The Commonwealth of Massachusetts' FY2023 Budget Process for ACEC/MA Members

Press Release from Governor's Office

Governor's Vetoes

View the FY2023 Budget

Excerpt from State House News Service:

Gov. Charlie Baker agreed to a major increase in state spending Thursday, signing a $52.7 billion annual budget, vetoing less than half a million dollars of spending, and returning 41 sections to the Legislature with amendments.

In total, Baker used his veto pen to strike just $475,000 from a budget that represents one of the largest spending increases in recent years. The FY2023 budget as passed by the Legislature represented an increase of $5.1B or 10.7 percent over the $47.6B annual budget passed for fiscal 2022.

During a signing ceremony in his State House office and in a press release from his administration, Baker focused almost entirely on the parts of the budget that he signed and supported, and had a lot of good to say about the spending plan, including that its "affordable" and "appropriate" given the steep rise in state tax collections.

"We're pleased to be signing the Fiscal Year 2023 budget, which supports tax relief efforts and delivers investments in a variety of key areas of state government including significant increases in education funding in both the K through 12 and higher ed level, child care investments, and big increases in local aid to our cities and towns," Baker, who will leave office about halfway through the budget year, said Thursday morning.

"Over the past seven years, we've always spent less than we raised in taxes and that's made a big difference in getting our budget structurally balanced. When we took office, we started with a budget deficit of varying proportions, depending upon how you do the math, and the Rainy Day Fund had somewhere around a billion dollars in it. At this point in time, the Rainy Day Fund has almost $7B in it and we've been in structural balance now for the past four or five years."

Secretary of Administration and Finance said the budget includes deposits to bring the Rainy Day Fund north of $8B by the end of fiscal 2023. 

According to State House News on 7/27/22: Governor Charlie Baker plans to sign this  state budget Thursday morning. He has until Friday to act on the $52.7B annual budget that the Legislature sent to him last week, but he will instead hold an 8:45 am event in the State House on 7/28/22 to sign the budget. Governor Baker could also veto portions and return sections to the House and Senate with amendments, but his official schedule did not mention those possibilities. 

FY2023 Budget Conference Report is here: https://malegislature.gov/Bills/192/H5050

From State House News Service and other sources: The fiscal year 2023 budget that the House and Senate sent to the governor's desk Monday taps into the enormous financial flexibility afforded by strong state tax collections and economic growth to fund investments in early education and care, school funding, behavioral health and safety at the MBTA while also banning child marriage, making phone calls free for the families of incarcerated people and stashing nearly $1.5B into savings.

The House and Senate both unanimously approved a compromise $52.7 billion annual budget (H 5050) for fiscal year 2023, which began on July 1 with an interim spending plan in place. Gov. Charlie Baker will have up to 10 days to review it and send back amendments and vetoes. Last year, under similarly strong economic conditions,  The Legislature's latest late budget could leave Democratic lawmakers with only a tight time window in which they could override or overrule the Republican governor on budget measures before formal sessions end July 31.

Knowing that fiscal year 2022 was about to generate a surplus in the neighborhood of $3 billion, that the state's primary savings account is already poised for a record high and that billions of dollars of federal money remains to be spent, the budget conference committee marked up the fiscal 2023 tax revenue estimate by $2.66 billion to $39.575 billion and then put the additional revenue to use throughout the budget.

The bill contemplates a $1.46 billion deposit to the state's stabilization fund, which would bring it to another record high balance of $7.35 billion at the end of the budget year. Combined with about $14 billion in federal reimbursements and other sources, the bill lists the "grand total" of funds available for the budget at $54.87 billion.

The conference committee report, which was filed Sunday evening and made Massachusetts the last state in the nation to put a budget in place for fiscal 2023, represents an increase of $5.1 billion or 10.7 percent over the $47.6 billion annual budget for fiscal 2022. Much of that new money is targeted for spending or savings, with lawmakers on pace to also enact $500 million in one-time rebates and $500 million in permanent tax relief.

When faced with differing House- and Senate-approved spending levels, the six-person negotiating team showed a strong inclination to adopt the higher of the two proposed spending levels. In some instances that reveal the priorities of House and Senate leadership, the conferees sometimes even agreed to a higher spend than was adopted by either branch.

The line item for regionalization incentive grants in the Executive Office of Administration and Finance serves as a dramatic example: The House budget called for $15,145,600 while the Senate plan was for $5,555,000. The conference committee decided to go with $20,675,600 in the final budget, a 272 percent increase from what the Senate approved and a 36.5 percent increase from what the House adopted.

