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The Connection Between Property Taxes and Pension Funding

A recent study from economist Evgenia Gorina, published in the journal State and Local Government Review, found a positive relationship between a local government’s reliance on property taxes as a revenue source and how well-funded their pensions are. In other words, local governments that rely heavily on property taxes as funding sources tend to have better-funded pension programs. On the other hand, local governments that rely on intergovernmental aid (usually from state and federal governments) as a revenue source have more precariously-funded pensions. Is this true in Massachusetts? Pioneer Institute’s MassWatch program provides citizens with transparent information on public programs, and how local governments raise and spend their money. When considering questions of pensions and taxes, the relevant databases are […]

Time to Say “Cut” on Massachusetts’ Film Tax Credit?

State Senate President Karen Spilka is taking preliminary steps towards reforming the state’s tax code, assembling a group of policymakers, academics, and other specialists to look for ways to make the Massachusetts tax code more progressive and possibly raise revenue. One place that’s ripe for reform is Massachusetts’s film tax credit program. What is the Film Tax Credit? Under current law, film production companies that spend more than $50,000 in Massachusetts are eligible for a sales tax exemption, a payroll tax credit worth 25 percent of its total salary costs, and a 25 percent production expense tax credit. To be eligible for the production tax credit, the company has to either spend at least half its film production budget in-state […]

A Primer on Secondary Revenue Sources for Local Governments

Using Pioneer Institute’s MassAnalysis tool, one can find information on how municipal governments raise revenue to fund services. A majority of revenue comes from local taxes – mostly property taxes – but a significant portion comes from transfers from the state and from other governments. On top of taxes and transfers, local governments also finance spending using various fees and fines. While the different types of fees and fines might sound similar, their social and economic merits can vary widely. Service charges (also known as user fees) are payments the public makes to government to use a public service. One example would be paying $10 to swim in a public pool or visit a public park. Economists tend to like […]

Coastal Towns Charge the Most Permit Fees Per Capita in Massachusetts

One of the ways local governments raise revenue is by requiring permits and licenses for various activities. Occupational licensing laws, which require a series of tests, education, and fees before someone can enter certain professions, are administered at the state level. However, local governments charge permit fees for changes to buildings, new businesses, reviews of historic property, recreational events, and other behaviors. In 2016, Massachusetts municipalities collected just over $362 million in revenue from fees for licenses and permits. The economic argument for permit fees is that the person paying for the government-service is the person benefitting from that service. A common example of this would be using tolls to fund roads. Drivers, the beneficiaries of government-provided roads, are the […]

The State Legislature Should Steer Clear of New Occupational Licensing Laws

The reach of occupational licensing laws has expanded greatly over the past half-century. In the 1950s, only 5 percent of the U.S. workforce needed a government-issued license to do their jobs. Now, almost 30 percent of workers require one. While everyone knows that doctors and lawyers have rigorous requirements, numerous jobs now require licenses. As the Institute for Justice found, over half the states require licenses for professions such as carpenters, head coaches, drywall installers, and makeup artists. These licenses often require thousands of dollars in fees, a bachelor’s degree, and more than a year of additional training. Economists have roundly lamented the expansion of occupational licensing laws. Milton Friedman originally criticized occupational licenses as being motivated by a desire […]

Guess What Massachusetts Public Employee Earns Over $1 Million

The State Comptroller’s Office makes available annual salary information for all Massachusetts public employees. Before the state established a website to provide such transparency, Pioneer Institute launched Mass Open Books, which allows the public to anonymously peruse information regarding state finances, pension funds, contractor payments, and employee salaries. Mass Open Books has information going back to 2004, allowing for easy comparisons over time. One surprising fact this data brings to light is that, for the second straight year, there has been exactly one state employee making over $1 million in salary, which had never happened before 2017. That year, one public employee earned $1,043,226. In 2018, that same employee made $1,069,752. Who was it? University of Massachusetts Worcester Medical School […]

How Much Does Your Local Government Raise from Fines and Forfeitures?

One of the ways local governments raise revenue to fund public services is through fines and forfeitures. That includes everything from speeding tickets or fines for fishing without a license to property seized in a criminal investigation. The latter practice, also known as civil asset forfeiture, has come under fire from both conservative and liberal researchers for several reasons. Police often need minimal evidence to seize property, raising concerns about due process, and it is more difficult for low-income people to challenge an unjust seizure. On the whole, local governments in Massachusetts raised just over $99 million through all fines and forfeitures in 2016. The Institute for Justice, a public-interest law firm, estimated that in 2014, Massachusetts local governments raised […]