HYANNIS — Though legislators voted Wednesday to repeal the technology sales tax, Department of Transportation officials said at a board of directors meeting that they were unconcerned with the repeal, for now.
That’s because money from the controversial tax on computer software services would probably not have contributed to MassDOT’s coffers until at least 2017.
“It does affect the package, to the tune of $26 million,” said Dana Levenson, MassDOT’s chief financial officer. “We’re hopeful there’s going to be a replacement.”
That lost revenue makes up just more than 3 percent of the yearly $805 million promised to the Transportation Department by 2018.
After the meeting, which was held at Barnstable Municipal Airport, Secretary of Transportation Richard A. Davey expanded on the reasons for the department’s apparent lack of immediate concern. As written by legislators, the revenue from the tech tax was meant to be added to the state’s pot of sales tax money. Each year, MassDOT either receives 1 percent of that total, or a sum of about $780 million, whichever amount is higher. For years, the lump sum has been larger than the 1 percent, and that probably will not change in the near future, Davey said.
“For the next three years, it’s probably not going to matter,” Davey said. “But it could be an issue in four to five years.”
The tax drew the ire of the state’s technology community, which stoked fears that the levy would threaten potential growth of the state’s innovative businesses. After state representatives voted Wednesday to repeal the tax, minority leader Bradley H. Jones said in a statement that the tax would have been “devastating.”
“A tax on one of the Commonwealth’s most vital and vibrant sectors should have never seen the light of day,” Jones said. “Beacon Hill Democrats should be ashamed that they green-lighted such a crippling revenue measure.”
The tech tax was part of a larger transportation finance package passed in July to infuse the state’s financially beleaguered Transportation Department with cash to make necessary repairs and invest in some big-budget projects for the future. That package included a 3-cent increase in the gas tax, and a $1 increase to the tax on tobacco products.
Additionally, legislation mandated that MassDOT seek to reopen tolls in the westernmost part of the state, which had been eliminated in 1996. On Wednesday, the board voted to approve that move: Starting Oct. 15, it will cost $2 to travel from exit 1 to exit 6 along the Massachusetts Turnpike, the same price as when the tolls were closed 17 years ago.
The board also approved $393 million for the first stage of the long-brewing Green Line extension project, a project that broke ground last December, even though the money to finance the project was not firmly in place. Now, that money that will probably come, at least in part, from the transportation finance package.
On Wednesday, Davey and Levenson painted a clearer picture of the process to decide how those funds will be spent.
“We didn’t get everything we wanted, but [legislators] did fund us to a pretty significant degree,” Levenson said. “Frankly, our biggest challenge is not so much that we got this money, but now that we have the money, how do we put it to work?”
Davey will offer a capital project spending plan at the October board meeting and hold several public meetings in the ensuing month, he said, with hope that the board will vote to approve the plan in November. He declined to reveal details about what he intends to include in his spending proposal, but said that much of the money will be spent on “the state of good repair”: MBTA and highway infrastructure that must be replaced, and projects like the Green Line extension that MassDOT is legally required to complete.
Additionally, as mandated by the July legislation, MassDOT will have to create an advisory council by the end of 2013, which will help MassDOT prioritize which construction projects to pursue and which to leave on the table for later.