The conference committee also went above and beyond approved spending levels for the University of Massachusetts system, Executive Office of Energy and Environmental Affairs administration, climate change adaptation and preparedness, veterans' outreach centers, state parks and recreational areas, the Safe and Successful Youth Initiative, MassHealth administration, local public safety program grants, the Department of Public Health, substance addiction treatment, children's mental health services, and more.

In at least one case, the budget conference committee created a spending initiative out of whole cloth -- $266.29 million for an MBTA Safety/Workforce reserve that also includes language requiring the Department of Transportation to report monthly on "the status of the department's progress toward responding to each finding and required action as issued by the Federal Transit Administration," which undertook a nearly unprecedented investigation of safety at the T.

While that account that was not funded in either the House or Senate budgets, safety and workforce problems at the T have been an increasingly urgent area of focus for the Legislature and the Joint Committee on Transportation is holding an oversight hearing related to MBTA safety on Monday. At that hearing, MBTA General Manager Steve Poftak estimated that addressing the FTA's directives will cost about $300 million and said Baker is likely to file for more money in a fiscal year 2022 close-out.

Local aid was no exception to the conference committee's general rule for adopting the higher of two proposed spending levels. The final budget went with the Senate's approach, dedicating a total of $1.23 billion for unrestricted general government aid to cities and towns -- a $63.1 million increase that was a priority for the Massachusetts Municipal Association.

"With property taxes tightly capped by Proposition 2½, cities and towns rely on adequate state revenue sharing to provide municipal and school services, ensure safe streets and neighborhoods, and maintain vital infrastructure. These services are fundamental to our state's economic recovery, success and competitiveness," the MMA wrote to lawmakers as they began to piece together a compromise budget. "This is a very high priority for municipalities throughout the state, as these funds will all be devoted to balancing local budgets and maintaining the local programs and services that residents rely on every day."

Senate officials said the final budget keeps Massachusetts "well positioned to deliver on the promise of high-quality public education" by providing almost $6 billion in Chapter 70 local school funding, a $495 million increase over fiscal 2022 that keeps the state on track to fully implement the Student Opportunity Act by fiscal year 2027. The budget also doubles the minimum Chapter 70 aid per pupil from $30 to $60.

The budget also makes significant investments in early childhood education and care, a sector that's importance and vulnerabilities came into sharp focus when the pandemic closed schools and child care centers, upending the work routines of many parents. The Special Legislative Early Education and Care Economic Review Commission estimated this year that $1.5 billion in investments are needed to stabilize the early education and care system and help it meet the needs of families.

The fiscal year 2023 budget works towards that goal with $250 million in Commonwealth Cares for Children (C3) stabilization grants, $60 million for a rate reserve to increase salaries for teachers and others at subsidized providers, $31.5 million in grants to Head Start programs across the state and $175 million for a new High-Quality Education and Care Affordability Fund that will help fund the implementation of recommendations from the review commission. In a separate bill, the House is proposing to bring in $200 million a year for early education by authorizing online Lottery sales.

"Extension of the C3 Stabilization Grant Program, coupled with an investment in salary increases for early educators serving lower-income children, will be critical for retaining early educators and keeping classrooms open for children and families," Lauren Kennedy, co-president of the Boston early education nonprofit Neighborhood Villages, said. "Moreover, ensuring that state reimbursement for child care subsidies is now tied to enrollment of children, rather than attendance, marks an important change in policy, one that will help to strengthen and build the capacity of the early education and care sector."

Beacon Hill Democrats have advanced their tax relief plans in a separate bill, but a Senate summary of the conference budget highlights calls attention to a smattering of budget provisions that officials said are meant to help families that are struggling with the high (and rising) cost of living in Massachusetts: a 10 percent increase to Transitional Aid to Families with Dependent Children (TAFDC) and Emergency Aid to the Elderly, Disabled and Children (EAEDC) benefits, and increasing the annual child clothing allowance to $400 per child for eligible families.

The conference committee budget includes $2 million in grants intended to make improvements to reproductive health access, infrastructure, and safety, and more than $2.75 million in funding for LGBTQ initiatives that ensure access to gender-affirming health care, youth-at-risk programming, and stable housing.

The conference committee continues to meet to work out the differences between the House and Senate versions of the FY2023 state budget.

