Top Mass. lawmakers: Raise state, cigarette taxes - Boston News, Weather, Sports | FOX 25 | MyFoxBoston

Top Mass. lawmakers: Raise state, cigarette taxes

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BOSTON (AP) - Legislative leaders unveiled a transportation financing plan on Tuesday that called for $500 million in new revenues, including increases in state gasoline and cigarette taxes, while rejecting a heftier tax hike proposed by Gov. Deval Patrick.

The lawmakers' proposal seeks to eliminate a chronic operating deficit in the state's transportation system and would forestall any immediate need for further fare hikes or service cuts on the MBTA or other public transit systems. It would still allow for some capital investments in transportation, but likely not to the extent sought by the governor.

"In order for our state to remain competitive, we need a transportation system that works," said House Speaker Robert DeLeo at a Statehouse news conference with Senate President Therese Murray and other key Democratic leaders.

"Yet we also recognize that Massachusetts is still struggling to emerge from the financial downturn. Families and businesses are still sensitive to any additional burdens," DeLeo added, in explaining why lawmakers opted for the scaled down tax plan.

DeLeo also said he wanted to make sure the state preserved its positive bond rating.

Patrick, also a Democrat, had proposed a series of tax changes that he said would raise nearly $2 billion in new revenues for transportation and education initiatives. The governor's plan called for hiking the state income tax rate from 5.25 percent to 6.25 percent, while also lowering the sales tax from 6.25 percent to 4.5 percent.

While the legislative plan only deals with transportation, the chair of the House Ways and Means Committee, Rep. Brian Dempsey, ruled out further tax increases in the overall state budget proposal expected to be released by his panel next week.

Patrick issued a guarded statement on Tuesday, thanking lawmakers for reviewing his plan and promising a thorough study of their proposal.

"My principles continue to be whether the financing is enough, dedicated and fair, and I will review the Legislature's proposal in that light," he said.

The legislative plan - which must be approved by the full House and Senate - would increase the state's gasoline tax by 3 cents to 24 cents per gallon, raising $110 million and costing the average driver in Massachusetts between $12 and $30 per year. The gas tax would also be indexed to inflation beginning in 2015.

The proposal calls for $165 million in new tobacco taxes, including a $1 per pack increase in the excise tax on cigarettes. Taxes on cigars and smokeless tobacco also would rise.

There would also be several corporate tax adjustments, including a change in the way utilities are classified for tax purposes, and software modifications and system design would be subject to the sales tax.

Legislators said they would seek to end a longstanding practice by the state of borrowing funds to pay for operating costs in transportation, including some employee salaries.

The plan would also make a key policy change by dedicating all motor vehicle sales taxes to transportation - instead of a fixed percentage of the total state sales tax as is currently the case.

DeLeo and Murray downplayed any serious rift with the governor, who had spent the past couple of months promoting his tax and spending plans around the state. They said the legislative approach represented a "different method" of addressing the state's most critical transportation needs.

"Nobody wants to go over a bridge that is going to fall down," said Murray.

While noting that the tax increases proposed Tuesday were less than those sought by the governor, Republicans were skeptical that Democrats had exhausted all cost-saving options before resorting to new taxes.

"In fact, we believe numerous other areas of savings still exist," said Rep. Brad Jones, the House minority leader.

Republicans, heavily outnumbered in both branches, also called for a public hearing to be held before the transportation plan was put to a vote, but a spokesman for the Senate president said no hearing was planned.

In a report delivered to Patrick earlier this year, state transportation officials detailed a chronically underfunded system that was deeply in debt from the Boston's massive Big Dig highway project and other past commitments, and called for at least $1 billion a year in new state spending.

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