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Budget calls for tax hikes, deep cuts

Local aid could drop by 15%; Transportation overhaul OK'd

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By Matt Viser and Noah Bierman
Globe Staff / June 19, 2009
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House and Senate leaders unveiled last night a state budget for the next fiscal year that would slash services in nearly every area of Massachusetts government and that calls for additional sales, meals, and alcohol taxes.

Under the $27.4 billion spending plan, expected to be voted on today, some communities could see up to a 15 percent cut in local aid, officials said. The proposal would eliminate 50 line items and funding for 800 local projects. A dozen Registry of Motor Vehicle branches would be closed.

The dramatic spending reductions have been forecast for months as state revenue projections have plummeted.

“It was just a litany of bad choices that we had before us,’’ said Representative Charles A. Murphy, chairman of the House Ways and Means Committee. “There’s going to be a lot of pain, and there’s going to be a lot people who aren’t terribly happy.’’

Under the proposal, the sales tax would increase from 5 percent to 6.25 percent, which is estimated to bring in an additional $900 million annually, roughly a third of which would be earmarked for the transportation system.

The budget would also boost taxes on meals by 1.25 percentage points, which is estimated to raise $108 million statewide. Cities and towns would be allowed to raise the meals tax by an additional .75 percentage point.

In addition, the budget would eliminate a tax exemption on alcohol sold in retail stores and allow communities to raise the local hotel tax by 2 percentage points.

In a move sure to draw fire from police unions, the budget proposal would also slash by about 80 percent funding for the Quinn Bill, a controversial program that awards bonuses for police officers who hold college degrees.

The budget agreement capped a frenzied day on Beacon Hill. Hours before, lawmakers defied angry union leaders and approved, by a veto-proof majority, a long-awaited transportation overhaul that would reconfigure the confusing array of agencies that operate roads, rail, and bridges in Massachusetts.

Business and watchdog groups offered measured support for the plan, but the man whose opinion now matters most, Governor Deval Patrick, stayed mum throughout the day.

“Until I can comment thoughtfully and with some study, I’m going to withhold comment,’’ Patrick told reporters yesterday.

But close observers said the transportation bill, while leaving potential funding gaps and opportunities for further waste in state government, included most of the tools the governor would need to reform the state’s transportation system, which he has vowed to do.

“You have lots of language allowing you to do lots of great things,’’ said Stephen J. Silveira, a lobbyist who led an influential commission that released a major report on the state’s transportation crisis two years ago.

Union leaders, objecting to certain provisions in the legislation, roamed the State House halls with threats of lost endorsements. But the Senate passed the overhaul, 27 to 11. The House followed shortly afterward with a 130-to-25 vote.

The activity at the State House - lawmakers were also furiously finalizing an ethics overhaul package - set the stage for a high-stakes chess match that will unfold over the coming days.

Patrick, who has said he must see significant government reforms before considering tax increases, is weighing his moves very carefully.

“Listen, I applaud the Legislature for taking a very important step forward in transportation reform,’’ he said. “The bill, on first review, contains a lot of the efficiencies and the changes that we were looking for.’’

When approached later by a reporter on a State House elevator, Patrick said with a laugh, “What part of no comment do you not understand?’’

His reticence to comment substantively on the transportation overhaul was in stark contrast to his approach last week, when Patrick was so pleased with lawmakers’ work on pension overhaul legislation that he sent gifts to House Speaker Robert A. DeLeo (a box of cigars) and Senate President Therese Murray (a vase of flowers).

Patrick, looking ahead to next year’s reelection campaign, appears to be increasingly weighing such decisions for their politics as well as their policy. He will face a host of delicate decisions over the next several days as lawmakers send him the budget and an ethics bill that could be filed as early as today.

Top lawmakers remained deadlocked yesterday over the ethics package. The major sticking point was whether or not to ban all gifts to public officials.

On the budget, Patrick has vowed to veto any proposal to raise the sales tax unless the Legislature first agrees to make acceptable changes in pension, ethics, and transportation laws.

The political stakes for Patrick are high. He was elected pledging to change the insular culture of Beacon Hill and touted big plans for education, community policing, and infrastructure.

But with the state economy struggling and state revenues plunging, Patrick has been forced to consider raising taxes to keep programs afloat. And yet he is surely aware of the pitfalls: Governor Michael S. Dukakis was swept from office in 1978 after his first term in part because of antitax fervor.

Lawmakers had little time to read the transportation bill, much less study it, given that it was filed only 16 hours before debate began in the Senate. Some details, including a provision that would give the mayor of Boston authority to approve commercial development projects built over the turnpike, were slipped in with little notice.

The most tangible savings, about $30 million per year, come through changes to MBTA healthcare benefits that would force workers and retirees to contribute more for their insurance.

Labor unions blasted the transportation bill, saying the plan would “eviscerate the rights of workers to collectively bargain.’’ Any lawmaker who votes for it, the AFL-CIO warned, may not be considered a friend of labor at election time.

“It eliminates all unions at the Turnpike Authority and takes no regard for collective bargaining,’’ said Robert F. Cullinane, head of the Teamsters Local 127, which represents toll-takers. “We thought we were voting for Democrats up here.’’

Senator Stephen A. Baddour, a Methuen Democrat who leads the Transportation Committee, promised to address some of the concerns in subsequent bills. But most lawmakers said they were happy to vote for 80 percent or 90 percent of what they believed was a good plan.

Matt Viser can be reached at maviser@globe.com.

Clarification: A Page 1 story Friday on the state budget proposal imprecisely referred to a provision in a transportation bill that gives the Boston mayor a role in approving commercial projects built over the Massachusetts Turnpike. The provision restated current law and does not represent a change in policy.