Patrick aide won't confirm or deny income tax hike report

BOSTON (State House News Service) - Gov. Deval Patrick’s press secretary on Wednesday morning declined to confirm or deny a report that Patrick plans to recommend an income tax increase Wednesday night during his State of the State address.

Without identifying his preferred new funding source, Patrick on Monday called for major revenue increases to finance state transportation infrastructure investments and on Tuesday outlined his plans for massive new public expenditures in education.

In addition to authorizing local option taxes and raising and lowering some business taxes, Patrick approved a sales tax increase from 5 percent to 6.25 percent in 2009 and has unsuccessfully tried to raise the gas tax and the cigarette tax. Patrick has also executed spending cuts since his first election in 2006 as the recession and weak recovery have impeded his plans for job creation and public sector investments.

After calling for up to $1 billion in new revenues Monday to address transportation needs, Patrick on Tuesday said he’d seek a $550 million investment in education in fiscal 2014 that would ramp up to $1 billion in new spending by 2017.

The Patrick administration and House and Senate budget writers on Monday agreed to a revenue estimate for fiscal 2014 reflecting modest 3.9 percent growth, an $838 million increase from this fiscal year's revised estimate that will largely be consumed by health care, fixed costs and caseload-driven programs.

Patrick declined Tuesday to elaborate on his revenue proposal, only acknowledging that "revenue" means tax and fee increases to pay for programs he believes will "accelerate" economic growth.

The income tax is the only broad-based revenue generator larger than the sales tax and the Patrick administration, which is executing a $540 million midyear budget-balancing plan in the face of overly optimistic tax revenue projections, in late 2012 ruled that economic growth triggers in Massachusetts had not been tripped to require a statutory reduction in the income tax rate from 5.25 percent to 5.2 percent.

Patrick indicated Tuesday that he does not believe economic trends alone should not dictate the state’s approach to raising revenue.

"I think the economy is improving and we're going to be stronger if we take action. We can't treat the economy like the weather. We don't have to stand around and wait for it, wait for it to happen to us, wait for someone to forecast what's going to happen. We can build our own future and we can create our own growth," Patrick said on Tuesday.

Massachusetts voters in 2000 approved a law calling for the income tax rate to be lowered to 5 percent. The rate was reduced but frozen at 5.3 percent in 2002 by the Democrat-controlled Legislature as part of a larger tax plan to balance the state budget.

Citing a “person with direct knowledge of the governor’s plan,” the Boston Globe reported Wednesday that Patrick is set to propose an income tax hike as part of a multi-pronged plan to raise revenue. Patrick press secretary Kim Haberlin declined to confirm or deny those plans.

According to his aides, Patrick has met with business, labor, grassroots and legislative leaders as he developed and finalized his plan.

“It’s never an easy time to talk about raising taxes. The Governor feels the realities of this economy and knows that families are making hard choices every day. He also knows the best long-term solution is more economic opportunity and easier access to education. He is committed to a solution that is dedicated, comprehensive and competitive - - and being competitive means being fair,” Jesse Mermell, the governor's new communications director, said in a statement on Tuesday.

(Matt Murphy contributed reporting)