#2023-11, April 28, 2023

House Passes $56.2B FY’24 Budget

On Wednesday Evening, the Massachusetts House unanimously approved a $56.2 billion FY’2024 budget shipping the Senate a spending plan that factors in hundreds of millions of dollars in tax relief, online Lottery authorization and a change to the tax cap law that triggered mandatory rebates last year.

The House voted 156-0 on the bill (H 3900), capping three days of deliberations that included deciding which of the 1,566 offered budget amendments would survive. In the end, the House added roughly $120 million in spending over the course of its budget process.

The House budget pursues major spending increases across state government, particularly on education, environmental agencies, transportation and childcare, while projecting more savings that will push the balance of the state's "rainy day" fund above $9 billion by the end of FY24. Its bottom line is about $3.7 billion or 7 percent higher than the fiscal year 2023 state budget enacted last summer. The bill also factors in about $650 million in tax relief next fiscal year, which the House approved in a standalone bill (H 3770) whose annual impact would eventually rise to $1.1 billion.

The House budget would allow the Massachusetts Lottery to sell games online, expanding another gambling option onto digital platforms shortly after the launch of in-person and mobile sports betting in the Bay State. Revenue from the "iLottery" would be directed toward Commonwealth Cares for Children (C3) grants that stabilize early education and care providers, and House Democrats estimate it would generate about $200 million per year for that program.

Most of the changes, adopted via mega-amendments, tacked on earmarks for projects, community organizations and other local needs in legislative districts. One package, Consolidated E, includes a Representative Jeffrey Roy (D- Franklin) amendment, which aims to add Prudent Investor Standards as an additional option for trust funds managed by municipalities, was carefully vetted and redrafted - with the Association’s input - before its inclusion in the final House budget bill.

Attention now turns to the Senate, where their fiscal 2024 budget bill is expected to be completed toward the end of May. More on that below.

Tax Relief Plan Likely to Precede Senate’s May 10 Budget Rollout

The Massachusetts Senate plans to unveil its fiscal 2024 budget proposal during the second week of May, but it remains unclear when the branch will tackle a tax reform package.

It was announced on Thursday that the Senate will share their annual budget plan on Wednesday, May 10,  coming on the heels of the House of Representatives approving a $56.2 billion budget the day before after three days of discussions.

As previously reported, earlier this month the House approved and sent a bevy of tax cuts, which will eventually total nearly $1.1 billion, to the Senate, including expanding the childcare and dependent care tax credit and Association-supported overhauling the estate tax. That tax relief was then factored into the annual budget bill that cleared the House Wednesday night.

It's likely the Senate's tax plan will be rolled out before its budget recommendation, similar to how Governor Maura Healey (D – Cambridge) and the House announced their pitches, according to Senate Ways & Means. Senators do have a template to work from -- the tax relief plan it approved, and then tabled, during the summer of 2022.

As reported, the House, echoing Governor Healey's signature tax relief proposal, wants to create a refundable $600 tax credit for families and caregivers. The branch also approved increasing the senior circuit breaker tax and rental deduction cap. The House also moved to bump the estate tax threshold from $1 million to $2 million while eliminating the so-called cliff effect, as well as gradually slashing the short-term capital gains rate from 12 percent to 5 percent.

In their budget, state representatives approved hefty investments in education, environmental agencies, transportation and childcare. The Lottery could be allowed to sell games online, should the House's successful proposal gain traction in the Senate.