#2021-20 July 9, 2021

House, Senate Agree to $48.1 Billion Budget

Late Thursday, House and Senate budget negotiators agreed to a deal to raise tax collection estimates by more than $4.2 billion and spend more than $48 billion in fiscal year 2022.  Late yesterday evening, the House-Senate Conference Committee filed the final conference report and the legislature scheduled a rare Friday formal session to approve the measure and send it to Governor Baker’s desk.

The budget deal accounts for increased tax collections over the last six months that have far outpaced the projections agreed to by legislative leaders and the Baker administration at the start of the year.  Some of the additional tax revenue was used by budget negotiators to create a $350 million trust fund that could be tapped in future years to help cover the cost of a $1.5 billion school funding reform law passed in 2019, known as the Student Opportunity Act.  The conference report, H. 4002, also does not draw at least $1.5 billion from the state’s “rainy-day” fund and makes a supplemental deposit of $250 million into the Commonwealth’s pension system.

Massachusetts is one of just four states in the country that started its fiscal year on July 1 and does not have an annual budget in place.  Though the budget is already eight days late, the Legislature and Governor Baker put in place a temporary budget totaling $5.4 billion to keep government operations funded through July.

The Association is pleased that the final budget includes both a Senate-backed plan to provide additional funds for testing for those residents who may be affected by the crumbling foundation issue in the central and western parts of the state and a House-backed proposal to add funds to support the state’s financial literacy efforts.  MBA supported both provisions during the budget debate earlier this year.

After agreeing in January to an estimate of $30.12 billion in taxes, House Ways and Means Chairman Aaron Michlewitz (D-Boston) and Senate Ways and Means Chair Michael Rodrigues (D-Westport) agreed to increase the tax revenue projections for fiscal 2022 to $34.35 billion – a substantial $4.23 billion increase.  The new projection reflects what House and Senate budget official described as an increase of $362 million, or about 1 percent, above preliminary tax estimates for fiscal 2021 of roughly $34 billion. 

The new flexibility in the fiscal 2022 budget allowed negotiators to fund accounts across the board at the higher level of what was recommended by either the House or Senate, adding roughly $300 million in additional spending added to the $47.7 billion budgets passed by both branches this spring.  That step led to larger bottom lines for higher education, nursing homes, local health departments, mental health programs and early educator salaries.  The measure also makes the state’s film tax credit, which had been the subject of criticism during the budget debate, permanent.

To review the final budget, please click here. 

Complete State House Reopening Not Expected by Oct. 1

In remarks earlier this week, House Speaker Ron Mariano (D-Quincy) indicated that the State House will not have a “complete reopening” before the start of October.  He noted that he is hopeful that the building will be at least more populated at that point as legislative leaders target some time this fall to welcome the public back to Beacon Hill.

While introducing a package of House rules for debate on Wednesday, Speaker Pro Tempore Kate Hogan (D-Stow) said the October 1 effective date in the bill “will coincide with the timeline of the reopening of the State House” but a complete reopening is not expected until some time after that. 

As previously reported, although Governor Charlie Baker lifted the COVID-19 state of emergency on June 15, the State House reopening plans are still unclear as Speaker Mariano and Senate President Karen Spilka (D-Ashland) have not expanded on the “comprehensive and nuanced reopening plan” to bring more employees and outsiders back in the fall that are in development.  The state capitol has been mostly closed for more than 15 months due to the pandemic, during which most members have participated remotely in hearings, sessions and votes. 

Division of Banks Establishes New Maximum DRI Fee

The Division of Banks recently released a decision that sets the maximum allowable fee Massachusetts state-chartered banks and credit unions may charge consumer deposit accounts for dishonored checks, also known as deposit return items (DRI).  According to the Division, the maximum allowable DRI fee, in effect from August 1, 2021 to July 31, 2022 will be $7.11. 

The DRI fee is based upon deposit return item cost data independently obtained from a sample of state-chartered banks and credit unions that reasonably reflect industry differences in asset size, charter type, geographical location and DRI processing procedures, according to the Division. 

A copy of the DRI fee decision is available here.