May 26, 2006

Mass. Senate approves $25.4 bln budget

NEW YORK (Reuters) - The Massachusetts Senate approved a
$25.4 billion budget for fiscal 2007 which boosts local and
education aid, gradually cuts the state income tax and raises
the minimum wage, a Senate spokeswoman said on Friday.

The Senate vote late on Thursday is one of the steps in the
budget approval process for the year that starts July 1. The
House approved its version of the budget in April.

The Senate budget lifts the previous cap for distribution
of lottery aid to cities and towns and increases the so-called
Chapter 70 aid for schools by $210 million. Chapter 70 aid is
school funds for local communities.

"We have made substantial investment in two out of the
three funds that go toward communities to help them run their
schools, police departments, firefighting and first response
teams," said Ann Dufresne, spokeswoman for Senate President
Robert E. Travaglini.

Senators also approved a minimum wage increase to $7.50 per
hour starting September 1 from the current level of $6.75 per
hour. In 2007, it will rise to $8.25 per hour and starting in
2008, the minimum wage will be adjusted for inflation annually.

Lawmakers also agreed to cut the state income tax to 5
percent over the next three years, provided the state first
brings its education and local aid funding to the 2002 level.

In 2000, voters overwhelmingly passed a referendum to
reduce the income tax rate to 5 percent from 5.95 percent, but
the Legislature froze the rate at 5.3 percent in the midst of a
financial crisis.

Massachusetts Gov. Mitt Romney has called on the
Legislature to roll the income tax rate back to 5 percent.

The House version does not include proposals for the
minimum wage increase and for the tax cut.

Both branches of the legislature will have to name a
conference committee that should reconcile differences between
the House and Senate budgets before the document goes to Romney
for a signature.