Legislative leaders strike deal to raise taxes by $500 million

House and Senate leaders struck a deal Tuesday night to raise taxes by $500 million to fund short- and long-term investments in the state’s aging highway and transit system, directing enough new revenue to the MBTA to forestall immediate fare increases and providing what lawmakers consider to be enough new funding to facilitate future expansion projects.

The House and Senate could vote on the bill as early as Wednesday, when both branches will be in session.


The conference committee proposal, which is not subject to amendment by lawmakers, would raise the gas tax by 3 cents a gallon and tie future increases to inflation. The per-pack tax on cigarettes would increase by $1, and lawmakers hope to collect $161 million by applying the state’s 6.25 percent sales tax to computer system design services and $83 million from changes to the utility classification and sales sourcing for tax reporting.

The bill would require the Massachusetts Department of Transportation to come up with plans to toll additional roads, including border tolls, and appropriate $100,000 for an advisory council to help MassDOT develop a statewide asset management system.

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Legislative leaders believe the plan will provide enough additional financial support to shore up operations of the Massachusetts Bay Transportation Authority and MassDOT in the near term, while allowing for projects like the Green Line extension to Medford and the South Coast rail extension to move forward.

Though the tax on software services was included in both the House and Senate bills and was not subject to the most recent negotiations, Massachusetts Taxpayers Foundation President Michael Widmer blasted its inclusion in the bill, suggesting that lawmakers have failed to grasp its full impact.He also estimated that software design businesses will pay as much as $500 million in new taxes under the deal, far more than the $160 million lawmakers are expecting.

House Ways and Means chairman Brian Dempsey and Senate Ways and Means chairman Stephen Brewer were not available to comment on the accord, but the contours of the plan mirror those presented in April by House Speaker Robert A. DeLeo and Senate President Therese Murray, according to a summary obtained by State House News Service.


The six-member conference committee, asked to negotiate a compromise between the previously passed House and Senate versions of the bill, also accepted Senate-backed provisions that would direct up to $805 million in additional spending to transportation needs by 2018. The concession from the House could help mitigate an April threat from Governor Deval Patrick to veto the bill if it insufficiently funds transportation.

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