EagleTribune.com, North Andover, MA

January 17, 2013

Local lawmakers leery about Patrick's tax hike plan

Governor wants to raise state income tax to help generate $2 billion a year

By Shawn Regan
sregan@eagletribune.com

---- — Local lawmakers, Democrats and Republicans alike, don’t appear ready to support Gov. Deval Patrick’s call to raise the state income tax.

Patrick wants to raise the income tax rate and possibly other taxes and user fees to generate up to $2 billion a year to pay for transportation infrastructure projects and massive new education initiatives — a plan he outlined at last night’s State of the State speech.

Boosting the income tax from the current rate of 5.25 percent to 6.25 percent would raise $1 billion annually. The remainder of Patrick’s proposals would be funded through other fees or taxes.

Patrick also proposed lowering the sales tax, from 6.25 percent to 4.5 percent.

House and Senate leaders have said they are not opposed to a tax increase this year — unlike past years when they called the idea a nonstarter. Still, House Speaker Robert A. DeLeo and Senate President Therese Murray have said Patrick’s tax and spending plans will be carefully scrutinized, not rubber stamped.

State Rep. Brian Dempsey, a Haverhill Democrat and chairman of the House Ways and Means Committee, played it close to the vest in commenting on Patrick’s tax proposal yesterday, only going so far as to say he anticipates “a robust debate” over any tax increases proposed by the governor. Dempsey said the his budget committee will spend the next several months analyzing revenue and spending proposals — a process set to begin next week when Patrick files his budget recommendations for fiscal 2014.

“As chairman of the committee, it is my responsibility to examine how the governor’s proposals will impact the state’s overall budget, our fiscal stability and our ability to attract and sustain businesses that will supply jobs to the Commonwealth,” Dempsey said in a written statement.

Other area lawmakers called the proposals outlined last night overly ambitious and off-timed — on both the revenue and spending sides — given the state’s fragile economy.

State Sen. Barry Finegold, D-Andover, said he’s willing to listen to the governor’s proposal, but that he’s inclined to oppose any increase in the income tax. The senator said he’d rather see future gaming revenue or even money soon to be on the way to state coffers from retail giant Amazon used to pay for overdue transportation projects.

State officials have estimated $300 million in one-time licensing fees and revenues of $300 million to $400 million a year once three approved casinos open in the next few years. They also expect to collect tens of millions annually starting in the fall as a result of a deal in which Amazon will start collecting Massachusetts sales tax on purchases made by Bay State customers.

“I want to see where that money is going first before I’d support raising taxes,” Finegold said of the casino and Amazon money. “I’d like to use it to solve our transportation problems.”

State Rep. Jim Lyons, R-Andover, said he is pleased to see the governor’s ambitious education plan, but that raising taxes is not the way to pay for it.

“He’s off track to be raising taxes on working families right now,” Lyons said. “What we ought to be doing in tightening programs like EBT. There’s $400 million right there that the governor and his people don’t even know who it’s all going to,” Lyons said of the the state’s public-assistance welfare program.

Lyons said there’s plenty of room in the state’s $45 billion budget to find cuts to pay for critical transportation and education initiatives.

“I agree with the governor that more money needs to go back to the communities,” Lyons said. “But his plan will stifle economic development and drive businesses out of Massachusetts. We should be reducing the sales tax, the meals tax and the income tax, not raising taxes.”

State Rep. Linda Dean Campbell, D-Methuen, said Patrick’s plan is “too expensive and risky.”

“We need to remember unemployment is still high and we have some big health care expenses coming up,” Dean Campbell said. “The Legislature and the governor have done some good work recently cutting spending and building our reserves, that’s what needs to continue. ... Our transportation problems have built up over a decade. We’re not going to solve them overnight.”

In the past, Dean Campbell said she opposed attempts to increase gas and sales taxes, but that she would potentially consider a modest increase to the income tax or increasing tolls on state roadways to pay for important initiatives.

“It’s the fairest tax if we have to raise taxes,” she said of the income tax. “But we have to be careful not to derail our slow recovery and go backwards. The governor’s timing is off for these ambitious educational and transportation plans. He needs to go slower.”

A spokeswoman for Sen. Kathleen O’Connor Ives, D-Newburyport, said the senator wasn’t prepared to comment about her position on potential tax increases.

“I’ll be at the governor’s State of the State speech tonight to learn more about the governor’s transportation plans,” O’Connor Ives said in a prepared statement, in response to a reporter’s questions about potential tax proposals by the governor.

Elsewhere, strong proponents and fierce opponents of tax hikes are gearing for a fight.

On Tuesday, a 120-member coalition of liberal groups and unions, calling themselves Campaign for Our Communities, rallied at the State House in support of raising the income tax to 5.95 percent, the rate it was in the late 1990s. That would bring an additional $2 billion annually into state coffers. The coalition includes teachers’ unions, service­ employees’ unions, and some state and local officials who are allies of the Patrick administration.

Budget specialists say that raising the income tax could unleash a furious competition among many groups and causes — mental health providers, homeless shelters, cities, and towns — that depend on state funding. Many have seen their budgets cut or reduced over the last five years and have powerful advocates.

Opponents of a higher ­income tax are sure to point out that Massachusetts voters approved a ballot question in 2000 to gradually lower the ­income tax rate from 5.95 percent to 5 percent.

But in 2002, the Democrat-controlled Legislature effectively froze the rate at 5.3 percent, while adding triggers that would lower the rates further only if certain revenue benchmarks were met.

Patrick has already ruled out or strongly downplayed several other possible tax increases. Last month, he said he was not prepared to support a levy on vehicle miles traveled.

As Beacon Hill prepares for the tax fight, the governor has indicated he stands ready to marshal his supporters to back his plans.

Patrick began campaigning for a tax increase Monday, with a presentation arguing that the state needs to spend an additional $1.02 billion annually to modernize and expand its ­transit system. The presentation included proposals to shore up the MBTA and regional bus services and expand rail service from Boston to New Bedford and Fall River, from New York City to the ­Berkshires, and from Boston to Cape Cod.

On Tuesday, the governor continued the campaign with another presentation in which he called for an additional $550 million in spending on education this year, increasing to nearly $1 billion annually over the next four years. The plan calls for universal access to early education for children from birth to age 5, extended school days in high-need schools, making college more accessible and affordable, and allowing community colleges to expand­ efforts to provide skills needed in the workplace.

Statehouse News Service contributed to this report.