Facing an estimated $1.3 billion deficit, Gov. Deval Patrick called for increased funding for certain healthcare initiatives and public schools while scaling back some campaign promises in his budget proposal for the Fiscal Year 2008.
A looming deficit forced Patrick to cut back some promises he made late last year — including reducing property taxes and adding 1,000 new police officers to the commonwealth. The budget will boost Massachusetts’s police-grant program to provide 250 more officers for 2008, he said.
Though he did not completely deliver on all his campaign promises, Patrick called his $26.6 billion budget request “balanced and responsible,” guaranteeing some of the measures he originally proposed during his campaign.
Calling for a record $3.7 billion investment in public education, Patrick said Massachusetts would only be able to provide a “modest increase” in higher education funding.
The system would find other ways to save money on the public school system, he said, though he did not elaborate. He said his office will file another legislative proposal within a few months specifically addressing possible savings in the state college system.
Board of Higher Education spokeswoman Eileen O’Connor said her independent agency had requested a 7 percent increase in funding when expectations for Patrick’s budget were higher — before it became apparent the commonwealth was facing a deficit this fiscal year.
“The Board of Higher Education recognizes the current fiscal climate,” as well as the many other interest groups competing for funding, she said in an email.
Patrick noted the often-discussed high cost of living that prompts young professionals to move to other states, which saps the economy of its labor force and innovation, he said.
Patrick said Massachusetts is the only state in the nation to have lost population in both of the past two years.
“A very important part of our future is walking right out the door,” he said.
A top healthcare priority in Patrick’s proposal is making free for girls ages 9 to 18 a new vaccine recently approved for immunizing them against human pappillomavirus, which can cause cervical cancer. The governor’s pledged increases come at the expense of cuts in parks maintenance and low-income housing programs.
Patrick also called for the elimination of several corporate tax “loopholes,” saying the move would make the commonwealth’s business climate fairer and bring in new revenue.
The loophole fix, he said, would bring the most revenue by stopping corporations from declaring their income in one state while maintaining operations and making profits in another, avoiding higher state taxes.
Corporations would have to combine their state and federal tax reporting under Patrick’s new method.
“Believe me, I know,” he said, “because I used to hire people in my previous life, people just like this, to do just that.”
The move would push more jobs out of Massachusetts, according to the Boston Chamber of Commerce.
“We have increased corporate taxes by more than $800 million annually over the past four years, while competitor states are working to make their corporate tax structures more competitive,” said Chamber Chief Executive Officer Paul Guzzi in a press release provided to The Daily Free Press. “And, we’re down 140,000 jobs since 2001.”
Deirdre Cummings, legislative director of the Massachusetts Public Interest Group, which has lobbied extensively for closing the loophole, said the new tax rules would bring extra revenue but still make large corporations pay their share of state taxes.
“It’s a good way to level the playing field between [Massachusetts] businesses and multi-state businesses,” she said.
Massachusetts is losing out to other states that currently collect a similar tax, she said.
“It’s a trend that has been happening state by state as people realize [corporations] are just moving to Delaware [to avoid paying taxes],” she said. “Every state is figuring out that they don’t want to be the last state with this loophole.”
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