Governor Charlie Baker on Tuesday promoted his plan to sharply increase taxes on real estate transfers to generate $1 billion for cities and towns to confront climate change, telling lawmakers the revenue would help “make important investments in cost-effective and data-driven solutions.”
The bill would raise the tax on real estate transfers by 50 percent, with revenue going toward infrastructure and climate resiliency programs.
“Our role is not only to protect our own communities, but to develop solutions and policy approaches that can be shared outside the borders of our Commonwealth,” Baker said in testimony before the Legislature’s Joint Committee on Revenue.
The Republican governor filed the measure as part of his state budget proposal in January and has said the tax increase could raise about $137 million a year toward a trust fund. The money would help cities and towns fund projects like modernizing public buildings or improving drainage.
Baker does not often testify on legislation he has filed. He last testified in May on a number of bills related to housing and criminal dangerousness.
Speaking in front of a packed hearing room, Baker thanked the Legislature as well as cities and towns across the state for their efforts to address climate change.
Environmental Affairs Secretary Kathleen Theoharides also testified Tuesday, saying Baker’s administration expects the demand for resources to mitigate climate change will increase in the coming years.
“We’ve heard loud and clear that communities want to be engaged in the work of designing the climate-resilient communities of tomorrow, and this partnership between state and local government gives us a way to do just that,” she testified.
The proposal would raise the transfer tax from $2 per $500 of value to $3 per $500 of value, which would tack on almost $1,200 in additional taxes to the sale of a $500,000 home. Sellers would take on those costs.
“This increase provides a sustainable, dedicated funding revenue stream that will be available to invest directly in local and state climate change work, year after year, without further appropriation,” Baker testified.
House Speaker Robert DeLeo, a Suffolk Democrat, has also proposed a bill aimed at building renewable-energy infrastructure and funding resiliency programs to combat climate change. Representative Thomas Golden filed the bill in the House.
Golden’s bill would draw the proposed $1 billion from state bonds and create a grant program in which cities and towns could apply for funds to go toward climate-conscious projects.
The bill also calls for allocating $295 million for energy infrastructure. The effort could include funding electric vehicles for municipal fleets and systems aimed at increasing the resiliency of the power grid.
Golden, a Lowell Democrat, said he was confident both parties could collaborate and agree on a single bill.
“Everybody — the governor, Speaker DeLeo — we are pushing to make this a priority,” he said. “The word of the day on Beacon Hill is always collaboration.”
Catherine Williams, a spokeswoman for DeLeo, wrote in an e-mail that the speaker’s office began conversations with Representative Mark Cusack — chairman of the Joint Committee on Revenue — after Baker’s testimony. Williams said it was the House’s understanding that the committee had remaining questions on the Legislature’s role in the bill.
“The House will continue to monitor the governor’s bill as those details are made available and as it goes through the Committee process,” Williams wrote.
After the hearing, Baker defended his plan by arguing money from an expendable trust can be used alongside other sources of funding, but declined to criticize Golden’s bill.
“First of all, good for him for stepping up and proposing this significant program,” Baker said. “In some respects, that’s important. It’s really important.”