Dempsey: 'Highly Unlikely' House Will Go Above $500M On New Taxes

The House’s budget chief on Friday appeared to dash any hopes liberal Democrats and transportation activists might have of forcing legislative leaders back to the negotiating table with Gov. Deval Patrick over tax hikes, indicating $500 million was as high as House leaders are willing to go.

Making a late afternoon impromptu visit to the State House press gallery, Ways and Means Committee Chairman Rep. Brian Dempsey said failure to pass the House and Senate leadership proposal dedicating $500 million in new revenue toward transportation would risk higher near-term MBTA fares and service cuts, jeopardize a $100 million increase in local road funding, and kill any discussion of expansion projects.

"We have looked at this and worked it and getting to a higher number does not appear at all likely and I think putting the $500 (million) at risk means it would be hard for us to go back at this this year, certainly in time for the MBTA to have additional revenues to avoid fare increases and service reductions," Dempsey told reporters during a short discussion.

Addressing what he described as “speculation” about the level of support for the leadership plan in the House and Senate, Dempsey said lawmakers are eager to move on from the transportation financing debate and leadership is "unlikely" to reengage in negotiations with members or the governor over a bigger revenue package.

The comments seemed directed at Democrats supportive of components of Patrick’s $1.9 billion new revenue plan for education and transportation that might be considering voting against the smaller package, or mustering the votes to sustain a veto, in an effort to pass a larger tax bill than the one favored by legislative leaders.

“We are optimistic and hopeful that the support is there to pass the bill as proposed. We only point out that it’s going to be very, very challenging to do anything to get to a higher number so if folks are thinking about perhaps not supporting $500 (million) with the idea that that will put everyone back at the table, highly unlikely that that’s going to happen,” Dempsey said.

The legislative leadership’s plan includes nearly a quarter billion dollars of new taxes on businesses with the remainder raised by taxes on tobacco and gas. Patrick wants to raise the income tax, lower the sales tax and enact a long menu of other tax code changes that he says will result in wealthier individuals paying the bulk of new taxes.

Patrick on Thursday vowed to veto the plan put forward by House Speaker Robert DeLeo and Senate President Therese Murray, calling it too small to address the state's needs, saying it hits middle class taxpayers, and labeling it a "pretend fix" to a problem of underfunded infrastructure that has been neglected for years.

In a letter to supporters emailed through his political action committee on Friday, Patrick urged the public to call their legislators and weigh in whether they support his plan or theirs.

"I don’t see how it’s either good policy or good politics to raise taxes on everybody without being able to show that you’re delivering something at home. By proposing a pretend solution rather than a real one, the Legislature is kicking the can down the road again. That is a slow-growth or a no-growth choice. It does not bear our generational responsibility. And I will not support it," he wrote in the email.

Dempsey said the Democratic leadership plan was "sensitive to the economic climate, sensitive to the middle class and one that is well balanced and provides for significant funding for transportation." He added that it would be "very, very challenging" to get support for additional revenue increases above $500 million. Asked if the challenge was a political one, Dempsey said, "Absolutely. People are very sensitive to the economic climate."

Patrick on Thursday and again on Friday said he remained open to resuming negotiations with House and Senate leaders, and supported the idea first pushed last week by Republicans of public hearings on the tax plan. House members rejected the call for a public hearing on the bill this week as they teed up the tax plan for debate Monday.

Dempsey said the bill before the House is a "reasonable" plan that will provide for some expansion in transit services once employees are moved off the capital budget. "If that is not achieved next week, we have other matters to move on to, which is the budget," he said.

The House Ways and Means Committee plans to release its full fiscal 2014 budget plan on Wednesday.

A Patrick spokeswoman said in a statement that Patrick remains open to working with lawmakers on transportation.

"The Governor respects the Speaker’s prerogative to pass this bill in whatever way he feels necessary, but has made clear that he cannot and will not support a bill that doesn’t meet the Commonwealth’s basic transportation and education needs, let alone makes critical investments the future,"said Patrick spokeswoman Heather Johnson. “He remains open to working with the Legislature to find a long-term solution."

After Patrick's criticism Thursday of the plan offered by legislative leaders, which Patrick called "not serious," Dempsey and Senate budget chief Stephen Brewer wrote a letter (PDF) to lawmakers Friday defending their plan and DeLeo's office disseminated a "fact versus fiction" memo (PDF) disputing claims that their plan locks the state into transportation system underfunding, will not fund road and maintenance projects, and will lead to fare hikes.

In the letter, Dempsey and Brewer apushed back against criticism that their plan will leave infrastructure neglected and will jeopardize the $1.3 billion Green Line extension.

"Our plan funds MassDOT’s and the MBTA’s existing long-term capital plans," Dempsey and Brewer wrote. "These plans include the Green Line extension and new Red and Orange line subway cars. House 1 would implement a major expansion of the transportation system without first addressing current unsound fiscal practices."

Dempsey and Brewer concluded, "The Governor's plan asks the taxpayer to carry the risk of his vision. Our proposal addresses critical infrastructure needs without over burdening taxpayers, who are still struggling to meet their financial needs as we slowly exit the recession."

Taking sides in the dispute Friday, the Greater Boston Chamber of Commerce came out in favor of the plan offered by legislative leaders. "The bill proposed by legislative leaders this week represents a serious and comprehensive approach to our transportation problems," Chamber President Paul Guzzi said in a statement. "It addresses public transit needs across the state, puts the transportation system on a sound financial footing, and sets the stage for important reforms that should accompany new funding and for future capital investment projects."

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