Gov. Deval Patrick approved a new state budget Monday that hikes the Massachusetts sales tax by 25 percent, largely preserves education spending and makes deep cuts to other state services.
The increase in the sales tax allowed the Massachusetts Turnpike Authority earlier Monday to vote to avoid a planned toll hike scheduled to take effect July 1, relying instead on $100 million from the tax increase.
In signing the $27 billion budget, Patrick issued $147 million in line-item vetoes.
At the same time, he submitted a separate $269 million supplemental budget to fund other initiatives, including $70 million for health care for 30,000 legal immigrants.
The budget also maintains current eligibility for state-subsidized health insurance programs and funds dental coverage for MassHealth and Commonwealth Care.
The budget approval comes after Patrick last Friday signed a transportation bill designed to overhaul the state’s road, bridge and commuter systems.
The new law eliminates the Turnpike Authority, but leaves intact the Massachusetts Port Authority and Massachusetts Bay Transportation Authority (MBTA).
Nearly all other state transportation functions would be consolidated under a new state Department of Transportation.
Patrick said the law will put an end to what he called “the Big Dig culture of deception, patronage and waste,” referring to the nearly $15 billion highway project which was plagued by cost overruns, falling debris and leaks.
“Today, we are inaugurating a new era of streamlined and efficient delivery of transportation services to the residents of Massachusetts,” said Patrick.
Another portion of the sales tax increase is intended to help the MBTA close an estimated $160 million gap in its new budget. The T has warned of fare increases and service cuts. Officials said some fare increases could go into effect even with the extra money.
Patrick had initially proposed a 19-cent-per-gallon hike in the state gas tax to pay for the reforms in the transportation bill, but lawmakers didn’t support the idea.
The bill signed by Patrick consolidates much of the state’s transportation management under a new state Department of Transportation administered by a Secretary of Transportation and overseen by a board of directors appointed by the governor.
The new law also changes the MBTA’s controversial pension system that allowed employees to retire with full benefits after 23 years on the job. Under the new law, workers will need to put in at least 25 years and can’t retire until they are at least 55.
It also shifts MBTA, Turnpike and Tobin Bridge employees and retirees to the state health insurance program, converts Turnpike and Tobin Bridge employees to the state retirement system and eliminates the Massachusetts Aeronautics Commission and Outdoor Advertising Board.
“The restructuring of our cumbersome and inefficient transportation system is a landmark achievement that will dramatically improve the way we deliver transportation services,” said Senate President Therese Murray, D-Plymouth.
The law retains the discount for Fast Lane transponders and requires that revenue received from tolls be applied exclusively to the payment of debt service on tolled roads and the cost of maintaining the roads.
It also brings the highway department, the Turnpike and the MBTA under the state’s tort liability provision — capped at $500,000 — with the exemption for MBTA for serious bodily injury or death.
Officials hope the changes in the law will help the state save billions over time as it grapples with the escalating costs of maintaining aging roads, bridges and public transit services.
A 2007 report by the state Transportation Finance Commission estimated it would cost an additional $15 billion to $19 billion over the next 20 years just to maintain the state’s existing transportation system.