#2021-12 April 16, 2021

House Leaders Release $47.65B Budget; Debate to Begin Week of April 26

On Wednesday, House Democratic leaders, including Speaker Ron Mariano (D-Quincy) and Ways and Means Chairman Aaron Michlewitz (D-Boston) released a state budget proposal that would spend $47.65 billion while avoiding service cuts or tax hikes on individuals.  As we reported previously, higher-than-expected tax receipts, along with a change in a key federal reimbursement allowed House budget writers to develop a budget without broad-based tax increases.  In addition, the House proposal relies on another withdrawal from the state’s rainy-day fund. 

The House budget, which is expected to be debated the week of April 26, includes none of the roughly $4.5 billion in federal aid coming to Massachusetts and proposes increasing spending by $1.189 billion or 2.6 percent over the current year’s budget.  It is also $1.792 billion, or 3.9 percent more than Governor Charlie Baker recommended in his January budget proposal.  About $1.4 billion of the nearly $1.8 billion increase in spending over the governor’s proposal is the result of a federal change that is increasing costs for MassHealth, the single largest budget item.

House leaders are also proposing a larger withdrawal from the state’s $3.52 billion rainy-day fund of approximately $1.875 billion -- $275 million more than the Governor proposed.  The Baker administration said its FY2022 budget would leave the rainy-day fund with a roughly $1.1 billion balance at the end of fiscal year, with withdrawals offset in part by fund replenishment associated with excess capital gains tax collections and higher than benchmark tax collections.

The plan anticipates a base of $30.12 billion in state revenue (roughly 3.5 percent growth over fiscal 2021), which has been supplemented by billions in unrestricted federal revenue unrelated to the American Rescue Plan Act, revenue generated by state departments and agencies, fees and other sources.  The revenue base, which was agreed to months ago by Legislative leaders and Governor Baker, is less than the $30.539 billion that the state is on pace to collect by the end of the current budget year and assumes a decline in revenue during a time that many economists are forecasting to be a high-growth period.  In announcing the budget, Speaker Mariano and Chairman Michlewitz cautioned that the current positive revenue picture may not last and said they wanted to take a “cautiously optimistic” approach to the budget.  

The House did not include any revenue from sports betting, a contentious issue on Beacon Hill.  The Governor’s budget assumed about $35 million in revenue from betting activity, which would need to be legalized by the legislature this session.  The House voted to legalize sports betting last session as part of an economic development bill and Mariano has estimated that it could net as much as $50 million a year for state government.  The plan also includes $2.29 billion for developmental services, including $220 million for day and work programs and a $55.4 million increase for the “Turning 22” class of individuals aging out of state supports.  It also recommends $277 million for the Transitional Aid to Families with Dependent Children program, $20 million for childcare provider rate increases, $291 million for state universities, $315 million for community colleges, $571 million for the University of Massachusetts system, $56.4 million for homeless individual shelters, $160 million for the Bureau of Substance Addiction Services, and $312.6 million for environmental services.

The Association is pleased to report the initial House budget proposal does not contain any significant tax increases on banks or other financial services firms and provides stable funding for the Division of Banks.  However, we are monitoring all amendments filed by House members, which are due by today at 5:00 p.m.  

To review the House Ways & Means FY2022 Budget Proposal and amendments, click here. 

House, Senate Clerks Begin Assigning Bills to Committees

Earlier this week, the House and Senate clerk’s offices began the process of assigning the thousands of bills state lawmakers filed to kick off this two-year session to joint committees for review.  The committee assignments began even though the joint rules governing how committees will deliberate remain under discussion in private conference committee negotiations.  As we reported previously, the Legislature extended the timeline for bills to be filed until February 19 – a month after the usual January deadline.  

In all, more than 6,000 bills are now before joint committees, ranging in number from the 29 before the Tourism, Arts and Cultural Development Committee to the Judiciary Committee’s 739.  Questions around public access to written testimony, disclosure of committee members’ votes on bills and how much advance notice must be provided before a hearing remain unclear and will be subject to an agreement on a joint rules package.

Members Invited to Participate in MassHousing Symposium

On Wednesday, April 28 from 11:30 a.m. to 5:00 p.m., MassHousing is hosting A Path Forward: Crafting a Just Housing System for the Commonwealth.  This virtual symposium, which is open to all member bankers, will discuss policies and practices for building a just housing system for Massachusetts communities.

The event features five discussion sessions with talented practitioners working to address racial disparities in housing and promote economic empowerment for people of color.  The sessions will cover:

• Closing the racial homeownership gap 
• Supporting renters through the pandemic 
• Diversity, equity and inclusion in the workplace 
• Supporting diverse businesses in the housing ecosystem 
• Recent changes in federal and state housing policies 
• To view the full schedule, learn more about the sessions and register, visit the A Path Forward: Crafting a Just Housing System for the Commonwealth event page.