Updated as of 12/23/2021; the budget process started in January 2020
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 and Senate continue work on budget overrides on 12/23/20||
House and Senate lawmakers continued work on a succession of fiscal 2021 budget veto override votes, including a series of outside policy sections to the fiscal 2021 budget including one item allowing for early voting by mail for municipal or state elections through the end of March. The House is now out for the next four days and back in session on 12/28/20 at 11 am in full formal session.
|House Overrides Governor's Veto in Abortion Language||
The House rejected Gov. Charlie Baker's proposed changes to an abortion access provision Wednesday, doubling down on its own attempt to make the procedure more accessible to 16- and 17-year-olds and clarify when abortions are allowed after 24 weeks of pregnancy. In a display of the super-majority that Democrats wield, representatives voted 49-107 to turn back the Republican governor's amendment that would have altered two key sections of the high-profile proposal. The vote reiterated the House's support for its original abortion access language, approved as part of the fiscal year 2021 budget bill, which would lower the age for teenagers to receive an abortion without parental or judicial consent from 18 to 16 and make clear that abortions after 24 weeks can be allowed to "preserve" a patient's physical or mental health. "One month ago, we stood in this chamber and took action to protect access to safe and legal abortion care for women in the commonwealth," said Rep. Claire Cronin, an Easton Democrat who co-chairs the Judiciary Committee.
Senate action is expected later this week.
|Governor Baker Signs Budget, but Sends Back with Amendments||
12/11/20: Gov. Charlie Baker signed a $45.9B state budget on Friday that will not raise broad-based taxes and reflects a more optimistic view of state finances than once feared early in the pandemic, but the governor sent back with amendments a key section of the legislation that would expand access to abortion.
The budget, which is more than five months overdue, relies heavily on one-time revenue to balance spending growth of 4.5%, including more than $2.76B in federal COVID-19 funds and a draw of up to $1.7B from the state's "rainy day" fund.
The administration also planned to upgrade its revenue projections for the year by $459M, as some sources of tax revenue, like the sales tax, continue to perform strongly.
The budget level funds local aid to cities and towns and includes a $108M increase in Chapter 70 for schools, increases support for substance abuse treatment and boosts spending on rental assistance and food security programs.
The budget is still built upon $1.2B less in tax revenue than the state collected in fiscal year 2020 and $3.1B less than the original fiscal 2021 budget Baker filed in January 2020 before the pandemic began.
Though the governor often vetoes legislative earmarks, Governor Baker signed off on $80M in earmarks that it saw as one-time needs directed by local legislators to deal with the impacts of COVID-19, but the governor vetoed $156M in other spending, including $103M that he saw as an expansion of benefit programs or service provider rates that would carry from year to year.
In addition, the Governor vetoed $53M for K-12 education funding supported by the Legislature to help schools struggling to educate students during the pandemic. Instead, Governor Baker refiled for the $53M in an FY2021 supplemental budget bill that would allow his administration to dole out the money for targeted programs, rather than distribute it through a formula. The supplemental budget he filed Friday also included $49.4M in small business grants and $5M to help set up a new Peace Officer Standards and Training Commission, which was part of the policing accountability legislation that he returned to the Legislature Thursday with amendments.
In total, the governor signed 96 of the 113 outside policy sections passed by the Legislature, including one allowing the registrar of motor vehicle to require anyone granted a hardship license after being caught driving with a blood alcohol content of 0.15 or higher to use an ignition interlock device. He also approved of allowing marijuana dispensaries to sell hemp and hemp products grown and manufactured in Massachusetts, and he said yes to repealing a prohibition on crabbing in coastal waters from January 1 through April 30, which the administration said is unnecessary for managing the crab population. The governor proposed an amendment to the section of the budget that would allow for voting by mail through March 31, 2021 in any state or municipal election. While he approved of what the Legislature sent to him, he proposed to add to it by allowing municipalities to offer in-person early voting if they wanted to. The governor also returned a section of the budget related to MBTA service cuts with amendments.
|Conference Committee Finishes Work, House and Senate approve FY2021 Budget||
12/4/20: The Legislature sent its compromise $46.2B budget for the fiscal year that started five months ago to Governor Charlie Baker's desk. Conference Committee Report on Budget that was sent to Governor.
