The Commonwealth of Massachusetts' FY2022 Budget Process for ACEC/MA Members

Governor Baker Signs $47.6 Billion Annual Budget on 7/16/21

Victory: Level-Funding the Contract Assistance Line-Item (1599-0093)($63,383,680). 

Gov. Charlie Baker signed a $47.6B FY2022 budget into law Friday, 7/16/21 in the afternoon, vetoing $7.9M in gross spending and an outside section that would delay implementation of a charitable giving tax deduction approved by voters in 2000.

He kept the Clean Water Trust Line Item at Level funding for FY2022. ACEC/MA had advocated for this funding level.

State lawmakers unanimously passed a $48.1B spending bill on July 9, approving a House-Senate deal that does not include any broad-based tax hikes and, unlike earlier versions of the budget, does not draw from the state's "rainy day" stabilization fund. A surge in tax collections well beyond projections allowed budget negotiators to cancel a planned $1.5B withdrawal. In his message to lawmakers, Baker wrote that the state must "remain alert to the risk that economic activity has been bolstered by ultimately unsustainable levels of federal spending, and that our currently high tax revenue growth might slow down as federal emergency spending phases out." "Reflecting this mixture of confidence and caution, the Legislature proposed that we set aside $600M in this budget for future education and pension costs ($350M and $250M respectively)," he wrote. "We applaud the instinct to use unanticipated revenue for future liabilities, but respectfully suggest that we could achieve the same result, with less risk, by making those transfers from the Fiscal Year 2021 (FY21) surplus rather than a projected future surplus." In addition to his vetoes, Baker returned 25 policy sections with amendments. He said he approved approximately $90M in earmarked funding. (Gov. Baker's Vetoes and Amendments) 

One week into the new fiscal year and Massachusetts remains one of just five states now without a full-year budget enacted to direct spending for the next 12 months as tax revenues have soared and the economy continues to rebound from the COVID-19 pandemic.

The new fiscal year began last Thursday, and as lawmakers returned to Beacon Hill this week after the long holiday weekend negotiations between the House and Senate over a compromise budget have continued.

Officials in both the House and Senate have suggested over the last 48 hours that a deal may be imminent, but as of late July 7 proposals were still being traded back and forth and one official told the News Service there would be no deal before the end of the night.

FY2022 begins July 1, 2021 without an annual state budget in place.

Legislators and the Baker administration built fiscal 2022 budgets this winter and spring based on revenue projections that turned out to be way off, and state leaders haven't announced how they'll account for a glut of unbudgeted tax revenues.

Lawmakers expressed hope this year of getting the annual budget cycle back on track after the uncertainty surrounding the pandemic prompted them to wait until December to finalize a budget for fiscal 2021, which ended on June 30, 2021.

State programs and services will not be disrupted due to the late budget since Baker and the Legislature have agreed to a $5.4B interim spending plan to cover state appropriations during July. Baker signed that spending bill on 6/28/21, the same day that the Legislature rushed it to his desk.

June 7, 2021: House and Senate leaders named a conference committee to negotiate a final FY2022 budget bill, tasking the six lawmakers with reaching a compromise on a more than $47.7B spending plan that includes major policy changes including those affecting a controversial film tax credit program and fees on ride-hailing companies.

Each branch appointed its Ways and Means Committee chair, vice chair and ranking minority member to the budget conference committee: Reps. Aaron Michlewitz of Boston, Ann-Margaret Ferrante of Gloucster and Todd Smola of Warren in the House, and Sens. Michael Rodrigues of Westport, Cindy Friedman of Arlington and Patrick O'Connor of Weymouth in the Senate.

The group will hash out differences between the House and Senate versions of the budget (H 4001 / S 2465). The bills have roughly similar bottom lines of about $47.72 billion, but they vary in several significant policy areas.

Under the Senate budget, the 20-cent per-ride fee on transportation network companies such as Uber and Lyft would increase to 40 cents for a shared ride, $1.20 for a non-shared ride and $2.20 for a luxury ride. Those changes mirror what Gov. Charlie Baker vetoed from a transportation bond bill in January. The House did not include any TNC fee updates in its budget.

The Senate also proposed a significant overhaul of the state's film tax credit program, calling for higher eligibility thresholds, an end to credit transferability and delaying the Jan. 1, 2023 sunset by four years. The House opted instead to eliminate the sunset altogether while imposing no additional changes to the tax credit program.

