Karen Spilka. In January 2017, Baker proposed a $40.5 billion state budget for fiscal year 2018, and in his 2017 State of the Commonwealth Address, Baker reiterated his opposition to broad-based tax increases for the 2018 state budget. In March 2017, legislative hearings began to review Baker's budget proposal, and with tax revenues coming in 9.1 percent lower than expected the previous month, the likelihood of overturning Baker's midyear budget cuts from the previous December became unlikely, and Speaker DeLeo stated that reversing those midyear cuts would be "very difficult." In June 2017, S&P Global Ratings downgraded the Massachusetts state government's credit rating to its third tier, citing the state government's failure to replenish its budget shortfall reserves as stipulated by the state's own fiscal policies. After missing the June 30 deadline to pass a state budget, in July 2017, both houses of the state legislature approved a $40.2 billion compromise state budget for fiscal year 2018, and Baker signed it into law 10 days later. In August 2017, Baker filed legislation to renew the state's sales tax holiday weekend, and the following month, the Massachusetts House of Representatives overrode Baker's vetoes of $275 million in spending from the 2018 state budget. In January 2018, Baker proposed a $40.9 billion state budget for fiscal year 2019. In June 2018, Baker signed into law a "grand bargain" bill that created a permanent sales tax holiday weekend and increased the state's payroll tax to fund a new paid family and medical leave program, and the state finished the 2018 fiscal year with a $1 billion budget surplus. The following month, Baker signed into law a $41.2 billion state budget for the 2019 fiscal year, and the state legislature overrode all but one of Baker's spending vetoes. In August 2018, Baker returned a bill creating a tax and regulatory structure for short-term rentals (such as Airbnb) with an amendment creating an exemption for rentals fewer than 14 days. In October 2018, Baker signed into law a $541 million supplemental budget bill for fiscal year 2018 that included a $220 million deposit into the state's budget shortfall reserves, bringing the reserves up to $2 billion and double their balance from when Baker took office. In December 2018, Baker's administration announced that the state income tax would fall to 5.05% effective January1 of the following year, the state's Administration and Finance Secretary announced that the