BOSTON — The Massachusetts House overwhelmingly backed a plan to raise the state sales tax from 5 percent to 6.25 percent late last night, despite a last-minute veto threat from Gov. Deval Patrick.
By a 108 to 51 vote, lawmakers approved a plan that some say would raise an additional $900 million annually to help balance the budget as the state grapples with plunging tax collections. The proposal next goes to the Senate.
Earlier in the day, Methuen Mayor William Manzi said hiking the sales tax will be "a job killer and an economic development killer" in communities close to tax-free New Hampshire.
"I'm against it, and I know that will be a minority position amongst mayors," Manzi said .
Manzi said the tax hike would be "exceedingly detrimental" to Methuen. The increase would hurt places like The Loop — a massive shopping center just a short drive from Salem, N.H.
Haverhill Mayor James Fiorentini didn't take a stand on the proposed sales tax increase.
"If they vote for the sales tax, I certainly will not be the slightest bit critical," he said. "We'll wait and see how this plays out. I don't want to get in the middle of which revenue package is better because I frankly don't know. I'm not going to be critical of which solution they come up with, as long as there is a solution."
Gov. Deval Patrick sent lawmakers a letter threatening to veto a sales tax hike unless they approve a series of reforms first.
Patrick has proposed his own tax increases, including raising the state gas tax by 19 cents per gallon, expanding the sales tax to include alcohol, candy and soda, and allowing local communities to increase taxes on restaurant meals and hotel rooms.
State Rep. Linda Dean Campbell, D-Methuen, said she was voting against the sales tax increase. She noted that the old Methuen Mall went under when the Mall at Rockingham Park opened in Salem, N.H.
"We have re-established, just recently, a retail presence at The Loop. But that's still young," she said. "I think considering a sales tax at this time is going to make a significant difference to them in terms of their ability to survive and continue to bring revenue into the city."
Lawmakers need to reform pensions, transportation, ethics, and pass the municipal relief package first, Campbell said.
Fiorentini was at the Statehouse yesterday along with mayors from around the state "to plead our case" to legislators, he said.
He told them about the "tremendous problem" he faces with devastating local aid cuts that would lead to layoffs and reductions in services.
Fiorentini left Boston feeling encouraged that lawmakers understand the problems faced by cities and towns, he said.
Manzi is skeptical that a 1.25 percent increase in the sales tax will raise $900 million. The state's sales tax revenue is down because of the recession — people aren't shopping as much — so Manzi figures the increase would only raise about $800 million.
Last night's vote revealed a growing rift between Patrick, the state's first Democratic governor elected in 16 years, and the Democratic leadership in the Legislature.
Patrick's veto threat forced House leaders to temporarily delay debate and spend much of the day rounding up enough votes to override a veto. Two-thirds, or about 107 House votes, are required to ensure a measure can withstand a veto.
Lawmakers debated the measure late into the night, finally approving the tax hike at about 11 p.m.
Under the plan, about a third of the proposed increase, $275 million, would help the state's deteriorating transportation system. Another $200 million would be returned to cities and towns in local aid.
Patrick said he couldn't support the increase because lawmakers have so far failed to put either an ethics, pension or transportation reform measure on his desk.
Material from The Associated Press was used in this report.