Healey Budget Raises Spending By $2.1 Billion

Gov. Maura Healey discusses her fiscal 2025 budget proposal at a State House news conference Jan. 24, 2024.
Sam Doran

STATE HOUSE, BOSTON, JAN. 24, 2024…..[Coverage Developing] The second annual state budget bill from Gov. Maura Healey proposes $58.15 billion in total spending, suggesting comparably modest growth over prior years, and a bevy of cost-control maneuvers in an attempt to navigate an increasingly uncertain financial environment.

Healey’s fiscal year 2025 budget calls for about $2.07 billion or 3.7 percent more in spending compared to the fiscal 2024 budget she signed in August. A combination of expanded and new investments, including hundreds of millions of dollars for MBTA operations and low-income fares, are among the measures driving up the bottom line.

Amid a forecast for little to no tax revenue growth, Healey’s team balanced their plan by trimming $450 million from various line items, proposing to prevent about half a billion dollars in other spending growth, and deploying $1.25 billion other available state resources.

Cost controls include closure of the MCI-Concord medium security prison and changes at MassHealth, which typically reflects the largest share of the budget. The budget will propose “flat spending” for MassHealth’s personal care attendant (PCA) program, reflecting a cap on hours authorized for meal preparation and some eligibility changes related to Activities of Daily Living (ADL) support.

The bill does not propose any new tax increases to generate additional revenue, nor does it recommend tapping into the state’s more than $8 billion “rainy day” savings account.

Instead, it calls for spending more than $500 million that lawmakers had set aside for K-12 public schools and early education and care, and allowing the administration to use $375 million that would normally be stashed into the stabilization fund as part of the annual budget.

“These recommendations establish a responsible glidepath into future fiscal years, as tax revenues improve and our economy steadily grows,” officials wrote in a budget brief.

The budget would fully fund another year of the K-12 education funding law known as Student Opportunity Act in part by drawing down $300 million from an investment fund specially designed to cover the costs of the law. Beacon Hill built up that fund in past years when the state was more flush with cash, and the withdrawal would leave about $200 million for future use.

Healey’s plan would also pull $265 million from a similar early education and care affordability fund, fully depleting its balance.

Other new funding sources the budget targets include $100 million in redirected casino gaming revenue, $75 million in projected revenue from authorizing online Lottery sales, and a one-time “tax amnesty” program that officials say could generate $75 million.

Excluding the use of income surtax revenues that are specifically earmarked for education and transportation, the budget proposes about $56.1 billion in spending, an increase of 2.9 percent over last year. Administration and Finance Secretary Matthew Gorzkowicz said the non-surtax spending growth rate is about half as much as the typical increase over the past five years and is slightly less than inflation.

The administration proposes another $682 million in spending on the Medical Assistance Trust Fund and $1.3 billion in surtax spending, an increase of $300 million over the fiscal 2024 budget that marked the first use of the voter-approved revenue source.

Surtax dollars drive many of the most noteworthy spending increases in Healey’s latest plan, with about 55 percent of the stream directed toward education and 45 percent toward transportation.

Healey’s budget proposes another year of funding free school meals for all students, using $170 million in surtax revenue, and $475 million in Commonwealth Cares for Children grants to early education and care providers funded partly via the additional levy on high-earning households.

MassReconnect, the program covering unmet community college costs for certain eligible adults that the state launched last year, would get $24 million in Healey’s budget, representing a $4 million increase.

The bill proposes $127 million more in state operating assistance to the MBTA, where officials continue to sound the alarm about their own budget gaps as they work to overcome a sustained period of service and safety problems.

It would also use surtax funding to backstop $1.1 billion in new transportation-related borrowing capacity. Gorzkowicz said that move could steer $300 million in bonds to help the MBTA fix tracks and eliminate slow zones in fiscal 2025, and $800 million for other T and Department of Transportation capital projects in the next five years.

Cities and towns could be in line for another boost in local road funding, too. Healey, who on Monday filed a bill calling for $400 million in Chapter 90 funds over two years, also proposes in her budget to supplement the program with $100 million in surtax revenue.