Of particular interest to our ACEC/MA community: The House version of the budget provides $63,383,680 in Contract Assistance for the Clean Water Trust. The Senate version funds Contact Assistance at a much lower amount. We are asking the conference committee to support level funding for this: 

Level-Fund the Contract Assistance Line-Item (1599-0093)($63,383,680). Funding under the contract assistance line item (1599-0093) allows the Clean Water Trust (CWT) to provide greater financial assistance to municipalities and regional water utilities in the form of lower than 2% interest rates or even principal forgiveness for certain qualifying projects. Contract assistance does not directly fund projects, but it addresses the difference between borrower repayments and amounts owed on debt service. The CWT maximizes this funding to expand assistance to municipalities and regional water systems to meet the Commonwealth’s water infrastructure needs. To encourage the Commonwealth’s further economic recovery, we need to level-fund ($63,383,680) the contract assistance line-item as it supports initiatives that directly lead to job growth, better public health and safety and a cleaner environment. 

MAY 27, 2021.....The Senate unanimously passed a $47.7B budget for next year after three days of debate over how best to invest state resources as Massachusetts looks to recover from the hardships of the past year of the COVID-19 pandemic.

Senate President Karen Spilka said the budget that passed 40-0 would put Massachusetts on "stable fiscal footing" and begin to restitch the fabric of society that had frayed over the last year, while Senate Ways and Means Chairman Michael Rodrigues said the bill would help get the state "back to better."

The vote sets the stage for negotiations with the House over a range of issues, from the film tax credit to fees on Uber and Lyft rides, but perhaps most consequential will be the decision the two branches will have to make about revenues.

Both the House and Senate relied on revenue projections of just over $30 billion in taxes for the fiscal year that begins July 1. But with revenue continuing to pour in at a clip that has exceeded expectations month after month, Democratic leaders have said they could consider increasing the projection.

The budget also did not tap into any of the $5.3 billion in discretionary federal dollars the state is expecting to receive from the American Rescue Plan Act, which Democratic leaders have said they want to allocate through a separate spending bill.

In keeping with that approach, senators rejected amendments that would have steered federal funds to the unemployment solvency fund to reduce the burden on business owners. They also turned aside amendments to extend the authorization for restaurants to serve to-go cocktails beyond the COVID-19 state of emergency as House and Senate leaders are working on a separate review of pandemic policies they might want to extend.

The budget that passed the Senate would increase spending by close to $1.3 billion over fiscal 2021 after senators added $63.7 million to the bottom line through amendments, putting the final total on par with what was approved last month by the House.

Both branches are in agreement on a $219.6 million increase in Chapter 70 funding for public schools that lawmakers said would finance one-sixth of the 2019 school finance reform law and put the funding schedule back on track after 2020.

The Senate budget also relies on $1.55 billion in reserves, which would leave the balance of the state's stabilization account at $1.15 billion if all the funds authorized for use are needed.

All three Republicans in the Senate voted for the budget and Senate Minority Bruce Tarr lavished praise on Spilka and Rodrigues for leading what he described as an inclusive process that incorporated the ideas of the minority party into a budget that did not raise taxes or wipe out reserves.

The Gloucester Republican said the Senate "should stand as a beacon for how democracy should operate in this country, which has seen too much division and too much rancor."

New spending approved through amendments bulked up support for everything from the METCO school desegregation program and a $50,000 Senate internship program geared toward under-represented students to funding for the Executive Office of Energy and Environmental Affairs to hire new staff to implement this year's climate law.

The Senate waded through 923 amendments over the course of three days and avoided the late nights that are typically a hallmark of budget debates in both chambers of the Legislature.

Rodrigues will almost certainly be tasked with leading negotiations for the Senate opposite House Ways and Means Chairman Aaron Michlewitz as the branches' competing budget bills move before a six-member conference committee.

One of the more high-profile issues to be ironed out is the future of the film tax credit. The House voted to eliminate the program's January 2023 sunset date, while the Senate budget extends the sunset by four years and reforms the program by requiring a production company to spend at least 75 percent of its filming budget or conduct at least 75 percent of principal photography days in Massachusetts, capping salaries eligible for the credit at $1 million, and banning the transfer of the credits.

House Speaker Ron Mariano has been an ardent defender of the film tax credit as a local job producer, but Senate leaders have questioned the cost and support it gives to wealthy actors and out-of-state production companies.

The Senate also voted this week to scrap three additional tax credits and exemptions for harbor maintenance, medical device company user fees and certain patent-related income that were not part of the House budget.

With COVID-19 restrictions being lifted and many workers and residents returning to their daily commutes and travel schedules, the Senate's vote this week to add increased fees on ride-hailing services to the budget also stands out as a major difference with the House.

