State's $28b budget delayed
Taxes, healthcare are sticking points
It's July 1. Do you know where your state budget is?
In what has become an annual ritual, Massachusetts lawmakers are blowing the deadline on the start of the new fiscal year, engaging in extra-inning negotiations, and passing a stopgap budget to keep state government running while they try to work out their differences.
House and Senate budget writers were not talking yesterday, but officials said the main sticking points blocking agreement on the $28 billion plan were corporate income taxes, legislative earmarks, and how much federal money to expect to support the state's health insurance efforts.
"You would have expected it to be done by now," said state Senator Richard R. Tisei, a Wakefield Republican who is the Senate minority leader, said of the latest in a long string of overdue budgets.
"I don't know if it's human nature or just the way this place is run," he said, "but it seems like there's not a lot of planning or cooperating between the branches, and that prevents things from getting done."
While they were not able to produce the fiscal 2009 budget on time, legislators did approve one aspect of the plan yesterday, a $1-per-pack hike of the cigarette tax rate. The increase, which still needs the governor's signature, would raise an estimated $174 million in revenues. It would push the price of a pack of cigarettes to $6.41, nearly 40 percent of which would be taxes.
A committee of six lawmakers - three from the House, three from the Senate - has been meeting for weeks behind closed doors. The meetings over how to spend the $28 billion are held in private, making it difficult to determine when talks will wrap up. House Speaker Salvatore F. DiMasi and Senate President Therese Murray would not comment yesterday, and even rank-and-file members said they were not quite sure what is causing the delay.
Later in the day, the chairmen of the House and Senate committees on Ways and Means released a joint statement. Enlightenment on progress was in short supply, but it did contain an abundance of generalities.
"The House and Senate are working to resolve differences between our respective budgets as soon as possible," read the statement, signed by Representative Robert A. DeLeo, a Winthrop Democrat, and Senator Steven C. Panagiotakos, a Lowell Democrat. "Our shared goal in that effort is to produce a budget that improves quality of life, stimulates regional economic growth, and places the Commonwealth on solid fiscal ground."
To keep the government running, Governor Deval Patrick signed last week a $1 billion temporary budget that allows the state to pay its bills for two weeks into July. Lawmakers are hoping to get a plan approved by the end of the week, and the governor will have 10 days to review it and issue any vetoes.
"We have been working very harmoniously, and we're getting there," said Senator Stephen M. Brewer, a Warren Democrat who is a member of the conference committee. "We will have a budget in the next three days."
Delayed budgets have become a virtual standard on Beacon Hill, although budget observers said that in recent years Democratic lawmakers submitted their budgets early to avoid being blamed for delays by Governor Mitt Romney, a Republican.
In 1999, budget deliberations between House Speaker Thomas M. Finneran and Senate President Thomas F. Birmingham languished until mid-November. Two years later, negotiations went even further, and the budget was not completed until Dec. 5. Massachusetts was the only state operating without a budget, and it was the longest delay since 1965, when the Legislature approved its spending plan on Dec. 31.
"It's one thing to have it a few days late," said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. "It's another to have it several weeks or months late."
This year, the budget holdups appear to be less epic.
"In a negotiating process, one side has to give in to the other, and nobody wants to be the first to give in," said Noah Berger, executive director of the Massachusetts Budget and Policy Center.
This year, lawmakers have clashed over how sharply to change corporate income tax codes, tightening rules while simultaneously trimming the corporate tax rate. The House plan for changes would bring in an additional $135 million for the state, while the Senate plan would bring in $297 million.
There are also disagreements over a House amendment that would open the door to offshore tax breaks. Under the provision, large corporations could avoid state taxes by maintaining large portions of their business operations overseas.
Budget writers are also unsure how much money to dedicate to the state's healthcare law. 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 an extension. In the meantime, the clock is ticking.
"If it's a week or two, it's not a big deal," said Jim Stergios, executive director of the Pioneer Institute. "But if it's more than that, it can really grind the wheels of government services to a halt."
Matt Viser can be reached at maviser@globe.com. 