Claiming a full-throated liberal mandate for the final years of his tenure, Governor Deval Patrick unveiled a $34.8 billion budget proposal Wednesday that reveals even more tax hikes than he proposed last week, increases spending across state government, and includes no significant cuts.
Patrick’s annual blueprint represents his most aggressive attempt yet to shift the tax burden to middle and upper-income earners and pour money into the types of programs that first stirred him to seek the corner office in 2006.
Despite the spending increases spread across the budget, there were a few losers, notably a tax credit for the film industry, which would be capped under the governor’s plan. The vast majority of programs, however, would receive increases in spending, paid for in large part by a $1.9 billion tax hike and a $400 million withdrawal from the state’s reserve fund.
Patrick had already described plans to hike the income tax and slash the sales tax, but on Wednesday he revealed still further proposals to apply the sales tax to candy and soda, which are currently exempt, and to raise the state tax on cigarettes by $1, to $3.51 per package. He would also extend the nickel deposit on bottled beverages to include water and sports drinks.
The governor has pushed all of these proposals in previous years and been rejected by the Legislature. Aides said the money these added taxes would generate is included in the $1.9 billion tax package.
Patrick signaled Wednesday that he anticipated some objection to his budget and said he understood there would be compromise. Yet he made a forceful argument that his plan was not a product of political calculation, but a response to the state’s residents, who want better MBTA service and longer school days. He pointed to hundreds of Green Line commuters, who were stranded in the bitter cold Wednesday after a cable caught fire, as evidence of the need to upgrade services.
“This is not what we want to do up here on Beacon Hill,” he said. “This is what the people of the Commonwealth have asked for.”
Legislative leaders reacted cautiously, suggesting the plan may be scaled back when the House releases its version of the budget in April and the Senate follows up in May.
Brian Dempsey, a Haverhill Democrat who chairs the House budget committee, made no promises about what the House would do but sounded cautious about the governor’s plan.
Stephen Brewer, a Barre Democrat who leads the Senate budget committee, said that while he was not “taxphobic,” the governor was asking for a lot.
“He has certainly thrown the full monty here,” Brewer said.
Republicans were more critical. House minority leader Bradley H. Jones Jr., a North Reading Republican, blasted Patrick’s use of $400 million in rainy day funds.
“The administration’s method of reckless taxation as a means towards revenue, while tapping into the rainy day fund, is both shortsighted and extremely irresponsible,” Jones said.
Lawmakers expect to reach an agreement on a final budget deal with Patrick by July 1, when the next fiscal year begins.
At the heart of Patrick’s plan is his proposal, unveiled last week, to increase the income tax from 5.25 percent to 6.25 percent while cutting the sales tax from 6.25 percent to 4.5 percent. It would also double the personal income tax exemption, eliminate 44 income tax deductions — for T passes, college scholarships, and dependents under 12, among other items — and tie the gas tax to inflation, ensuring gradual increases. Three corporate tax breaks would be eliminated. MBTA fares, turnpike tolls, and Registry fees would increase periodically.
Wednesday’s budget proposal depends on spending $1.2 billion from the new tax package, which will take effect midway through the budget year. Even as he has sold the tax increase as targeted for education and transportation, Patrick revealed Wednesday that one-third of the new tax dollars would be used to bolster the rest of his budget, a practice his aides said would continue until July 2015.
The budget comes after five years of budget cuts and constrained spending. The shift to higher spending this year quieted social service and interest groups, which have complained about cuts in the past. As they examine the details of the budget this week, some may come forward to ask for more.
But almost every area would see an increase under Patrick’s plan, including local aid, education, health care, and human services.
Glen Shor, Patrick’s budget chief, said that while some programs have not been restored to their prerecession levels, the administration was ‘‘glad to stop the bleeding.”
The budget calls for an overall increase of $269 million for transportation and $553 million for education, from early childhood programs through college.
Some of the new money for transportation, about $24 million, would come from the $83 million officials expect to begin collecting for casino licensing fees.
Elementary and secondary schools would receive $226 million more, including an increase of at least $25 per student. Cities and towns would get another $31 million in local aid for basic services.
For all the programs that received additional money, Shor acknowledged, there would still be waiting lists for some programs, including early childhood and elder services.
The AARP said the governor’s budget would do little for the 1,000 seniors who are on waiting lists for home care. Some of them could be forced into costlier nursing homes, the AARP said.