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House releases $38b budget, holds line on taxes, fees

House leaders unveiled a $38 billion budget Wednesday that would hold the line on taxes and fees, make modest new investments in early education programs, and suspend a controversial antiprivatization law for the MBTA with an eye toward efficiency.

Facing a projected $1.8 billion fiscal gap, Speaker Robert A. DeLeo said the proposed budget makes “targeted investments” while showing that “we’re living within our means.” The budget would increase state spending by 2.8 percent, less than in recent years.

In the broadest strokes, the Democratic legislative leaders’ plan hews to Governor Charlie Baker’s proposed spending blueprint — providing additional money for K-12 education and aid to cities and towns, and making a significant push to slow the growth of state health care spending.

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But, officials said, it reins in some of the Republican governor’s spending proposals for sheriffs’ departments, public defenders, and higher education. And it undoes several of Baker’s cuts.

For instance, Baker proposed a cut to the trial court that sparked outcry from judicial leaders, who warned of massive layoffs. The plan from the House Committee on Ways and Means includes a boost of about $15 million in funding, which court officials lauded.

And Secretary of State William F. Galvin had publicly worried that Massachusetts would not be able to hold its 2016 presidential primary with the funding Baker’s budget allocated. The House budget offers more funding for the elections division administration.

“It’s really different priorities,” said committee Chairman Brian S. Dempsey, explaining the shifts between the governor’s and House’s proposals for the fiscal year beginning July 1.

Perhaps the biggest policy change embedded in Dempsey’s plan is a five-year suspension, for the beleaguered T but not the rest of state government, of a law analysts say is designed to curb outsourcing of services by creating an onerous process to do so. That proposal could well prompt outcry from MBTA workers, who benefit from the statute known on Beacon Hill as the Pacheco Law, after its primary sponsor, Senator Marc R. Pacheco of Taunton.

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“What we saw demonstrated over the course of the winter months cries out for a change in the status quo and that’s exactly what we are proposing,” Dempsey said, referring to public transit delays and disruptions.

Pacheco said that when people tie the law bearing his name to the T’s winter failures, it’s “misleading.” He said the shortfalls at the Massachusetts Bay Transportation Authority were management failures and unrelated to whether services were done by public employees or were outsourced. And he said the law, which requires a review of the savings from proposed outsourcing before it’s initiated, simply protects the taxpayer.

Among the new investments proposed in the House plan, small in the sweep of a $38 billion budget, are $10.1 million targeted at substance abuse prevention and treatment, including new beds in recovery programs. There are also new efforts at addressing homelessness.

And there is $5 million for new early education child care vouchers to move an estimated 833 kids in low-income families off a wait list for subsidized education and care, praised by one advocate as “a good move.”

Not everyone was happy with the budget though.

Lew Finfer, an organizer at the Youth Jobs Coalition, decried some cuts in funding for a youth jobs program and an antigang violence grant program.

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If the budget were to stand, “it means a significant number of youth will not have jobs this summer,” he said.

As with many previous spending plans, the budget relies, in part, on one-time revenues that are difficult or ill-advised to reproduce every year. Those total $456 million and include $300 million in capital gains tax revenue that would normally land in the state’s rainy day fund. Fiscal watchdogs discourage use of such funds.

Overall, said Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation, Wednesday’s budget is fiscally responsible and holds the line on spending. She praised its efforts at MBTA reform — which include the Pacheco law suspension, audits of the T’s finances and maintenance, and efforts aimed at streamlining procurement.

But, she added, the budget does some things “that cause us concern,” such as using the money intended for the rainy day fund.

Much of the $38 billion budget is devoted to relatively fixed costs. Dempsey said 40 percent of it goes to Medicaid, the state-federal health plan for poor and disabled people, costs of which have been increasing at a high rate in recent years.

His plan lines up with Baker’s efforts to reduce ballooning state health care costs through, among other measures, making sure everyone using Medicaid is actually eligible and pushing off some payments from the new fiscal year to the next one.

The House budget’s math also relies on the savings from an early retirement incentive bill, meant to entice 4,500 state workers to head for the exit. Both the House and the Senate have passed versions of that legislation, though they have not yet been reconciled.

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The House will debate the budget, and it is likely to be amended and pick up millions of dollars of legislators’ pet projects. The Senate will then propose and pass its own, and the two chambers will reconcile their competing spending plans for the fiscal year.

Once a bill reaches Baker’s desk, he’ll have a number of options, from signing it into law to vetoing all or part of it.


David Scharfenberg of the Globe staff contributed to this report. Joshua Miller can be reached at joshua.miller @globe.com.