The House voted 147-10 to accept the budget and the Senate then accepted the budget unanimously. Governor Baker now has 10 days to review the budget and send back any vetoes.
The $46.2B budget relies on a series of one-time revenue options to close a $3.6B shortfall while making targeted investments into key elements including education, housing, food security, and combating domestic violence and substance addiction.
State Treasurer Deborah Goldberg's office was credited with refinancing existing state debt, so that the budget calls for $2.48B in debt service, a savings of $140M from the previous year's budget.
The budget contains numerous policy sections, including one that codifies the right to an abortion in state law and expands access to abortions in certain cases. Baker has said previously that he supports existing state laws on abortion, but not "late-term" abortions.
Meanwhile: Fiscal 2022 Budget Talks Start With December 15 Revenue Hearing - which is the start of planning for the next fiscal year, when the House and Senate Ways and Means Committee leaders and the administration invite economic expert and state finance officials to testify about their projections for revenue growth in FY2022, which starts July 1, 2021.
|FY2021 Budget Compromise Expected Soon||
12/2/20: The legislative conference committee work on the FY2021 state budget is meeting to work out differences between the House and Senate versions of the budget.
Lawmakers tasked with writing the compromise version of the long-overdue fiscal 2021 budget continued their private deliberations through the holiday weekend.
The Legislature needs to either approve a general budget compromise or seek another temporary budget to keep government operating through December. State agencies are running on an interim spending authorization that Gov. Charlie Baker said was intended to cover November but will also cover several days in December.
The House and Senate do not have any formal sessions scheduled this week to take up a budget.
Governor Baker, who has initiated the three interim budgets so far this fiscal year and wanted a full-year budget by Thanksgiving, has not filed a fourth interim spending plan.
More so than in previous years, the budgets contain many similarities. The differences that need to be resolved are not extreme. Policy sections were kept to a minimum. It is a proposed $46B budget. Lawmakers are facing the most complicated budget process they've faced in recent memory, with a series of interim budgets, with revenues not being as relatively reliable as they normal.
The budget is predicated on a drop in fiscal 2021 state tax collections that has yet to begin materializing.
Lawmakers appear likely to settle on a full-year fiscal 2021 budget in the $46B range, a spending plan that avoids tax increases or service reductions, and sets up a real struggle for fiscal 2022 by driving up the state's spending on the back of one-time federal revenues and a roughly $1.5B draw on state reserves.
The Massachusetts Taxpayers Foundation estimates a "multi-billion shortfall" for FY 2022, a budget cycle that could get underway this month with a revenue forecasting hearing, since Baker and the Legislature will need to replace about $3.5b in non-replicable revenues while facing higher costs in health care and pensions, as well as the need to begin funding a 2019 law aimed at shoring up public school finances.
A few major measures appear destined to become law soon since they are in both the House and Senate budgets as well as Governor Baker's revised fiscal 2021 budget. They include a one-time sales tax revenue bump of $267M obtained by accelerating the remittance due dates for certain vendors, delaying the start of a charitable giving tax deduction to net $64M for the budget, and a $107M increase in Chapter 70 school aid.
All three budgets fund the massive MassHealth program at about $18.5B, a big increase from the $16.7B in fiscal 2020. The taxpayers foundation says the estimated 10.7% increase in MassHealth costs stems from the addition of 182,300 members since the start of the pandemic. While the federal government is covering much of the new costs, major increases in MassHealth always threaten to crowd out other spending.
A huge unknown hanging over the next budget is expected federal aid for FY 2022.
The much-discussed fifth federal aid bill never materialized before the election. Talks over a lame duck session virus relief bill have picked up and U.S. Senate Majority Leader Mitch McConnell said Monday he expects discussion in the next Congress, with a new Biden administration, of a relief package.
|Budget Now in Conference Committee||
11/23/20: The FY2021 state budget is now with a six-member conference committee on Monday. The conference committee that will now negotiate a compromise FY2021 budget to be presented to Gov. Charlie Baker is led by House Ways and Means Chairman Aaron Michlewitz and Senate Ways and Means Chairman Michael Rodrigues. Other members include House Ways and Means Vice Chairwoman Denise Garlick, and the committee's ranking Republican Rep. Todd Smola, Senate Ways and Means Vice Chairwoman Cindy Friedman and ranking Republican Senator Patrick O'Connor.
