At this point in the process, the Fiscal Year 2018 (FY 2018) state budget looks a lot like the FY 2017 budget. As MassBudget's new Budget Monitor, "Analyzing the Fiscal Year 2018 Budget" explains, the proposed total bottom line is lower than that of the FY 2017 budget, after adjusting for inflation, and we see essentially status-quo funding levels in each major category.
Over the coming weeks and into the fall the Legislature will decide on whether to override the Governor's vetoes and whether to accept changes he has proposed or advance new proposals in response to his suggested changes.
One major area of the budget remains in limbo: MassHealth, the Commonwealth's Medicaid program that comprises about a quarter of state spending. (While MassHealth is about 40 percent of the total budget, much of the cost of the program is paid by the federal government.) At the beginning of the budget process, the Governor identified a major challenge facing the MassHealth program: cost shifting from private sector employers onto the state MassHealth program as a result of more private sector employees not receiving health care from their employers.
To address this cost shifting and help to stabilize the finances of the state MassHealth program, the Governor proposed an assessment on employers that don't meet certain thresholds for providing health insurance for their employees. That assessment would have raised $300 million in revenue in the first year and $600 million or more in future years. The budget enacted by the Legislature included a modified version of the employer assessment recommended by the Governor, but not new changes to MassHealth or the commercial health insurance market he proposed.
When signing the budget, the Governor used his authority to send back sections with proposed amendments to ask the Legislature to hold hearings on and adopt his proposed changes to MassHealth along with the employer assessment.
The budget uses a conservative revenue estimate for FY 2018, $749 million below the original estimate. It relies, however, on significant amounts of temporary revenue and savings to achieve balance.
This Budget Monitor describes the funding levels and major initiatives in each area of the budget. It also provides comparisons to earlier versions this year, FY 2017 funding levels, and historic funding levels back to 2001 where relevant. For more comprehensive data on historic spending levels for each line item and category of the budget, see MassBudget's Budget Browser. For additional detail on programs in the state budget that affect children see our Children's Budget.
The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.