BOSTON (CBS/AP) - The Massachusetts House and Senate have agreed on a plan to raise $500 million to fund the state's transportation system.
The plan announced Tuesday rejects a $1.9 billion revenue plan proposed by Gov. Deval Patrick that included a hike in the state income tax to pay not only for modernizing the state's transportation system, but also for new education initiatives.
The joint House-Senate transportation financing plan announced Tuesday calls for a three cent hike in the state gas tax.
WBZ NewsRadio 1030's Carl Stevens reports
Legislators believe it will raise $110 million this year. By January 2015 the gas tax would be indexed to inflation.
A $1 increase in the tax on tobacco, cigarettes, cigars and smokeless tobacco products is expected to raise another $165 million.
An expansion of the Computer Services Tax Code would bring in $161 million this year. This would be a modified version of the Governor's plan, which includes taxing downloaded music. The House and Senate plan would not tax this.
The Legislature's proposal would also raise another $46 million by eliminating the Utilities Tax. With deregulation this is tax outdated, and it would put utilities into another category.
Senate President Therese Murray and House Speaker Robert DeLeo both attended the formal announcement Tuesday morning. Speaker DeLeo acknowledged differences in approach compared to the governor, but said the end goal is the same.
"Although everyone has a different priority and solution, most people recognize that in order for our state to remain competitive, we need a transportation system that works," Speaker DeLeo said.
The plan claims to identify and solve the current transportation funding gap, require state agencies to meet reforms and provide adequate revenue to enable future capital investments.
Gov. Deval Patrick has already proposed a series of tax reforms he says will raise nearly $2 billion for transportation as well as new education initiatives. His plan calls for hiking the state income tax from 5.25 percent to 6.25 percent, while also lowering the sales tax from 6.25 percent to 4.5 percent.
A statement released by the governor on Tuesday saying he's looking forward to seeing the House and Senate's proposal.
"I thank the House and Senate leadership for considering my plan and look forward to thoroughly reviewing theirs," the statement read. "My principles continue to be whether the financing is enough, dedicated and fair, and I will review the Legislature's proposal in that light."
The Massachusetts Bay Transportation Authority has said it needs more than $100 million in new state funding to avoid another round of fare hikes or service cuts on the MBTA later this year.
The plan being unveiled on Tuesday did not address any of the governor's education proposals, and was specifically designed to address transportation.
According to the legislative summary, the goal of the tax changes was to generate "sustainable new revenues" that did not disproportionately affect one area of the state.
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