Mass. Gov. doesn't know if new taxes needed

By Steve LeBlanc, Associated Press Writer  |  August 10, 2008

BOSTON --Gov. Deval Patrick has a message for Massachusetts taxpayers -- there aren't any tax hikes in the works, but if the state wants the schools, businesses and infrastructure it needs to compete in a global economy, new taxes can't be off-limits either.

Increasingly Patrick is walking a tightrope when it comes to taxes. He's not promoting more taxes, but he's also looking for ways to pay for an ambitious first term agenda.

It's a balancing act that is becoming ever more tenuous as that agenda bumps up against a sluggish Massachusetts economy.

"Over the next ten years we are going to need some additional revenue. Does that come in taxes? I don't know." Patrick said in an interview with The Associated Press. "Does it come from economic growth? That's the first prize, it seems to me.

"The point is we have to stop being afraid of talking about how to pay for the things we say we want," he said.

Among the things Patrick wants is a 10-year overhaul of the state's education system -- a plan that includes reducing the dropout rate and creating universal pre-kindergarten.

It's one of a series of big ticket initiatives the governor says will transform the state's economy and put Massachusetts on a strong path to the future.

To get there, Patrick has refused to echo the anti-tax line of Republican governors from William Weld to Mitt Romney. He's also signed the recent $1-per-pack increase in the cigarette tax and backed the closing of so-called business tax loopholes.

And while the anti-tax stances of former governors were sometimes a matter of interpretation -- Romney approved hundreds of millions in higher fees and fines -- Patrick openly raises the possibility of new taxes.

"I'm not going to be like some of my predecessors and say you can have that without paying for it. We're going to have to make some choices," Patrick said. "I don't buy the conventional politics that says you can never, ever mention taxes.

"We can deal with the fact that we hate taxes," he added. "People hate to pay taxes, but I think they hate broken roads and unplowed streets and failing schools even more."

Anti-tax activists say they're more baffled than irked.

"This is one governor who just doesn't connect the dots. I don't think he sees a connection between all the programs he wants and the needed revenues," said Barbara Anderson of Citizens for Limited Taxation. "He says we shouldn't be afraid about talking about taxes and then he doesn't talk about taxes."

Anderson said she's not worried, though. She doubts Democrats in the House and Senate would agree to any broad-based tax increases.

House lawmakers also nixed a plan by Patrick to license three resort style casinos -- a bid to bring in new revenue. Patrick hasn't said if he'll refile the bill next year.

Patrick's decision not to shut the door on taxes comes as Massachusetts is shedding its "Taxachusetts" label.

A new report by the nonpartisan Tax Foundation ranks Massachusetts in the middle of states -- 23rd -- when it comes to the overall state and local tax burden. Massachusetts taxpayers pay 9.5 percent of their income in state and local taxes, slightly below the national average of 9.7 percent, the study found.

In 1980, by contrast, Massachusetts was ranked with the second highest tax burden in the country behind New York.

Patrick said the nearly two-decade focus on lower taxes has been reflected in the state's failure to maintain critical infrastructure.

It's been estimated it will cost up to $19 billion over the next 20 years to fix the state's transportation system.

"We are trying to turn around a habit of neglect that goes back a long time here in state government," he said. "We're not going to be able to do that in a day or in a year, but we can start it and that's what I mean to do," he added.

Patrick's embrace of the recent cigarette tax and business tax "loophole" closings has critics charging that the state is slipping back into its Taxachusetts ways.

Critics also say that under Patrick the state is relying too heavily on borrowing -- including $1 billion, 10-year life sciences bill, a 10-year, $2.2 billion higher education bill and a a $3.5 billion transportation bond bill.

"He's determined to crank up spending and borrowing so much that he's going to turn around and ask for a very large tax increase," said Republican Party Chairman Peter Torkildsen. "Maybe when he worked for Texaco and Coca Cola, that's how he did things, but most people in Massachusetts don't have that kind of money."

Patrick said the borrowing plans are sound, and avoiding critical needs will only put the state in a deeper hole.

"We are going to have to make some investments in ourselves, in our infrastructure, and in our people in order to ensure our long-term prosperity," he said.

Patrick and Beacon Hill lawmakers may have a much bigger tax headache in November if Massachusetts voters approve a ballot question to eliminate the state income tax.

If the question passes, Massachusetts would be looking at a loss of 40 percent of its annual revenues -- a huge hit that would leave leaders scrambling to slash spending and find new revenues.

Patrick has called the question "a dumb idea."