Legislature OKs Transportation Compromise; Patrick Says He Can't Support

A compromise bill aimed at upgrading the state's aging and debt-ridden transportation system was advanced by Massachusetts lawmakers on Wednesday, but Gov. Deval Patrick announced he could not accept the measure in its current form.

The bill unveiled a day earlier by House and Senate negotiators would eliminate the MBTA's projected deficit for the fiscal year that starts Monday, forestalling any immediate fare hikes or service cuts.

It would also provide financing for long-term capital projects, including the extension of the Green Line and the expansion of commuter rail to the South Coast, and would end the practice of borrowing to pay the salaries of some transportation workers.

The bill calls for about $500 million in new taxes, including a 3 cent hike in the gasoline tax, to 24 cents per gallon, and a $1-per-pack increase in the cigarette tax. It would also impose the state's 6.25 percent sales tax on computer and software services, a move that has been sharply criticized by business leaders.

In a statement issued by his office Wednesday evening, Patrick said he could not support the bill because it fails to account for a revenue source that will not be available in the future. While the statement did not specify that source, it was an apparent reference to tolls on the western portion of the Massachusetts Turnpike that are scheduled to be taken down in 2017.

Without those tolls, the Patrick administration believes the $805 million in new transportation funding that the bill promises by fiscal year 2018 would not be achievable.

"I expect to return this bill with an amendment and look forward to working with the Legislature to enact it," Patrick said in the statement. The governor is in California this week visiting his new grandson.

The House approved the bill on a 105-47 vote one day after the compromise was unveiled by House and Senate negotiators. The Senate followed a short time later, approving the measure on a 34-6 vote.

Republicans who are heavily outnumbered in the House warned of the consequences of the new taxes.

"If you think it's OK to pass taxes without knowing exactly who they will impact or how they are going to impact the economy of Massachusetts, vote yes," House Minority Leader Brad Jones, R-North Reading, told his colleagues. "We (Republicans) don't think it's appropriate to do that."

The business-backed Massachusetts Taxpayers Foundation issued a statement, saying the state would have the highest tax rate in the nation on software services if the new tax is imposed.

"The tax takes clear aim at the state's innovation economy, which is the essence of the state's competitive edge and at the core of its economic future," the foundation said.

The group estimated that the tax would cost businesses $500 million, well above the $160 million estimate of Democratic leaders.

But supporters of the overall bill called it a responsible and reasonable approach to bridging the state's chronic transportation funding gap and addressing some of its most pressing infrastructure needs.

Rep. Brian Dempsey, D-Haverhill, chairman of the House Ways and Means Committee, said the bill calls for far less than the $1.9 billion in new taxes originally sought by Patrick for transportation and education improvements.

"We are still in a challenging economic climate," Dempsey said.

The bill also directs transportation officials to formulate a plan for placing tolls on highways near the borders of neighboring states, and immediately reinstate tolls for motorists traveling between Exits 1 and 6 on the western end of the turnpike.