The budget calls for increasing unrestricted general government aid to municipalities by 3 percent and Chapter 70 aid for public education by 4 percent.

While her administration continues to navigate an emergency shelter crisis, Healey will look to a separate legislative vehicle to cover unmet costs for the system.

Her annual state budget proposes level-funding the emergency assistance shelter system at $325 million in fiscal year 2025, which officials said could fund service for about 4,100 families — just a bit more than half of the 7,500-family cap the administration implemented in response to unprecedented demand. The administration has estimated in recent reports to the Legislature it will need more than $900 million annually this year and next year to cover costs.

Healey on Wednesday also plans to file a separate supplemental budget that proposes draining a savings account, known as the transitional escrow fund, to help manage the shelter crisis in fiscal years 2024 and 2025.

With an eye on the increasingly common extreme weather events that last year hammered Massachusetts residents, especially farmers, Healey’s budget calls for creating a standalone disaster relief fund. The bill does not include seed money for the fund, instead proposing to automatically deposit 10 percent of excess capital gains tax revenues each year in addition to other sources like federal grants.

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01/24/2024

Original Link: Healey Budget Raises Spending By $2.1 Billion

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Healey Resets Budget Outlook With Spending Cuts, Downgraded Forecast

Administration and Finance Secretary Matthew Gorzkowicz addresses reporters in his office’s front lobby on Monday, Jan. 8, 2024 about the administration’s mid-year emergency budget cuts. Sam Doran

STATE HOUSE, BOSTON, JAN. 8, 2024…..[Coverage Developing] Gov. Maura Healey and her budget team hit the reset button Monday, announcing a plan to cut $375 million from the current year’s budget amid flagging tax collections, to downgrade the amount of tax revenue expected this budget year by $1 billion, and to build the next state spending plan on the assumption that even less tax revenue will come in next year.

By paring back spending over the next six months, tapping into investment earnings that are generally not used in budgeting, and planning for basically flat growth next year, Healey administration officials said they think they will be able to get through fiscal year 2024 without having to make additional cuts and can then build a balanced budget for fiscal year 2025.

“We expect that while the economy’s is growing, it’ll be a bit slower. There are some positive signs — the interest rates not increasing and the prospect of them coming down later this year, I think, bodes well for what we’re seeing in terms of our growing out of this,” Secretary of Administration and Finance Matthew Gorzkowicz said Monday. “So we see this pretty much as creating a glide path to FY26. We see this as sort of a 12-to-18-month condition where we have to do some belt-tightening. But overall, we think that … we don’t see this as being a recessionary environment and we believe the economy will continue to grow in [FY] 25.”

Halfway through fiscal year 2024, the state has collected $769 million or 4.1 percent less tax revenue than the projections used to craft an annual budget featuring steep spending increases and a record bottom line of $56 billion. It’s not that tax revenue has declined — in fact, tax revenue has increased a hair compared to the same point one year ago, up $60 million or 0.3 percent — but the limited revenue growth has not been enough to line revenue up with Beacon Hill’s appetite for spending.

To address what the governor said is a “budgetary shortfall totaling $1 billion” and to reset the foundation for future budgets, the Healey administration announced a multi-pronged plan Monday.

The plan includes $1 billion worth of “solves” to close the existing gap — a net $375 million in spending cuts along with $625 million in newly-tapped non-tax revenues. The plan is meant to address the existing revenue shortfall of $769 million while also providing some breathing room for the second half of the budget year, when Gorzkowicz said he expects additional months of below-benchmark collections.

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The governor’s cuts affect 66 different line items.

Among them is a gross $294 million reduction in MassHealth fee for service payments. An administration official said there are no eligibility changes, but MassHealth had room to trim because the ongoing redetermination effort has eliminated more people from MassHealth enrollment than expected by this point and because utilization of some key MassHealth services is below what was expected.

A big portion of the non-tax revenues being relied upon to close the budget gap are expected to come from increased investment earnings that the state typically does not budget against. Gorzkowicz said the current high interest rate environment helps the state generate more interest earnings on some of its investments.

