Governor and Legislature at odds over taxes

At his State of the State address in January, Governor Deval L. Patrick outlined an ambitious agenda.

At the top of his list was a major overhaul of state taxes, including an increase in the income tax to 6.25 percent, a reduction in the sales tax to 4.5 percent, a doubling of the personal tax exemption and the elimination of a number of personal and corporate tax deductions.

The new tax revenue, he said, would go to fund an additional $1.9 billion annual appropriation for badly needed transportation projects and increased education funding.

House Speaker Robert DeLeo and Senate President Therese Murray took a “wait and see” attitude, said they would consult with their members and get back to Patrick.

The Legislature then passed its own dramatically reduced, alternate tax plan.

Fast forward six months and little of the governor’s agenda remains intact.

The only thing he and the Legislature have agreed to do is increase transportation funding by $500 million now and up to $800 million by 2018, but they’re still wrangling about how to pay for it.

Last week, Patrick signed the annual state budget, but vetoed $240 million from transportation and $177 million from unrestricted local aid to cities and towns.

He said he had to make these cuts because the Legislature’s alternate tax plan to raise the gas tax by three cents, an additional dollar tax on a pack of cigarettes and some new levies on software would not cover the state’s obligations after 2017 when tolls on the MassPike west of Weston are set to expire.

Without those tolls, he said, the budget is out of balance and the alternative is to increase the gas tax by another three to five cents above the Legislature’s amount.

DeLeo and Murray retorted that the tolls might not have to come down and said that taxpayers wouldn’t tolerate such a high gas tax now.

They vowed to override the governor’s veto and those votes are scheduled this week.

Leaders are confident

The legislative leaders are confident their members will vote against Patrick and restore the $417 million.

And they also sound confident that their tax package can fund the increased spending in the short term, but are much less convincing about what’s going to happen in future years.

Presumably, the administration and the Legislature are looking at the same data, but Patrick sees a big deficit and the Legislature doesn’t see a problem.

Granted, every legislator is up for reelection every two years and Patrick is not running again.  This helps explain the Legislature’s reluctance to endorse an even higher gas tax now.

But if not an even higher gas tax, then what?

It’s doubtful that DeLeo and Murray have any “secret” plan they’re keeping to themselves to eliminate the future budget deficit. But time is on their side.

Since they won’t actually have to deal with the shortfall for a few years, they could be hoping that a sudden economic upturn will increase state tax revenues automatically.

Maybe they’re counting on a citizen’s petition appearing on the ballot in 2014 and that the supposedly tax-averse citizens of the commonwealth will take the heat off the Legislature and vote to increase their own taxes.

Or perhaps they’re waiting until after the next election, hoping that a new legislative session starting in January 2015 would be a better time to actually consider and approve more of the governor’s income and sales tax overhaul and that will solve the problem.

The one clear thing, however, is that the governor likely will never run for office again and he’s free to advocate for any expensive tax plan he wants.

The Legislature doesn’t have that luxury.

Posted by Bruce Garlow on July 18, 2013. Filed under Columns,Opinion. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry