Miracle’s Over: Dukakis Signs Tax Hike Bill

Gov. Michael S. Dukakis, who bragged about the “Massachusetts Miracle” during his failed presidential bid, has signed a bill taxing myriad services to infuse the state with needed cash.

Dukakis signed the bill Wednesday behind closed doors. “This is not something to celebrate,” he said later.

“Taxes are like medicine,” he said. “Nobody likes to prescribe them. Nobody likes to take them. But taxes are part of what will be required to regain fiscal health in the state.”

The measure raises state income and gasoline taxes and extends the 5% sales tax to hundreds of business services that were previously exempt. The new law is expected to generate $1.2 billion this fiscal year and an additional $1.8 billion next fiscal year.

State officials said residents will start feeling the effects of the law at the gasoline pump within 10 days and will start seeing a bigger bite out of their paychecks as early as three weeks.

The huge tax boost marks another chapter in the up-and-down fortunes of Dukakis and Massachusetts. Two years ago, Dukakis was preparing to accept the Democratic nomination for the presidency as he bragged about the “Massachusetts Miracle.”

But since then, the economy has soured, revenue has shrunk, and state government has run up a deficit of more than $1 billion for last fiscal year. Massachusetts’ bond ratings have plummeted to the lowest in the country.

“The only miracle that I can see is that working men and women up to this time have been able to keep their heads above water,” said House Minority Leader Steven Pierce, the Republican candidate for governor. He said he will file legislation to repeal the tax package.

Dukakis is not seeking reelection.