State lawmakers reach compromise on long-stalled spending bill

The State House. John Tlumacki/Globe staff/file

State lawmakers passed a compromise spending bill Thursday and will avoid a potential legal clash with the state comptroller, capping a weekslong dispute over how to spend the state’s $1 billion surplus.

But in reaching the deal, legislators sliced what both chambers had previously earmarked — and Governor Charlie Baker had requested — for the MBTA, whittling the extra funding from $50 million to $32 million days after a high-profile report criticized the T for not prioritizing safety.

The compromise also did not include a controversial corporate tax change that had the backing of businesses, Baker, and the House, but not the Senate.

The legislation, which emerged from a close-door conference committee late Wednesday, quickly passed both chambers just after midnight, when only a smattering of lawmakers were on hand, and was set to reach Baker’s desk.

Dubbed a supplemental budget, the bill includes $541 million in spending, a drastic reduction from the versions both the House and Senate had previously passed.

The bulk of the money now goes toward funding deficient accounts to close the books on the fiscal year that ended in June. But roughly $186 million is tabbed for so-called discretionary spending, including the money for the T and about $15 million to test for and address “forever chemicals” — per- and polyfluoroalkyl chemicals known as PFAS — in town water supplies.

The legislation will push another $587 million into the state’s emergency savings account, also known as the Rainy Day Fund. The bill also moves the 2020 state primary to Sept. 1.

House Speaker Robert A. DeLeo said in a statement Wednesday that the reduced funding for the T would provide an “immediate infusion,” but he also questioned its purpose, citing what he suggested was a shifting narrative from Baker.

The governor, who first proposed the $50 million funding in June, said then it would go toward funding a new team of engineers, bus operators, maintenance workers, and outside contractors to help do inspections and complete capital projects. On Monday, after a panel of T-hired experts released their withering report, he said the money would also allow the MBTA to improve safety oversight, without slowing down capital projects.

“The resources need to be there for the T to be able to do both of these things well at the same time,” he said.

DeLeo said Wednesday lawmakers are awaiting “clearer and more consistent information” but argued the money will still help the T.

“While we seek more precise information on the needs of the T, the House recommits itself to a transportation revenue debate in the coming months,” DeLeo said.

Senate President Karen E. Spilka cited the “give-and-take” of negotiations in explaining the lower funding.

“I believe that the T needs some funding, and that’s something we’re talking about,” she said.

Baker’s office said Wednesday it was still reviewing the package, but pointed to remarks he made earlier Wednesday. If the Legislature didn’t fund the full $50 million, he said, “we’ll be back to them in January . . . to ensure that the T has the money it needs to implement that safety management system.”

The bill emerged following a dizzying set of developments between the Legislature and the state comptroller, Andrew W. Maylor, who had warned about closing the books on the last fiscal year so many months after it concluded, and said he would unilaterally do so and move the $1 billion surplus into the state’s savings account if lawmakers didn’t reach a deal.

But the House of Representatives challenged whether Maylor even had authority to do so, and argued that such a move — which Maylor acknowledged was unprecedented — would run afoul of the Massachusetts Constitution.

The dispute bubbled to the surface after Maylor gave legislative leaders until 3 p.m. Wednesday to reach a compromise on how to spend the $1 billion.

He ultimately backed off, releasing a statement at his self-imposed deadline that said that House and Senate negotiators had made “substantial progress” in their talks. But Maylor also left open the possibility of making the transfer Thursday morning, absent a compromise.

Less than two hours after Maylor’s comments, James Kennedy, the House counsel, sent the comptroller’s office a two-page letter, saying the House does not believe he has the authority to make the transfer.

Further muddling the picture: The comptroller’s office last week identified various accounts that are running deficits, including $296 million in MassHealth fee-for-service payments and $6.9 million for snow and ice removal.

Maylor has said that, should he make the transfer, the actual “downstream consequences” of leaving accounts deficient is unclear. But Kennedy suggested it would run afoul of the constitutional mandate that the state budget remain balanced.

The Senate did not raise similar concerns publicly. “Our focus was getting the [supplemental] budget done,” Spilka said. “That is our job.”

In a statement responding to Kennedy’s letter, Maylor’s office said that it has “no interest in litigating this issue in the press,” but that it stands by its assertion that it had the legal authority to transfer the money.

“It is our hope that the Fiscal Year 2019 closeout process was a true anomaly and that the opinion of House Counsel does not foreshadow the reaction to future fiscal year closes,” his office said.

The House and Senate had for weeks been negotiating the bill behind closed doors after the chambers passed differing versions in October.

Legislative leaders have not publicly disclosed what has fueled the delay in reaching a compromise, but a dispute over the corporate tax change had long hung over the closed-door discussions.

“We each had different things we were trying to get accomplished,” state Representative Aaron Michlewitz, the House budget chairman, said of negotiators. “We were trying to create a compromise that would best serve our constituents. At the end of the day, this is getting passed and we’re moving on to the next budget cycle.”

Still, budget tardiness is starting to be a tradition on Beacon Hill.

The Legislature was the last in the country to approve an annual budget this year, at least among states with a fiscal year that begins July 1. It was last among all states in 2018.