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.
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