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Senate $40.3 billion budget plan keeps tax estimates intact

Posted 5:12 p.m. Tuesday
Updated 5:14 p.m. Tuesday

— A state budget plan released by a key Senate panel on Tuesday leaves intact current revenue projections that may no longer be realistic, prompting top lawmakers to acknowledge the budget may need adjustments if tax collections continue to fall short of targets.

The Ways and Means Committee's $40.3 billion spending plan for the July 1 fiscal year includes more than $400 million in new revenues but, similar to previous budgets offered by Republican Gov. Charlie Baker and the House of Representatives, does not call for any significant hikes in the most widely-paid taxes in Massachusetts.

Senate Democratic leaders have suggested the need for new taxes to fund to keep up with demand for government services, yet for now appear to be staking their hopes on a proposed "millionaires tax" that could go before voters next year.

The budget proposal to be debated by the full Senate next week assumes a 3.9 percent increase in revenues, an estimate agreed upon months ago by House and Senate leaders and the Baker administration. But 10 months into the current fiscal year, tax collections had risen only 1.1 percent over the same period a year ago, and were $462 million below benchmarks.

Democratic Sen. Karen Spilka, the committee's chairwoman, called the budget "balanced and fiscally responsible." But she would not rule out cutting revenue projections during later negotiations with the House, a move that might then require corresponding cuts in spending.

"By the end of June we'll have a balanced budget on the governor's desk," Spilka pledged.

The panel calls for extending the state's lodging tax to include Airbnb and other short-term rentals, a move the committee said would bring in $18 million a year. Baker offered a similar proposal but it was not part of the House budget approved last month.

The Senate budget also allows a "fair share" assessment on businesses to help offset rising state Medicaid costs. It would authorize the administration to either increase an existing health care fee paid universally by employers, or create a new assessment on employers with 25 or more workers who do not offer health insurance benefits to their workforce.

Baker's original plan calling for a $2,000-per-worker assessment on companies with 10 or more employees had met with resistance from business groups. The more restrictive Senate plan would also limit the assessment to two years and exclude some nonprofit organizations and companies that employ mostly part-time workers.

A spokeswoman for Baker said he looks forward to working with the Legislature on a final budget, but is concerned that lawmakers underfunded several accounts, including one that pays public defenders, and failed to include cost-saving welfare reforms sought by the governor.

Asked about the potential revenue shortfall, Sen. Vinny deMacedo, the ranking Republican on the committee, compared the budget process to a baseball game in the 5th inning, with the score likely to change in later innings.

"We're going to have to address the revenue picture, there is really no way around it," said the Plymouth Republican.

Other highlights of the Senate budget plan:

— Includes a new $15 million program to help low-income children access preschool.

— Provides a minimum $30 per pupil increase in state aid to public school districts.

— Pledges nearly $100 million for the state's "rainy day" fund.

— Creates a commission to review all tax breaks and tax credits offered by the state.

— Diverts $15 million from a fund to help the horse racing industry to use for general purposes.

The Senate panel did not include a House-passed proposal to let casinos serve liquor until 4 a.m., rather than the current 2 a.m. last call.

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