Gov. Deval Patrick proposed raising income taxes in Massachusetts, while lowering the sales tax and dedicating all its proceeds to a public works fund to benefit transportation.
In his annual state of the state address to the legislature in Boston on Wednesday night, Patrick said he wants to raise income taxes to 6.25% from 5.25%. The sales tax, under his plan, would drop to 4.5% from 6.25%.
The income-tax hike, he said, would benefit educational funding.
"There is no good time to raise taxes. … This is the point I knew in this speech when silence would fall over the hall," Patrick told lawmakers.
Patrick, a Democrat beginning his seventh year in office, said sales-tax receipts would go to a lockbox account for transportation - both existing responsibilities and expansion projects - as well as for the school building fund and other public infrastructure.
"In transportation in particular, new funding must be dedicated. We need disciplined, sustained investments in specific service improvements and expansion projects over time, without the risk that funds will be diverted to the next good idea," said Patrick.
Fitch Ratings and Standard & Poor's assign AA-plus ratings to the state's general obligation bonds, while Moody's Investors Service assigns its Aa1 rating.
Patrick's tax plan must win over lawmakers, some of whom sounded skeptical after the speech.
Senate President Therese Murray, D-Plymouth likened the proposal to a trial balloon.
"He threw long, and you know, maybe we'll meet him somewhere down the road," she said.
"We have to hear from the business community and our constituents in terms of what this is going to mean for them," said House Speaker Robert DeLeo, D-Winthrop.
Earlier in the week, Massachusetts announced an accelerated energy program designed to save the state $43 million annually by reducing energy consumption 20% to 25%.
It expects to spend $400 million in retrofits of 700 state buildings over two to three years, funding the program partially through general obligation bonds and a clean energy investment program that uses savings from energy and water projects to repay the bonds.
State officials also said the program would create about 4,000 clean-energy jobs.