The budget conference is now one of six actively seeking compromise on major legislation passed by the House and Senate this session. The Legislature in late July voted to suspend its rules and extend its formal lawmaking sessions until early January 2021, in part to deal with the budget and those bills in conference that had yet to be resolved. The last possible full day of formal sessions is Jan. 5, 2021.
Here's the lineup of these major bills:
FISCAL 2021 GENERAL BUDGET
Bills: H 5151 and S 2955
Bills: S 2500 and H 4933
Bills: S 2796 and H 4916
Bills: S 2874 and H 4887
Bills: S 2820 and H 4886
Bills: H 4547 and S 2836
Senate Finishes Budget 11/18/20; House and Senate Conference Committee to be appointed.
Senators worked through more than 473 amendments to their roughly $46B budget for the current fiscal year over 2 days of debate on 11/17 and 11/18/20. One of those amendments addressed was a closely watched provision dealing with abortion access, filed by Sen. Harriette Chandler, with a further amendment from Weymouth Republican Sen. Patrick O'Connor. The Senate voted 33-7 to add the major policy changes into its FY2021. Most of the amendments adopted or rejected Tuesday were dispensed with through the Senate's "bundling" process, where a group of amendments from the same categories receive a single "yes" or "no" vote. Amendments adopted outside of the bundling process include a Sen. Patricia Jehlen measure to give cash-strapped nonprofits more time to repay the unemployment trust fund and a Sen. Michael Rush amendment that would extend eligibility for veterans' benefits to the families of soldiers' home residents who died of COVID-19.
Senators filed 473 amendments to the annual state spending bill, which is currently four-and-a-half months overdue. Legislative leaders wrapped up the bill for Gov. Charlie Baker to sign by the end of the month, and have cautioned against making major additions to the framework negotiated between the branches in the interest of preventing the budget from getting bogged down.
|House finishes Budget Debate on 11/12/20||After two days of deliberations, the House passed a roughly $46B budget on 11/12/20 that includes expanded access to reproductive health care in Massachusetts, stays away from new broad-based taxes, and draws $1.5B from the state's "rainy day" fund. Operating on a condensed timeline, the House passed a budget 143-14 that largely stayed true to the proposal released by House Ways and Means earlier this month. Gov. Charlie Baker has said he wants the final bill on his desk by Thanksgiving, now two weeks away. "We know we're on the clock, because of the idea of FY22," Ways and Means Chair Aaron Michlewitz said after session. "With the FY22 process needing to begin pretty soon. So certainly, we want to make sure that we do it as quickly as possible. But I don't want to put a definitive, arbitrary deadline on that. But I'm confident we're going to be able to work with the Senate to get this done it." Over the course of roughly 25 hours in the chamber, the House adopted four mega-amendments that addressed topics from education and local aid to labor and economic development. The only debate of the day came when the House adopted an amendment to allow abortions after 24 weeks in the case of lethal fetal anomalies and lower the age from 18 to 16 that a minor can choose to have an abortion without parental or judicial consent. The amendment process added around $27.9M. The Senate starts its deliberations Nov. 17 on its $46 billion Senate Ways and Means budget plan.|
|House Budget debate started 11/10, continues on 11/12.||
On 11/12, the House started its fiscal 2021 budget debate with lawmakers opting not to make any revenue-related changes to the House Ways and Means budget plan (H 5051), and adopting a bundle of changes on topics like education, transportation, and veterans' services. Most state representatives participated virtually and negotiated amendments to the budget in private Zoom calls. Late on Tuesday, the Ways and Means Committee released a consolidated amendment to deal with amendments amendments related to education, local aid, transportation, social services, veteran services, and soldiers' homes. AAfter session, Ways and Means Chair Aaron Michlewitz highlighted components of the consolidated amendment dealing with regional transit authority funding, veterans' programs, and a commission to study equity and access to telecommunications services for students and families. Another provision in the bundle, based on a Rep. Alice Peisch amendment (690), addresses specifications for attendance and participation tracking systems used by school districts that adopt a remote learning model. Lawmakers unanimously approved the consolidated amendment, tacking on an extra $2.65M in spending to the budget plan's bottom line. They voted down an amendment that would have raised the tax rate on unearned income from 5 percent to 9 percent. The House recessed just after midnight with plans to resume budget debate at 11 am on Thursday, November 12.
