BOSTON — The scaled-down House plan to fund the transportation system will not feature a borrowing scheme that Patrick administration officials proposed to begin spending new revenue more quickly than it comes in, according to the House’s budget chief.
“We have always considered the RANs, the revenue anticipation notes, as non-starters here at the committee,” House Ways and Means Chairman Brian Dempsey told the State House News Service. “We have not liked that idea from the very beginning and would not include that at all in our proposal.”
The Haverhill Democrat also said he did not see the logic in drawing money from state reserves at a time when the state would be receiving new revenues, another element of Gov. Deval Patrick’s plan.
“Very simply, if you’re going to raise $2 billion in new revenue, recurring revenue, then you certainly want to lessen your reliance on one-time monies, because it creates a structural problem,” Dempsey said yesterday.
In his budget, Patrick has sought to boost spending on education and transportation through an overhauled tax system that would raise $1.9 billion through an income tax hike and the elimination of deductions, which is coupled with a doubling of the personal income exemption and a sales tax reduction.
In a closed-door meeting with fellow Democrats yesterday, House Speaker Robert DeLeo called Patrick’s plan “fantasy land,” and his House lieutenants have been seeking a pared version that DeLeo has said will include new revenue.
Recent reports by credit rating agencies viewed warily Patrick’s planned use of $400 million from the rainy day fund in fiscal year 2014 and a multi-year short-term borrowing of $400 million that administration officials say would allow the state to ramp up education and transportation investments now with the pledge of anticipated new tax revenues in fiscal 2015 and 2015 to back the borrowing.
“The bond rating agencies reports confirms our concerns that we have had around House 1 from the very beginning,” Dempsey said.
“There’s a timing difference between when we receive the revenue and when we need to spend the revenue. We do not see there being a fundamental problem with borrowing what amounts to a relatively small amount of money,” Deputy Secretary for Capital Finance and Intergovernmental Affairs Scott Jordan told the News Service on Tuesday. He said the proposed revenue and the spending were matched, and the borrowing plan is “conceptually” no different than the $1 billion of short-term borrowing the state already uses to meet cash flow needs throughout the fiscal year.
Moody’s reported that Patrick’s budget would task the “already volatile” income tax with raising 72 percent of the state’s General Fund revenue, which Dempsey said was a “concern.” He declined to rule out any form of new revenue and said transportation-related revenue is a preferred method of transportation funding.
“I think folks feel better about it if they know where the money is going. They know it’s going to repair roads and bridges and do the important structural things that we have to do,” Dempsey said.
House Ways and Means will release its budget April 10, and while DeLeo has indicated he would like to focus on a separate transportation financing bill ahead of the budget, the window for that is shrinking.