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Governor Deval Patrick Proposes Fiscal Budget

Patrick to Include Popular Items in Fiscal Budget

Heights Editor

Published: Thursday, January 31, 2013

Updated: Thursday, January 31, 2013 00:01

Massachusetts Governor Deval Patrick unveiled his $38.4 billion budget plan for the 2013-14 fiscal year last Wednesday, Jan. 23. Coming off of the heels of Patrick’s State of the Commonwealth address last week, the plan promises additional spending on education and transportation. The bold budget proposal marks the beginning of a contentious debate leading up to the fiscal year that begins July 1.

The plan features an 8.9 percent increase in statewide spending, balanced largely by higher income and expanded sales taxes. The state income tax would be increased from 5.25 percent to 6.25 percent. Gasoline, cigarettes, candy, and soda would also see tax hikes.

“The ultimate objective is to raise sufficient revenue so that we can invest in things we know accelerate job growth,” Patrick said in defense of his proposed tax increases in a press conference last Wednesday.

Lawmakers on all sides of the political spectrum have been hesitant to raise taxes across the board in light of the current economic climate. Even President Barack Obama and Congressional Republicans agreed to extend the Bush tax cuts for 98 percent of Americans. Obama had made the extension of the tax cuts for most Americans a cornerstone of his 2012 reelection campaign.

There is concern that an extensive tax increase would deter private sector hiring, Michael Wildmer, president of the Massachusetts Taxpayer Foundation, told CBS Boston. “I can be sure it will cost us jobs,” state Rep. Brad Jones, the House Minority Leader said in an interview with The Boston Herald.

In contrast, Patrick has asserted that the tax increases will help stabilize the economy. “History has shown us that investing in transportation and education is a winning strategy,” he said in reference to the concern. The plan secures an additional $553 million for the Commonwealth’s educational initiatives and $269 million for transportation. The Department of Health and Human Services is also to receive an additional $1.4 billion under the proposed plan.

The plan calls for the expansion of the sales tax into everyday products like soda and candy, which had previously been exempt from the state sales tax.  New York City Mayor Michael Bloomberg has pioneered the movement to tax, and in some cases ban, soda and candy. Under the plan, cigarettes will also see a $1 increase, bringing the state tax to $3.51 per pack.

This is not the first time tax increases on such products have been proposed. In fact, Patrick’s proposed budget in 2009 featured similar tax hikes on gasoline, candy, soda, and alcohol. Those proposals were eventually removed from the final budget after extensive debate in the state legislature and replaced by a 25 percent increase in the sales tax. Last year’s proposed budget also called for an increased tax on cigarettes but that was also removed after debate.

Patrick’s plan is far from a finished product, and the budget will likely dominate discussions on Beacon Hill throughout the coming months. Both the state House of Representatives and the Senate will submit their own budget proposals.

Senate Minority Leader Bruce Tarr told the Boston Business Journal that the plan “lacks credibility,” because of its proposed widespread spending increases in light of the fact that the state is currently running a $1 billion deficit, and is still recovering from an economic recession. Republicans and Democrats in the legislature have noted that the proposed budget offers virtually no spending cuts.

In the meanwhile, Patrick has taken to the road to drum up support for his budget with leaders across the Commonwealth. In a speech at the Massachusetts Municipal Association’s annual convention at the Hynes Convention Center late last week, Patrick reminded his audience what was at stake: “We can choose to invest in ourselves, in a growth strategy … or we can do nothing.”

Many of the mayor’s responses reflect the uphill battle Patrick may face in passing his budget.

Agawam Mayor Richard Cohen told he was hesitant about the income tax hike given the state’s unemployment: “Is there another way to do it? It’s still very early. I’m very cautious at this point.”

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