Legislature approves $20.9b state budget

By Michael Crowley, Boston Globe Correspondent, 11/11/99

More than four months late, the Massachusetts Legislature approved a $20.87 billion state budget last night that makes several long-term commitments, including prescription drug subsidies for seniors , a refinancing of the MBTA without fare increases, a huge trust fund from a tobacco-lawsuit settlement, and modest tax cuts that would total about $57 for an average family.

The House approved the plan, 155-2. The Senate vote was 31-4. It now goes to Governor Paul Cellucci.

The plan would increase state spending by almost 7 percent and phase in tax cuts of $430 million per year. Coming with more than a third of the fiscal year elapsed, it is the latest budget since 1965. Monthly stopgap budgets have kept state agencies running since July 1.

Many of the budget's key elements already had been made public during the months of deliberations that have consumed Beacon Hill. But hundreds of new details emerged yesterday once House and Senate negotiators released the results of negotiations that had bitterly divided them at times.

Speaking on the House floor yesterday, a fatigued House Ways and Means Chairman Paul R. Haley said he was happy with the final product, but warned that the state must be careful not to enter into too many new spending commitments.

''It is unrealistic to think that with finite resources we can meet every single demand,'' said Haley, a Weymouth Democrat.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, praised the final plan as a prudent blend of fiscal reforms, tax cuts, and new funding for education and health care. ''Despite the budget being absurdly late, on balance the final product may have been worth the wait,'' he said.

The final plan would overhaul the finances of the MBTA, which the Legislature reimburses for its expenses in an unusual ''blank check'' system. The agency would now be allocated 20 percent of the state sales tax annually and guaranteed an annual minimum beginning with $645 million this year.

The plan does not require or bar fare increases. Haley, an advocate of a fare increase, said he does not expect the plan to cause the T to raise fares anytime soon.

The budget also includes $42 million in new spending to senior citizens struggling to pay the rising costs of prescription drugs. Of the total allocation, $22 million would help low-income seniors pay for prescriptions and another $20 million would fund a new program to aid seniors with ''catastrophic'' drug costs that consume 10 percent or more of their income.

The plan also calls on the administration to consider buying prescription drugs in bulk and resell them at a lower cost to clients of state health care programs. The Legislature's budget for other elderly services increased by $24 million, including $12 million for seniors who lost home health care benefits to US Medicare cutbacks. ''This is a remarkable budget for us,'' said Al Norman of Mass Home Care.

Tax cuts are not a defining feature of the budget, which includes a reduction of the state's income tax rate from 5.95 percent to 5.75 percent over three years. The budget also extends a 3 percent investment tax credit for businesses, and freezes at 2 percent a planned phaseout of the state's capital gains tax for long-term assets at 2 percent.

Low-income working families would receive an increase in the state Earned Income Tax Credit of up to $180 per year. By 2002, low-income seniors would receive up to $750 in tax relief.

The plan also details what would happen to the $7.7 billion the state will receive during the next 25 years as part of a landmark 1998 tobacco settlement. Seventy percent of the sum would be placed in a trust fund whose interest would pay for future health programs.

The remaining 30 percent would be given to a variety of health care and tobacco control programs ranging from catastrophic drug coverage to local efforts to enforce restaurant smoking bans and laws barring smoking by minors.

The state would spend a total of $2.8 billion on education next year, including $245 million in public school funding as required by the state's 1993 Education Reform Act.

And establishing a national precedent, the budget compromise extends Medicaid coverage to low-income people who are HIV-positive but have not yet developed AIDS. A spokesman for the AIDS Action Committee said the early treatment the $10 million in new spending can provide would save the state money from hospitalization costs.

Cellucci repeated his pledge yesterday to veto several budget measures, including an early-retirement plan for public school teachers, the freeze of a planned phase-out of the capital gains tax, and various spending increases that have helped lift the final budget's price tag above the $20.4 billion proposed by the governor.

Cellucci spokesman John Birtwell said the governor hoped to make his vetoes and return the budget to the Legislature for final passage by Tuesday. ''They took six months, and we're going to take six days,'' Birtwell said.

In a first for a Legislature that has been an Information Age straggler, the budget was e-mailed to all House and Senate members. But some House offices reported that the huge file caused computer problems and left them with what resembled hieroglyphics on their screens.

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