Northampton council calls for tax reform in hopes of boosting state aid
NORTHAMPTON — For the second time in three years, the City Council is urging the state to adopt a “fair and equitable” tax code in hopes of increasing state aid that the city has seen fall by $4 million in the last decade.
The council approved a resolution earlier this month, by a vote of 7-2, that urges the Legislature to support a tax reform package that councilors believe will level the playing field among taxpayers and raise as much as $2 billion in revenue.
Some of that money could be used to boost local aid to communities that struggling to provide basic services, Ward 4’s Pamela C. Schwartz said.
“We need progressive tax reform,” Schwartz said. “We need revenue in order to sustain our health as a community, both here in Northampton and across the state.”
Schwartz crafted the resolution, which was recommended by the City Council/School Committee Conference Committee. That committee includes councilors Schwartz, Maureen T. Carney, Jesse M. Adams, and School Committee members Blue Duval, Downey Meyer and Stephanie Pick.
While all councilors agree that the city needs more money, Ward 5’s David A. Murphy said he could not support the measure because he doesn’t trust Boston to share it fairly.
“I really think it’s delusional to think that if we gave the state the opportunity to raise more money that we’re really going to see that come back to us in an amount that’s going to make a big difference,” Murphy said.
Murphy, who joined Ward 7’s Eugene A. Tacy in voting against the measure, called for petitioning the legislature to give municipalities more local options to raise revenue.
Ward 2’s Paul D. Spector said he agreed philosophically, but questioned how the city, if given the chance, would raise such money without instituting more regressive measures like property, sales and meals taxes. He said he could support a local progressive tax proposal, should one be presented.
“I don’t see what the actual, practical solution is, although I agree with you philosophically,” Spector said.
Murphy said the discussion is not even on the table.
“I’m sure we could find a way for municipalities to raise more money if we would ever take that approach,” he said. “We never take that approach.”
He later threw out an idea of allowing taxpayers to designate 25 percent of their state tax burden to specific communities.
“That would work,” he said. “It probably wouldn’t please the state very much.” Schwartz said she disagrees with placing the burden exclusively at the municipal level. She said communities first need to convince the state to raise more money, then lobby for it to be dispersed equitably.
“I want the tax revenue of wealthy people in the Boston area coming back to Northampton,” she said. “Your rejoinder is that it doesn’t. My rejoinder to that is we need to hold the state government accountable for that.”
The resolution outlines two proposals that it would like legislators to consider — Gov. Deval Patrick’s $1.9 billion tax package unveiled this year and “An Act to Invest in Our Communities,” a tax reform bill that would raise $2 billion in revenue.
The latter bill, introduced two years ago, is being re-introduced in the Legislature this spring by state Sen. Sonia Chang-Diaz, D-Boston, and Reps. James J. O’Day, D-West Boylston, and Peter V. Kocot, D-Northampton. It would raise money through a combination of income tax and capital gains tax rate increases, while increasing personal and other exemptions.
Patrick’s proposal would increase the income tax rate from 5.25 percent to 6.25 percent and decrease the sales tax from 6.25 percent to 4 percent. Automatic personal exemptions would double and a number of specific existing personal income tax exemptions and deductions would be eliminated.
Some councilors expressed concern about inclusion of proposed changes to capital gains. Carney said that even though the proposals conflict on several points, Kocot has said compromises will occur.
The resolution outlines how significant changes to the state tax code have afftected state and city coffers. The city received $9.6 million in state aid this fiscal year, compared to $13.5 million in fiscal 2002.
Despite taking “every possible” avenue to raise local revenue and implementing dozens of cost-savings measures, the city currently faces a substantial budget gap that will require more cuts to the school system and city services.