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Patrick's Budget: Can The 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 increases 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 at the pump; the sales tax exemption for soda and candy would be eliminated; 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.

moe howard January 26, 2013 at 01:56 PM
Right on Johnny
dskelley2727@aol.com January 26, 2013 at 02:04 PM
What people move from MA to Texas!
Michael Fleming January 26, 2013 at 02:28 PM
Learning to live within a budget is difficult and requires discipline. It means saying yes to some things and no to others. If our state and federal government cannot muster up the discipline required, individuals will find it even harder. We must learn to live within our means if we want this ship of state to remain afloat. When a ship sinks, it affects everyone, first class and steerage alike.
Jerry January 26, 2013 at 04:35 PM
Deval Patrick has been ruining Massachusetts since he was first elected. Same with the clown in the White House. I can only imagine what our defecit will be in four years. How was that 155 million dollar party to swear him in?
Joshua DeCosta January 26, 2013 at 05:45 PM
If its for transportation, education and infrastructure relating to those. I'm all for it
Aron Levy January 26, 2013 at 06:25 PM
Hear, hear!
Aron Levy January 26, 2013 at 06:29 PM
Maybe it is because We the People know austerity DOES NOT WORK. In order to beat a down economy, you have to spend your way out of it. It worked for FDR, and it is working for Barack Obama and Deval Patrick. If you hate it so much, there are cheap flights to Utah to be had.
Lee Adams January 27, 2013 at 01:33 AM
Why don't our Political Leaders give up their Pensions and have 401K like the rest of us. That should free up some money.
paul disidoro January 27, 2013 at 01:53 AM
theres no hope for this state well be like california in a few years
paul disidoro January 27, 2013 at 01:57 AM
you really think that property taxes will be lowered, remember the lottery they stole that money that was suppose to go to lower property taxes
x January 27, 2013 at 02:09 AM
Paul, It is worse yet. Massachusetts will be like Greece. After all, where did most Greek expats escape to in the 50s, through 70s? They knew about 'leaders' like Obama before, he ascended to The Throne. (It's a joke, they came here for good reason and knew the difference.) Reverend E.Raleigh Pimperton III
David Chase January 27, 2013 at 03:20 AM
We could say "yes" to tax increases and "no" to tax cuts. That works, too. There's more than one way to balance the books. Taxes were higher when we moved here, and it was no big deal, and the economy was healthy then, too.
Michael Fleming January 27, 2013 at 03:45 AM
David Chase- More likely, it is a combination of both tax increases and spending cuts that will prove to be the best route. But we cannot save the entitlements at the current rate of spending. Just about everyone agrees that the biggest drivers of our deficits are entitlements. Not defense spending, not corporate welfare, but Medicare, Medicaid, and social security. Simply adjusting the the formula that the cost of living raises for SS is calculated at will save billions, something Obama agreed to 2 years ago, is no longer on the table. Why? A simple, painless, minor adjustment, allows the program to extend its life 6-10 years further than currently projected, but Obama and the LEFT side of congress refuses to even consider it. They are for NO adjustments, at all. That is not compromise, that is not reaching across the aisle, that is the politics of destruction. This countries destruction. David...no spending cuts, then there is no way out of this mess. We cannot pay for the current spending rates with tax increases alone. Once you get that through your head, you will start to see the dilemma that Obama is putting this country through.
M C Stringfellow January 27, 2013 at 01:24 PM
What really worked for FDR was WWII. Up until then, it was create and spend on programs that were truly needed to help the poor, but, really did not help the economy. WWII saved his day. You cannot spend your way out of a recession without a little belt tightening. In this case a LOT.
Dan Murphy January 27, 2013 at 10:26 PM
I find it interesting that the governor proposes raising the income tax, but lowering the sales tax. State and municipal retirees pay NO State income taxes, so they won't be sharing in the extra burden, but retirees from the private sector will. This this sound fair to you?
NWBL January 28, 2013 at 02:45 AM
To say nothing of the fact that Florida has no estate tax either, Steven.
Aron Levy January 29, 2013 at 05:25 AM
MC Stringfellow look up the little depression of 1936(?), then get back to me. Austerity was tried. It failed miserably. The economy was nearly completely healed by late 1941. The War simply accelerated growth.
Michael Fleming January 29, 2013 at 05:30 PM
Aron- I think the word "austerity" is being bandied about with little definition being included. Austerity is being used by the left to describe any spending cuts, which in fact is not correct. Like anything, it's all a matter of degree. The right wants to deflect the rate of increases to try to bend the spending spree curve down. So instead of, say, an annual and automatic increase of spending of 4%, they look to reduce that increase to 2%. Still an increase, but just not so much of one. That hardly fits the definition of "austerity". Real austerity is when government goes on a serious diet, cutting and slashing programs and reducing spending by a large degree. Greece is under pressure to make austerity budgeting occur under the terms of their EU bailout packages. That is not happening in the US. Yet. But the left characterizes ANY budgetary discipline as extreme and comprehensive. But if we don't show SOME fiscal restraint, our credit ratings will be downgraded, and it will be entirely the Democrats intransigence about cutting spending. That will occur soon. The right has already compromised of raising revenue. Now where is the good faith of cutting spending promised by the left? Nowhere to be found.
x January 29, 2013 at 05:33 PM
Thank you Michael. Reverend E. Raleigh Pimperton III
Steven Cavaretta January 29, 2013 at 07:02 PM
A mere three minute lag between Micheal's epistle and the Reverend's amen. Hardly enough time to type a thank you and hit return...unless of course Michael and the Reverend are the Holy Duality ;-0
Michael Fleming January 29, 2013 at 08:46 PM
Hey Rev! This guy thinks we are the same blogger! Some solid thinking there, huh?
Steven Cavaretta January 29, 2013 at 09:10 PM
Cue the other half of the Holy Duality...wait for it...wait for it...
Michael Fleming January 29, 2013 at 09:40 PM
Yeah, Mike, that's is pretty silly! Boy, is he off the mark! Did I mention how witty, intelligent, erudite and charming you are as well? -Reverend Pimperton (oops, I forgot to switch accounts! Now the cat is out of the bag!)
Steven Cavaretta January 29, 2013 at 09:41 PM
Pretty thin there Duality, perhaps you should morph into a Trinity...
Michael Fleming January 29, 2013 at 10:08 PM
Thanks for recognizing my near divinity status. It's always nice to be recognized for your hard work and being right 100% of the time. Go and sin no more....
Steven Cavaretta January 29, 2013 at 10:51 PM
The Reverend's silence is deafening...
Karl February 27, 2013 at 03:29 AM
Communites will not lower their property taxes. They will just spend more. Count on it.
Karl February 27, 2013 at 03:33 AM
Sure, just like the gas tax was for road maintenance. How can you believe anything these people say? We already spend plenty on education. Money is not the problem.
Karl February 27, 2013 at 03:38 AM
Fair? No. Typical, yes. All through the recession , while those of us in the DPS were getting no raises, pay cuts, or just laid off, those in the public sector still got raises, some even got new paid holidays if you can believe that. They didn't really share in the pain before so I wouldn't expect they would for something like this either.
M C Stringfellow February 27, 2013 at 01:02 PM
Aron, I am sorry I did not get back to you earlier, but Murphy;'s law came for a visit. A question, where did you get your information? I would like to read the same along with another book on The Depression. Every one gets a slant from the material they read. One source is not enough. then, I will get back to you on FDR and the Depression and the economy. Have a great day.

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