The House vote to hike the sales tax to 6.25 percent is causing some major political ripples on Beacon Hill, with both the Speaker and the Senate President expressing astonishment and outrage that the Governor would be critical of the Legislature. The exchanges between the Big Three were pretty tough and extensive, with the Legislature defending against Patrick’s charges of inaction and watered down reform. Patrick stepped it up a notch with new threats to veto either the Pension Bill or the Transportation Reform bill currently in conference. From the State House News Service:
Patrick made his comments Monday in an interview with WBUR reporter Martha Bebinger. Asked whether he would veto the Legislature’s pension or transportation bills if he deemed the reforms inadequate, Patrick said “you bet.” “I’m not interested in some papered over victory, something that is halfway there that we can claim is reform and then move on,” he said, according to a transcript of his remarks. “I’m not about fighting with the Legislature. It’s about fighting for our values and priorities.”
As the process moves forward there were some interesting developments yesterday.
The House, utilizing revenues from the sales tax increase, put $205 million back into the local aid account. I believe that would translate to about a million dollars over the House Ways and Means number for Methuen.
The Senate President said that FY2009 benchmarks were going to be off by $400 million or more. Neither Legislative branch has taken any steps to deal with the FY2009 shortfall. It will likely have to come out of the State rainy day fund.
Senate Ways and Means Chair Steve Panagiotakos seemed to indicate that the Senate would go along with a sales tax increase of some magnitude, and I saw Senate President Murray say that additional revenues may be needed beyond the sales tax.
Michael Widmer’s Massachusetts Taxpayers Foundation has produced a short sales tax primer that deals with revenue estimates and state to state comparisions. I have attached it below. Widmer gives an estimate for FY2010 of $905 million in increased revenue for the 25% increase in the sales tax, which is in line with legislative revenue estimates. I had questioned the $900 million dollar figure, but Widmer’s estimates have been pretty reliable.
The Beacon Hill Institute has produced an anaysis of a sales tax hike to 6%, and that study says it will cost 10,000 jobs and have the Commonwealth lose 42 million dollars of business investment. That study is below.
The Tribune slammed local reps who voted in favor of the sales tax hike pretty hard. The Tribune editorial link is below.
The Globe, who had expressed some editorial support for a sales tax hike this week, shifted gears somewhat and supported the Governor’s call for reforms. The Globe editorial highlighted two items that the Legislature will apparently fund with some of the additional revenues. First, the Quinn Bill at $50 million. The second would be an elimination of the House budget provision increasing the percentage paid by state employees for health insurance from 20 percent to 30 percent. The Globe was heavily critical of both of those items, as well as legislative inaction on the other reform items. That editorial is linked below.
Read the Tribune editorial here.
Read the Globe editorial here.
Bill Manzi.com 
Your Honor,
I heard Governor Patrick on the Tom Finneran show this morning. He pretty much took the position that you and papers have reported on.
He also said he may veto the house MBTA ‘reform’ legislation.
Veto threats seem to be ignored.
He seems to be championing the ‘reform’ issue, but I have found his performance in the past to be minimalist. Any minor victory is claimed as reaching the goal. Case in point is the traffic guard issue.
Another thing is some of you ‘friends’ changed their votes and approved the tax increase.
Jules (RWT)
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Your Honor,
Came across this article in the Herald. It supports your desire to get relief from State regulation that interfere with your ability to manage the town.
Jules
One day. That’s all it took.
We wait years for pension reform. Years for the state to reform health care purchasing. Decades for elected officials to shrug off the embrace of public employee unions. And still none of it is done.
But increase the sales tax? All it takes is a day.
On this one, the governor is right. He sent the House a letter promising to veto any sales tax hike before critical reforms are passed. This reasonable request offended House members’ sense of sovereignty, the way U.S. interference in a Central American election would offend that country’s population. The governor’s letter was an act of gamesmanship, but what’s wrong with that? Yes, he got religion late in the game. But he got it.
The Senate has talked reform before revenue, but its transportation bill didn’t deliver. The House did less. Perhaps that’s because the initial House budget sagged under the weight of public employee union pressure. The result will almost inevitably reinstate provisions like the Quinn Bill.
Reforms take decades – if they ever happen. A $1 billion tax increase takes a day.
The governor needs to stand firm. To use a theatrical metaphor, he needs to prove he isn’t part of the tired tradition of Kabuki theater that has dominated Beacon Hill for decades. He must prove a master of the other Japanese theatrical tradition – Noh, as in “no.”
That will require that his new slogan of “meaningful reform” is, well, meaningful. Needed actions include reducing the state’s work force. Municipalities have been doing that, so why not the state? We need to remove state mandates so local leaders have the power to make decisions on employee health-benefit purchasing. We need to let communities opt out of providing incentives to cops for doing what we all do – develop professionally. We need to end corporate welfare for the biotech and film industries.
On transportation, it means reforms that enhance transparency by measuring performance and putting the results online. It means fixing before building It means using excess borrowing capacity to defease Big Dig debt.
But the hard part is that it also means cutting expenses. Reducing costs means transportation employee-pension and health-care reforms. And getting rid of inflated prevailing wage agreements, having MassHighway provide the bulk of road and bridge work for the state’s parks agency, and allowing public-private partnerships.
None of that is easy. But neither is it easy for taxpayers to dig deeper.
The curtain has come down on the House’s first act of disrespect to the voters. We await the Senate’s second act, but without much hope. The final act may lie with the governor.
The 108-51 margin by which the House passed the sales tax increase is barely veto-proof. The question for Deval Patrick is whether his first-term rehearsal has molded a first-rate actor.
The question for us is whether he and legislators should be re-elected.
Jim Stergios is executive director of Pioneer Institute.
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