$27.6B state budget OK'd; Loss of federal funds forces more cuts.

• Position: NEWS

Byline: John J. Monahan

BOSTON - The $27.6 billion state budget adopted by the House and Senate last night slashed hundreds of millions of dollars more than expected to make up potential losses in federal funding that state officials had been counting on.

If federal Medicaid funding is approved by Congress later, House and Senate budget leaders said the budget now on its way to the governor's desk provides for the cuts to be reversed, which would produce a $27.9 billion budget for fiscal 2011.

Hopes for the funding were set back further yesterday when Republicans in the U.S. Senate blocked an attempt to vote on a larger bill that included an extension of unemployment benefits.

"This is a terrible blow to Massachusetts," said U.S. Sen. John F. Kerry, D-Mass, of the Republican action. "This can cost our state half a billion dollars in Medicaid funding, jeopardize our seniors access to Medicare benefits and strip unemployment benefits from almost a hundred thousand laid-off workers," in the state.

U.S. Sen. Scott P. Brown, R-Mass, said he could not support the bill because it included tens of billions in tax increases and billions in new deficit spending. "Federal and state governments can't pass the buck anymore," he said.

Versions of the state budget that passed the House and Senate earlier called for deep cuts that were expected to prompt up to 1,500 state worker layoffs, and a 4 percent cut in local aid.

But the final revisions agreed to in the House-Senate conference committee reduced spending even further to make up for the possible loss of the Medicaid funding.

Gov. Deval L. Patrick and House and Senate budget writers had been confident the additional federal funds would be approved.

Mr. Brown insisted state officials were told the funding, part of the federal economic stimulus program, would be cut off as of Dec. 31, and state officials should not have counted on additional amounts for the coming fiscal year's budget.

On Beacon Hill, House Republicans said the governor never should have depended on the money when he proposed his budget in January.

To fill a $687 million gap, the budget calls for use of $195 million in rainy day reserve funds.

Also, about $160 million of $360 million in final spending cuts came from adoption of the lower of two line item amounts in cases where the House and Senate had approved different appropriations.

The spending cuts range from 1 percent to 100 percent for different programs to make up for the...