Legislature looks to add $1b in spending

Flush with new tax money, the Legislature is on track to add as much as $1 billion in new spending on expanded healthcare coverage, construction projects, government salaries, and dozens of local projects in the districts of leading lawmakers.

Five months after approving a $24 billion state budget for the fiscal year, lawmakers in recent weeks have approved sweeping spending and ''economic stimulus" bills as well as an $80 million energy plan, and are readying a healthcare proposal that would cost several hundred million dollars.

The Democratic-controlled Legislature, at the same time, has repeatedly resisted Governor Mitt Romney's calls to return the growing budget surplus back to taxpayers by rolling back the state income tax rate and by refunding an unusual, retroactive capital gains tax increase that 48,000 investors owe because of a court ruling. The Department of Revenue is sending out bills for the capital gains taxes this month.

Fiscal watchdogs say the Legislature is frittering away money on pet projects instead of spending it on long-term needs or socking it away for the state's reserve fund. Other critics say the surplus should be returned to the taxpayers in the form of tax cuts.

''They spend money for the same reason a person climbs a mountain -- because it's there," said Barbara Anderson, who heads Citizens for Limited Taxation. ''When times are good and the money is flowing in, they spend it."

Because of the improved economy, tax revenues from personal income taxes, corporations, and other levies are running 7.9 percent ahead of projections for the current fiscal year, putting the state $232 million ahead of what it expected to have by the end of October. Massachusetts also ended fiscal years 2003, 2004, and 2005 with more revenue than expected.

Democratic lawmakers, defending their handling of state spending, say they have used some of the budget surplus to partially restore the roughly $3 billion in cuts made during the fiscal crisis in 2001 and 2002. Earlier this year, they also put $690 million into the state's reserve fund, which now totals $1.7 billion.

''I think we've shown great fiscal restraint," said Representative Robert A. DeLeo, the Winthop Democrat who chairs the House Ways and Means Committee. ''What we've done with the surplus funds is address many one-time needs, as opposed to putting ourselves in a further hole in the next fiscal year budget."

Romney, who has clashed with the Legislature on the income tax rollback and the retroactive capital gains taxes, has threatened vetoes of the spending initiatives. But with their overwhelming majority in both chambers, Democrats usually can muster the votes to overrule him. For example, the Legislature restored about $100 million in spending that Romney vetoed earlier this year.

''Spending on feel-good projects that are not essential at a time when people voted for tax relief is not right," Romney said last week. ''I will continue to fight in my budget to lower the tax rate to 5 percent, and veto any additional excessive spending."

During the summer and early fall, lawmakers approved several routine spending bills and quickly gave the nod to a $25 million fund for Katrina victims relocated to Massachusetts. But the biggest bump in spending came in October and November, when both the House and the Senate approved midyear spending plans to supplement the roughly $24 billion budget for fiscal 2006 that Romney signed last summer. In addition, each chamber approved an economic stimulus bill designed to create jobs. House-Senate negotiators will craft two compromise measures in the coming weeks and send them to Romney.

The House's $317.2 million supplemental spending plan includes $100 million for capital improvements at state colleges and universities; $72 million for roads, bridges, and other transportation-related projects; and $40 million for capital improvements to parks, beaches, and historic sites.

Those are known as one-time costs because they are individual projects. But the House bill would also commit the state to some continuing costs. For example, there is $25 million to pay for healthcare coverage for about 10,000 people who have been unemployed for a long time and $7 million to raise the salaries of judges, sheriffs, court officers, and other state workers.

The Senate's $240.7 million supplemental budget also includes one-time and recurring spending.

Among the projects in that bill: a new $500,000 bathhouse at Constitution Beach in East Boston -- which is represented by Senate President Robert E. Travaglini -- and $250,000 ''for the creation of a new brand identity" for Plimoth Plantation, a historic site in the district of Senate Ways and Means Chair Therese Murray; and $55 million for transportation projects around Fenway Park and the Longwood area.

''There may be an argument for individual line items, but clearly it's a bit of a grab bag," said Michael J. Widmer of the Massachusetts Taxpayers Foundation, a business-funded nonprofit organization. ''The state's fiscal picture has clearly improved, but we're not in any kind of position to be adding several hundred million dollars to the bottom line before we even address healthcare reform."

According to an analysis by the Taxpayers Foundation, the two House bills include $519.5 million in one-time spending and $104.2 million in recurring spending. The Senate plans have $522.2 million in one-time spending and $192.4 million in recurring spending.

Widmer also cautioned that the state's economic recovery remains sluggish; Massachusetts lost 7,100 jobs in October, the third straight month of job losses.

Supporters say the two stimulus bills, which total $353 million in the House and $473 million in the Senate, are designed to create jobs through infrastructure improvements, money for research, and development in growing high-tech fields; and myriad tax credits and incentives. Both plans also include money for job training and adult basic education.

The Senate, for example, wants to spend $35 million to create a nanomanufacturing and biomanufacturing complex at the University of Massachusetts at Lowell, $10 million on a bioprocessing facility at the University of Massachusetts at Dartmouth, and $2 million on tax credits for medical device companies.

Representative Daniel E. Bosley, the North Adams Democrat who played a leading role in putting together the House version, emphasized that he and his colleagues toured the state to gather ideas from business owners. Bosley also said the House measure is free of ''pork" for any specific firm.

Daniel R. Feenberg, a research associate at the National Bureau of Economic Research in Cambridge, said that with the exception of the job training programs, the Legislature's stimulus bills won't do much to boost employment in the Bay State. The real problem, Feenberg said, is the high cost of housing. The Legislature approved a separate measure last week designed to spur more housing construction.

''Is anyone on the Hill aware that the only thing that prevents the creation of more jobs in Massachusetts is the inability of people to find a place to live?" Feenberg said.

Scott Greenberger can be reached at greenberger@globe.com.