Legislature enacts tax-raising bill over Gov. Patrick's veto

Michael Norton and Matt Murphy, State House News Service
Jul. 24, 2013

In the face of claims that higher taxes will hurt a slowly recovering economy, the House and Senate voted Wednesday to override Gov. Deval Patrick's veto of legislation raising taxes by $500 million to invest in transportation and other areas of the state budget.

The House voted 123-33 and the Senate 35-5 to override the governor's veto with two-thirds majorities in both branches. The tax increases are scheduled to take effect in seven days.

"We need to do something on transportation and we have to do it right," said Sen. Kenneth Donnelly (D-Arlington), who commended Senate President Therese Murray and others for "having the courage to say if we need to fix the roads we're going to pay for it."

The bill raises the gas tax by 3 cents a gallon, tacks one dollar onto the per-pack cigarette tax and applies the sales tax to certain software and computer system design services. Patrick vetoed the bill because he was looking for a more robust tax package. The bill's passage plugs an immediate hole in the MBTA's budget.

Sen. Patricia Jehlen (D-Somerville) said the massive Assembly Square development in her community would not have happened without public transportation investments. "The same will happen with the Green Line extension," Jehlen said. "And the Green Line extension will be built, because we have an obligation to it and because it is the first claimant on any new revenue that's made."

Jehlen continued: "As Republicans should understand, you don't get growth without investments and you can't make investments without a way to pay them back. So I hope this veto is not sustained. I don't think it's enough money but I think it's such an important first step and the Senate President has said before to us, we will revisit this. We will continue to see if it's the right amount and whether there are other revenue sources."

After the Senate moved immediately to a vote without debate, Sen. Robert Hedlund, a Weymouth Republican, said the issue deserved more than the 10 minutes of debate allotted Wednesday to a motion to reconsider the vote.

Hedlund said the new taxes could "cripple" the tech and software industry, hurt industries that are most heavily reliant on gas, and suggested the "revenues are there" in the transportation system but that the system needs management improvements.

"This is something that is going to set us back and make us much, much less competitive," Hedlund said.

Prior to the House vote, Transportation Committee Co-chairman Rep. William Straus noted that despite his veto, Patrick had described the legislation as a "good bill."

Straus said the governor's argument that it could be a better bill is no reason to vote against it. "Frankly, that's probably true with every piece of legislation that comes through this institution, historically," he said.

Straus described the legislation as "carefully crafted," with some lawmakers favoring a higher gas tax hike and others no gas tax increase. Straus also called for an override because revenues from the tax hike are needed to fund this year's budget, which has already been signed into law.

"It's time to move on," said Straus.

Rep. George Peterson (R-Grafton) said it's unclear how much will be raised by the bill's proposed application of the sales tax to software services, calling into question the estimate of $500 million in anticipated revenues.

House Minority Leader Brad Jones (R-North Reading) urged his colleagues to sustain Patrick's veto, noting declining consumer confidence and rising gas prices. "Your vote today on taxes is the one that matters most, not the one you took in April. So if you voted against it in April, don't think that covers you," Jones said, alluding to coming elections next year.

Jones said Democratic leaders had succeeded in framing the debate as being more about "telling the governor to shove off" than voting to raise taxes. He also said the tax hike was not necessary in part because state tax collections last fiscal year surpassed estimates by more than $600 million.

"We could have survived within our means," said Rep. Viriato deMacedo (R-Plymouth). "We didn't have to go after the taxpayer again." Citing a rising unemployment rate, deMacedo expressed concern that mobile innovation economy jobs will move out of state due to the software tax.

Rep. Dan Winslow said indexing the gas tax to inflation, as the bill calls for, amounts to taxation without representation. "Today is our last chance to kill this gas tax, to send it back to the drawing board," Winslow said.

Rep. Marc Lombardo said tech industry officials are alarmed by the application of the sales tax to software services. "Folks, we have a chance today to stop the death of the tech industry in Massachusetts," Lombardo said.

In the House, Democrats James Miceli, Dennis Rosa and Thomas Stanley joined with all 30 Republicans in voting to sustain Patick's veto. Senate Minority Bruce Tarr, Sen. Richard Ross, Sen. Robert Hedlund, Sen. Mark Montigny and Sen. Marc Pacheco voted to sustain in the Senate.