The Senate voted to restore $3 million for summer jobs for at-risk youth while rejecting proposed cuts in the state sales and income taxes.
By STEVE LeBLANC
BOSTON (AP) — The Massachusetts Senate began debate on its proposed $30.5 billion state budget Wednesday, voting to restore $3 million for summer jobs for at-risk youth while rejecting proposed cuts in the state sales and income taxes.
The Senate rejected another amendment that would have created a permanent sales tax holiday weekend. Sales tax holidays are popular with shoppers and merchants, but critics say the state can't always afford the loss of tax dollars.
During last year's sales tax holiday on August 14 and 15, the state lost an estimated $19.9 million in potential sales taxes, which instead went as savings for consumers.
Democratic leaders in the Senate say their spending plan for the fiscal year that begins July 1 protects the state's most vulnerable residents while spending slightly less than budgets proposed by the Massachusetts House of Representatives and Gov. Deval Patrick.
The Senate plan includes no new taxes and dips into the state's one-time savings accounts for $440 million to help close an estimated $1.9 billion spending gap without additional federal stimulus dollars.
Senators kept that no-new-taxes promise by rejecting a proposed increase on the excise tax on cigars, smoking tobacco and smokeless tobacco.
Lawmakers were equally reluctant to pass significant tax cuts, defeating separate proposals to cut both the state sales and income tax rates.
The sales tax amendment would have cut the rate from 6.25 percent to 5 percent. It was defeated on a 28-10 vote.
A second amendment that would have cut the income tax rate from 5.3 percent to 5 percent also failed on a 33-5 vote.
Stephen BrewerSenate Ways and Means Committee Chairman Stephen Brewer, D-Barre, said rolling back the income tax rate would result in a $116 million loss in state revenue. Brewer said that would be too big a fiscal hit. He said if revenues continue to come in faster than projected, they could trigger an automatic income tax rollback to 5.25 percent.
Republican lawmakers pointed to a ballot question approved by Massachusetts voters in 2000 that would have lowered the income tax rate to 5 percent. Lawmakers later froze it at 5.3 percent.
They said Democrats have repeatedly failed to honor the will of voters by refusing to drop the tax to 5 percent.
The Senate also rejected an amendment that would have established a six day holiday from the state meals tax. Senate Democrats said the state would lose between $60M and $86M in revenue in the new fiscal year if the measure had passed.
Senate Minority Leader Bruce Tarr, R-Gloucester, said the drying up of federal stimulus dollars reinforces the need for the state to tighten spending and work to spark up the Massachusetts economy. He compared stimulus money to a roller coaster ride.
"The federal stimulus money pulled that car up on the roller coaster and we got near the top, but we knew that at some point we'd be facing a downturn as that money was removed and we'd be accelerating at a very rapid level to a new valley," Tarr said.
Brewer said the state's reliance on one-time revenues will drop dramatically as a result of stimulus dollars drying up. In the current fiscal year, the state used $1.75 billion in one time funds.
Under the Senate plan, Brewer said, that will fall to $440 million in one-time funds.
"It is a testament to the financial straits facing the commonwealth," he said. "Simply put, the money is not there."
Youth advocates praised the Senate for restoring summer jobs money, saying it could help save 1,200 jobs. The $3 million is $1 million higher than the funding in the House version of the budget.
Senators are hoping to wrap up their budget debate on Thursday.
At that point a six-member House and Senate conference committee will be named to hammer out a compromise budget that will be sent back to both chambers for final approval before being sent to Patrick's desk.
The governor has 10 days to sign the budget and issue any vetoes.