Patrick's Budget: Can State Afford It Right Now?

The governor's budget proposal for fiscal 2014 would raise $1.9 billion in new revenues through a combination of tax increases and eliminating some tax breaks. Is the state's economy ready for this?

After years of treading water in the state budget, Gov. Deval Patrick has put forth an ambitious $34.8 billion proposal for the coming fiscal year that would make significant investments in education and transportation by raising $1.9 billion in revenue, through a combination of tax hikes and eliminating some tax breaks.

The question: Is the state's economy ready for this?

To raise that funding, Patrick's proposal would increase the income tax from 5.25 percent to 6.25 percent, while doubling personal exemptions. It'd also lower the sales tax from 6.25 percent to 4.5 percent. Several tax breaks for both personal income and businesses would be eliminated.

The gas tax would be indexed to inflation, ensuring gradual increases in what people pay at the pump; the sales tax for soda and candy would be hiked; and the cigarette tax would be increased by $1 per pack.

Patrick would also tap an additional $400 million from the state's rainy day fund.

Increased funding would go first to education. Early Education and Care would see a 26.4 percent increase over the current budget; K-12 education funding would get a $226.2 million bump; and there'd be an additional $197 million next year for the state's higher education system, which has faced even more than that in cuts over the past decade.

The other big investment would go towards transportation—an initial $253.6 million increase in fiscal 2014 and additional spending increases over the next two fiscal years of $600 million and $700 million respectively once revenue reforms are fully phased in. Regarding the transportation investment to improve public transportation and roads, the governor said, ""This is what the people of the commonwealth have asked for."

Unrestricted general government aid—usually the biggest piece of local aid funding, outside of Chapter 70 education funding—would also receive its first increase in five years, of $31 million.

Looming over Patrick's bold plan is the lingering effect of the Great Recession. While education and transportation may need an injection of funding, can Massachusetts afford it right now?

The liberal think tank Massachusetts Budget and Policy Center said the governor's proposals make the tax system "less regressive and more fair."

On Patrick's proposed investments, the think tank said "education plays an important role in helping grow state economies" and "there is an increasingly strong connection between improving the skills of the state workforce and creating a high-wage economy."

Regarding transportation, MassBudget said that "a growing body of research makes the case for the economic development benefits of investing in Massachusetts's transportation system."

Meanwhile, Jim Stergios, executive director of conservative think tank Pioneer Institute, told WBUR that because of various exemptions the income tax is actually a slightly progressive tax system and that property taxes are "incredibly regressive," which the governor ran on in 2006.

"If you want to fix something, fix the property tax, which was an original promise," Stergios said. "I think he actually has merit to do something like that."

On Patrick's proposed investments, Stergios said that Patrick's education proposals do not put any "real reforms" on the table associated with the spending increases and "that's not going to get us a different kind of outcome." 

Regarding transportatin, Stergios said the Pioneer Institute has supported modest gas tax increases in the past and recognized the "good work" Patrick has done in delivering infrastructure improvements in recent years.

"That said, we would not come even close to what the governor's saying. We're talking about something on the order of $2.5, $2.7 billion over a 10-year period," he said. "We believe there are still further reforms that MBTA needs to have, needs to do before we hand over $3.1 bilion to them. They're not exactly the best run organization in the state ... We want both reform and we will support increasing some revenues."

What do you think? Can the state afford Patrick's proposal right now? Are there further reforms both in education and transportation that can be undertaken, or after years of treading water, is now the time to make a big investment and drive the Bay State forward?

Tell us what you think in the comments.