“We don’t always budget against those because interest earnings, particularly in this type of environment, are very volatile. And so we usually budget against a pretty, pretty nominal amount, a pretty conservative amount of that. And so we know that this fiscal year we’ll see increased investment earnings, and so a big portion of the 625 [million dollars] will come from those earnings,” the secretary said.

The remainder of the $625 million in non-tax revenue will come from higher-than-budgeted departmental revenues, Gorzkowicz said.

Gorzkowicz also decreased the fiscal year 2024 revenue estimate by $1 billion, from the $41.41 billion figure that he and key lawmakers agreed a year ago to build the fiscal 2024 budget on to $40.41 billion, including revenue from the state’s new surtax on income above $1 million.

And Gorzkowicz also announced Monday that he, House Ways and Means Chairman Aaron Michlewitz and Senate Ways and Means Chairman Michael Rodrigues have agreed to base the fiscal year 2025 budget — which Healey has to file with lawmakers by Jan. 24 — on a consensus revenue forecast of $40.202 billion plus an additional $1.3 billion in surtax revenue.

 

Original link: Healey Resets Budget Outlook with Spending Cuts, Downgraded Forecast

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One SouthCoast Chamber Policy Pulse – January 2024

As we kick off 2024, One SouthCoast Chamber is excited to announce the Public Policy Pulse. This new column aims to spotlight up-to-date policy issues at the local, state, and federal levels affecting our business community in a high-level, easy-to-understand format. Whether it’s legislative changes, ballot initiatives, or regulatory updates, the Policy Pulse is your source for staying informed and understanding the potential implications for your business. Through the Policy Pulse, our goal is to spark interest, foster dialogue, and encourage stakeholder engagement around the ever-evolving policy landscape.

For those of us who enjoy, or should I say tolerate, all things Politics, there is no doubt that 2024 will be a year we never forget.

The state legislature has returned to Beacon Hill to begin work on the second year of their two-year session. Any legislation that has aspirations of becoming law must be passed by the end of the formal session on July 31st. We can expect to see movement and debate over legislative priorities as this deadline approaches.

Budget season has officially reached the State House as Governor Maura Healey prepares her fiscal 2025 proposal. With state tax revenues missing their projected benchmark for the sixth month in a row and state spending exceeding expectations, budget leaders certainly have their hands full as they work to find a way to rein in spending and balance a state budget.

In 2024, we will be heading to the polls to cast our ballot on several issues. At the top of everyone’s mind is, of course, the presidential race. While this will prove to be a monumental race, there will be many questions on the ballots this year that may have a significant impact on your life and your businesses. This spring, most towns will hold municipal elections for local government. In the fall, in addition to electing our next president, we’ll be casting our votes for U.S. Senate, U.S. Representatives, Governor’s Council, State Senators, State Representatives, and even county office, depending on where you live. On that very same ballot, we’ll undoubtedly be faced with a slew of ballot referendums that will be put before the Massachusetts voters, some of which may include an increase in the minimum wage for tipped workers, the employment structure of app-based drivers, MCAS reform, and even the legalization of psychedelic mushrooms.

With such an exciting year ahead, One SouthCoast Chamber and our Board of Directors have prioritized enhancing our public policy efforts. With the retirement of COO and dear friend Rick Kidder, we are excited to have brought on Ian Trombly to lead our public policy efforts. Ian will be representing One SouthCoast on the Massachusetts Chamber Policy Network, a coalition made up of nine of the largest chambers in the Commonwealth who will advocate as one voice for policy that impacts the business community.  Ian will also be revamping several committees, including the Education Committee, which will be chaired by Carl Sawejko, President of Sawejko Communications, and the Government Affairs Committee, which Paul Chasse, CEO of the REALTOR® Association of Southeastern Massachusetts, will chair. We want to give special thanks to our past chairs, Nicholas Christ, Chris Howard and Julie Gagliardi, who led the Education Committee, and William Burns, who led the Government Affairs Committee, for their hard work and dedication over the years.

We look forward to working with you all throughout this busy, yet exciting year ahead. If there are any specific policy or legislative issues that you are interested in, or if you would like to be involved in any of our committees, please reach out to Ian at itrombly@onesouthcoast.com. Be well, and Happy New Year!

 

 

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