Sen. Joseph Boncore's proposal would increase the current flat 20 cent fee per trip to 40 cents for a shared ride, $1.20 for a non-shared ride and $2.20 for a luxury ride. It would also put an additional 20-cent fee on rides that start and end in the MBTA's service area.

The House has voted in the past for higher fees on ride services as a way to address traffic congestion, but the pandemic changed a lot of the nature of the debate about how people were using those services.

After two days of budget debate on May 25 and May 26, senators have worked through almost all of the 923 amendments they had filed and fewer than 100 proposals remain to be adopted, rejected or withdrawn. The Senate has made use of its "bundling" process again, in which amendments are grouped together for adoption or rejection with a single vote, and the bundles for the remaining amendments are expected to be ready by 9:30 AM on May 27. The Senate will gavel in at 10 AM for the third, and likely final, day of debate on its $47.6 billion spending plan for the fiscal year that starts July 1. 

Senate Amendments Status: https://malegislature.gov/Budget/FY2022/SenateDebate

Senate Committee on Ways and Means Releases FY2022 Budget Proposal.

Amendments Are Due May 14.

May 11: The Senate Committee on Ways and Means, chaired by Senator Michael Rodrigues, released its proposed Fiscal Year 2022 budget. The timing of this release follows the typical pre-pandemic timetable which was used to develop the Commonwealth’s budget. Governor Baker previously filed his version of the FY22 budget, which totaled $45.6B in gross spending, back in January and the House completed debate on their version at the end of April, bringing the total proposed spending up to $47.416B.

The House and Governor’s budget plans were built on a tax base of $30.12B in state revenue (roughly 3.5% growth over fiscal 2021), which was agreed to at the beginning of the calendar year by the House, Senate, and governor's office. The consensus revenue figure being used is less than the at least $30.92B that the state is on pace to collect by the end of the current budget year, given that tax revenues have come in higher than expected every month, except for September.

Like their House colleagues, Senate Democrats did not include in their budget any of the $4.5B Massachusetts will receive from the American Rescue Plan. The US Treasury published guidelines May 10 on how states can use those funds,

With the release of the Senate Ways and Means budget today, Senate members will have until 2:00 pm on Friday, May 14 to file amendments and a combination floor/remote debate is scheduled to begin on Monday, May 24.

Senate leadership plans to release its fiscal year 2022 budget bill on May 11 with plans to debate it and the hundreds of amendments likely to be filed during the week of May 24.

Gov. Charlie Baker proposed a $45.6 billion state budget in January, the House last month passed its own $47.716 billion spending bill for the fiscal year that starts July 1, and the Senate Committee on Ways and Means will meet in an executive session Tuesday to roll out its own recommendation. 

As soon as Chairman Michael Rodrigues introduces his committee's budget during the 1 p.m. session, senators will get to work drafting and filing amendments to the spending plan. Those amendments will likely be a main topic of discussion when the Senate's 37 Democrats meet Monday, May 24 for a private caucus at noon.

Formal Senate sessions to consider the budget and amendments are planned to start at 10 a.m. on Tuesday, May 25, and senators have been told to prepare for possible formal sessions Wednesday, Thursday and Friday of that week as well.

After the Senate passes its fiscal 2022 budget, the House and Senate will likely appoint a conference committee of three representatives and three senators - typically the Ways and Means Committee chairs, another Democrat from each branch, and the ranking Republican on the Ways and Means Committee from each chamber -- to reconcile the spending plans.

In recent years, the Legislature has struggled to reach an agreement on the full-year budget to have it in place by the time the new fiscal year begins July 1 and Massachusetts often begins a new budget year operating under a temporary, one-month budget. 

House passes its version of FY2022 Budget 

Debate and Amendments 

Link

Budget Link

House lawmakers unanimously passed a $47.716 billion budget on April 29 after adding tens of millions of dollars in spending over three days, largely to support investments that representatives said would guide the state in forging a pathway out of the COVID-19 crisis.

Most of the 1,157 amendments filed ahead of floor deliberations were dispensed with through a consolidated amendment process, where House leaders group individual amendments together by category and present the ones chosen to be included for one single vote. Another 96 were withdrawn by their sponsors.

Almost all seven consolidated amendments passed unanimously, with the exception of Somerville Rep. Erika Uyterhoeven's Tuesday vote against the one dealing with public safety and the judiciary.

In all, the seven mega-amendments added almost $59.8 million in spending to what began as a $47.65 billion bill. They ranged in size from $4.87 million for constitutional officers, state administration and transportation to $11.9 million for labor and economic development.

