#2023-13, May 26, 2023

Senate Approves $56 Billion Annual State Budget; Association-Supported “Crumbling Foundation” Language Amendments Included

Late Thursday, the annual state budget season moved to the next phase as the Senate unanimously approved a nearly $56 billion spending plan that ramps up spending while setting aside hundreds of millions of dollars for a tax relief plan that hasn't been unveiled.

Senators voted 40-0 to finalize their rewrite of a spending plan first proposed by Gov. Maura Healey (D- Cambridge) and already approved by the House, setting up weeks of closed-door negotiations with their counterparts ahead of the July 1 start of fiscal year 2024.

That conference committee process, which in recent years has failed to produce a final accord before the deadline, will decide the fate of some of the most notable parts of the budget, including how it divides $1 billion in new income surtax revenues and whether to give undocumented students access to in-state tuition at public colleges and universities.

Over the course of three days of deliberations, the Senate approved more than 400 amendments, collectively adding $82.2 million in spending and pushing the bottom line to about $55.9 billion, according to the Senate Ways and Means Committee.

Notable additions senators made include funding for kits to test whether drinks have been spiked amid a worrying rise in cases, another attempt to study congestion pricing and other transportation cost questions, and a tweak to a House-backed push to revive and make permanent an eviction diversion policy. We were also pleased to see both Association- supported amendments aimed at further tackling the mounting so-called “crumbling foundation” issue in the central and southern part of the state be approved by the Senate. The amendments, offered by outgoing Senator Anne Gobi (D- Spencer), seek to boost existing funding for homeowners testing (#160) and would implement testing for the troublesome element, pyrrhotite, at quarries throughout Massachusetts (#780).

Unlike the $56.2 billion budget the House approved last month, the Senate's version does not include funding to continue offering free school meals to all students -- a measure top Senate Democrats say they plan to address in another spending bill -- nor does it allow the Lottery to offer games online. Senators also quietly rejected an amendment that would have added online Lottery authorization into their budget, revealing opposition among the chamber's top Democrats to another gambling expansion soon after the approval and launch of sports betting.

The Senate also diverged from the House on its approach to tax relief. As previously reported, the House approved a tax relief bill (H 3770) -- estimated at a $587 million impact in FY24 and $1.1 billion once it fully takes effect over several years -- before tackling its budget bill. However, Senate Democrats are not quite ready to move ahead on tax relief so the Senate Ways and Means Committee instead factored in $575 million to cover tax relief in a bill that still has not yet emerged. Senate Democrats have not said when they will unveil or debate their tax relief proposal.

To review the final Senate FY’24 budget, click here.

After April Drop, Mid-May Tax Collections Up

State tax collections over the first half of May were up nearly 12 percent over the same period in May 2022. The $1.34 billion collected by mid-month was $141 million more than mid-month 2022 collections, Revenue Commissioner Geoffrey Snyder wrote in a May 18 letter. However, Department of Revenue officials caution against using mid-month revenues to assess trends or project future revenues.

Massachusetts collected $4.782 billion in taxes in April, a drop of $2.163 billion or 31 percent from the same month a year earlier and $1.435 billion or 23 percent below the most recent monthly benchmark projection. Through mid-April, total state tax collections of $1.597 billion were running $848 million or nearly 35 percent below collections during the same period in April 2022.

April tax collections left the state more than $700 million below what budget chiefs originally forecast Massachusetts would have hauled in by that point. Through March, revenues had been running roughly $870 million above the original benchmark pace.