Tax Bill Delivered To Patrick With Veto-Proof Support
Beacon Hill’s march toward a $500-million tax hike to make transportation investments continued Thursday, with Gov. Deval Patrick offering faint praise for the plan while holding to his pledge to veto a bill he says won’t adequately address the system’s many needs.
Senate Democrats easily fought off a series of Republican-sponsored amendments aimed at gutting tax hikes included in the bill, which would raise the cigarette tax by a dollar per pack, add 3 cents per gallon to the gas tax and index that levy to inflation, and impose a new sales tax on software services.
The Senate, like the House, opted not to include in the bill a mechanism sought by Patrick to ensure that if turnpike tolls come down as scheduled, the gas tax will increase further to cover the lost funding, so that the bill will deliver $800 million in revenue to transportation by 2018.
Patrick has said he will veto the legislation unless lawmakers adopted some form of his amendment to shore up its financial underpinnings. On Wednesday night, he said it was “not a bad bill” but would leave problems for taxpayers and his successors to address. Lawmakers expect to override his veto.
Senate President Therese Murray said the Legislature understands Patrick’s concerns about the tolls, but said lawmakers will be around to address tolls or other revenue decisions in the future.
“We share the governor’s concerns in all of these things, and we put forth what I believe is a very good bill that addresses the future needs of the commonwealth far into the future, in fact into 2019 and 2020. We have provisions in there. We also have toll equity and studies to come back to us, so if in 2017 there’s a need, there’s a Legislature that will still be here,” Murray said.
The amended bill cleared the Senate on a vote of 29-9, with Murray opting to cast a rare vote and voting for the legislation. The vote for the bill in the House Wednesday was 123-31.
Based on those tallies, Patrick’s hopes rest in the Senate for having his veto sustained and getting back to the drawing board on a revised transportation financing plan. To override a veto, the House and Senate must round up two thirds of members to support their plan.
Asked if the vote was indicative of support for a potential veto override, Murray said she believed so and suggested she might be able to pick up more support for the bill.
Voting against the measure were Sens. Michael Barrett, a Lexington Democrat; Sonia Chang-Diaz, a Jamaica Plain Democrat; Jamie Eldridge, an Acton Democrat; Robert Hedlund, a Weymouth Republican; Mark Montigny, a New Bedford Democrat; Marc Pacheco, a Taunton Democrat; Richard Ross, a Wrentham Republican; Minority Leader Bruce Tarr, a Gloucester Republican; and Dan Wolf, a Harwich Democrat.
The bill, which supporters say will boost the economy by improving transportation systems statewide, was sent back to the governor’s desk as state officials reported that the Massachusetts unemployment rate in June rose to 7 percent, up from 6.6 percent in May. Senate Minority Leader Bruce Tarr said Massachusetts was in the midst of a “tempest of taxation” that would worsen the state’s business climate.
Tarr pushed back particularly hard on provisions of the bill that allow for automatic gas tax increases in the future based on inflation, and the extension of the sales tax to computer software services that the Republican said would make Massachusetts one of four states to tax software services and undercut the state’s competitive edge.
Senate Ways and Means Chairman Stephen Brewer also said legislative leaders plan to make their intent clear to the Department of Revenue to make sure the software sales tax provisions aren’t too broadly interpreted, and stand ready to clarify the law if necessary in the future.
The House and Senate are counting on $160 million in new revenue from the software service tax, but some in the industry have suggested it could climb as high as $500 million. Brewer said the topic had been in the public sphere since January when Patrick first proposed the idea, but suggested tech leaders didn’t come to the table to express their concern until the “fifth or sixth inning.”
Sen. Jennifer Flanagan also said the 3-cent gas tax increase was a “small” and “necessary” component of the financing plan that would only push Massachusetts to the 24th highest gas tax in the nation, up from 29th. She said indexing to inflation would protect against the value of the tax eroding over time and creating future budget problems.
During a New England Cable News segment Wednesday night, Patrick said of the bill, “It just doesn’t deal with all of our issues. It doesn’t even deal with enough of our issues, which is my issue with it.”
The bill’s final passage is necessary to plug a major hole in the MBTA budget and make investments in regional transportation systems statewide. Proponents say it will also enable the state to gradually stop the expensive practice of paying state employee salaries with borrowed funds.
What’s less clear is which major transportation projects and transit system expansions will be funded under the bill and whether its passage will prompt Patrick to release $150 million in local road funds that he’s frozen while awaiting the final outcome of the tax bill drama.
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