Mass. Gov. Patrick submits $34.8B budget plan

BOSTON (AP) -- Gov. Deval Patrick sent the Legislature a proposed $34.8 billion budget on Wednesday that seeks new taxes and a return to spending levels closer to those seen in the years prior to the Great Recession.

The budget would increase overall state spending by 6.9 percent in the fiscal year beginning July 1, with an emphasis on new education programs and fixing the state's ailing transportation system.

The spending plan relies on $1.2 billion in revenue from tax changes along with an additional $550 million in one-time revenues, including a $400 million withdrawal from the state's reserves, better known as the 'rainy day fund.'

Patrick had already announced plans to seek a hike in the state's income tax rate from 5.25 percent to 6.25 percent, coupled with a reduction in the sales tax from 6.25 percent to 4.5 percent. On Wednesday, he added several other revenue proposals that he has also offered in previous years, including a $1 hike in the cigarette tax to $3.51 per pack, removing the sales tax exemption for soda and candy, and extending the state's 5-cent deposit law to bottled water and sports drinks.

He again proposed capping the state's film tax credit designed to provide movie production in Massachusetts at $40 million a year, a move that would save the state about $20 million.

Patrick defended his decision to press for additional tax revenues, saying it was vital to invest in the state's economic future.

"I do not submit this proposal lightly," Patrick told reporters at a Statehouse news conference.

Patrick last week unveiled an education plan that he said would cost an additional $550 million in the 2014 fiscal year to pay for universal access to early education from birth through age 5, fully fund K-12 education and allow for extended school days in high-need schools.

The spending plan would include a $269 million increase in operating funds for transportation as a first step toward meeting the goals of an ambitious 10-year plan to maintain and modernize the state's transportation system. Patrick said the funding would help eliminate chronic deficits at the MBTA and allow the T to make "modest" improvements in service.

The budget would provide cities and towns with a $31 million increase in unrestricted local aid, and a $226 million increase in education funding that would boost how much each school district receives per child by $25.

In all, cities and towns would receive about $5.6 billion — or about 14.6 percent of all state spending, Patrick said.

"The whole budget depends on the pieces hanging together," said Patrick, emphasizing that the investments would not be possible unless the Legislature agrees to the new revenues.

The filing of the budget is the first step in a lengthy process and lawmakers have historically put their own imprint on the spending plan. Legislative leaders have said they are open to new revenue proposals but have yet to endorse any of the governor's specific proposals.

"He's really rolled the dice. This is a very aggressive budget and it depends on a lot of things happening," said Michael Widmer, president of the business-backed Massachusetts Taxpayers Foundation.

The proposed hike in the income tax would give Massachusetts residents the highest income tax burden in the country when measured as a percentage of personal income, and could pose a short-term risk to the state's economic health, Widmer added.

The spending plan won praise from organizations including the Campaign for our Communities, a coalition of teachers unions and other groups that said it backed the governor's commitment to "increase investments in excellent schools, reliable transportation systems and a strong economy that provides good jobs."

Glen Shor, Patrick's secretary of administration and finance, said the state has made a cumulative $11 billion in cuts and savings over the past four years that even this budget proposal cannot fully restore.

"We're glad to stop the bleeding, but by the same token there will still be impacts felt in these accounts that have not been restored to pre-recession levels," said Shor.

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Associated Press Writer Steve LeBlanc contributed to this report.