The Massachusetts House has finally taken up Governor Deval Patrick’s bill to balance the FY 2009 budget, with some important tax proposals appearing to bite the dust. The Governor had proposed eliminating the sales tax exemption for beverage alcohol, and imposing a sales tax on candy and soda, but those have been stripped out of the bill. New registry fees, asked for by Patrick in FY2009, appear to have been stripped out as well. From the State House News Service:

House leaders appear to have laid aside Gov. Deval Patrick’s bid for a $25 million midyear sales tax increase on candy, sugared drinks, and alcohol, but yielded to his request for $327 million in withdrawals from the state’s quickly shrinking stabilization account.

The House Ways and Means Committee is poised Tuesday to approve portions of Patrick’s “emergency recovery” bill, filed Jan. 28 as a way to close a fresh $1.1 billion budget deficit. Last week, House Speaker Robert DeLeo said another gap had opened in the fiscal 2009 plan, estimated between $200 million and $500 million.

The Speaker’s reference to an additional FY2009 gap is ominous. With the Legislature not appearing to be willing to act on revenues, and not wanting to impose further cuts, the State’s Rainy Day Fund may take another hit. The House will now consider the Governor’s tax proposals as part of the FY2010 budget.