The budget was due by July 1. Massachusetts is operating with a temporary budget one-twelfth for now. The Bay State will be last state in the country that starts its budget year on July 1 to put a final budget into place. In 2019, Moody's Investor Services said Massachusetts' repeatedly late budgets "reflect governance weakness" on Beacon Hill.

The budget is not the only significant piece of legislation that is subject to conference committee talks with a July 31 deadline. Senators and representatives are also hashing out compromises on climate and offshore wind policy, sports betting, mental health access, cannabis industry reforms, mental health care access and more.

The House appointed these members of the conference committee: Reps. Aaron Michlewitz of Boston, Ann-Margaret Ferrante of Gloucester and Todd Smola of Warren.

The Senate appointed these members of the conference committee: Sens. Michael Rodrigues of Westport and Cindy Friedman of Arlington and Patrick O'Connor of Weymouth

The conference committee started its work on June 8, 2022 to begin formally hashing out differences between the House and Senate versions of the nearly $50 billion budget (H 4701 / S 2915). 

While the spending levels are similar -- $49.76B in the House bill and $49.92B in the Senate's proposal -- the two bills take different approaches to that spending and each branch included its own suite of policy proposals. The Senate included licensing protections for doctors and other professionals involved with providing reproductive care while the House budget would extend free, universal school meals for another year, make phone calls free for incarcerated people and ban child marriage.

With similarly strong tax collections last year, budget negotiators increased the budget's tax revenue projections by $4.23B and then used the added flexibility to fund accounts across the board at the highest level approved by either the House or the Senate, adding roughly $300M in spending to the budget's bottom line.

The new budget year, fiscal year 2023, begins July 1, 2022, but Massachusetts rarely has its annual budget in place by then. Instead, the Legislature and governor typically approve one month's worth of spending as a stop-gap measure.

Senate Budget done.

On 5/26/22, the MA Senate unanimously approved a $49.78 billion budget for the fiscal year that starts July 1, after tacking on more than $93 million in spending over the course of three days of debate. A conference committee will probably be appointed next week to hash out the Senate's differences with the House, which passed its own version of the budget in April, also in the nearly $50 billion ballpark.

Senate version of the budget

Mass Taxpayers Foundation analysis, as a courtesy

Senate Debate started on May 24, continued on May 25, and is expected to conclude on May 26.

On May 24, Senators determined the fate of  268 budget amendments through a bundling process used earlier in the first day of debate on the $49.7 billion state budget bill, the Senate used a single, unrecorded voice vote to approve 96 amendments from across the environment, government, economic development, health and human services, and education topics, then rejected another 172 amendments from similar topics the same way.

Check on this page to see the amendments and then see the Bill History tab to see how whether certain amendments passed or failed: https://malegislature.gov/Budget/FY2023/SenateDebate/Amendments

By May 13 at 5 PM, Senators filed 1,178 amendments for consideration when Senate budget debate begins on May 24. 

Link to Amendments to be considered by Senate

Senate Budget Proposal from Senate Ways & Means issued 5/10/2022

SWM Budget Proposal

Today, the Senate Committee on Ways and Means, chaired by Senator Mike Rodrigues, released its proposed Fiscal Year 2023 budget. The timing of this release follows the typical timetable used to develop the Commonwealth’s budget. Governor Baker previously filed the FY23budget proposal in January, which totaled $48.2B.

Since then, FY22 tax revenues have continued to surpass the projected benchmarks. Last week, it was announced that the recent April tax haul brought the state to at least $3.5B ahead of the year-to-date benchmark. April collections totaled $6.941B, which represents $3.076B or 80 percent more than April 2021 collection, as well as represents $2.057B or 42 percent more than the Department of Revenue’s monthly benchmark. While it will be unlikely that the Senate’s budget proposal to include the Governor’s proposed $700M tax relief policies, Senate President Spilka announced last week that the most recent revenue haul has provided her with the assurance necessary for Senate leaders to begin working on a tax relief package for residents before the end of the session. The Senate President noted that areas she would like to target relief for those who are hardest hit by inflation and economic disruption.

With the release of the Senate Ways and Means budget today, House members will have until the afternoon of Friday, May 13 to file amendments and a combination floor/remote debate is scheduled to begin the week of May 23.

SWM proposes $49.8 billion in line-item spending, along with $6.8 billion in off-budget transfers, for total spending of $56.6 billion. This is an increase of $2.16 billion over the FY 2022 budget signed into law last July.

