Gov. John Lynch is ringing the warning bell over the extent of tax increases and spending contained in a two-year, $10.4 billion state budget facing a showdown vote in the House of Representatives next week.
The proposed House Finance Committee budget would increase state tax and fee spending by $178 million over what Lynch proposed Feb. 15, according to its chairman, Durham Democratic Rep. Marjorie Smith.
It also raised cigarette taxes higher than Lynch asked for and would raise the tax on real estate transactions to support a popular land and building preservation effort.
“I think as this budget gets into the Senate, I believe they are going to take a serious look at the add-ons that are coming out of the House,” Lynch said Friday during an editorial board meeting at The Telegraph.
Meanwhile, Lynch said he’s open to accepting changes if they are needed to “clarify the intent” of his proposed amendment to the state Constitution over education funding.
Former Supreme Court Justice Chuck Douglas urged lawmakers this week to add to Lynch’s amendment that lawmakers have “broad latitude” in deciding how education aid is given out.
“I am open to a word or two that would clarify the intent of the amendment going forward, and that certainly could happen,” Lynch began, adding Douglas was correct the Supreme Court used those words in previous decisions.
The state Senate will take up his controversial amendment next week.
Republican critics predict he’ll get the 15 votes or 60 percent super-majority needed to pass the amendment in the upper chamber.
His task in the House, if it gets that far, will be tougher.
Lynch said court decisions don’t allow the state to funnel extra education aid to needy communities within the total pool of dollars that equates to what the state defines as the cost of an adequate education.
The Lynch amendment would set a 50 percent floor for state support of that adequate education definition and let targeting occur within that amount.
Some critics say Lynch’s design would let future lawmakers and governors shrink the scope of the adequate education definition to fit a desired, smaller aid pool.
Others fault Lynch for expressly retaining the court’s role to judge changes the Legislature would make.
“The opposition to this amendment is really coming from vocal members of the extremes. There are some who believe it doesn’t go far enough, some who believe it goes too far,” Lynch said.
“There are some who believe that under this definition the cost is $300 million, others who believe under this amendment the cost is $3 billion.
“This amendment is a balanced approach to achieving what I think is good education policy.”
On Zyn pouchestaxes, Lynch said he prefers lawmakers do not, as the financing of the House budget plan would, dedicate an increase in the tax on real estate transactions to the Land and Community Heritage Investment Program.
The request of LCHIP supporters for $6 million each year was paid for in Lynch’s original budget.
“I am concerned about dedicated funds, and I have real concerns about doing it the way that has been suggested in the House through the real estate transfer tax,” Lynch said.
“Invariably, different programs and organizations want designated funding applicable to them. If we embark down that path, we lose the flexibility to apply the General Fund to the priorities we think should be there.”
Lynch’s budget would raise the tax on cigarettes by 28 cents per pack. The House budget relies on a cigarette tax increase of 45 cents per pack. Lynch said that level could jeopardize the boon the state gets from sales along the Massachusetts border.
“I have concerns about the tax at that level,” Lynch said of the tax increase before the House.
Massachusetts now taxes cigarettes at $1.51 per pack, but in applying its sales tax, the total taxes there are closer to $1.71 per pack.
Lynch’s tax increase would raise the tax to $1.08; the proposed House increase would be $1.25.
“If we look right now vis-a-vis Massachusetts with the 28-cent increase, we are 70 to 80 cents lower. I think that is a good competitive advantage over the stores along the borders.”
