Things to know about Massachusetts' state budget delay as new fiscal years get underway

Meet the state's new fiscal year. Same as the old fiscal year.

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For now at least.

July 1 came and went without a final agreement between the House and Senate on how Massachusetts should spend roughly $38 billion over the next 12 months. Top legislators insist a budget deal is close and no one on Beacon Hill has used words like "impasse" or "breakdown" to describe negotiations.

It's not an unusual occurrence for the state to begin a fiscal year without a budget in place, but in each of the last six years, a spending plan had at least been delivered to the governor's desk for review by July 1.

Here's what you need to know about the state budget delay:

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BUSINESS AS USUAL

There is no government shutdown and state operations are continuing as usual thanks to a $5.5 billion stopgap budget signed by Gov. Charlie Baker. The governor wanted a two-week interim budget, but the Legislature gave him one that would cover the entire month of July if necessary, which was seen as a possible sign that talks were progressing slowly. The stopgap budget keeps agencies funded at last year's levels, but the longer it's in place, the longer it will take for new budget initiatives, or targeted spending increases, to take hold.

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DEALMAKERS

It's up to a six-member conference committee — three from the House, three from the Senate — to resolve budget differences between the chambers. The House members are Reps. Brian Dempsey, D-Haverhill; Stephen Kulik, D-Worthington; and Todd Smola, R-Warren. Sens. Karen Spilka, D-Ashland; Sal DiDomenico, D-Everett; and Vinny deMacedo, R-Plymouth, comprise the Senate contingent. But the heavy lifting is almost certainly being done by Dempsey and Spilka, the chairs of their chambers' Ways and Means panels. Legislative rules allow the conference committee to negotiate under a virtual cloak of secrecy, with meetings closed to public view.

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TAX TROUBLES?

The secretive nature of the budget negotiations make it difficult to pinpoint what any sticking points might be, but one possible hang-up could be over a tax amendment that was added during Senate debate. The proposal calls for freezing the state's income tax rate at its present 5.15 percent, while also increasing the earned income tax credit by 50 percent over three years. House leaders — and Baker — are supportive of boosting the EITC, but much less so of freezing the income tax rate, which critics say amounts to a tax hike since under current law the rate would be allowed to gradually fall to 5 percent.

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MBTA REFORMS

The specter of last winter's disastrous public transit failures has loomed over the budget process and both chambers included proposals aimed at strengthening MBTA management. But it now appears more likely that any major reforms will be dealt with in a separate bill later this summer. Disagreements remain among lawmakers over proposed changes in arbitration rights for MBTA unions and whether the T should be exempted from the state's anti-privatization law. Regardless, the agency should be somewhat better off financially as both the House and Senate backed a $65 million hike in state subsidies over the previous fiscal year.

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BAKER'S BUDGET

When Baker does finally sign the budget, it will signal a transitional moment in his administration. For his first six months in office, Massachusetts has been operating under a budget formulated before he took office, and the Republican has repeatedly complained that state government has a "spending problem" that needs to be controlled. Once the new budget is in place, with his signature on it, the management skills and pledges of fiscal austerity that Baker campaigned on will be put squarely to the test. We already know the executive branch will be a bit leaner in the new year, as nearly 3,000 state workers opted for an early retirement program offered by Baker and approved by lawmakers.