In a victory for Governor Charlie Baker, lawmakers are poised to approve a $38.1 billion budget Wednesday that includes a modified version of his controversial MBTA overhaul.
The legislation gives Baker a variant of the T oversight board he has sought for months and temporarily opens the door to greater privatization of services at the public transit agency.
Baker said in a statement the budget “includes a very promising start to the overall effort of fixing the MBTA.”
The spending plan, unveiled Tuesday night after negotiations by House and Senate lawmakers, works to close a projected $1.8 billion shortfall that helped define the first six months of the governor’s tenure.
It holds the line on taxes and fees for residents, legislators said, and expands a tax credit for more than 400,000 low-income workers.
The debate over taxes and spending, though, has been overshadowed by maneuvering over how to fix the Massachusetts Bay Transportation Authority, which repeatedly shut down during this winter’s historic storms.
Baker proposed changes in April that included a fiscal and management control board designed to right the troubled transit agency. He also wanted to permanently remove restrictions on privatization imposed by what’s known as the Pacheco law, which requires state agencies to prove that outsourcing would save money before it can go forward.
The legislation unveiled Tuesday tinkers with Baker’s proposed control board, tethering it more closely to the state’s broader transportation system, and removes Pacheco restrictions for the T for three years.
This may not be the end of the debate over the MBTA. A separate transportation bill is still winding its way through the Legislature.
And Baker administration officials said Tuesday they would push for other changes they have sought, such as greater leeway to raise fares and a shift in the way contract disputes are settled with T unions.
Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation, which has pressed for the T changes championed by Baker, said, “We’re certainly pleased that there are meaningful reforms that will help the MBTA get on sound financial footing, and we look forward to additional reforms.”
If the T has been the primary flashpoint this budget season, there have been other conflicts as well.
One major point of contention: whether to expand the earned income tax credit, designed to help the working poor, and how to pay for it.
Baker proposed funding an expansion, in part, through eliminating the controversial tax break for the film industry. The Senate, instead, sought to freeze an expected incremental decline in the state’s income tax from the current 5.15 percent to 5 percent. Both funding plans ran into stiff opposition.
In the end, House and Senate negotiators agreed to expand the credit by repealing a big corporate tax deduction. The deduction has never gone into effect — it has been delayed every year by the Legislature.
The earned income tax credit expansion, however funded, is a victory for Senate President Stanley C. Rosenberg and his left-leaning chamber — and was lauded by some advocates.
Noah Berger, the president of the liberal-leaning Massachusetts Budget and Policy Center, said the earned income tax credit increase “will help hundreds of thousands of working families pay for basic necessities like clothing and nutritious food for their kids.”
He pointed to studies that he said show “when the income of low-wage families increases, there are long-term positive effects on the children: They do better in school and earn more as adults.”
The budget, which Senate Ways and Means chairwoman Karen E. Spilka said would boost spending 3.5 percent over last fiscal year, includes modest increases in several areas.
Lawmakers would provide millions of new dollars to combat the opioid crisis that has torn through the state and more money to address homelessness.
They would also boost funding for the University of Massachusetts by about 4 percent, according to a school spokesman’s calculations, though student costs are still expected to rise for the academic year that begins in September.
One way the budget works to bridge the estimated $1.8 billion gap is by curbing the sharp growth of the state’s health care program for the poor.
Earlier this year, in another effort at filling the fiscal hole, the Legislature passed an early retirement program designed to trim the state’s payroll and save $172 million after costs. About 2,475 employees took advantage of the pension-sweetening deal and left state government last month.
Baker unveiled his proposed budget in March. The House and Senate subsequently passed their own plans and reconciled them in a committee composed of members of both chambers.
Rosenberg told reporters he is confident the full Legislature will approve the latest plan.
“I believe that the budget will be on the governor’s desk very soon,” he said Tuesday night, “but not before breakfast.”
Baker will have 10 days to take action on the spending plan. Among his options: signing it into law or vetoing all or part of it.
David Scharfenberg can be reached at email@example.com. Follow him on Twitter @dscharfGlobe.Joshua Miller can be reached at firstname.lastname@example.org. Follow him on Twitter @jm_bos.