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BOSTON (State House News Service) — House Democrats want to boost state spending by 3.3 percent next fiscal year with a $57.9 billion budget that mirrors many of Gov. Maura Healey's ideas for tapping new funding sources and drives up outlays on the expectation that flat state tax collections will begin to rise again.
The proposal, which lands amidst growing fiscal strain, increases spending by about $1.9 billion over the annual budget Healey signed into law last summer, steering more money toward public transit, K-12 education and child care, among other areas.
While the total spending growth is a shade smaller than the $58.1 billion plan Healey offered in January, it similarly reflects a push to increase state outlays in the face of sluggish tax collections and unexpected cost drivers, such as the crisis in the emergency family shelter program.
House Speaker Ron Mariano -- who along with Senate President Karen Spilka, Healey and former Gov. Charlie Baker oversaw a major increase in state spending in recent years -- said the budget balances fiscal responsibility with a need for investment.
"We know the good fiscal times don't last forever. The reality is one that we have come to know all too well over the past 10 months," Mariano told reporters. "This March broke a streak of nine months where revenues came in below benchmark, all while the commonwealth's emergency assistance program remains strained with no immediate prospect of support from Congress or anywhere else."
"The result of these issues is simple: this fiscal year is not going to be like the last few," he added.
The House plan does not call for any major tax hikes or draw from the state's long-term "rainy day" savings account, whose balance could surpass $9 billion by July 2025 under the House's latest projection. Instead, House Democrats moved to embrace a variety of other revenue sources to fund the spending growth.
Their budget uses about $1.03 billion in one-time money, including $300 million from a fund lawmakers created years ago to help with implementation of the Student Opportunity Act, $200 million from a similar early education and care fund and $79.5 million in redirected revenues from legal gambling.
Like Healey sought to do in her plan, the House budget would also allow up to $375 million in "excess" capital gains tax revenues - should they materialize - to be spent instead of automatically stashed into savings.
Representatives will also consider nearly $300 million in new, recurring sources of money, including legalization of online Lottery sales that they estimate will generate $100 million per year. Healey also supports allowing the Lottery to sell its products online, but the idea has failed to generate traction in the Senate in the past.
"We don't know yet if we're out of the woods," Michlewitz said Wednesday afternoon. "Obviously, the March [revenue] numbers were positive. April numbers are going to be a big driving factor. There's many other different scenarios that could take place ... I think we're still being cautious and trying to be thoughtful in that approach."
"Until you get three months of positive numbers, you don't change much at all," Mariano added. "We still have a ways to go before we know if we're out of the winter and into the spring."
Both Healey and House Democrats proposed spending growth rates that are smaller than recent years, but not historically unusual. Between fiscal 2015 and fiscal 2022, annual state budgets boosted spending over the prior year anywhere from 2.3 percent to 7.2 percent, according to analysis from the Massachusetts Taxpayers Foundation.
Beacon Hill displayed its most sizable appetite for spending in fiscal 2023 (9.1 percent growth) and fiscal 2024 (6.9 percent), according to MTF, years in which tax collections surged past expectations and federal pandemic aid padded accounts. The fiscal 2023 budget was Gov. Baker's last budget and the fiscal 2024 budget was Healey's first.
MTF President Doug Howgate said his group wanted the Legislature and governor to limit spending to "sustainable levels" of about 2.5 percent to 3.5 percent growth now that money from Washington has dried up and tax hauls have slowed.
"Having this kind of bridge budget that continues to maintain some of the programs we've put in place like [C3] stabilization grants while not investing in major new programs -- I think that's the right approach," Howgate said in an interview.
It's not clear whether or how much House Democrats moved to trim spending in some areas to support expansions elsewhere.
House Ways and Means Committee Chair Aaron Michlewitz said his chamber's budget proposal calls for half as much money for snow and ice removal as the governor did, and has about $25 million less in unrestricted general government aid compared to Healey's spending plan.
But asked about reductions compared to the fiscal 2024 budget, he did not answer directly.
"I don't want to get into each line item directly, but overall, 3.3 percent growth -- there's a lot of growth across the board," he said. "Some [areas] have better growth than others."
The bottom line will likely grow once the House begins its debate on Wednesday, April 24 as representatives jockey to pack on more spending, most of it featuring earmarks for specific projects or organizations in their districts.
Mariano said he and Michlewitz "haven't really talked about setting limits" on earmarks.
"We both agree that we will be looking at earmarks with how it fits in with the priorities that we've established in this budget," he said. "We need to be consistent in our message on spending, and we intend to be."
Like most budgets, the largest area of spending in the House's proposal is on MassHealth, which would receive $20.8 billion. That reflects about $530 million more than in the fiscal 2024 spending plan Healey signed last year.
The upcoming budget cycle reflects the second year in which Beacon Hill is able to fund education and transportation investments using money generated by an income surtax on the state's highest earners, which voters approved in 2022.