Highlights of Interest to ACEC/MA:

Transportation: The MBTA, MassDOT, and Regional Transit Authorities (RTAs) receive $2.07B in the SWM budget, an increase of $71.9M over FY22, essentially level with the Governor’s budget and $61M more than the House.

The three FY23 budgets fund the MBTA at the same level: projecting the sales tax transfer to the MBTA to grow by $59.1M over FY22 and transferring $60M in MBTA funding from the capital to the operating budget. When FY23 tax estimates are revised upward, the MBTA share of the sales tax will also grow.
Unlike the House, SWM fully funds the Administration’s proposal for MassDOT to cover expected maintenance, meet expected snow and ice removal obligations, and cover personnel and planning costs related to the federal Bipartisan Infrastructure Law. SWM also adds $2.5M in funding for regional transit authorities to support reduced fare pilot programs.

Energy and environment: SWM provides $358.1M for energy and environment departments, an increase of $32.7M over FY22; $20.9M more than the Governor; and $5.1M more than the House. 

Massachusetts should get its first look at the Senate Ways and Means Committee's proposed fiscal 2023 state budget during the week of May 9.  Senators will have until 1 pm on Friday, May 13 to file amendments to the spending bill Debate on the budget and amendment is planned to start on Tuesday, May 24.

Once the Senate approves its budget proposal, legislative leaders will appoint a conference committee to negotiate a final version with the House, which last month approved a $49.7B budget for the fiscal year that begins July 1.

4/27/22 Evening: The House passed a $49.7B FY2023 budget Wednesday evening after adding nearly $130M in spending through seven mega-amendments over the course of three days.

Lawmakers dispensed with 1,522 budget amendments through a number of large packages that were split up by subject category. The House approved the first on Monday, which included $500,000 for the new Genocide Education Trust Fund, a program lawmakers have said will help younger generations learn about some of the world's worst mass killings and genocides.

Representatives worked through three more consolidated amendments on Tuesday, adding another $88.3M in spending and approving language outlawing child marriage in the state and increasing judicial system salaries.

Net Zero Massachusetts: The House added another $33M Wednesday through three more mega-amendments covering energy, environmental affairs, and housing; state administration, constitutional officers and transportation; and economic development.

The bill includes $137M for the Executive Office of Labor and Workforce Development, a $20M increase over last year, and $15 million for MassHire. These are one-stop regional career centers serve as a conduit between job seekers and businesses looking to fill positions.

Next step:  Senate Ways and Means is expected to release its version of the budget in May.

4/25/2022:

House Budget Debate begins

On 4/25/22: Today the House began debate on more than 1500 Amendments to the House Ways & Means Budget Proposal

Amendments Filed

House lawmakers are working their way through nearly half of the 1,521 amendments filed to the $49.6 billion spending bill.  The vast majority of those will be dispensed with through a consolidated amendment process, where leaders group proposals dealing with certain topics as one mega-amendment and discard the ones that will not be included.

Through a trio of consolidated amendments -- covering health and human services, elder affairs, public safety, judiciary, public health, mental health and disability services -- the House on Tuesday added more than $88.3 million to the budget's bottom line, plus policy changes including a ban on child marriage. On Monday, after rejecting tax relief proposals, the House unanimously agreed to a $7.3 million amendment tackling education, local aid, social services, veterans' services, and soldiers' homes.

Remaining topic areas include constitutional officers and state administration, transportation, energy and environmental affairs, housing, labor and economic development, and non-budgetary legislation.

Link to House Ways and Means Committee Budget Proposal

Amendments are due by 5 PM on 4/15/22

April 13, 2022: The House Ways and Means Committee unveiled a $49.6B budget for FY year 2023. This budget recommendation is expected to be debated the week of April 25. It would increase spending by $2.015B billion, or 4.23 percent over the current year's budget, and proposes to spend $1.398B, or 2.9 percent, more than Gov. Charlie Baker recommended in his January budget filing.

House Speaker Ron Mariano and House Ways and Means Chairman Aaron Michlewitz announced the proposal today.

It would boost local aid, fully funds the next year of the 2019 school finance reform law known as the Student Opportunity Act, eliminate communication costs for incarcerated people and their families, provide free school lunches for another year, and push the state's stabilization fund to an estimated balance of $6.55B by the end of next June.

The budget includes $6B for Chapter 70 education aid, increases the minimum per-student aid amount from $30 to $60, accelerates by one year the charter school reimbursement process, and increases higher education scholarship funding by more than $25M. There is also $912M for early education and child care, $853M for housing initiatives and $638.4M for workforce development.

