Budget Woes, Gubernatorial Race Dominate State Political Scene

If January is any indication of the future, 1989 promises to be a year of turmoil in Massachusetts politics.

A year ago, as a candidate for the Democratic presidential nomination, Gov. Michael S. Dukakis campaigned across the country touting the "Massachusetts Miracle." Aides to powerful Senate President William M. Bulger, a Democrat, were quietly talking about a campaign for state-wide office. And no rational politician dared make designs on the Governor's office. Suddenly, all of that has changed.

Budget Battles

In the coming months, Dukakis faces a battle over next year's budget with an angry legislature while still facing this year's revenue shortfall.

Dukakis's proposed fiscal 1990 budget--which was unveiled last week and calls for a 12.4 percent increase in state spending--is already under attack from legislative leaders, who denounced the $13.4 billion plan, saying the governor is unaware of the state's "new fiscal realties."

The budget for this fiscal year, which ends June 30, is out of balance by $636 million.

Senate Ways and Means Committee Chair Patricia MacGovern (D-Lawrence), whose committee must approve the budget, has requested that Dukakis rescind his proposal and overhaul the plan before resubmitting it.

The Dukakis budget plans come in the wake of negative reaction to the governor's proposal for a $604 million tax hike for next year. The tax plan would raise revenue by increasing taxes on alcohol, cigarettes and capital gains.

Lacking support from even his most staunch legislative allies, Dukakis recently launched a statewide campaign to generate support for the tax plan. But legislative leaders have adamantly insisted that the public will not tolerate tax hikes.

Bulger in a Bind

Senate leader Bulger will face renewed criticism in coming months over his role in a controversial Boston real estate deal. Last week, Massachusetts Attorney General James Shannon called upon the U.S. Justice Department to review the federal probe of the 75 State Street construction project, to which the South Boston Democrat is linked.

In 1985, Bulger's former law partner, Thomas Finnerty, received $500,000 from real-estate developer Harold Brown for help in securing government permits on the State Street project. Two years later, Brown sued Finnerty, claiming the payment was part of an influence-peddling scam involving the Senate President.

Although the case was settled out of court in December, Bulger had received $240,000 out of the payment through a trust fund. Bulger has said that the money was a loan against future legal fees and that he repaid the loan with interest once he knew Brown was the source of funds.

Also that month, the Federal Bureau of Investigation and the U.S. Attorney's office closed, without any major indictments, a wide-ranging 2 1/2-year investigation into Boston real estate that included the State Street project. But federal investigators never questioned Bulger. Shannon refused to launch a state-wide probe, but instead requested that U.S. Attorney General Richard L. Thornburgh review the case.

Race Heating Up

Dukakis' surprise announcement last month that he would not seek reelection in 1990 has sent prospective governors from both parties scrambling for attention, money and organization.

Lieutenant Governor Evelyn Murphy, State Rep. John Flood (D-Canton) and former Massachusetts Attorney General Francis X. Bellotti are expected to announce their candidacies in the next few months. U.S. Rep. Joseph P. Kennedy II is reportedly considering running.

Possible Republican candidates include White House advisor Andrew Card, former U.S. Attorney William Weld, State Sen. Paul Cellucci (R-Hudson), State Rep. Steve Pierce (R-Westfield) and former U.S. Senate candidate Joseph D. Malone '78.

The first hurdle of the upcoming gubernatorial campaign is February 4, when state Democratic caucuses elect delegates to the party's issues convention, held this spring. Prospective candidates' organizational strength is typically gauged by their convention showing.