By Trevor Hughes 
State House News Service 

November 10, 1999--Saying the 133-day-late $20.87 billion state budget was worth the wait, lawmakers worked up until midnight Wednesday, before giving final approval to a spending plan that prunes more than $400 million in taxes while pouring funds into popular prescription drug and education programs. 

Bleary-eyed legislative aides filed the 706-page document at 7:13 am Wednesday after months of late-night negotiating sessions between House and Senate conferees.  The House voted 155-2 to okay the budget.  The Senate approved it by a 31-4 vote, sending it to Gov. Paul Cellucci's desk at 11:58 pm after hours of sometimes heated debate.  The budget was due July 1, but got hung up with members arguing over philosophical disagreements on big public policy questions. 

Although the spending plan represents a compromise, the war that led to is has left its scars - the debate Wednesday was marked by boasting and targeted barbs from the leaders of both branches. 

Legally due July 1, the budget represents a 7 percent hike over last year's budget.  Massachusetts is the only state in the nation lacking an annual spending plan. 

Senate President Thomas Birmingham and House Speaker Thomas Finneran announced the major budget details Oct. 13, then left their fiscal lieutenants to work out the details.   This morning, those budget negotiators pronounced themselves "very pleased" with their work, which they said balances spending on immediate social needs with necessary fiscal reforms. 

"We're very pleased we have reached resolution," said House Ways and Means Committee Chairman Paul Haley (D-Weymouth). "It was worth this lengthy period, to consider where we want to be, not in the next six to 10 months, but in the next six to 10 years." 

Haley has criticized senators as too eager to expand popular social programs.  He complained no one was interested in making unpopular fiscal reforms that would prepare the state for what he believes is an inevitable economic downturn. His top priority was a plan to restrict the rapidly growing billion-dollar MBTA budget before it precluded spending on other programs. 

In the end, the budget compromises reflected both positions. 

"I am very pleased that we've been able to achieve some long-term investments.  There was a collision course that was going to occur at some point between the competing priorities," Haley said. 

Senate Ways and Means Committee Chairman Mark Montigny (D-New Bedford) sounded a similar note.  He said neither side wanted to back away from its priorities, which made the negotiations "agony," but ultimately worthwhile. 

"I think in the end, what we feel is most important are the values contained in the budget," Montigny said.  He said his top priority in the budget was a plan to more than double, from $30 million to $72 million, the amount of aid senior citizens can get to help pay for the high cost of prescription drugs.  Another major Senate priority in the budget is the $2.8 billion full funding of the 1993 education reform law. 

Additionally, Montigny said the plan to dedicate 30 percent of the state's share of the multi-state tobacco settlement to health-care related programs "will be a national model." Under the plan, the state will invest 70 percent of the settlement funds, and use the earnings to insulate social programs from cuts should the economy slow.  The remaining 30 percent, about $100 million  a year, will be spent on various health care programs, like treatment for people with HIV/AIDS. 

Observers like Massachusetts Taxpayers Foundation President Michael Widmer said the "absurdly late" budget appeared to be balanced - both financially and politically.  "The combination of major fiscal reforms, the tax cuts and the targeted spending on education and health care are a strong combination and a positive compromise," he said.  The business-backed MTF has long been a supporter of the House plan to revamp the T's finances. 

Long-time anti-tax activist Barbara Anderson blasted the spending plan as a "bad budget."  She said lawmakers were "just looking for ways to spend money. They're just creating brand new programs and adding to the size of government.  When the economy slows down, they're going to be in trouble." Anderson and Cellucci are leading a ballot campaign to cut the income tax rate to 5 percent over three years. 

Cellucci, who promised to work over the weekend reviewing the budget, said he will not sign a $60 million early retirement package for teachers.  He had previously said he would veto the measure, and reiterated that he'll veto a plan to freeze a planned phase-out of the capital gains tax.  That freeze would keep taxes on capital gains like profits from home sales at 2 percent. 

If Cellucci returns the budget before Wednesday, Nov. 17 - the final day of schedule formal sessions for the year - it might allow the House and Senate to consider a few budget overrides before formal sessions end.  The Senate tied to assure itself of a shot at overrides by voting 35-1 early this morning to suspend rules and allow special formal sessions to consider overrides.  It is unclear whether Finneran and the House will go along with that, but with the possibility of $400 million in vetoes and the axing of proposed policy changes, there will be pressure on the House. 

As announced last month, the budget contains: 

* A three-year phased-in cut in the income tax to 5.75 percent from 5.95 percent.  The tax cut would be implemented Jan. 1, 2000 and would save residents $275 million annually; 

* An additional $245 million in school funding under the last year of the state's 1993 education reform law.  Supporters say the aggregate seven-year education investment is $2.8 billion. 

* A Senate-sponsored two-year phased-in property tax cut for senior citizens, worth $48.5 million, as well as tax deductions for renters (about $16 million), people paying student loans ($6 million) and 275,000 of the state's poorest workers ($15 million). The tax cuts begin phasing in Jan. 1, 2001; 

* Haley's plan to revamp and limit T spending, which will cost the state than $645 million annually.  T officials already receive about that amount each year, but can spend more if they want.  The T plan also calls for the state to borrow $800 million to pay off existing T debts and set the billion-dollar agency on a path to self-sufficiency.  According to details released today, the plan neither mandates nor prohibits fare hikes. Disagreements over whether fares would rise stalled negotiations for a week late last month.  "We have put the T on a diet," Haley said of the plan. Changing MBTA assessments remain an item for further debate. 

* A provision extending the 3 percent investment tax credit for 4 1/2 years; 

* A $14 million House-sponsored plan for maintenance of state-owned building; 

* More than $70 million for a Senate initiative to help seniors buy prescription drugs; and 

* A controversial early retirement plan for public school teachers. 

Additionally, the budget contains: 

* $10 million for the first funding installment of the Clean Elections initiative. Conferees left unresolved a House plan to seek additional approval from voters before approving the money and boosted the budget for the Office and Campaign Political Finance.  Some members of the House said they were angry about the language of the item, which would allow candidates to raise campaign funds as usual for 18 months, then participate in the limited public financing program for the remaining six months of the election cycle; 

* A reduction in the pension liability payments, from $961 million to $910 million; 

* $569 million for the health care premiums for state workers, a four percent increase; 

* A 75 percent budget increase, to $2.9 million, for the backlogged Massachusetts Commission Against Discrimination; 

* A 31 percent increase in funding for day care slots, to $159 million; 

* A plan creating a "Massachusetts Film Advisory Board;" 

* $5.5 million for the Department of Education's "John Silber early literacy program;" 

* $20 million to help students improve their MCAS scores. 

Haley and Montigny were unable to resolve several dozen items from the budget.  "If you can't find resolution, you need to put it aside," Haley said.  He said he didn't know when those items would be resolved. 

Among those items left in conference: 

* A House plan to let community hospitals perform open-heart surgery; 

* A House plan for advisory question on Clean Elections funding; 

* Relocation of the Boston Municipal Court; 

* Changes to charter school reimbursements; 

* Changes to nursing home reimbursements; 
 

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