House Ways and Means Releases their Budget Proposal for Remainder of FY2021
House Debate Planned for 11/10/20
Amendments Due to be Filed by 5 PM on 11/6/20
11/5/20: The House Ways and Means Committee released their version of the FY21 budget today. The proposal, which totals $46.021B, is $188M larger than the revised budget Governor Baker filed last month and $2.44B larger than the state’s FY20 budget. At a press conference, Speaker Robert DeLeo said that this proposal “pays the bills by concentrating on those who are most in need of our help.” The budget would withdraw an additional $200M from the rainy day fund, leaving the state with $2 billion in reserves. House Ways and Means Chair Aaron Michlewitz noted that in the past two economic recessions, the state made its largest withdrawals from the rainy day fund in the first year of the crisis.
The proposal would adopt many of the same one-time revenue sources that Baker relied on in his revised budget submission, including a $267M plan to accelerate sales tax collections from larger businesses that collect and remit to the state more than $150,000 from consumers in sales taxes a year. The budget also relies on $550M in federal CARES Act funding and $834M in enhanced Medicaid reimbursements for MassHealth.
The largest increases in spending would go to rent assistance programs, supporting education programs, food security, community days and work programs, and substance addiction services.
While leaders admitted to being unable fully fund the Student Opportunity Act, the Speaker said the House bill would increase Chapter 70 by $108M, consistent with the agreement with the Senate and Governor, and spend $80M more on educational support programs, including a new $50M COVID student support fund to help districts with low-income student.
In addition: The House unanimously passed a $423M spending bill on November 5 to close out the books on FY2020 more than four months after the new fiscal year began. the closeout will also grant the University of Massachusetts a short-term line of credit for operating expenses, implement technical changes to unemployment insurance, and allow the MBTA to use capital funds for employee salaries. Chairman Michlewitz said the MBTA measure was included in both the House and Senate versions of the transportation bond bill, but with that legislation tied up in conference negotiations since July 23, it was sewn into the closeout budget to get it done in a timely manner. The Senate took up this closeout bill on November 6. The final bill that was enacted and sent to the Governor is S.2944
|House Ways and Means to Release their Budget Proposal for Remainder of FY2021 on 11/5/20||
House leaders have announced that they will release a budget for the remainder of FY21 on 11/5/2020. House Ways and Means Chairman Aaron Michlewitz has said that the House plans on debating the budget next week, starting on Tuesday, 11/10/20 during formal sessions. The debate is expected to take several days.
Last month House and Senate leaders held a roundtable with economists to hear the latest predictions for how the economy and tax revenues might perform over the remainder of the fiscal year. After the roundtable, Governor Charlie Baker filed an updated $45.5B budget for fiscal 2021 that took into account a decrease of $3.6B in previously anticipated revenues.
Once the House approves a budget, it will move on to the Senate. After the Senate passes its budget, the branches will need to agree to a single plan to send to the Governor's desk. The Governor has said he would like a final budget on his desk by Thanksgiving.
|House, Senate Fast-Track Another Interim State Budget, Funding State Operations Through October 31, 2020.||
With state funds running down and an annual budget still far off, the House and Senate on October 26, 2020 approved a short-term budget that would make $5.4B available to keep state government operating beyond Oct. 31, when the current interim budget expires.
Gov. Charlie Baker last week filed the interim spending authorization bill on the same day the House and Senate Ways and Means committees held a hearing on the governor's full $45.5B spending proposal for FY2021.
The governor, in a letter to legislators, said the newest interim budget, which would be the third enacted since the start of the fiscal year in July if it is sent to Baker's desk, would be sufficient to fund essential services through November, though it has no expiration date.
"We look forward to completing the final budget for Fiscal Year 2021, and we hope that the revisions we filed with you last week help move that process forward," Baker wrote. "We know firsthand the challenges you face in assuring stability in government policies during this time of disruption, and we appreciate the cooperative spirit we continue to share as we work together to get a budget in place for the full fiscal year."
The latest interim budget would take effect on Oct. 31, 2020, and would be supplanted by a full-year budget if and when one gets passed and signed by the Governor.
