The Massachusetts House of Representatives on Monday debated an alternative transportation financing bill one-fourth the size of what Gov. Deval Patrick has proposed.
Discussion about the dueling plans was expected to last into the evening.
Patrick introduced a measure to raise $2 billion through an increase in the state income tax by 1% to 6.25%. Some of the money would go to educational programs.
Senate President Therese Murray, D-Plymouth and House Speaker Robert DeLeo, D-Winthrop, meanwhile, want to raise $500 million through a 3-cent increase in the state's gasoline tax, to 24 cents, as well as increase tobacco taxes.
Massachusetts has not adjusted its gas tax in 21 years.
Rep. Brian Dempsey, D-Haverhill, urged lawmakers to downsize the proposal. He cited a Moody's Investors Service report last month that said based on fiscal 2013 estimates, Patrick's plan would increase the percentage of general fund revenue from personal income taxes to 72% from 58%, making the ratio the second highest of any state and "increasing Massachusetts' reliance on an already volatile revenue source."
"Moody's is throwing up a caution flag," Dempsey said. "It's time to look carefully at those numbers."
Moody's assigned an Aa1 rating to Massachusetts' $450 million sale last month of general obligation bonds, while Fitch Ratings and Standard & Poor's assigned AA-plus ratings.
Patrick's proposal hinges on a $400 million stabilization fund draw and $400 million in short-term borrowing such as revenue anticipation notes. "The short-term borrowing would be repaid across three fiscal years and is essentially a deficit financing, an unusual tool for a highly rated state with as strong a financial position as Massachusetts," Moody's said.
Murray and DeLeo say their plan would close the annual operating deficit of the Massachusetts Bay Transportation Authority, assist regional transit systems and phase out borrowing to pay state transportation employees.
The MBTA, which mostly services public transportation in Greater Boston, faces a $118 million gap for the next fiscal year. About 30% of its budget goes toward debt service, making it the most leveraged public transit agency in the country. Authority leaders said more state aid is necessary to avoid steep budget cuts and large fare increases. The "T," as the system is commonly known, hit riders with a 23% fare increase last year.
But Patrick said he would veto the measure. He met Monday morning with about 20 lawmakers urging them to defeat the Murray-DeLeo bill.
"While the plan makes substantial progress in closing the operating budgets for the MBTA and MassDOT [Massachusetts Department of Transportation], there is an alarming lack of support for fixing our roads, bridges and trains," Transportation Secretary Richard Davey said in a memo to Patrick. "At a time when federal funding is shrinking and after years of neglect for infrastructure across the state, this proposal offers another short-term Band-aid."
House Republicans, outnumbered 127 to 33, also introduced their own plan, which would forgo tax increases while repealing the Pacheco Law, which effectively prohibits contracting with private firms, and eliminating union-friendly project labor agreements.