Republican Gov. Charlie Baker has filed a $40.5 billion state budget proposal with the Legislature that seeks new controls on Medicaid costs and $179 million in tax changes.
The fiscal 2018 budget would mark the first time that state spending has exceeded $40 billion.
Administration officials say the budget calls for overall spending to rise 4.3 percent, with a net increase of 2.7 percent when federal Medicaid reimbursements are included.
Baker says the spending plan reduces a structural deficit from $1.2 billion when he took office in 2015 to less than $100 million.
The spending plan calls for $440 million in Medicaid savings.
The tax changes, which officials emphasized were not tax increases, include applying the state sales tax to more online retailers who operate outside the state.