Speaker Bob DeLeo is backtracking today after making an incredibly inaccurate prediction on Fox 25’s Morning Show yesterday. DeLeo, discussing the repercussions of the sales tax increase said, “It’s my prediction that July may end up pretty good because of that, and we'll see what happens in August.”
As if his overwhelming naiveté isn’t bad enough, later yesterday afternoon, the Department of Revenue announced that July’s revenue numbers weren’t only down but were even worse than predicted. In fact, according to DOR, July’s tax collections were $24 million below benchmark. Speaker DeLeo was right when he said, "We were really never in competition with New Hampshire relative to the sales tax. In terms of losing business to New Hampshire, I don't think that was ever a concern." So, apparently the majority of Democrats who voted to hike the sales tax didn’t feel the need to concern themselves with just how negatively the sales tax increase would affect Massachusetts businesses. What else are they not concerned about?
Comments like this prove the sharp difference between where Beacon Hill Democrats stand and reality. Our country is dealing with a serious fiscal crisis, but prior to the economic downturn, the Commonwealth was in position to weather the financial storm. Just over a year ago, we had approximately $2 billion in the rainy day fund and every national economic indicator illustrated we were in for a long and tough recession. In the spring of 2008, we saw the collapse of Bear Stearns, formerly one of the world’s largest global investment banks and securities trading and brokerage firms. Foreclosures in Massachusetts in July of 2008 were 100% higher than the same time the year before. The cost of oil was up from $80 a barrel to $144, raising gas prices to well above $4 a gallon. Unemployment had spiked from 4.1% to 4.9% and the welfare load had increased for the first time since 1996. We even heard Democratic Treasurer Tim Cahill warning of the economic dangers ahead. The signs were all there and abundantly clear. They were however, unfortunately ignored by many.
Republican lawmakers said rein in the spending, tighten our belts and prioritize. But instead, the FY09 and FY10 budgets were filled with spending based on bloated revenue projections. We warned that if we didn’t play it safe, we’d be in a dire situation. And that is exactly where we are today. We now have less than $600 million in the stabilization fund, an unemployment rate hovering just below 10% and we’re only a little over one month into the new fiscal year. Democrats, led by Speaker DeLeo continue to ignore reasonable warnings. While there’s no doubt the Commonwealth’s economy was going to feel the impact of the national collapse, there is no reason to doubt that if Governor Patrick and the Legislature followed our principles of fiscal responsibility, we’d be in a much better position today.