Note: the news media did report that Governor Baker did sign the budget on Friday and in so doing vetoed a bunch of line items. MA.gov has been updated to reflect the vetoes. All the details can be found here:
How was the budget balanced in the face of a sudden $750 million shortfall?
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What is (and isn't) in the Budget Approved by the Legislature
How did the Legislature balance the budget in the face of a sudden $750 million shortfall?MassBudget's new Budget Monitor explains and offers an analysis of each major section of the state budget with comparisons to current and historic funding levels.
The Legislature enacted the FY 2017 budget in particularly challenging circumstances. Towards the end of the process, the goalposts moved when new projections indicated that there would be $750 million less in tax revenue than had been assumed. The final budget includes some cuts below the levels that had been recommended by either the House or Senate, as well as a number of strategies that provide only temporary solutions by pushing costs into future years and underfunding accounts that will eventually need to be funded.
The Legislature managed to provide modest funding increases in a few priority areas, including local aid which receives a 4.3 percent increase, Chapter 70 education aid which is increased by 2.6 percent, and a number of initiatives to address opioid addiction including $8.3 million in increased funding for substance abuse services in the Department of Public Health.
The budget also cuts funding in a number of areas: the $18.6 million kindergarten expansion grant program is eliminated; funding for the Department of Revenue is reduced by $15.9 million, potentially weakening the capacity to combat tax evasion and ensure the integrity of our tax system; and the budget imposes a 13 percent cut in YouthWorks which provides funding for summer jobs.
The revenue decline did not all translate into budget cuts. The Legislature projects that $206 million of the decline was capital gains taxes that would have been deposited into the rainy day fund, so the shortfall will lead to less money for the rainy day fund rather than for the budget. The tax cut that had been expected to be triggered by revenue growth likely won't be, saving $79 million in FY 2017. School buildings and the MBTA won't see $62 million in sales tax receipts because of the lower sales tax projections. The state's Medicaid plan will postpone paying some bills. The state will also likely need to provide mid-year funding in several accounts.
The conference committee also reduced spending levels for a number of programs below the levels recommended by the House or Senate - and in some cases below both.
The Legislative Budget Monitor describes both where lawmakers were able to preserve or build upon programs, and where programs were cut or eliminated. Click (HERE) to read the new Budget Monitor.
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Massachusetts Budget and Policy Center, 15 Court Square, Suite 700, Boston, MA 02108
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