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Patrick's Budget: Can State Afford It Right Now?

The governor's budget proposal for fiscal 2014 would raise $1.9 billion in new revenues through a combination of tax increases and eliminating some tax breaks. Is the state's economy ready for this?

After years of treading water in the state budget, Gov. Deval Patrick has put forth an ambitious $34.8 billion proposal for the coming fiscal year that would make significant investments in education and transportation by raising $1.9 billion in revenue, through a combination of tax hikes and eliminating some tax breaks.

The question: Is the state's economy ready for this?

To raise that funding, Patrick's proposal would increase the income tax from 5.25 percent to 6.25 percent, while doubling personal exemptions. It'd also lower the sales tax from 6.25 percent to 4.5 percent. Several tax breaks for both personal income and businesses would be eliminated.

The gas tax would be indexed to inflation, ensuring gradual increases in what people pay at the pump; the sales tax for soda and candy would be hiked; and the cigarette tax would be increased by $1 per pack.

Patrick would also tap an additional $400 million from the state's rainy day fund.

Increased funding would go first to education. Early Education and Care would see a 26.4 percent increase over the current budget; K-12 education funding would get a $226.2 million bump; and there'd be an additional $197 million next year for the state's higher education system, which has faced even more than that in cuts over the past decade.

The other big investment would go towards transportation—an initial $253.6 million increase in fiscal 2014 and additional spending increases over the next two fiscal years of $600 million and $700 million respectively once revenue reforms are fully phased in. Regarding the transportation investment to improve public transportation and roads, the governor said, ""This is what the people of the commonwealth have asked for."

Unrestricted general government aid—usually the biggest piece of local aid funding, outside of Chapter 70 education funding—would also receive its first increase in five years, of $31 million.

Looming over Patrick's bold plan is the lingering effect of the Great Recession. While education and transportation may need an injection of funding, can Massachusetts afford it right now?

The liberal think tank Massachusetts Budget and Policy Center said the governor's proposals make the tax system "less regressive and more fair."

On Patrick's proposed investments, the think tank said "education plays an important role in helping grow state economies" and "there is an increasingly strong connection between improving the skills of the state workforce and creating a high-wage economy."

Regarding transportation, MassBudget said that "a growing body of research makes the case for the economic development benefits of investing in Massachusetts's transportation system."

Meanwhile, Jim Stergios, executive director of conservative think tank Pioneer Institute, told WBUR that because of various exemptions the income tax is actually a slightly progressive tax system and that property taxes are "incredibly regressive," which the governor ran on in 2006.

"If you want to fix something, fix the property tax, which was an original promise," Stergios said. "I think he actually has merit to do something like that."

On Patrick's proposed investments, Stergios said that Patrick's education proposals do not put any "real reforms" on the table associated with the spending increases and "that's not going to get us a different kind of outcome." 

Regarding transportatin, Stergios said the Pioneer Institute has supported modest gas tax increases in the past and recognized the "good work" Patrick has done in delivering infrastructure improvements in recent years.

"That said, we would not come even close to what the governor's saying. We're talking about something on the order of $2.5, $2.7 billion over a 10-year period," he said. "We believe there are still further reforms that MBTA needs to have, needs to do before we hand over $3.1 bilion to them. They're not exactly the best run organization in the state ... We want both reform and we will support increasing some revenues."

What do you think? Can the state afford Patrick's proposal right now? Are there further reforms both in education and transportation that can be undertaken, or after years of treading water, is now the time to make a big investment and drive the Bay State forward?

Tell us what you think in the comments.

[Editor's note: In the original post we mischaracterized how the taxes on candy and soft drinks would change.]

Sean Ward January 28, 2013 at 02:08 PM
I agree. We put this crook back in office. This should be no surprise. This is the term the dems have been waiting for to unleash their full diabolical plan.
Saber Walsh January 28, 2013 at 02:30 PM
I was in a union for years. The strong-arming was amazing, the push to have rank-and-file follow their "comrades" was outrageous, and worst of all, they "lost" our pension money. Unions, like the ACLU, are like cornered animals right now. Ever see the thugs on Highland Avenue with the banner "Dr So-and-So -- Dangerous Malpractice?!? Go to website: www.dangerousdrsosandso...") So you go to find out who owns that website, and lo-and-behold, it's the IBEW Local in Boston. Extorsion R' Us. Enough is enough. If the money doesn't get spread across where we need it, we will be resurfacing the same roads we just resurfaced because that's what the contract called for.
John Merrett January 28, 2013 at 03:00 PM
If you're not in academia, healthcare or biotech, - move the hell out of Mass.
Bob January 28, 2013 at 10:00 PM
Your so right and these sheep are getting ready to be slaughtered. Idiots don't realize what they did by giving Obama and his cronies the power in a 2nd term. Glen Beck has been warning people for 4 yrs now with facts and proof of his agenda as well as the people he associates with and his past and his plans to change America to the United Socialist States of America.
Kathleen April 10, 2013 at 07:54 PM
People ought to check out how much the state's higher education system is paying people these days. Secretaries making close to $100K. Any funding going to higher ed isn't going to pay people back by way of lower tuition costs for the tax payers who are struggling to put their kids through college. It's a farce. Every administrator in the system will be getting another big fat raise. I didn't vote for this incompetent and arrogant jerk. Funny how many people did and now they are complaining...

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