. Opponents say the $2.5 billion will come out of $17 billion or so in discretionary spending left over after the state pays required bills, like the annual service on its debt.

"It's a risky proposition. It's going to hurt individual communities," said Toby McGrath of Massachusetts Coalition for Our Communities, which opposes the question.

Republican Charles Baker and independent Timothy Cahill say they support returning the sales tax rate to 5 percent. Incumbent Gov. Deval Patrick said he also supports lowering the rate to 5 percent when the state can afford it.

Also at issue is whether the question will spark job growth.

David Tuerck, executive director of the Beacon Hill Institute at Suffolk University, said the tax cut will lure shoppers from other states, creating about 30,000 private-sector jobs.

Widmer counters that Tuerck underestimates how many public workers would have to be laid off. Tuerck concedes big tax cuts aren't painless.

"This is quite a big chunk out of state spending and there would be a loss in state services," he said. "There's no doubt about it."


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