Republican Gov. Charlie Baker filed a $40.9 billion state budget with the Legislature on Wednesday, one that calls for a modest 2.6 percent hike in overall spending and renews a previously rejected proposal for curbing Medicaid costs.
The election year blueprint would increase total spending by $933 million spread over various areas of state government, including $83 million to upgrade programs for mentally ill adults, $20 million for the state's child welfare agency and $49 million to cover rate increases for early education and child care.
Also included are funds to hire 200 new correction officers, 100 state police recruits and to raise the starting salaries for prosecutors in district attorneys' offices.
"This fiscally responsible budget continues to support every community in the Commonwealth, without raising taxes on the people of Massachusetts," said Baker, who plans to seek a second four-year term in November.
The administration and legislative leaders have agreed to base their spending assumptions on a projected 3.5 percent increase in tax revenues during the fiscal year that starts July 1. The estimate is a conservative one as tax collections in the current fiscal year are running about 6 percent ahead of the benchmark.
The administration touted its success in slowing down runaway costs of MassHealth, the state's Medicaid program that consumes about 40 percent of the total budget. While MassHealth spending would continue to rise in the governor's budget, it would so by only 1.3 percent -- below than the overall projected spending increase.
Baker is again asking lawmakers to approve a shift of 140,000 non-disabled people from MassHealth into subsidized insurance offered through the state's Health Connector. The same plan was turned aside last year by the Democratic-controlled Legislature, following objections it could harm low-income families.
Addressing those concerns, Secretary of Health and Human Services Marylou Sudders said the subsidized insurance plans would more closely mirror Medicaid coverage, include dental benefits and eliminate co-payments.
If lawmakers again reject the plan, Medicaid costs are likely to rise more than 3 percent, Sudders said.
The budget assumes the state's income tax rate will drop from 5.1 percent to 5.05 percent next January. Baker also is seeking to increase the state's earned income tax credit for working families from 23 percent of to 30 percent of the federal credit, a proposal likely to be embraced by many Democrats.
The governor is again proposing to extend the state's hotel tax on short-term rentals, including online services such as Airbnb, a move projected to raise $13 million. Lawmakers have yet to act on similar proposals.
The governor has told cities and towns to anticipate a $37 million increase in unrestricted state aid, and a $118 million increase in aid to public schools, including $15 million to help school districts dealing with an influx of students whose families left Puerto Rico after Hurricane Maria.
In a statement, Sen. Sonia Chang-Diaz, a Boston Democrat who chairs the Senate Education Committee, called the school funding request "inadequate," arguing it would leave K-12 funding down more than 5 percent since 2002 after being adjusted for inflation.
"That means more cuts to classrooms, in reality," she said.
The administration is seeking in the budget to make a minimum $93 million deposit to the state's reserves. Standard & Poor knocked the state's bond rating down a notch last year, citing the state's failure to replenish its so-called rainy day fund.