Appearing in town yesterday, House Speaker Robert DeLeo repeated that "everything is on the table" for possible tax increases in the state budget, but said an income tax hike is not politically realistic, and that support for meals and hotel room taxes is "up in the air."
The Winthrop Democrat also said that after the House finishes its budget, it would likely take up a "municipal relief package" in May.
The House Ways and Means Committee last week unveiled a $27.4 billion state budget proposal for fiscal 2010 that includes no tax increases but does have deep cuts, including to local aid, that would bring more financial pain to struggling cities and towns.
As a former Winthrop selectman, DeLeo said he understands how state cuts affect communities. The municipal relief package is an opportunity, "hopefully, to bring some relief back to the cities and towns," he said, addressing about 70 people at the Dedham Rotary Club's weekly luncheon at the Dedham Hilton.
DeLeo said the House, beginning Monday, will have a revenue and tax discussion and debate as it considers budget changes. DeLeo said he hopes "that if we do have some revenues, then maybe we start to backfill, maybe, some of the cuts that we made in our budget."
"But let me be perfectly clear: No matter what we raise in revenue, there is no possible way that we're going to be able to make up in taxes (an approximately) $3 billion deficit. There's no way that we're going to be able to tax our way out of the situation," DeLeo said.
The speaker appeared in town as a gesture to state Rep. Paul McMurtry, a second-term legislator who represents Dedham, Westwood, and part of Walpole. McMurtry welcomed elected officials from those towns and Norfolk County yesterday.
"I'm very grateful for you for making the time in your extremely busy schedule to come to the district I'm proud to represent, and to address members and friends of the Dedham Rotary Club," he told DeLeo, who is also a Rotarian.
DeLeo referred to McMurtry's persistence in getting a home-rule petition for a Westwood Station beer and wine license passed in the House last year despite months of opposition from other lawmakers. He said McMurtry was "there for each and every step of the way to make sure that, finally, that became a reality. I think that gives you a good idea of the type of gentleman he is. And whether I served as chairman of Ways and Means, or now as speaker of the House, one of the guys that I respect quite a bit is Paul McMurtry."
DeLeo became speaker in late January after vying with Norwood Democrat John Rogers for the top post in the House. He has represented Winthrop and a portion of Revere since 1991.
He touted bills for ethics, pension, and transportation reform that have passed the House during his first few months in charge. (For more on those bills, see video excerpts of DeLeo's speech at www.dailynewstranscript.com.)
DeLeo addressed the state budget situation in the greatest depth. He said the spending plan released by Ways and Means Chairman Charles Murphy, D-Burlington, "was very stark, and it was real."
He noted, however, that it does not include any new taxes, or use money from the state rainy day fund. DeLeo said one of his proudest accomplishments as the Ways and Means chairman was building up that fund to $2.5 billion. This fiscal year, that fund is on track to dwindle to $1 billion.
Saying that the state's current fiscal condition could last for multiple years, DeLeo signaled his opposition to spending any more from the fund. "We have to make sure that for real major contingencies that we have that rainy day fund set aside," he said.
Dedham's Town Administrator, William Keegan asked if the state is going to make any more cuts in local aid during the remainder of this fiscal year as revenues continue to drop. DeLeo said the state might need to make another $200 million to $500 million in budget cuts this fiscal year, but he did not foresee any further local aid cuts among those.
DeLeo said he sees strong support for a telecom tax as part of a municipal relief package. But he does not see the same support for more meal and hotel taxes, he added.
Gov. Deval Patrick has proposed four small-scale tax increases, including the latter two options.
But as speaker, DeLeo said, "I'm not sure if I could get members to vote for four separate and distinct taxes."
"I think the feeling of the membership is to cut. We'll see how that changes on Monday with some of the amendments," DeLeo said. "But politically speaking, the income taxes, (and) a lot of those smaller taxes - which could equal the same amount of money - I think are a lot more difficult to sell than more of a broad-based tax."
That seemingly left one such broad tax - the sales tax - as the most feasible option. Within the Legislature, momentum has built recently to increase the sales tax from 5 percent to at least 6 percent, and DeLeo said earlier this week he is "open-minded" on such a move.
Asked after his speech if he foresees lessening towns' pain primarily through a sales tax increase and the municipal relief package, DeLeo said, "There's going to be a couple of ways. One, we have to see what happens with the tax package on Monday. I'm not trying to be cute or coy, but right now it really is flux."
He said a number of House members want to keep the budget as is, while some are talking about sales and income taxes.
"What I'm hoping is on Monday once we do have the vote, then that will provide us some additional revenue. And if we do get that additional revenue, I think part of that will be put back into the cities and towns right there," he said.
A few weeks later after that, the relief package will be discussed, DeLeo added.
Daily News staff writer Edward B. Colby can be reached at 781-433-8336 or ecolby@cnc.com.
