Legislature passes budget with $400m in cuts

The Mass. Legislature passed a $40.2 billion operating budget for the fiscal year that started last Saturday. John Tlumacki/Globe Staff, file

Stung by years of overly optimistic revenue projections, the Legislature on Friday sent Governor Charlie Baker a $40.2 billion budget marbled with limited cuts, prompting one legislative leader to call it “the harshest state budget since the last recession.”

The plan increases spending on health care for the poor, aid to cities and towns, and K-12 education, and represents an overall increase of about 2 percent, a threadbare amount by recent Massachusetts standards.

The bottom line represents a reduction of roughly $400 million to spending plans that passed both chambers just months ago. Cuts from what lawmakers originally passed hit an emergency shelter program for homeless children, law enforcement, the state’s high court, and a gamblers’ treatment initiative.

The budget paring sparked calls for new revenue from some legislative Democrats. Senate President Stanley C. Rosenberg, who said the state had not seen such austerity in nearly a decade, took issue with the House’s refusal to go along with his chamber’s bids to impose new taxes.

“It would have been somewhat better had it contained the Senate’s modest revenue proposals including those on Airbnb, Internet hotel resellers, flavored cigars, film tax, and the Community Preservation Act,” Rosenberg said in a statement. “We can take some measure of pride in what we were able to do for local aid, children, and veterans, but too many were left behind.”

Representative Brian S. Dempsey, the House budget chairman, told reporters one of the ways lawmakers bridged the gulf between anticipated revenues and spending was to reduce increases in spending on several areas. For example, he said the Department of Developmental Services was originally going to get an $84 million increase. But because of the tighter fiscal environment, it will now see a smaller bump.

The plan relies on lawmakers’ assumption that more than $200 million they are appropriating will not be spent — instead remaining in accounts across state government — a practice watchdogs call unwise.

It also sets aside at least $50 million for the state’s rainy day fund and $100 million for supplemental spending needs over the course of the year, which could range from snow and ice costs to paying for lawyers for the poor. But insiders say other areas, such as marijuana regulation and sheriffs, will also surely need supplemental funds later in the fiscal year.

Lawmakers voted for their own pay raise in January as part of an $18 million package. But they struggled in the final days of budget negotiations, raising temperatures between the two chambers as they grappled to slice the budget after fresh evidence that this year’s tax revenues would not fund their more optimistic spending designs.

“In some ways, this budget is a fiscally prudent response to another tax revenue shortfall — notably its commitment to a rainy day fund deposit,” said Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation.

“However, in other aspects, the budget is shortsighted; for example it does not include any long-term MassHealth reforms and relies on a new $200 million employer assessment, the revenue from which is questionable given the governor’s commitment to only support the [assessment] as part of a larger health care reform package.”

Baker proposed a wide-ranging plan that he said would reduce health care costs, but the Legislature only put part of it in the budget, including a fee on employers to raise $200 million to help fund the rising costs of the state’s Medicaid program.

House lawmakers voted, 140-9, to approve the full budget accord shortly after 3:30 p.m. Friday. A short time later, the Senate voted, 36-2, to do the same.

Baker, who now has 10 days to sign the budget or veto sections of it, was noncommittal to the accord that, after weeks of prolonged negotiations, ultimately sped through the chambers Friday on its way to his desk.

“The Baker-Polito administration appreciates the Legislature’s work to deliver a budget and will carefully review their proposal,” said William F. Pitman, Baker’s press secretary.

The spending plan drew mixed reaction from advocates.

“Representatives and senators are clearly protecting and prioritizing municipal and school aid,” said Geoff Beckwith, the executive director of the Massachusetts Municipal Association, which represents cities and towns.

“Family shelters are underfunded,” said Libby Hayes, executive director of Homes for Families, a nonprofit that aims to end homelessness. “It will remain a challenge to address homelessness, and curb spending on shelter without more investments in housing subsidies.”

The accord was not filed until Friday morning, leaving scant hours for lawmakers to review it before votes in the afternoon. Negotiations over the annual budget were conducted in secret, with even senior lawmakers professing not to know details as late as Thursday night.