The state generated a surplus of more than $5B last fiscal year and is already more than $2B ahead of expectations this fiscal year. On top of tax revenue, the state still has more than $2B of American Rescue Plan Act money to put to use in the coming years and a record amount of money socked away in the stabilization fund.

The state's strong revenue performance has led to a chorus calling for tax relief for residents who are also dealing with higher prices across the board, but Mariano and Michlewitz made clear Wednesday that they think the money will do more good if the Legislature spends it in a targeted way rather than putting it back into taxpayers' pockets.

Speaker Mariano had announced Monday that the House budget would not include any of Gov. Charlie Baker's proposed $700M worth of tax breaks. 

The House budget also looks to bolster the state's stabilization fund, the savings account that serves as a reserve in case of an economic downturn, with a deposit of at least $785.7M in FY 2023. 

Several sources: State House News Service and others

The Governor’s budget recommends $48.2B in line-item spending, along with $7.1B in off-budget transfers, for total spending of $55.3B, an increase of $895.4 million over the FY 2022 budget signed into law last July.

Courtesy of the Mass. Taxpayers Foundation, among the many elements to note are: 

- The Governor’s budget assumes approximately $700M in tax reductions he proposed in separate legislation. 

- This budget does not include any federal Fiscal Recovery Funds or anticipated budget surplus spending.

- The budget includes a major reduction in both MassHealth spend and associated federal revenue due to the expected end of the federal Public Health Emergency, which will allow MassHealth to re-determine member eligibility, but also mean the end of $1B in enhanced federal reimbursements;

- The FY2023 budget contains a revised hospital assessment that will help support more than $1B in new off-budget spending related to the state’s Medicaid Waiver reauthorization; and

- The cost of implementing the Student Opportunity Act rises dramatically in the second year, which is reflected in Governor Baker’s proposed $485.2 million increase for Chapter 70. This increase would be even greater if inflation growth was not capped at 4.5 percent by statute.

Next step in the budget process: The House Committee on Ways and Means examines the Governor's Proposal and releases its own recommendations for the annual budget for deliberation by the House of Representatives, usually in early April. Prior to release of the House Ways and Means Budget, Joint Ways and Means Committee budget hearings are held across the state. 

By January 15, Legislative leaders and the Baker administration must agree to an estimate of tax revenues for the next fiscal year that will inform budget decisions in the months ahead. In the coming weeks, Gov. Charlie Baker will deliver his final State of the Commonwealth address and before the end of the month file a budget for fiscal year 2023 that will be his last chance to shape the way the state invests billions of dollars in growing tax revenues.

12/21/22, source: Rasky Partners: House and Senate leaders kicked off debate on the FY23 budget with the first consensus revenue hearing. Led by House Ways and Means Chair Aaron Michlewitz, Senate Ways and Means Chair Michael Rodrigues, and Administration and Finance Secretary Michael Heffernan, thes hearing brought together economic experts to assist budget writers to decide on a projected tax revenue level for FY23, the first step in building a spending plan for the budget year that begins July 1, 2022.

Estimates given at the hearing ranged from about a minimum of $36.48B and possibly as much as $40.8B in tax revenue next budget cycle, which would be between 6% and 18.6% more than the Baker administration's official expectation for the current budget year. Revenue Commissioner Geoffrey Snyder said that the current year's tax collections have been solid enough so far that he now projects fiscal year 2022 will end with DOR having collected between $35.726B and $36.623B -- between $1.325B and $2.222B more than the consensus revenue agreement reached a year ago. The fiscal 2022 benchmark could be updated when the fiscal 2023 agreement is announced. For fiscal year 2023, Snyder said that DOR forecasts that state tax revenue will land in the range of $36.484B to $37.684B, which would be between 2.1% and 2.9% higher than the agency's revised fiscal 2022 forecast.

Other testifiers included the Massachusetts Taxpayers Foundation, which said revenues would grow approximately 1.1% or $411M in fiscal 2023, Northeastern University economist Alan Clayton-Matthews, who predicted Massachusetts could collect as much as $40.795 billion, and the Center for State Policy Analysis at Tufts University, which is projecting $36.5B in revenue collections.

The Joint Ways and Means Committee and the Governor’s administration will now work together to come to an agreed-upon tax revenue forecast for fiscal year 2023. They have until January 15, 2022 to agree upon this number, which will then become the state revenue-side anchor in Governor Charlie Baker's final budget filing, which is due to the Legislature by January 26,2022.