House and Senate Transportation Plan Increases Gas, Cigarette Taxes

State House and Senate lawmakers have announced a joint transportation plan which would close an estimated five-year, $2.3 billion transportation budget gap through tax increases to cigarettes, gas and new taxes on business technologies.

The plan, which would create $500 million in new revenue, focuses on long-term financing for the state’s regional transit authorities and the state department of transportation, asks the MBTA and MassDOT to continue to hit revenue and savings targets, moves employees off of the capital budget for three years and fully funds the state ice and snow budget.

The plan was unveiled at a State House news conference Tuesday led by Massachusetts Speaker of the House Robert A. DeLeo and Senate President Therese Murray.

To provide new revenue to close the estimated five-year out gap there would be a 3-cent gas tax increase (which would be indexed to inflation), a $1 per-pack increase on cigarettes along with excise tax increases on cigars and smokeless tobacco, a new sales tax for businesses for software purchases, an elimination of the "utility" tax classification and a changing of the sourcing of the state's sales factor system, which would require out of state companies that sell products in state to pay more in taxes.

The proposal eliminates the need for MBTA fare increases and would overshoot the deficit by $300 million for the next five years, according to Sen. Stephen Brewer, chair of the Senate Committee on Ways and Means.

This plan differs from Gov. Deval Patrick’s 10-year, $13 billion transportation investment proposal released in January. Patrick’s plan involves tax increases to gas and income, fees for vehicle registrations along with fare, fee and toll increases and a new tolling mechanism.

A reporter asked if the House and Senate joint plan is a "vote of no confidence” for Patrick’s plan.

Murray said the group of legislators “considers the governor a partner on this.”

"He put out a 10-year vision," she said. "We’re just saying maybe 10 years is too ambitious right away."

DeLeo and Murrey made no mention of improvements to infrastructure, which Patrick has sought to address through his Accelerated Bridge Program and through his transportation plan.

Murray, when asked, insisted the state’s infrastructural needs will be addressed through the joint plan.

"I think it’s good that there is attention on the fact that there are infrastructure needs," she said. "Nobody wants to go over a bridge that’s going to fall down. We want to invest on our infrastructure we just have a different plan on how to do that."

Brewer was a bit harsher when it came to the governor’s plan.

"The governor has laid out a series of increases on registry fees and license applications, etc.," Brewer said. "You would see service cuts that are draconian.”

Patrick, in response to the new plan, released an emailed statement Tuesday afternoon: "I thank the House and Senate leadership for considering my plan and look forward to thoroughly reviewing theirs. My principles continue to be whether the financing is enough, dedicated and fair, and I will review the Legislature's proposal in that light."

Republicans are not impressed. State Sen. Bruce Tarr seemed to find the plan preferable to Patrick's plan but also criticized the plan for its tax increases and lack of reforms.

"It’s clear that transportation is a priority for our residents," Tarr said in a statement. "They expect, demand, and deserve a better transportation system. But we can’t achieve that goal by pursuing new revenues at the expense of needed reforms. If we are serious about having a full and open debate on transportation funding, a good way to start that debate would be to hold public hearings on this latest proposal so the voices of the people can be heard."

Republican State Rep. Jim Lyons expanded on that.

"There are significant areas of reform that need to be done that could give us plenty of money to provide the necessary dollars for transportation," Lyons said. "Based on numbers from the administration, we're providing health care benefits to people who are basically, as they refer to them, undocumented, to the sum of $275 million. We've had an explosion of $100,000 jobs under this admin... there are legal fees that are going uncollected, $234 million. Before we should raise any taxes, we have to reform state government and hold people accountable for the tax dollars of hard working families and struggling businesses."