[Editor's note: In the original post we mischaracterized how the taxes on candy and soft drinks would change.]

john January 26, 2013 at 08:03 PM
Taxing specific items is unfair. If taxes are going up they should go up for everyone.If you don't drive, smoke, drink or eat candy why would you care?
Neil January 26, 2013 at 08:45 PM
A median income family of four making $60,000 a year would pay $91 /year more based on this plan that calls for a 1% increase in income tax and, a %1.75 cut in sales tax.
Mike January 26, 2013 at 10:25 PM
Okay Mike A, you don't have kids in pre-school or use the T. We get it. You hate paying for things you don't approve of. My children will still be paying for the Iraqi War when they grow up so I get it. But that's society. You can opt out and move somewhere where you don't pay taxes. All we have had for the last ten years is spending cuts, esp. for schools. Not exactly thrilled we need to increase taxes but we are paying the lowest federal income rates in years. The Tea Party somehow has got it in their head that taxes are too high when they are pretty much lower than many of us have seen in 40 years. And The Tea Party is excellent at spreading disinformation.
Mike January 26, 2013 at 10:33 PM
Also, taxing specific items is extremely fair. I'm wondering why one would feel differently? The tobacco tax has led to a decrease in young people smoking. Isn't that a benefit for society? Unless you work for Philip Morris I think you would agree.
Mike January 26, 2013 at 10:42 PM
Lastly, historically union membership rates correlate with the growth of the middle class almost perfectly. When union membership goes down, it takes with it the middle class. Ask yourselves why big corporate America is spending BILLIONS of dollars to defeat unions. Because Unions are the only thing keeping a living wage alive in many industries or jobs here in America. Unions are not perfect and need to be fixed from within, not done away with. I was speaking with a local Chief of Police on Thursday. We were discussing irony. He felt that several members of his department who are in the union yet are "anti-union" in their rhetoric would be the first to be let go if the unions didn't protect their jobs. So yes, there needs to be changes made.
jjrm January 26, 2013 at 10:49 PM
People in Massachusetts need to button their lips, majority of you voted for this clown. Stop crying and live with it.
Bob Samson January 26, 2013 at 11:03 PM
Vote Democrat and TAXES go up.
john January 27, 2013 at 12:35 AM
This isn't about federal taxes so why are you talking about the TP? If the federal tax rates are too low, how come obama just made them permanent for 99.5% of americans? If you want to pay more taxes I am sure the IRS will accept a check from you at the end of the year.
john January 27, 2013 at 12:36 AM
Haha. The tobacco tax is one of the most regressive taxes there is.
john January 27, 2013 at 12:37 AM
Unions are on their way out. Public unions should be outlawed. A bunch of public employees bargaining with elected public officials on how they are going to divide up the taxpayers money.
John Merrett January 27, 2013 at 12:48 AM
Each day we all make choices in our lives as to how to budget money without over extending ourselves, ...but for some reason, we allow politicians to massively overspend and then we re-elect them - crazy.
doc holliday January 27, 2013 at 12:53 AM
Reform Welfare, that would save the state hundreds of millions of dollars.
John Merrett January 27, 2013 at 02:09 AM
They can start with the 19,000 who collect while living out of state.
Frank January 27, 2013 at 02:17 AM
The democrats on Beacon Hill are as clueless as the idiots that vote for them. WAKE UP Massachusetts!
MikeA January 27, 2013 at 02:19 AM
Mike - thanks for the kind personal remarks. Although I do hate paying for things I don't approve of (you got me there - and when I had kids in pre-school I paid for it), I love going to the Panera Bread and paying for everyone's soup and salad because we all know Panera Cares. I'm also not aware of any spending cuts - government budgets have been consistently rising - so if something's been cut - the money must be going somewhere. Mike - where's the money going? Government run day care is very wasteful IMHO - there's even evidence that the Head-Start program is ineffective in eventual education achievement A government rail system between Boston and Fall River or Worcester and Springfield or where ever? How does that make any financial sense? Can't buses handle that? If if the ridership is low, the bus can be used on another route. But once we're stuck with a money losing rail system the money continues to fly out the door. The only people who really want these trains are unions - who get hired during construction and run the system after its built. And the politicians who hand out the personal favors.
John Merrett January 27, 2013 at 02:55 AM