House leaders have not signaled a timeline for releasing or debating an FY2021 budget proposal, after holding a hearing last week on the revised budget proposal offered by the governor.
|Legislative Hearing on Revised FY2021 Budget Held on 10/21/20||
10/21/20: This afternoon, the Joint Committee on Ways and Means, chaired by Senator Michael Rodrigues and Representative Aaron Michlewitz, held the first formal hearing on Governor Baker’s revised Fiscal Year 2021 budget. The Committee invited the Governor’s administration to virtually testify on the various aspects of the revised $45.5 billion spending plan. These State leaders testified: Secretary of Administration and Finance Michael Heffernan, Secretary of Health and Human Services Marylou Sudders, Secretary Housing and Economic Development Mike Kennealy, Secretary and Chief Executive Officer of the Massachusetts Department of Transportation Stephanie Pollack, and Secretary of Labor and Workforce Development Rosalin Acosta.
In addition to the hearing by the Joint Ways and Means Committee, Governor Baker filed an interim budget for the month of November 2020. The $5.4 billion interim budget would be the third one adopted by the state as a final FY21 budget is crafted. The current interim budget, which was adopted in July, is set to run out at the end of October. Upon filing the latest interim budget, the Governor told legislators that he hopes that a final FY21 budget can be submitted to him before Thanksgiving.
Governor Refiles FY2021 Budget, an unusual step
Link to Governor's new FY2021 Budget documents: https://www.mass.gov/lists/the-governors-revised-fiscal-year-2021-budget-recommendation-october
October 14, 2020: Gov. Charlie Baker today took the exceedingly rare step of refiling his annual budget, proposing a $45.5B plan that increased spending beyond what he proposed in January despite the projected loss of $3.6B in state tax revenues from an economy ravaged by the COVID-19 pandemic.
The increased spending was driven in large part by growth in the state's MassHealth, or Medicaid, program. To close the gap between falling tax revenues and rising spending levels, Baker's budget leans heavily on one-time revenues, including more than $1.8B in federal funding and a $1.35B withdrawal from the state's $3.5B "rainy day" fund. The budget proposes to increase spending by 3.8%, while also solving for the loss of billions in tax revenue.
The Governor hopes the Legislature can turn the budget around before Thanksgiving so that the administration can turn its attention to preparing for FY2022, but whether that will be possible remains to be seen. He said he will "soon" file another one-month interim budget to ensure government remains funded through November.
Once averse to using one-time money to balance the state's budget, Baker said that reticence in recent years is what will enable the state to get through this financial crisis without dramatic reductions in services. The proposal relies on a $267M plan to accelerate the collection of sale taxes from large business that would generate a one-time boost for the FY2021 budget, but has been rejected in the past by the Legislature.
The MBTA is also facing a $600M budget gap due to decreases in ridership and other financial pressures, and while Governor Baker's new budget proposes to increase the transit agency's funding by $64M, it would still received $107M less in direct transfers than it would have under Baker's January proposal.
The loss in revenue due to the pandemic is made up for in the budget proposal with federal relief funding, including $834M in enhanced Medicaid reimbursements and $550M from the federal Coronavirus Relief Fund. It also uses $422M in Federal Emergency Management Agency funding carried over from last year, and $515 million in cost savings across state government.
The governor's plan avoids any broad-based tax increases, layoffs, or cuts to social and health safety net programs, and level funds local aid, consistent with an agreement announced with the Legislature in July. It also would commit $100.7M in new funding to a small business recovery programs that would invest $35M in small business grants targeted at minority-, women-, and veteran-owned businesses, $35M for community financial institutions and $15M for small business capital improvements.
The budget proposal does contain new sources of revenue. To help offset the slowdown in tax growth, the Governor is reviving his plan to increase fees on Uber, Lyft and other transportation network companies from 20 cents to $1 per ride, and refiled his proposal from January to add an excise tax on opioids. The budget also counts on revenue from sports betting that has yet to be legalized.
Massachusetts is one of just four states in the country to not have an annual or biennial budget in place to cover FY2021 spending, though many states have said they will need to revisit those budgets. In January 2020, Governor Baker filed a $44.6B budget for FY2021 based on the projection agreed to with legislators that tax revenues would grow by 2.8% and amount to a little more than $31.15B.
