State House News Service 

AUG. 25, 1999--After approving a $3 billion interim spending plan
aimed at keeping the government running until the end of Sep- 
tember, the House's fiscal chief today indicated major differences remain between negotiators working on the 54-day-late state budget. 

According to House Ways and Means Committee chairman Paul Haley (D-Weymouth), House and Senate leaders are hung up over the level of tax cuts, education funding and decisions on spending the state's share of the national tobacco settlement.  He declined to say that the latest interim budget will be the last - another may be needed to keep state government limping along. 

Municipal officials who get most of their operating funds from the state have been among the most vocal critics of the budget delay.  Today, Haley said the interim budget will send $1.2 billion flowing into municipal coffers as schools get ready to open their doors to students again. 

While the local aid is proposed at minimal levels, pending the outcome of budget negotiations, Haley said it is enough to allow municipalities to "meet all of their commitments."   He added that local governments nationwide are spending 15 percent more than their state and federal counterparts.  And in Massachusetts, Haley described cities and towns as "flush with cash" and said record numbers of communities have the ability to raise funds locally if they want. 

The $3 billion budget approved by the committee today is $500 million larger than Gov. Paul Cellucci had requested; a committee spokeswoman couldn't account for the higher figure. 
 
The committee today also approved a deficiency budget to close the books on fiscal 1999, which ended June 30. That budget includes $85 million in unrestricted Lottery Aid that cities and towns can spend as they wish. It also includes $35 million to pay past due state bills. 

The deficiency and the interim budget are expected to win House and Senate approval tomorrow. 

Haley cautioned that the main state budget - which was due July 1 - may not surface any time soon.  He said House-Senate  negotiators are no longer meeting from 10 am to 10 pm daily, but are now meeting occasionally, exchanging compromise proposals and speaking by phone. 

"We keep at it, we keep exchanging ideas," Haley said.  "We  hope to think we're fairly close.  I don't know how much we can discuss.  We've come at these things from every angle." 

Haley refused to rule out the possibility of a fourth interim budget.  He said the main budget is so late due to familiar House-Senate differences that have remained for months: tax cuts, education funding, the tobacco settlement funds and MBTA financing.  Haley today insisted that some type of reform of MBTA finances and management be included in the budget.  If conferees can reach agreement on big-ticket items, other differences could be resolved "in a few days," he said. 

Haley declined to talk about areas of disagreement or to say whether any firm agreements have been reached.  "In this business, I don't know that anything's been decided," Haley said. 

Haley and Stanley downplayed the effects of one of the longest budget impasses in state history. Municipalities have warned the budget delays are hurting schools and local services, but Haley said the state has made sure, through interim budgets, that essential services aren't interrupted. 

"I don't know where the criticism is coming from.  The Globe has been writing stories about folks that are being impacted but those are all expansion matters," Haley said. "Nobody is losing any support they were receiving last year." 

Haley claimed that the six legislative budget negotiators and their staffers are the most affected by the budget impasse.  "We haven't had a vacation this year.  I think we're the most impacted in all this," Haley said as Stanley lifted her leg to show she was wearing shorts. 

Haley said the negotiations reflect how seriously House Speaker Thomas Finneran (D-Chelsea) and Senate President Thomas Birmingham (D-Chelsea) take their responsibilities.  And the talks show how committed the House is to more conservative spending levels, Haley said. 

"It's not about brinkmanship," he said of talk that Finneran and 
Birmingham, both considering gubernatorial bids, are playing a high-stakes game of chicken.  "It's about believing in how the commonwealth's finances should be handled into the next century.  I think we're much more cautious in our spending initiatives on this side.  I think it's come to a head this year." 

Haley said the House wants to ensure the state meets its
necessary obligations while ensuring a solid base to fall back on if the economy sours. He warned against major program expansions proposed by the Senate, and said those who benefit eventually believe they are entitled to lavish funding even during a recession. As he has before, Haley reminded reporters that the Legislature in the late 80s raised taxes and authorized more than a billion in borrowing to bail the state out from a recession- induced fiscal crisis.  He cautioned that such borrowing is no longer possible. 

"I don't know if you've noticed that we're at our debt ceiling. What will happen if there's an economic decline at this time?  We'll have to make immediate and dramatic cuts across the board, particularly in local aid and education support," Haley said.  "Unlike what we did in the late 80s and early 90s when we borrowed our way out, we can't do it this time.  That is a real concern for us." 

Haley also said he and Stanley would have taken vacations if it were true that Birmingham and Finneran, not the six-member conference committee, were really doing all of the negotiations.