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Patrick Proposes Broad Cuts, Taxes

Plan Could spur Widespread Layoffs
By Matt Viser, Globe Staff  |  January 29, 2009

Governor Deval Patrick announced a series of far-reaching proposals yesterday to address the worst economic crisis to hit the state in decades, calling for a range of new taxes on such items as alcohol and soft drinks and higher fees at the Registry of Motor Vehicles, combined with deep cuts in local aid, education, and healthcare that will probably trigger layoffs across the state.

In producing his emergency measures to balance this year's budget and in his budget proposal for the next fiscal year, the governor wants to generate $587 million in new taxes, fees, and other revenue and has proposed draining a total of $913 million from the state's rapidly shrinking rainy day fund.

Even with those dramatic moves, Patrick's budget is still relying on Congress and President Obama to come to the rescue with at least $1.2 billion for Massachusetts as part of the federal government's overall economic stimulus package.

The pain will flow down to local communities. Patrick said yesterday he would freeze the local school aid distribution, which would withhold $300 million that otherwise would have been sent to schools across the state. That measure is expected to trigger teacher layoffs, school closings, and larger class sizes.

He also proposed cutting judiciary spending and Medicaid and slicing state subsidies to public colleges and university budgets by more than $100 million. Libraries that serve the blind in Worcester and Watertown would see cuts, and funding for the mentally and physically disabled would be reduced.

"Taken together, these measures are right and necessary steps to get us through these difficult times," Patrick said at a State House press conference.

Patrick's belt-tightening plans are even more severe than those developed in 2003 by Governor Mitt Romney, who sought cuts to local aid and higher fees on everything from commercial licenses to fees at state golf courses.

The release of his midyear plan for fiscal 2009 and his proposed budget for fiscal 2010, which begins July 1, are the starting point for debates that will feature aggressive lobbying by alcohol retailers, restaurant and hotel trade groups, and unions. The budgets are already drawing fire from some who say deeper cuts are required.

In all, the governor would extract new taxes, fees, and other payments from Massachusetts residents and businesses of more than $500 million. The governor also wants to allow local communities to raise meals and hotel taxes by an additional percentage point and eliminate a tax exemption for telecommunications companies, which combined could generate $200 million.

"This is an opening salvo," said Christopher Anderson, president of the Massachusetts High Technology Council. "I've been around for 25 years, and every time there's a downturn, we make permanent tax changes to solve temporary budget problems."

Patrick would raise $75 million, for example, by increasing charges at the Registry of Motor Vehicles, including hikes of $25 for getting a title for a car and $2 to renew a license. Eliminating an exemption on the state's 5 percent sales tax on alcohol, candy, soft drinks, and juice drinks would raise $150 million and be placed in a special health fund. (Administration officials have defined a juice drink as one that is less than 50 percent natural). Patrick would also expand the 5 cent deposit charge on carbonated sodas, beer, and malt beverages to include beverages such as water and juice drinks.

The governor said he recognized that increasing taxes and fees is difficult, but he said the alternative is worse. "I have looked at what the impact would be if we went deeper in terms of cutting services," Patrick said.

The proposal for the fiscal 2010 budget will be subject to multiple hearings and closed-door meetings, first in the House and then in the Senate, before it takes effect July 1. House Speaker Robert A. DeLeo and Senate President Therese Murray, who stood together yesterday after DeLeo was elected as the new House leader, both deflected questions from reporters.

Several groups, angry over the plan, are already laying the groundwork for protests and will begin lobbying legislators to make changes.

"We think it's outrageous for them to single us out when our industry is reeling," said Peter Christie, president of the Massachusetts Restaurant Association.

Patrick's $28 billion budget proposal for the next fiscal year is about $200 million less than the budget lawmakers approved this year, the first year-to-year decline since the early 1990s.

In addition to announcing his budget proposal for next fiscal year, Patrick also put forward his plan for addressing a $1.1 billion midyear shortfall in the current fiscal year.

His immediate, emergency budget plan would eliminate $63 million from state government spending and cut $128 million from local aid, which would force local officials to close public schools, curtail library hours, and lay off teachers, police, and firefighters.

The cut to local aid will expand to $220 million in the next fiscal year if the Legislature approves the meals and hotel taxes, according to Patrick's plan. If those taxes are not approved, then the cut next year will be $375 million, Patrick has said.

Matt Viser can be reached at maviser@globe.com

 
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