The administration is now forecasting that tax revenues will tumble this fiscal year to $27.6B, or $3.6B below those initial projections. If Congress does come through with additional stimulus funding for states, the administration could look to adjust its draw on reserves.
Since the start of FY2021 on July 1, 2020, the Legislature has authorized more than $21.7B in spending through two interim budgets, the second of which expires at the end of October.
|Status of Full FY2021 budget as of 8/17/2021||The FY2021 budget remains in limbo as two interim budgets totaling $22B were passed to cover state expenses through the end of October.
Lawmakers continue to postpone action on the FY2021 budget until there is clarity from Washington DC regarding federal financial assistance to states and municipalities. It also appears that Massachusetts lawmakers are reluctant to revise the FY2021 revenue benchmark, the key revenue figure needed to begin FY2021 budget development. Given the uncertainty about whether Congress will enact a relief package, the state faces a sizable, but yet unknown, fiscal gap with few insights to date as to how to proceed.
|Governor Baker signs $16.53B Interim State Budget||
On August 4, Gov. Charlie Baker signed a $16.53B interim budget that will keep state government operating through at least the end of October, but he rejected a firm deadline of Oct. 31 for the funding to expire and said the Legislature's attempt to impose minimum spending requirements would "unduly" limit his authority to manage state spending over the next three months.
The governor's signature on the bulk of the spending bill ensures that the Legislature will not have to return until at least the fall to either debate and pass a FY2021 spending bill, or approve another extension that would push decisions on new taxes, spending cuts or the use of reserves until after the elections.
The Legislature has yet to even propose a budget for FY2021 as it waits to better understand the fiscal impacts of the pandemic and learn if Congress will send additional aid to help bail states out of massive budget holes. While some states have passed budgets and plan to return to make adjustments, Beacon Hill has elected to wait until as much as a third of the fiscal year is over before committing to spending levels.
In July, the governor filed a second one-month budget to cover payroll, local aid and other government services through August, but instead of going month-to-month the House and Senate last week passed a spending bill with enough money to cover 3 months of spending.
The governor on Tuesday did return multiple sections of the bill, proposing amendments to eliminate the sunset date and guarantee that his administration has the ability to pursue opportunities for savings as they arise.
Baker rejected a similar clause in July that the Legislature added to a more than $1B billion COVID-19 supplemental spending bill to impose minimum spending requirements, saying it "impinges on executive discretion."
This three-month budget would have restricted Baker from spending less on any program or agency than the lower of either the FY2020 general appropriations act, or what was proposed in Baker's budget from January.
"This discretion would be proper at any time; in a period of fiscal stress, it is imperative that the executive be allowed the latitude to execute on legislative purposes in an efficient manner," Baker wrote.
By returning the spending floor language with an amendment, Baker raised the specter that he may reduce or slow state spending down to levels below FY2020 levels.
Baker, however, said he agreed with the Legislature that his administration should have to report regularly to House and Senate leadership on how it is managing state spending.
The administration proposed to report to the Legislature at least monthly if any savings have been achieved, or if federal funding comes through that can supplant state tax dollars for any programs. He said the reporting requirements put in the bill by the Legislature were not workable from a timeline standpoint.
Baker also he said he didn't understand why the Legislature had sought to put an expiration date on this interim spending authorization when it had not included any sunset clauses in any previous interim budgets, including the one he signed to cover the month of July.
"As a matter of course, interim budgets such as this do not contain a sunset date, and there is no reason to include one here," Baker wrote.
Senate Ways and Means Chairman Michael Rodrigues said last week that he anticipates having enough information by the end of October with regard to federal relief funding and the trajectory of coronavirus infection rates and the state's economic recovery to act on a budget for FY2021.
|Legislature passes 3 month interim operating budget||
On July 28, 2020 The House and Senate quickly passed a $16.53B interim budget to keep the government funded through October 31, 2020, a plan that would give the Legislature and Governor Charlie Baker more time to understand the state's financial picture in the middle of the ongoing pandemic.
The House and Senate are in the final scheduled days of their formal legislative calendar for the two-year session, but as a result of COVID-19 neither the House nor Senate have produced a full-year spending plan and will need to take the rare step of holding a special session later this year to take up a budget.
The Legislature and Gov. Charlie Baker agreed on a $5.25B one-month budget in June to keep state services funded through July, and Baker filed another $5.51B budget bill last week to cover spending through August.
