Thursday, March 2, 2023

Healey-Driscoll Administration filed their Fiscal Year 2024 budget recommendation

The Healey-Driscoll Administration today filed its Fiscal Year 2024 (FY24) budget recommendation, a $55.5 billion blueprint for Massachusetts’ future that makes historic investments in climate action, public education and transportation, and workforce development. It also lays out Governor Healey’s plans for first-time use of Fair Share revenue, including the creation of a new Education and Transportation Fund. This budget is being filed alongside the $750 million Healey-Driscoll tax relief package and Article 87 legislation to create the Executive Office of Housing and Livable Communities.  

“Our FY24 budget is what Massachusetts needs to meet this moment and build a strong economy, livable communities and a sustainable future,” said Governor Healey. “Combined with our tax relief proposal, we will set Massachusetts up for success by lowering costs, growing our competitiveness, and delivering on the promise of our people. Additionally, we are taking aggressive action to address our housing crisis by creating the Executive Office of Housing and Livable Communities led by a housing secretary who will coordinate across state government and with cities and towns to move us forward on our housing goals.” 

“Massachusetts is made up of 351 cities and towns that each play an important role in helping Massachusetts reach its potential – from educating our kids, to keeping us safe, to investing in places where we build vibrant, healthy, livable communities,” said Lieutenant Governor Driscoll. “That’s why our budget proposes historic investments in local aid, a down payment on the future of our cities and towns, schools, and kids, and fully funds the Student Opportunity Act with the largest ever increase for K-12 schools in Massachusetts’ history.” 

This budget, filed as House 1, puts forward a responsible proposal to utilize $1 billion in new spending from the Fair Share Amendment. Governor Healey is establishing a new Education and Transportation Fund to ensure that the money collected is used exclusively and transparently for education and transportation.  

On education, House 1 fully funds the Student Opportunity Act with historic investments in Chapter 70 school aid and other local aid accounts. It supports state-subsidized early education and care, increasing child care slots and putting the state on a path toward universal Pre-K, starting in Gateway Cities. It also expands access for high school students to quality early college and career pathways, creates the new MassReconnect program to make community college free for students aged 25 and older, and locks in a four-year tuition freeze across the UMass system. 

On transportation, House 1 includes start-up funding for a means-tested program for thousands of low-income MBTA riders, and to spur progress on key projects like West-East Rail, the Red-Blue Connector, and the electrification of the state’s bus fleet. The administration will also recommend funding for new hiring and training supports for the MBTA in an upcoming supplemental budget to help meet their goal of hiring 1,000 additional workers this year. This budget also dedicates funding within various departments in the Executive Branch to maximize the state’s ability to compete for federal grant dollars with matching funds for infrastructure and other projects. 

The budget follows through on Governor Healey’s commitment to dedicate 1 percent of the state’s overall operating budget to the Executive Office of Energy and Environmental Affairs. The administration will be tripling the budget of the Massachusetts Clean Energy Center to empower local entrepreneurs, decarbonize buildings and make our state the global capital of the clean energy economy.  

The administration is also filing Article 87 legislation to create a new Executive Office of Housing and Livable Communities, headed by a Cabinet level Secretary, that will be charged with dramatically expanding the work now done by the Department of Housing and Community Development. The Executive Office of Housing and Economic Development will be renamed the Executive Office of Economic Development. 

Alongside this balanced budget proposal, the Healey-Driscoll Administration will be filing a comprehensive tax package fully paid for in the FY24 budget at a cost of $742 million on the budget to address the challenges of affordability, equity and competitiveness confronting our families, employers and those who might be considering leaving Massachusetts.  

“We approached this budget with the goal of building a responsible and sustainable spending plan for the Commonwealth that invests thoughtfully in its people, its economy and its future, We’re proud to be able recommend historic investments in areas like higher education and climate, while also delivering on tax relief for families and developing a transparent plan to use new Fair Share revenue to improve our education and transportation systems as voters intended,” said Secretary for Administration and Finance Matthew J. Gorzkowicz. 

House 1 Overview 

House 1 proposes $55.5 billion in gross spending, which represents 4.1 percent spending growth over fiscal year 2023 made possible by the $40.41 billion consensus tax revenue growth estimate of 1.6 percent, as well as $1 billion from Fair Share and other sources of revenue. 

This budget does not utilize any funding from the Stabilization Fund, which has grown to a record high $6.938 billion and is projected to finish fiscal year 2024 at $8.962 billion. The recommendation assumes $1.946 billion in capital gains tax revenue, of which $466 million will be transferred to the Stabilization Fund and other long term liability funds for pension and retiree health insurance costs.  

The budget recommendation maintains the state’s commitment to fully fund its pension liability by 2036 with $4.105 billion in fiscal year 2024, a $361 million increase over the fiscal year 2023 contributions. Projected sales tax revenues will enable a $1.463 billion transfer to support the operations of the Massachusetts Bay Transportation Authority (MBTA), an increase of $138 million over the fiscal year 2023 budgeted contribution, and $1.3 billion will be transferred to the Massachusetts School Building Authority to support school construction across the Commonwealth.  

Fair Share 

The voters of Massachusetts in November 2022 approved a new 4 percent surtax on income above $1 million. They did so with the understanding that the new revenue generated from the tax on higher-income earners would be used to promote high-quality education, repair and maintain roads and bridges and improve our public transit system. 

This budget proposes to keep that commitment by establishing a new Education and Transportation Fund that would receive all surtax revenues and ensure that the money collected is restricted for the use of education and transportation in the most transparent way possible. House 1 also recommends a mechanism to ensure that while all funds remain dedicated to those purposes, they are used in a manner that is sustainable and protected against future downturns and fluctuations in the revenue stream. 

The proposal recommends the establishment of a required minimum fund balance that would be used only in the event of significant revenue decline to preserve base programs funded from Fair Share tax revenue. This balance would grow annually to account for inflation. 

To ensure predictability, a cap would be established on recurring spending with revenue collected above the cap used to support one-time investments in pilot programs, start-up grants, studies, one-time capital investments such as bridges, railroad right-of-way improvements, and other non-recurring projects. 

Continue reading the press release online -> 

The Governor’s filing letter, budget message and specific account information are available here ->

The Governor’s filing letter, budget message and specific account information

The Governor’s filing letter, budget message and specific account information

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