The Governor's Fiscal Year (FY) 2019 budget proposal level funds much of state government, includes some targeted initiatives - including an expanded earned income tax credit (EITC) and new services for people struggling with and recovering from mental illness - and proposes small reductions in funding, after accounting for inflation, for higher education and other areas.
The budget proposes an increase in the state EITC from 23 percent to 30 percent of the federal amount. The EITC is a refundable tax credit that increases the incomes of lower-income working families. Research has found that in addition to helping families make ends meet, the EITC can have long-term positive effects on children: improving their performance in school and leading to higher lifetime earnings. The increase to 30 percent of the federal amount would increase the EITC for families by up to $460 a year.
To improve mental health services, the budget proposal allocates $84 million towards creating a new model of service delivery for adults. This model aims to provide more coordinated, standardized, and consistent treatment that would be better aligned with health care systems. It would seek to provide more comprehensive care, particularly for people with co-occurring substance use disorders.
The budget funds the state's colleges and universities at levels that don't keep pace with inflation. Since FY 2001, state funding for higher education has declined substantially, leading to rising tuition and fees for students and higher debt levels for graduates. The proposed funding levels in the Governor's budget won't make up for lost ground and will likely lead to continued tuition and fee increases.
Compared to recent budgets, this proposal reduces reliance on temporary revenue sources and temporary savings, but doesn't end those practices. It counts on $260 million from an employer assessment to help fund MassHealth that is scheduled to end after this year (enacted in response to an historic trend of MassHealth paying for the health care costs of increasing numbers of private sector employees). The budget also relies on $65 million from one-time state tax payments by multi-national corporations as a result of the federal tax changes (these payments would otherwise likely have been made in future years).
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