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Massachusetts governor signs budget, health curbs next

NEW YORK (Reuters) - Massachusetts Governor Deval Patrick on Monday said he signed a $30.6 billion budget, which cuts spending by $750 million, marking the biggest year-on-year reduction in 20 years.

The Democratic governor relied on an interim budget to ensure that the state government would not have to shut down when it looked likely that the July 1 deadline would be missed.

The new accord withdraws $185 million from the state's rainy day fund, a step that credit agencies often frown upon.

But Patrick noted in a statement that the fund will have at least $585 million when the new fiscal year ends, "ranking the commonwealth among the top ten states with the largest fund balances in the nation."

Massachusetts, like many state governments, has been eager to wring savings out of public employees because tax revenue has yet to fully recover from the U.S. economic recession.

To slash the costs of public work forces, the Republican governors of Wisconsin and New Jersey curbed collective bargaining rights, prompting fierce clashes with labor unions, which are traditionally supporters of Democrats.

Underscoring the sensitivity of this issue, the White House contacted the Massachusetts governor's office to inquire about his plan to limit some union power over healthcare coverage, according to a source familiar with the matter.

"The White House did check in ... just on the status of the municipal healthcare reform," said the source, who requested anonymity. The purpose of the questions was fact-finding, he said.

A spokesman for the governor declined to comment.

The Massachusetts governor is expected to sign the healthcare measure as soon as Tuesday.

Massachusetts Senate President Therese Murray with House Speaker Robert DeLeo in a joint statement on July 1 billed it as a middle-of-the-road approach, which ensures "that employees and retirees have a strong voice without a veto."

As long as the healthcare plans' features do not cost more than the health insurance program for state workers and legislators, municipalities can "alter co-payment, deductibles," and other items, they said.

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