Legislature approves budget; Patrick threatens to veto sales tax

"Legislative leaders should quickly agree to final ethics legislation that includes the strongest provisions from the House, the Senate and my original bill. ... Without that, I will veto the sales tax [increase]," he said.

Under the $27.4 billion plan, communities could see up to a 15 percent cut in local aid, officials said.

Representative Charles Murphy, the chairman of House Ways and Means, introducing the bill in the House, said the cut was a victory because it wasn't deeper. "That's a win. In these times, that's a win," he said. "It's a victory, and it's something that we can take back to our communities."

The proposal would also eliminate 50 line items and funding for 800 local projects. A dozen of Registry of Motor Vehicles branches would also be closed.

At the same time, the budget calls for tax increases to make up for revenues lost due to the stumbling economy. Under the proposal, the sales tax would increase from 5 to 6.25 percent. Taxes on meals would rise by 1.25 percentage points and cities and towns would be allowed to hike the meals tax by an additional 0.75 percentage points.

The budget would also eliminate a tax exemption on alcohol sold in retail stores and allow communities to raise the local hotel tax by 2 percentage points.

Governor Patrick had proposed a 19-cent increase in the state gas tax as well as other smaller increases in his January budget. When the two chambers of the Legislature separately approved increases in the sales tax, he threatened to veto it, unless they passed ethics, transportation, and pension reforms.

The Legislature last week passed a pension reform bill and this week passed a transportation reform bill. Legislative leaders are expected to unveil an ethics reform bill soon.

Patrick commended the Legislature for passing the pension reform bill, which he has signed, and the transportation reform law, which he said, "seems to be a good faith effort at reforming our broken transportation system."

But he said, "For the Legislature to enact a 25 percent increase in the sales tax without first passing a strong ethics bill goes against the pledge that the Legislative leaders and I have made, and that the public expects us to keep, to deliver all three reforms before new revenue."