Mariano and Michlewitz are targeting a different breakdown in that spending than Healey. Their budget would carve it up into $695 million for education and $605 million for transportation, a bit closer to an even split than Healey's proposed $750 million for education and $550 million for transportation.
Under the House budget, surtax money would go toward investments such as another year of providing free school meals to all students ($190 million), increasing rates for child care providers ($65 million), a transfer to the Commonwealth Transportation Fund ($250 million) and supplemental aid for roads and bridges ($25 million).
On the transportation front, the House budget matches Healey's proposal for $314 million in direct assistance to the MBTA and supplements it with another $75 million to cover T capital investments, $40 million for an "academy" program to help the T build out its workforce, and $35 million for a "Resilient Rides" program aimed at better preparing stations, rails and other infrastructure to adapt to climate change impacts.
That money would add to other longstanding funding sources that will direct more than $1.6 billion toward the MBTA next cycle.
Mariano described the funding boost as a sign of his confidence in MBTA General Manager Phil Eng, who started last year.
"The last couple of folks that have run the T came out of the philosophical think tanks of the Pioneer Institute and a number of other places," Mariano said. "We [now] have a train man, a man who can walk the tracks and not electrocute himself. It's a gentleman that we feel is going to make an impact, and we're excited to work with him as he makes changes."
House Democrats also want to use $37 million in surtax dollars as a supplement to K-12 schools, on top of $6.86 billion in Chapter 70 education aid that would cover another year of the landmark K-12 education funding law known as the Student Opportunity Act.
Michlewitz said those investments together would push state aid per pupil to $104, which he described as $74 more than the governor's budget and $44 above last year's level.
The bill would also make permanent the Commonwealth Cares for Children, or C3, grant program, which launched during the pandemic with federal dollars and has since been continued using state funds.
"I think we're the only state in the country that is continuing to fund this," Michlewitz said. "No other state in the country has picked this up going forward."
House Democrats would direct $475 million toward C3 grants, which matches Healey's proposal but draws from a different mix of funding sources.
They also want to implement new controls on how the program would work, responding in part to a flood of demand that has reportedly forced some cuts to recipients. The House budget would cap the amount that for-profit, multi-state or franchised early education and care organizations can receive from C3.
Mariano said the limits would "ensure that we can stretch that money a little bit further."
One source of massive pressure on state budgeting has been the emergency assistance shelter crisis that erupted right around when Healey took office, fueled in part by an increase in newly arriving migrants.
The House budget would make $500 million available to cover shelter costs, $175 million of which would come from a savings account known as the Transitional Escrow Fund.
That total shelter spend is only a bit more than half of what the Healey administration has projected the state will spend on the system in fiscal 2025.
"Being an eternal optimist, things could change. Things could change next year," Mariano replied when asked about the gap between the administration's estimates and the House's proposal. "We want to maintain as much control over this process as we can. As we deal with the ebb and flow, we're never quite sure what the numbers are going to be. So to anticipate the end number, I think, is a bit premature."
Michlewitz added that shelter funding is "a fluid discussion."
"You go back nine months ago and it was a different discussion than it is today," he said. "It's hard to say exactly where it's going to be in six to nine months. We think the number we're putting on the table for discussion within the House gets us far enough along that we can see where we are going forward down the road."
Michlewitz and his Ways and Means counterpart, Sen. Michael Rodrigues, are negotiating a fiscal 2024 spending bill that would steer more money toward the shelter system outside the annual budget process and implement some limits on stays.
Asked if House debate on fiscal 2025 shelter spending would delay compromise on the fiscal 2024 shelter bill, Michlewitz said, "I gave up a long time ago on guessing when we're going to come to an exact agreement, what day it's going to be, but we're continually talking with our Senate counterparts right now."
Other housing investments in the budget include $219 million for the Mass. Rental Voucher Program, which is a $39.4 million increase over fiscal 2024; $197.4 million for the Residential Assistance for Families in Transition (RAFT) program, a $7.4 million increase over fiscal 2024; and $57.3 million for the HomeBase program, an increase of $20.3 million over fiscal 2024.
Mariano said that spending would "work in conjunction" with a rewrite of Healey's housing bond bill the House plans to consider "shortly after the budget."
The House budget matches Healey's proposal to close MCI-Concord, a medium-security prison that's nearly 150 years old, and it also calls for creation of a permanent disaster relief fund while seeding it with a different source of money.
Another departure from the governor's budget would impact the personal care attendants program. Healey's budget would reduce $113 million in spending from the program that makes home care workers available to support Bay Staters with disabilities, while the House budget would instead level-fund it.
"We heard a lot from folks on that. I think they made a pretty strong case," Michlewitz said. "Particularly during COVID and the times after that, these were some of our real front-line workers. We felt it was necessary to continue to give them the tools that they currently have going forward."
The House Ways and Means Committee released the bill Wednesday, and amendments are due by 5 p.m. Friday.
Written by Chris Lisinski (SHNS)
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