Legislators consider Patrick’s plan
“Bold” is the term area legislators are applying to Gov. Deval Patrick’s proposal to raise income taxes for the first time in two decades while dedicating a reduced sales tax for transportation and school building projects.
They’re also reserving judgment on Patrick’s bare-bones proposal, which follows on the heels of his call Monday for a $13 billion investment in transportation over 10 years, at least until the governor issues his budget plan next week.
As outlined Wednesday night, Patrick’s plan would hike the state income tax a full percentage point from 5.25 percent to 6.25 percent while doubling the personal exemption for all taxpayers and eliminating dozens of itemized deductions. He said the changes would pull in an additional $2.8 billion in revenues each year.
The governor, arguing that sales taxes tend to have a disproportionately bigger impact on lower and middle income residents, also proposed reducing the state sales tax from 6.25 percent to 4.5 percent. That, he said would end up costing the state about $1.1 billion each year.
Patrick called for eliminating some corporate deductions and special classifications to generate an additional $194 million a year, for a net overall addition of $1.9 billion to state coffers.
Sen. Benjamin Downing, D-Pittsfield, a member of the Committee on Ways and Means, said, “I don’t think anyone’s going to argue against the fact that we need to make greater investments in the system we have right now for transportation, in education and particularly in public higher education, where we know that for the better part of the last generation, we’ve systematically under-invested.”
But despite what Downing said was “broad support” for that kind of investment, he said legislators now need to dig into the details of such broad proposals as eliminating 45 tax exemptions and some corporate loopholes. “On the surface, that makes sense, so we have a broader base, we’re more competitive, and we aren’t picking winners and losers within the tax code. That’s certainly something we ought to look at.”
Downing said he believes there’s “a recognition that despite the steps we’ve taken, in the areas of government reform and cutting spending, there’s certainly still a need, and one we can’t meet within the current budget — particularly in transportation and higher ed — and if we continue to allow that to build up, the costs or the consequences of addressing it in two, 10, 20 years, is even greater. I think people recognize, especially in those two arenas, that something has to be done... and that ignoring the problem, sticking our heads in the sand, is not a solution.”
House Ways and Means Vice Chairman Stephen Kulik, D-Worthington, said “It’s such a bold, unexpected proposal that came out of nowhere, and we’re in the very early stages of people trying to digest it. I’ll reserve final judgment, since it’s so connected to the final budget the governor will be presenting next week. That budget will be based on the assumption that the Legislature will support his tax proposal, and that’s a big assumption.”
Despite a Boston Herald editorial with a headline screaming, “Gov, this is WAR!” and a statement from the conservative Massachusetts Fiscal Alliance that Patrick’s proposal “would bring us back to the 1990s,” Kulik said that this year, unlike the past several years, “there’s not the immediate pushback from the very start: on the part of leadership or the rank and file saying ‘We’re not even going to consider it.”
Kulik said that as he and other western Massachusetts legislators head off today to an annual human service forum in Chicopee, agency leaders “are going to be saying, ‘Why aren’t we getting a piece of this? If the governor is proposing to increase a broad-based tax tied to services, why has he singled out two of the many sectors funded by state government. What about mental health, human services and public safety?’ We know we’ll hear from the environmental, the public safety and the human-service community. They’re all going to want to know how can the governor propose such a huge increase in revenues and not be dedicating it more broadly?”
Kulik said he supports the approach of dedicating a particular revenue stream for a specific purpose, pointing to a penny from the existing sales tax now going for school building construction and the MBTA.
“I think the public generally is more supportive of dedicated revenue streams that can’t be fooled around with, think a good idea,” he said. But it remains to be seen exactly how other government expenses would be paid for.
Sen. Stan Rosenberg, D-Amherst called Patrick’s proposal “well beyond what most people in the Legislature thought the governor would put forward. I think people are still a little bit reeling from the proposal. When the dust settles, people will start comparing a range of various proposals,” yet are rushing to incorporate their own proposals by this afternoon’s filing deadline for expanding transportation and education.
“We know if we’re going to tackle transportation, it’s not going to be done within the current revenue stream,” Rosenberg said. “He’s really changed the conversation pretty dramatically by putting education in the mix, and by talking not just about raising taxes, but also about tax reform and shifting revenue sources. There’s a lot of details we don’t know yet.”
Senate Ways and Means Chairman Stephen Brewer, D-Barre, said, “I commend the governor for lofty ideals. The governor’s not running for re-election, but many of my colleagues in the House and Senate are,” and all of them, he said, saw a pay cut of $1,100 this year because of the shaky economy. “So we’ll temper those expectations of the governor to the normal process of vetting between the House and Senate.”
Brewer, whose district until last month included part of eastern Franklin County, questioned whether the sales tax — which he said been in decline because of that sour economy — should be the basis for planning and constructing transportation projects.
He, like Rosenberg, said they want to see federal action to allow the state to collect taxes from Internet sales.