President Kennedy was a war hero, for low taxes, despised communists and was an NRA member - he would not even recognize the Democratic party today.
Steve Marino January 27, 2013 at 04:59 AM
Mike, what country do you live in?
Bob January 27, 2013 at 01:28 PM
These bleading heart Dummiecrats now are trying to put a bill in to make DOGS wear seat belts!!! When is this Taxaztion and stupid bans going to end in Messachusetts? Liberals have it all backwards. Look up the definition of a Liberal person. The Dummicraps put in more laws and bans and taxes than anyone else to take away our freedoms. And people who keep voting in these socialist are the ones who keep complaining.
Bob January 27, 2013 at 01:30 PM
Totally agree !!! It is because of the Social Democrats that are trying to change us over to a Socialistic Government.
Bob Samson January 27, 2013 at 01:40 PM
A spending binge is not a budget.
Frank January 27, 2013 at 02:23 PM
How do the voters go about getting a recall vote against Deval Patrick?
Carolyn Costain January 27, 2013 at 04:39 PM
It sounds more like a legal Mafia. Your forced to join to keep a job. You have to pay union dues for them to watch your back on the job. Talk bad about them on the job and they can kill your livelihood "your the first to go." They strong arm Government and business owners with the threat of a "strike" to get what they want. Sure sounds like what the Mafia was doing illegally.
gumshoe January 27, 2013 at 05:33 PM
A dollar more for smokes noooo!
Carol A Mazzetta January 27, 2013 at 06:26 PM
Politicians are the only people in the world who create problems and then campaign against them! Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have them? Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes? Tax his car, Tax his gas, Find other ways to tax his ass. When he screams and hollers; Then tax him some more, Tax him til He's good and sore. Then tax his coffin, Tax his grave, Tax the sod in which he's laid. When he's gone, Do not relax, It's time to apply The inheritance Tax. One hundred senators, 435 congressmen, one President, and nine Supreme Court justices equates to 545 human beings out of 300 million are directly, legally, morally and individually responsible for the domestic problems that plague this country.
Steve Marino January 27, 2013 at 11:16 PM
We're just getting what we voted for, what's the surprise? Stop voting for the party that spends us into bankruptcy and then raises our taxes instead of making cuts and we would not be in the mess we're in. The problem is with one party and always has been. It will take extreme hardship on the middle class before things change and this is what is happening now. We were all told by this party that they would not raise taxes on the middle class to get elected, and now that they are in control, they are laughing at the idiots that believed them and voted for them. So now we just live with the damage we have done to ourselves. Votes have consequences, so just bend over and take it!
Sean Ward January 28, 2013 at 02:08 PM
I agree. We put this crook back in office. This should be no surprise. This is the term the dems have been waiting for to unleash their full diabolical plan.
Saber Walsh January 28, 2013 at 02:30 PM
I was in a union for years. The strong-arming was amazing, the push to have rank-and-file follow their "comrades" was outrageous, and worst of all, they "lost" our pension money. Unions, like the ACLU, are like cornered animals right now. Ever see the thugs on Highland Avenue with the banner "Dr So-and-So -- Dangerous Malpractice?!? Go to website: www.dangerousdrsosandso...") So you go to find out who owns that website, and lo-and-behold, it's the IBEW Local in Boston. Extorsion R' Us. Enough is enough. If the money doesn't get spread across where we need it, we will be resurfacing the same roads we just resurfaced because that's what the contract called for.
John Merrett January 28, 2013 at 03:00 PM
If you're not in academia, healthcare or biotech, - move the hell out of Mass.
Bob January 28, 2013 at 10:00 PM
Your so right and these sheep are getting ready to be slaughtered. Idiots don't realize what they did by giving Obama and his cronies the power in a 2nd term. Glen Beck has been warning people for 4 yrs now with facts and proof of his agenda as well as the people he associates with and his past and his plans to change America to the United Socialist States of America.
Kathleen April 10, 2013 at 07:54 PM
People ought to check out how much the state's higher education system is paying people these days. Secretaries making close to $100K. Any funding going to higher ed isn't going to pay people back by way of lower tuition costs for the tax payers who are struggling to put their kids through college. It's a farce. Every administrator in the system will be getting another big fat raise. I didn't vote for this incompetent and arrogant jerk. Funny how many people did and now they are complaining...


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