Senate passes a budget

-Faced with a precipitous decline in state tax collections and the stark reality of building an operating plan on $1.9 billion less than the governor’s proposal, the Massachusetts Senate on Thursday passed a $27.35 billion budget that balances the urgent need for additional revenues with the responsibility to minimize the impact on taxpayers.

After rejecting a host of proposed tax increases including a regressive gas tax, an additional tax on income, and other targeted tax proposals the Senate approved a sales tax increase from 5 percent to 6.25 percent that will generate $633 million in new revenues for fiscal year 2010 and help restore core services and programs for the citizens of the Commonwealth. Even at 6.25 percent, 30 other states would have a higher aggregate state sales tax rate than Massachusetts. “We made the tough decisions,”

Senate President Therese Murray (D-Plymouth) said. “This is a responsible, bare bones budget that raises necessary revenue for the state and offers relief to our cities and towns. There is no perfect solution to this economic crisis, but a sales tax is the fairest way to go because of built-in exemptions for food, clothing up to $175, prescription drugs, utilities, gasoline and other necessities that are especially important to the working poor and middle class. We’re all going to feel the pain, but we’ll get through this if we work together.”

Sales tax revenues will help restore important services that were previously cut, including $10 million for Prescription Advantage, $6.5 million for youth violence prevention grants and $4 million for universal pre-K. The Senate budget also generates approximately $80 million from the removal of the alcohol sales tax exemption. That money will be used to restore safety-net services such as substance abuse programs, community health centers, domestic violence prevention, elder care and early intervention programming.

“These are incredibly challenging economic times, and this budget reflects the fiscal reality of the Commonwealth,” said Senator Steven Panagiotakos (D-Lowell), chairman of the Senate Committee on Ways and Means. “We made difficult decisions, cut many worthwhile programs and services, and did not include earmarks. However, even with these challenges, we worked to preserve critical safety net programs and services, and give communities the tools they need to help weather the storm. Now is the time to balance fiscal discipline with essential programs and services, and this budget accomplishes that goal.”

An important part of the Senate budget is a municipal relief package that allows cities and towns to raise additional revenue locally to maintain essential services provided by schools, police and fire departments. The plan allows municipalities to adopt a local option meals tax of 2 percent and also a 2 percent lodging tax that combined could generate nearly $200 million for cities and towns.

The municipal package also eliminates the property tax exemption on poles and wires located on public property and public rights-of-way that could generate another $26 million locally. In addition to the revenue options, the municipal relief plan includes important reforms that give cities and towns the ability to hold down health care costs and develop cost-cutting agreements to share resources with neighboring communities.

The Senate budget also contains a proposal to help sustain and improve the state transportation system as major transportation reform legislation is expected to emerge soon from a Legislative conference committee.

The proposal establishes the Transportation Investment Fund that will receive $275 million annually for use by transportation authorities and agencies in all areas of the Commonwealth. This transfer will avoid the need for any devastating increases to the Turnpike tolls, MBTA fares or the gas tax in fiscal year 2010.

The Senate also passed budget amendments to restrict the use of cell phones while operating motor vehicles; to provide $35 million for local aid and $10 million for the Quinn Bill; to pull back the so-called Pacheco Law restrictions on private contractors; and to allow Massachusetts to participate in the popular multi-state Powerball lottery game which would bring in additional money for cities and towns.

The budget will now go to conference committee with the House of Representatives. The new fiscal year begins July 1.

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