Massachusetts Gov. Charlie Baker

Massachusetts Gov. Charlie Baker's proposed $38.1 billion budget for fiscal 2016 projects $1.6 billion savings in Medicaid expenses, increases direct aid to the battered Massachusetts Bay Transportation Authority, and establishes an MBTA weather resiliency fund.

"Right-sizing the budget now" plugs a $1.8 billion gap without raising taxes or fees or drawing on the commonwealth's stabilization fund, Baker told reporters Tuesday afternoon in Boston.

Baker's budget is up $1.1 billion, or 3%, over that of fiscal 2015. Baker, a Republican who took office in January, needs the approval of a Democratic legislature. The House and Senate must approve it separately before a six-member panel consisting of both branches crafts a final plan for an up-or-down vote.

Moody's Investors Service rates the commonwealth's general obligation bonds Aa1. Fitch Ratings and Standard & Poor's assign AA-plus ratings. Speaking in December at the commonwealth's annual investor conference, Baker said Massachusetts should strive for a triple-A rating.

The governor, a former health-care administrator, called for tightening eligibility requirements for MassHealth, the state's Medicaid program.

According to Baker, MassHealth consumes 71% of the Health and Human Services budget, which accounts for 53% of this year's budget proposal. Baker said his plan curbs projected growth at MassHealth in fiscal 2016 to 5.6% from 16%.

"Our plan will ensure that only the people who are truly eligible receive services and that revenue opportunities are maximized," he said.

Baker's budget would increase unrestricted municipal aid and school aid by $34 million and $105 million, respectively.

The proposal increases overall transportation funding by $109 million, or 20%. The MBTA, whose systemic breakdowns during a winter of record snowfall have generated national headlines and embarrassed state officials, would receive a 53% bump in direct aid, from $122.5 million to $187 million. Funding for ice and snow would total $72 million, including expected federal reimbursement in the wake of storms.

The weather resiliency fund, said Baker, would support operating costs, projects and programs in weather-related circumstances. The MBTA's $6.2 billion capital plan for 2015-2019 included only $2.8 million, or 1/20th of 1%, for snow-fighting equipment, according to Boston free-market think tank Pioneer Institute.

According to Pioneer executive director Jim Stergios, lawmakers outside Greater Boston may be wary of pumping more money into the MBTA given the agency's reputation for dysfunction. "I believe there may be openness to help the 'T' with unexpected costs associated with snow removal, but there is likely to be skepticism of additional 'T' funding unless the Baker special panel comes up with a clear and tough plan to turn around the authority," said Stergios.

Baker has appointed a six-member committee to examine MBTA's operations. It is scheduled to complete its review by the end of March.

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