Dukakis hard at work crafting '90 budget, filling gaps in his cabinet

WHILE many fellow Bay Staters are taking it a bit easier for a few days, Gov. Michael Dukakis is hard at work. The Massachusetts head of state, who returned to his Beacon Hill desk Dec. 19 after a week's respite in Florida, will be focusing on three areas:

Putting the finishing touches on the fiscal 1990 state budget.

Filling some key posts in his administration.

Preparing his ``state of the state'' message.

The annual gubernatorial address, to be delivered before a joint Senate-House gathering, will almost certainly set the tone for 1989 and probably the rest of Mr. Dukakis's third term as governor.

Dukakis, unlike some past governors, is not content to leave the crafting of the ``state of the state'' address to others. At least a portion of his presentation is expected to include a renewed commitment to improving the plight of the disadvantaged while safeguarding what has been accomplished in that direction during his administration.

The chief executive, having gotten along famously with the legislature for the past six years, will almost surely have plenty of praise for the lawmakers, whose continued cooperation and support he needs.

Shaping the fiscal 1990 budget has been made particularly difficult by the increasingly uncertain condition of state revenues. The governor would ordinarily be well along with that spending blueprint by Thanksgiving, but he got off to a late start because he had to devote so much time and energy to balancing the budget for the current fiscal year, now nearly half-gone.

Cutbacks that had to be made in the current budget make the task of coming up with figures for the next 12-month cycle all the more complicated, since the period involved does not begin until next July.

Once the fiscal 1990 budget is off to the printers, or shortly thereafter, Frank Keefe, Dukakis's secretary for administration and finance for the past six years, will be stepping down to pursue career opportunities outside government.

Taking over the fiscal reins will be Edward Lashman, a close Dukakis ally. He has served the governor in a variety of positions and currently chairs the state board of regents of higher education. He comes to the full-time, $80,000-a-year cabinet post from Harvard University, where he has been vice-president for external affairs.

In Mr. Lashman the governor has someone who can get along with other members of the state administration, as well as lawmakers. Keefe, whose performance has been increasingly criticized in some quarters for making the commonwealth's financial outlook sound better than it is, can hardly be faulted for a lack of loyalty to the governor. During the presidential campaign, when candidate Dukakis was often out of the state, Keefe worked mightily to play down the revenue shortfall the commonwealth is facing.

What is needed at administration and finance is a chief with both management skills and a knowledge of the inner workings of state government.

Also on the governor's talent-search list has been a new secretary for economic affairs. It is the cabinet-level position formerly held by Lt. Gov. Evelyn Murphy and occupied for the past three years by Joseph Alviani, who left Dec. 1 to join a Boston law firm.

In recent weeks three other top posts in Dukakis's official family - those of chief of staff, director of operations, and secretary for environmental affairs - have opened up.

S.Stephen Rosenfeld, the governor's former chief legal counsel, has been named chief of staff, taking over from Hale Champion, who had agreed to stay on only through the presidential campaign and has returned to his administrative post at Harvard University.

Jack Corrigan, a key Dukakis campaign aide, has taken over as the governor's chief of operations.

John P. DeVillars, who had held that post, moves into the Dukakis cabinet as secretary for environmental affairs. James Hoyte, who held the job since January 1983 is leaving state service at the end of the month.

Most other members of the current Dukakis cabinet and heads of key agencies are expected to stay on.