Legislature approves $28.2 billion budget

July 3, 2008 03:13 PM Email| Comments (0)| Text size – +

By Matt Viser, Globe Staff

House and Senate lawmakers this afternoon approved a $28.2 billion budget, ushering through a spending plan that relies heavily on higher taxes and spending from reserve funds to increase spending in local aid, education, and healthcare.

Meanwhile, Governor Deval Patrick today signed into law a major corporate tax reform package that will prevent corporations from declaring some of their profits in states with more favorable tax rates.

Patrick had been seeking the changes -- which will raise $285 million in new state revenue next year -- but his proposals have been rebuffed by House Speaker Salvatore F. DiMasi.

"I want to thank my partners in the Legislature for their work in passing this important legislation," Patrick said in a statement.

The budget also relies on a $1-per-pack increase in the state's cigarette tax, which will bring in $174 million.

Republicans immediately pounced on the spending items, which come during rising healthcare costs and an uncertain financial future.

“Beacon Hill Democrats are addicted to spending, period,” said Rob Willington, the executive director of the Massachusetts Republican Party. “...This budget, which is coming three days late already, contains enough pork in it to make BLTs for the whole Commonwealth.”

The budget also includes changing the name of the Department of Mental Retardation to the Department of Developmental Services.

The final budget also includes a plan to grant a cost of living adjustment for the pensions of about 250,000 state and teacher retirees. A controversial proposal that would have allowed municipal employees to opt in was removed.

“We’re very disappointed,” said Ralph White, president of the Retired State, County, and Municipal Employees Association of Massachusetts. “We’ll have to fight again next year.”

It is still uncertain whether additional adjustments to the budget will be needed. The state has been negotiating with federal officials over extending a Medicaid waiver that helps subsidize coverage for low-income residents. The waiver was set to expire June 30, but federal officials have allowed for a two- to four-week extension for more negotiations. The state budget assumes those will come out in the state's favor; if they don't, it could create a budget gap of hundreds of millions of dollars.

The budget approval comes several days late, which required Patrick last week to approve a $1 billion temporary budget that allows the state to continue paying its bills for two weeks into July. The governor now has 10 days to review the budget before offering any vetoes, which will likely include some of the earmarks stuck in by the Legislature.