Updated as of 6/24/20
Massachusetts government is funded on a fiscal year basis. Fiscal Year 2021 runs from July 1, 2020 - June 30, 2021. This page will give you updates on the FY2021 budget process. This page lists newest actions first.
|House Budget Appears Unlikely by July 1, 2020 Deadline||
On June 24, the Massachusetts House adopted emergency rules to govern its operations during the pandemic, including a new target date for Democratic leaders to produce an annual state budget. The House Ways and Means Chairman Aaron Michlewitz indicated that his committee does not expect to present a full-year spending plan by next week.
The House will have to move off that date as it continues to try to anticipate how the economy will react the slow reopening of businesses and the threat of a second wave of the coronavirus in the fall. There is also the possibility that Congress will come up with additional federal relief that could dramatically change the state's fortunes, although the outcome of those talks remains uncertain.
The rules package adopted in May called for the Ways and Means Committee to produce a fiscal 2021 budget bill by the time the new fiscal year begins on July 1. Leaders are now looking into whether that rule must be changed, or whether the House's passage of a $5.25B interim budget filed by Gov. Charlie Baker to keep government funded through July can be interpreted to satisfy the requirement.
Emergency rule 15 states, " ..., the committee on Ways and Means shall report the General Appropriation Bill by July 1, 2020."
Baker on Tuesday reinforced the uncertainty with which state budget officials are operating. He specifically brought up the fact that the state delayed the April 15 income tax filing deadline until July 15.
In a joint letter to House Ways and Means Chair Michlewitz and Senate Ways and Means Chair Michael Rodrigues, Treasurer Deb Goldberg and Administration and Finance Secretary Michael Heffernan on June 8 said the state received $2.46B in funding from the federal CARES Act to pay for the state's emergency COVID-19 expenditures. The state's top finance officials noted that to manage cash flows the state had entered into a line of credit with commercial banks for up to $1.75B and highlighted a new state law authorizing the Treasury to borrow in anticipation of revenues, if necessary, with the funds needing to be paid back by June 30, 2021.
"The Commonwealth currently anticipates that it will have sufficient liquidity to meet ordinary treasury and cash flow needs for FY20 and FY21 through the existing liquidity and credit facilities and access to the capital markets," Heffernan and Goldberg wrote.
Treasury officials also say the state is eligible to borrow up to $7.86B under the Federal Reserve's Municipal Liquidity Facility program to help states with cash flow needs due to the later tax filing deadline.
State Treasury officials are expected to make the final monthly fiscal 2020 local aid payment to cities and towns next week without needing to resort to short-term borrowing.
Secretary Heffernan said he expected one or more interim budgets to be approved to keep state spending flowing while a fiscal 2021 budget is developed and approved by the Legislature.The first interim budget could be enacted in the Senate on Thursday and sent to Baker's desk.
Despite collapsing state tax revenues, the Baker administration opted against a formal downward revision of FY2020 tax collections, which could have triggered the need for immediate spending cuts or other budget-balancing plans. A revision to the FY2021 revenue estimate is expected, though, once an annual budget bill starts to advance in the Legislature.
Baker in January filed a $44.6B fiscal 2021 budget, which remains under review in the House. (source: State House News Service)
|Link to House 2, the Governor's FY2021 Budget Proposal||
On January 21, 2020, Governor Charlie Baker gave the annual State of the Commonwealth address. One January 22, he announced his administration's proposed budget for FY2021. In his speech before an audience of federal, state, and municipal elected officials and other leaders seated in the House Chamber, the Governor called for action on several legislative proposals, including a landmark housing production bill and health care reform legislation. Governor Baker also announced a goal to bring the Commonwealth to net-zero emissions by 2050, recommitted his support for the multistate Transportation Climate Initiative (TCI), and previewed initiatives from his proposed FY21 budget.
On January 22, 2020, tThe Baker-Polito Administration filed its Fiscal Year 2021 (FY21) budget recommendation, a $44.6B balanced and fiscally-responsible proposal which fully funds the first year of the historic Student Opportunity Act, increases funding for the MBTA and the Commonwealth’s transportation system and helps train 20,000 more workers in skilled trades and technical fields by transforming vocational high schools into Career Technical Institutes.
The FY21 budget, known as House 2, is based on the $31,151B consensus tax revenue estimate which anticipates a 2.8% growth in total tax collections over revised Fiscal Year 2020 (FY20) tax estimates. House 2 recommends a total of $44.6 billion in gross spending, excluding the Medical Assistance Trust Fund transfer, approximately 2.3% growth over FY20.
The central themes of the Baker administration's sixth budget (H 2) are education and transportation, Administration and Finance Secretary Michael Heffernan said. Public schools would see $355M in new spending -- the first payment towards a $1.5B, seven-year overhaul of the state's public education funding formula -- and the budget newly directs $216.7M to the MBTA and other transportation agencies to address safety and infrastructure issues.
Baker's budget was built on the consensus agreement of his administration and lawmakers that the state will collect an estimated $31.15B in tax revenue during fiscal 2021 -- 2.8% growth, modest compared to recent years of higher-than-expected collections that resulted in large surpluses.
The governor's budget would increase overall state spending by 2.3% above the current fiscal year, according to the administration, and accounts for a $96 million reduction in tax revenue associated with the income tax rate having dropped to 5 percent, a reduction of $95M because of the state's new restrictions on the sales of vaping products, and another $64M reduction from the scheduled re-emergence of a charitable giving tax deduction.
Baker's spending plan assumes the state will pull in $282.7M in revenue from casino gaming, $146M in marijuana taxes and another $14M from Cannabis Control Commission license payments and fines.
Gov. Charlie Baker proposed in his annual budget to increase the per-ride fees on such ride-sharing services as Uber and Lyft to $1 per ride and to use much of the new funding to improve the safety and reliability of the MBTA.
The House is expected to introduce and debate its proposed budget in April, and the Senate is expected to do the same during the month of May. The 2021 Fiscal Year begins July 1, 2020.
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