The labor and economic development consolidated amendment was the last of the seven to come before the House, approved just after 11:30 p.m. Wednesday. Lawmakers who spoke on the topic said both the amendment and the budget as a whole contained investments critical to the state's post-pandemic recovery, particularly highlighting $5 million in tourism funds and a $10 million offshore wind training trust fund.

Tourism, Arts and Cultural Development Committee Chair Rep. Carole Fiola said a Monday vote to remove the sunset from the state's film production tax credit, making that incentive permanent, would also buoy the tourism and hospitality sectors that have been hard hit by the pandemic and corresponding state restrictions.

Housing Committee Chair Rep. James Arciero highlighted the budget's $56.4 million for the homeless individuals shelter system, which he said has been permanently changed by COVID-19. Environment, Natural Resources and Agriculture Chair Rep. Carolyn Dykema said the budget provides $50 million for state parks, which experienced heightened demand as people across Massachusetts engaged with nature "as an antidote for pandemic life."

Rep. Jeffrey Roy, the House chair of the Telecommunications, Utilities and Energy Committee, said a $7.3 million energy and environment amendment included language that "clarifies" the Legislature's intent in a major climate policy law Gov. Charlie Baker signed earlier this year. Roy, a Franklin Democrat, said the new language makes clear that lawmakers intended to call for procurement of 5,600 megawatts of offshore wind power and not less than that amount.

Speeches to introduce the consolidated amendments, made both over phone by members participating in sessions remotely and by some in chamber, and the roll call votes to adopt those packages, accounted for the bulk of the activity on the House floor, punctuating lengthy recesses. Monday votes on the film tax credit and on increasing the cap for a conservation land tax credit to $5 million also prompted speeches in support.

Otherwise, much of the work, like the private Zoom calls where representatives tout their spending priorities in hopes of winning inclusion in a consolidated amendment, took place out of public view.

After adopting three amendments on a voice vote -- one from Rep. Jon Santiago regarding parking meter authorization on public ways, a Rep. James Murphy amendment involving credit for reinsurance, and Rep. Marjorie Decker's proposal to revive a special commission on school-based health centers -- the House broke for a recess at 11:40 p.m. Wednesday.

A final amendment, which contained $7.1 million in extra spending but was described as technical in nature, surfaced after 2:15 a.m. and was quickly adopted before the final vote, with no discussion. That amendment included several earmarks for local projects, including $25,000 for the Lowell Festival Foundation, $300,000 for the North End Waterfront neighborhood health center, and $100,000 for student supports at Quincy College.

House Ways and Means Releases Its FY2022 Budget Proposal on 4/14/21

Link to H.4000

4/14/2021: House Speaker Ronald Mariano and House Ways and Means Chair Aaron Michlewitz officially released the House’s proposed budget for Fiscal Year 2022. The $47.65 billion spending plan would increase spending by $1.189 billion, or 2.6% over the current year's budget, and proposes to spend $1.792 billion, or 3.9%, more than Governor Charlie Baker recommended in his January budget filing. 

The timing of this release follows the typical pre-pandemic timetable which was used to develop the Commonwealth’s budget. Governor Baker previously filed his version of the FY22 budget, which totaled $45.6 billion in gross spending, back in January 2021.

Since then, FY21 tax revenues have continued to come in higher than anticipated and the Federal government passed the American Rescue Plan Act. Leaders in the House and Senate have already announced that they had reached an agreement on local aid funding for next year's budget, which includes a $219.6 million increase to Chapter 70 aid to school districts, up from the $197.7 million increase Governor Baker proposed.

With the release of the House Ways and Means budget today, House members will have until the afternoon of Friday, April 16 to file amendments and a combination floor/remote debate is scheduled to begin on Monday, April 26.

The House budget plan is built on a base of $30.12 billion in state revenue (roughly 3.5 percent growth over fiscal 2021), which was agreed to at the beginning of the calendar year by the House, Senate, and governor's office. The consensus revenue figure being used is less than the at least $30.539 billion that the state is on pace to collect by the end of the current budget year, given that tax revenues have come in higher than expected every month, except for September. Speaker Mariano and Chair Michlewitz expressed caution when speaking about the budget proposal, saying that the currently rosy revenue picture may not last.

Importantly, the proposed spending plan does not include any of the roughly $4.5 billion in federal aid coming to Massachusetts through the American Recovery Plan Act. The state is expecting to get the rules next month for spending this money, with Mariano saying that the House would rather distribute that money in a separate spending bill and not in the fiscal 2022 budget.

We will add more information to this section soon.

