House Speaker Robert DeLeo, whose pledge to oppose new taxes and fees this year undermined proposals by Gov. Deval Patrick to balance next year’s state budget, said Tuesday that he would also oppose any efforts to lower taxes, and he predicted that the “vast majority” of his colleagues would agree.
“I think we have to be realistic in finances we need in running the state. I would be opposed to any reduction,” DeLeo told reporters after addressing the Greater Boston Chamber of Commerce at the Westin Copley Hotel. “There are always amendments to increase taxes. There are some amendments maybe to decrease taxes. I think that right now it would be wrong for us to take up either one.”
House Republicans have traditionally pushed tax cuts during annual budget deliberations in April but have been unable to aggregate enough support from Democrats to advance their proposals.
DeLeo in January said his House colleagues would offer a state budget next month that lacks new taxes and fees. By indicating that rank-and-file members largely oppose tax code changes, DeLeo – whose office regularly takes the pulse of House members – offered his most telling assurance yet that next fiscal year will feature the same tax rates as the existing one, despite a groundswell from members of the House’s left flank in support of new revenue to stave off deep budget cuts that could be on the horizon.
In a $32.3 billion budget he released in January, Patrick proposed raising about $260 million in revenue, in part by adding a dollar-per-pack to the state cigarette tax and expanding it to non-traditional tobacco products. He also proposed eliminating a sales tax exemption on candy and soda, a proposal he estimated would raise tens of millions of dollars and also help address childhood obesity.
During a question-and-answer session at Tuesday morning’s event, Boston Foundation President Paul Grogan wondered why DeLeo would oppose a sales tax on candy and soda. “Is it really a new tax to remove the special tax status?” Grogan wondered.
“I’ve spoken to a lot of the folks maybe in the bottling industry, the soda industry,” DeLeo replied. “At the present time, it is my position that any type of new tax, I just don’t think right now is the right time to do that. We’re coming out of our economic problems … I think we’re moving in the right direction, and right now I feel like any discussion of a new tax would not be in the best interest of our fiscal economy.”
In 2009, at the nadir of the nation’s economic downturn, DeLeo led the push to raise the state sales tax by 25 percent, beating back resistance from opponents who warned of dire economic consequences to deliver a major infusion of new state tax dollars to support government spending and programs. Rep. Jay Kaufman (D-Lexington), co-chair of the Legislature’s revenue committee has resisted individual tax code changes in recent years, calling instead for a comprehensive tax code review that has yet to lead to any recommendations.
During his remarks to business leaders, DeLeo estimated that the House is working to close a budget deficit of between $500 million and $1 billion. “We’re going to have to make some serious cuts,” he said, adding that budget writers are looking at “some other means of creating income without raising taxes.” His only applause line of the morning came when he pledged to support a stable, predictable and transparent tax and regulatory scheme.
DeLeo’s budget chief, Rep. Brian Dempsey (D-Haverhill), told the News Service that a budget released in April by the House Ways and Means Committee will be balanced primarily with program cuts.
“I think that it’s going to be a challenging budget and there’ll be cuts across the board,” he said. “You really have to focus on the spending side of the equation. That means that we’re really drilling down into every single line item to determine the appropriate dollar amount that we can afford this particular year.”
Dempsey said he is against using the state’s $1.3 billion rainy day fund “aggressively” in the upcoming fiscal year, calling the governor’s proposal to drain $400 million from the account “a healthy number.”
“I think the challenge that we have is managing expectations,” he said. “There’s a sense because our unemployment numbers are coming down. There’s a sense because our revenues in February, for instance, were pretty good, that things are better than they appear. We’ve got to be careful.”
Asked about local aid to cities and towns – one of the largest most closely watched accounts – Dempsey said House and Senate leaders are considering declaring their intentions with a resolution “in the next week or two.” Cities and towns typically request that legislators indicate their intentions on local aid by mid-March to aid municipal leaders with their budget planning process.
During his remarks, DeLeo said he had begun to work on the “some concepts” of a jobs creation proposal with Dempsey and Economic Development Committee Co-chair Rep. Joseph Wagner (D-Chicopee). A component of that plan, he said, could be expansion of an infrastructure financing program called I-Cubed.
I-Cubed entails the state using its borrowing capacity to finance major developments – such as Fan Pier on the South Boston waterfront – based on guarantees by developers that the economic benefits of the projects will repay the cost of the bonds. If a developer fails to live up to its obligation, the city or town that houses the project would be on the hook to make up the shortfall.
State officials announced in October that Fan Pier would receive $50 million in I-Cubed funding. Since its 2006 inception, I-Cubed funding has been approved for one project other than Fan Pier: a $10 million investment for Assembly Square in Somerville. An application for I-Cubed funding for a movie studio in Plymouth was rejected, and backers of I-Cubed funding for Westwood Station withdrew their application. Administration officials said other projects have applied and are under review. Critics of the program have argued that it is designed to support Boston-based projects, rather than to benefit the entire state.
DeLeo also told business officials that the cost of electricity is “on our radar screen” and in the province of the Legislature’s Committee on Telecommunications, Utilities and Energy, co-chaired by Rep. John Keenan (D-Salem) and Sen. Benjamin Downing (D-Pittsfield).