The Legislature, however, responded with an appropriations bill that would give them more time and remove the need to figure out immediately how and when to return for a special post-July 31 session to deal with a spending plan for the rest of fiscal 2021.
Assuming the Governor signs the bill, the Legislature and governor will have appropriated $21.78B to cover spending over the first four months of FY2021. At that rate of spending, the state's budget would balloon to over $65B, well above the $44.6B budget Baker filed in January. But budget officials said state spending is weighted toward the early part of the fiscal year, and would eventually slow down.
Massachusetts is one of eight states without a FY2021 budget, according to the National Association of State Budget Officers (NASBO), but the organization said some states with full-year budgets are already planning to return for special sessions to adjust those plans in response to revenue declines.
The spending bill passed on Tuesday expires on Oct. 31, meaning the Legislature will either have to return before the Nov. 3 general election, when relatively few will be facing serious challengers, or extend again.
Economists and fiscal analysts have projected that the $31.15B in state tax revenue that officials once predicted could wind up at least $6B lower because of the pandemic and the business closures enacted by government to control the virus's spread.
Baker and the Legislature have not yet updated that revenue projection, and the trajectory of the virus's infection rate will have a huge impact on whether the economy can spring back to life, or if a second surge forces more business slowdowns.
The budget bill approved by the Legislature prevents the Baker administration from seeking savings over the next three months "through reductions in eligibility standards or benefit levels as compared with items funded in the general appropriations act for fiscal year 2020."
The bill would also give Secretary Heffernan some flexibility to respond in the event Congress delivers on another relief package for the states.
"If federal programs, or other alternative funding sources, are available to supplant state funding for the same purposes, the secretary may reduce the state's portion of said funding in a manner commensurate with the additional federal revenue received for said purpose," the bill states.
|Governor Baker files 1 month operating budget bill for August 2020.||
On July 21, Governor Charlie Baker filed another one-month spending bill to keep state government funded through August 2020 with an additional $5.51B. The legislature is expected to act on this budget by July 31, 2020. Link to this bill: https://malegislature.gov/Bills/191/H4869
It is unlikely that the state will finalize an FY2021 operating budget before the planned end of the formal session on July 31, 2020. It appears that the legislature will have to come back into formal session in August to work on the budget.
The July 1-month interim budget was for $5.25B.
House Leaders Lower Expectations for Annual Budget
Unknowns, Volatility Make Decision-Making Difficult
July 8, 2020 excerpts from State House News Service: Today, the Commonwealth Resilience and Recovery Special Committee, led by House Majority Leader Ron Mariano, heard from House Revenue Committee Chairman Mark Cusack and House Labor and Workforce Development Committee Acting Chairman Stephan Hay about some of the pandemic-inspired bills their committees have been reviewing, including proposals to provide extra sick time, providing COVID-19 worker compensation protection to emergency response and medical personnel, and more.
Mariano said he hoped the special committee could compare the proposals "to where we actually are financially in the commonwealth today as we speak," but noted that "there are certainly a bunch of unknowns that we can't put numbers to and certainly the amount of federal help is one of those numbers."
Department of Revenue Commissioner Geoffrey Snyder told the committee that in fiscal year 2021, which began July 1 with a temporary budget in place, "we are confronted with a sea of unknowns." "As is the case with fiscal 2020, tax collections in 2021 will vary depending on the status of public health measures enacted by the state, municipalities in the commonwealth, as well as the United States to mitigate the impact and breadth of COVID-19," Snyder said. "The full impact COVID-19 has on consumer and corporate behavior, the economy, and the stock market is not yet fully clear."
With so much uncertainty around the revenues that would form the foundation of the eventual FY2021 state budget, Cusack said it seems unwise to push ahead with proposals for relief that he said "range in cost anywhere from $50 million to $3.2 billion."
In January, the Baker administration and legislative budget managers agreed that the FY2021 budget would be built on $31.151 billion in state tax revenue. Though they have not officially updated that expectation, there is widespread agreement that it will not be met. In lieu of a full-year budget, Beacon Hill appears prepared to adopt a series of temporary budgets, typically one month's worth of spending at a time, until lawmakers decide to propose, debate and pass a permanent budget.
|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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