Link to House 1, the Governor's FY2022 Budget Proposal

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Press Release

On January 26, 2021, Governor Charlie Baker gave the annual State of the Commonwealth address. On January 27, he announced his administration's proposed budget for FY2022. In his speech before a virtual audience of federal, state, and municipal elected officials and other leaders, Governor Baker spent a large portion of his remarks thanking the people of Massachusetts for the sacrifices and tough choices everyone has made to fight the pandemic, while also celebrating the heroes who made it possible for Massachusetts to fight back against COVID-19. Baker also touched on what the state was able to, despite the pandemic, which included passing an omnibus health care bill, a policing accountability law, and economic development bill. The Governor ended his speech by addressing the steps that will need to be taken in order for the Commonwealth and all its citizens to recover from the pandemic, including the widespread distribution of the vaccine and reimaging what the workplace looks like all across the state.

Budget link: https://budget.digital.mass.gov/govbudget/fy22/
Governor's Letter link: https://budget.digital.mass.gov/govbudget/fy22/governors-message/
Line item link: https://budget.digital.mass.gov/govbudget/fy22/line-item/
Local Aid link: https://budget.digital.mass.gov/govbudget/fy22/local-aid/
Outside Section link: https://budget.digital.mass.gov/govbudget/fy22/outside-section/

Governor Charlie Baker filed his Fiscal Year 2022 (FY22) budget, House Bill 1, which recommends $45.6B in gross spending, a decrease of 0.7% over the Fiscal Year 2021 (FY21) projected spending. Governor Baker noted that his proposal seeks to transition away from one-time revenue and spending that was needed to combat the pandemic. The budget recommendation authorizes a withdrawal of up to $1.6 billion from the rainy day fund to help ensure the continuation of essential government services. As a result of higher than expected tax revenues during FY21, the Governor’s administration is predicting that following a withdrawal for FY22, there would still be approximately $1.11B in the rainy day fund.

Highlights from the Governor’s proposal includes fully funding the first year of the Student Opportunity Act, with $246.3 million in new funding added for initiatives laid out in this legislation. This includes an increase of $197.7 million in Chapter 70 funding, with a particular focus on school districts serving low-income students. The Administration’s proposal also provides increased funding for charter schools and special education circuit breaker reimbursement. House 1 is proposing an increase in the Unrestricted General Governmental Aid (UGGA) investment that is equivalent to the expected 3.5% tax revenue growth, $39.5M, in the consensus revenue forecast announced on January 15, 2021. 

The filing of this budget comes just two months after the Governor and the Legislature were able to complete the FY21 budget. Budget writers will likely have to face similar obstacles this year, such as uncertain tax revenues, anticipated federal stimulus, and the distribution of vaccines.

Typically, the House would hold budget debate in April and the Senate in May, and though leaders from both chambers have indicated that they hope to finalize the FY22 budget on time, there are a lot of uncertainties that will need to be dealt with before it is signed by the Governor.

The Baker-Polito Administration today filed its Fiscal Year 2022 (FY22) budget recommendation, a $45.6B proposal that continues the Administration’s response to the COVID-19 pandemic and addresses critical priorities including promoting economic growth, fully funding the first year of the landmark Student Opportunity Act, and supporting cities and towns across Massachusetts. This balanced proposal does not raise taxes on the Commonwealth’s residents and preserves substantial financial reserves for the future.

Submitted as House 1, this budget recommendation provides $246.3 million in new funding for the Student Opportunity Act including an increase of $197.7M in Chapter 70 funding, with a particular focus on school districts serving low-income students. The Administration is also proposing to allow municipalities to count $114M in federal dollars towards their Chapter 70 required local contribution increases to further deliver on the commitments in the Student Opportunity Act. Additionally, House 1 maintains the Administration’s promise to cities and towns with a $39.5M increase in unrestricted local aid, which is equivalent to the 3.5% consensus tax revenue growth rate.

In his budget, the Governor has proposed a new 7 member MBTA Board to replace the current Fiscal Management and Control Board. (Sections 59, 63 and 96)

Outside Section 84 seeks broad A + B bidding authority for any awarding entity – similar to the language originally sought in the Governor’s version of the transportation bond bill. While the outside section is titled “MassDOT A + B Bidding” it in fact would allow any awarding entity to use A + B when procuring a traditional Chapter 30, §39M project.

There is language contained in Sections 60 and 61 to allow the MBTA to utilize any best-value alternative procurement method for engineering, designing, building, financing, operation and maintenance of infrastructure, technology and services.

The filing of the budget is the first step in a much longer legislative process which will include public hearings, comment periods, redrafts by the House and the Senate and many, many hundreds of amendments offered in the respective branches. The Governor's budget is the starting point for this process.