Massachusetts House agrees to scrap property tax plan
BOSTON — House Democratic leaders agreed Monday to scrap a proposal that critics said could have raised property taxes by as much as $500 million.
The measure, which would have let cities and towns raise taxes above the limit set by Proposition 2½ to pay property tax abatements, came under fire from Gov. Deval Patrick, who said he would not sign the bill if the measure was included.
Patrick's top opponents in the race for governor, Republican Charles Baker and independent Timothy Cahill, also said they were against the plan.
Seth Gitell, a spokesman for House Speaker Robert DeLeo, said leaders decided to eliminate the provision from a municipal relief bill.
After news of the provision became public late last week, DeLeo's office issued a statement saying he did not support any weakening of Proposition 2½, but stopped short of opposing the measure.
Prop 2½ was approved by voters in 1980 and radically changed the way cities and towns raise taxes to pay for municipal services. It limits communities from raising property taxes by more than 2.5 percent a year without approval from voters.
Barbara Anderson, whose group Citizens for Limited Taxation helped push through Prop 2½, said lawmakers were trying to slip through the measure.
"They didn't think anyone would notice," Anderson said Monday at a press conference with Baker on the Statehouse steps. "We think we've gotten them to back down."
Baker said the measure got as far as it did because Democrats hold every statewide seat and overwhelming majorities in the House and Senate.
"The first impulse when times get tough is not to cut the budget ... but instead to push the tax button," he said.
Stanley Nacewicz, chief assessor in Attleboro and chairman of the board of assessors in Plainville, said if the measure was approved every taxpayer in Attleboro could have seen their tax rate climb by 15 cents for every $1,000.
"It would have definitely escalated the amount of taxation on an annual basis," said Nacewicz, who is also a Democratic candidate for the House.
The question of whether to give cities and towns more flexibility on property taxes comes amid a larger debate about when to raise or cut taxes.
Baker seized on the opportunity to renew his call for lower taxes.
Baker said if elected he would try to lower the state income tax rate from 5.3 percent to 5 percent. He said he'd also try to roll back the state sales tax rate from 6.25 to 5 percent.
"My goal would be to do it within my first term," he said. "It's obviously a function of a lot of moving parts."
He said lowering the two taxes would create a $1.4 billion budget hole. He said he would close that hole by eliminating 5,000 jobs in the executive branch, or about 10 percent of the total, and by "dramatically streamlining state government's operating model."
Baker stopped short of endorsing a proposed question for the November ballot that would lower the sales tax rate to 3 percent. Baker said that would make it virtually impossible for him to avoid local aid cuts.
Not everyone on Beacon Hill was pushing for lower taxes.
In his proposed $28.2 billion state budget plan, Patrick called for increasing taxes on candy and soda and smokeless tobacco.
House leaders said their version of the budget doesn't include any tax increases, although individual members are pushing for additional revenue.
Rep. Matthew Patrick is joining with about 10 other House members to push a plan to increase the tax on dividend and stock interest back to 12 percent. Lawmakers reduced that tax to the level of the state income tax rate, currently 5.3 percent, in the late 1990s.
Patrick said the move would bring in another $500 million for services. The proposal would include a $5,000 exemption for elderly residents.
"It's an appropriate tax," said Patrick, D-Falmouth. "It falls mainly on the wealthy."
Yawu Miller, director of ONE Massachusetts, an umbrella group that includes unions and social justice organization, said it's important not to abandon core social services or the needs of working families, particularly in the aftermath of a recession.
"We can't cut our way out of this situation that we are in now," he said. "We have to invest."
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