#2021-15 May 14, 2021

Senate Releases $47.6 Billion Budget Proposal

On Tuesday, Senate Democrats released a $47.6 billion FY2022 state budget proposal that mirrors the House-passed budget in some ways but also contains several key differences.  Specifically, the Senate proposal makes changes to taxes for pass-through companies, overhauls the film tax credit program, and expands support for lower-income residents in the wake of the pandemic.

The budget bill, which will be debated beginning on May 25, seeks to repair the economic damage of the COVID-19 pandemic without factoring in the billions in federal aid set to flow to Massachusetts or the state’s recently robust tax receipts.  The Senate Ways and Means Committee’s budget (S 3) calls for increasing state spending by $1.2 billion, or about 2.6 percent, above FY2021.  The overall amount, which will likely grow through the amendment process, is $1.8 billion higher than the bill Governor Charlie Baker proposed in January and $64 million less than the House-approved bill.

Senate budget writers did not include in their budget any of the $4.5 billion Massachusetts will receive from the American Rescue Plan.  The U.S. Treasury published guidelines Monday on how states can use those funds, and Senate Ways and Means Committee Chair Michael Rodrigues (D-Westport) indicated the Committee has not yet “had the time to dig into that.”  The Senate built its budget on the assumption that Massachusetts will collect $30.12 billion in taxes in fiscal 2022, the so-called “consensus revenue” figure on which the Legislature and Baker administration agreed in January.  However, monthly tax receipts have grown above expectations and if May and June collections hit their projected marks, the state will end FY2021 with $800 million more than legislators anticipate collecting in FY2022.

In addition, the Senate’s budget bill calls for a maximum withdrawal from the state’s “rainy day” stabilization fund of $1.55 billion, $50 million less than Baker proposed and $325 million less than the House proposal.  Chairman Rodrigues said that drawdown would leave the fund, which had a balance of $3.52 billion before the pandemic with more than $1.15 billion.  

While the Senate budget does not call for any broad-based tax increases on individuals, it does propose a handful of new revenue sources not considered by the House, such as authorization of debit card lottery payments estimated at $30 million.  Two notable pieces of Baker’s budget bill do not feature in either the House or Senate budget bill: a plan to penalize pharmaceutical companies for excessively increasing drug prices, and revenue from sports betting, which continues to be the subject of debate on Beacon Hill.

As we noted above, the Senate plans to begin debate on the budget on Tuesday, May 25.  Amendments are due by 2 p.m.  on Friday.  To review the Senate’s FY2022 budget proposal, click here. 

MA Mask Guidance Remains in Place Despite CDC Changes

Although the federal Centers for Disease Control (CDC) issued guidance this week advising fully vaccinated individuals they can stop wearing a face covering in most indoor and outdoor settings, the Commonwealth is not planning to update its guidance and masks will still be required in all indoor public places, at all events and outdoors when social distancing is not possible.  While Governor Charlie Baker’s office issued a statement on Thursday night saying the governor welcomed the new health guidelines from the CDC and would be “updating Massachusetts’ COVID restrictions in the near future.”

The CDC, led by former Massachusetts General Hospital physician Dr. Rochelle Walensky, took a major step toward allowing the country to return to life as it remembers it before the pandemic when it said Thursday that Americans no longer need to wear a mask outdoors or indoors in most cases, if they are fully vaccinated against COVID-19.  States have varied mask rules and Massachusetts continues to have one of the most stringent mandates.

The Governor relaxed the mask mandate on April 30 when he said they were no longer required outdoors if social distancing was possible and eliminated the $300 fine for violations.  Face coverings are still required at all times in indoor public places, and at public and private events held indoors and outdoors, except when eating or drinking.

This past Monday, large venues were allowed to expand their capacity from 12 percent to 25 percent and other industries, such as amusement parks and road races, were allowed to resume.  The next step in reopening is scheduled to occur on May 29 when gathering limits are will increase to 200 people indoors and 250 outdoors, and street festivals, bars and beer gardens will reopen.