Baker's Budget Proposal Gets Cool Reception From Local Leaders

MASSACHUSETTS — The Baker administration filed its proposed budget for the upcoming fiscal year last week, days after it was met with a tepid reception at the Massachusetts Municipal Association's (MMA) annual meeting.

The proposal failed to address local leaders' initial criticisms, chiefly that the 2.7 percent increase in local aid was too low, considering the state set a record for revenue collection in fiscal year 2021 and recently released projections for another record in the current fiscal year.

"As we stated during our Annual Meeting this past weekend, a 2.7 percent increase is too low," MMA Executive Director and CEO Geoff Beckwith said, "and we will be working with local leaders and lawmakers to advocate for an increase that reflects the actual growth in revenues that the state is receiving. With capped property taxes and inflation running higher than 2.7 percent, cities and towns need a much higher level of UGGA aid to maintain essential services."

Baker's administration touted the $48.5 billion plan as sustaining efforts to recover from the COVID-19 pandemic, while fully funding the Student Opportunity Act and making key investments in other critical areas, like housing and health care.

The administration also submitted a tax proposal that it says will provide relief for housing and childcare costs, eliminate the income tax for hundreds of thousands of low-income taxpayers and maintain the state's competitiveness, allowing nearly $700 million to remain in the hands of taxpayers each year.

By the numbers

Local Government

• Increases the Unrestricted General Government Aid (UGGA) investment by $31.5 million compared to the FY22 budget, consistent with the expected 2.7% growth in tax revenue and keeping a promise made by Governor Baker and Lt. Governor Polito at the outset of their administration
  • Total UGGA investment of $1.2 billion to local cities and towns across the Commonwealth
  • Under the Baker-Polito Administration, total annual UGGA has increased by $253.9 million
• $6 million in funding for Community Compact related programs including best practices and regionalization and efficiency grants, an increase of $2.4 million (66%) above FY22
• $4.8 million for the Public Safety Staffing Grant Program managed by the Executive Office of Public Safety and Security
• $3 million for district local technical assistance

What local leaders are saying

In a statement last week, the MMA said the Baker administration is calculating revenue growth using a methodology that omits a large portion of the record-setting revenue the state generated over the last year, which "works to the disadvantage of cities and towns, and minimizes revenue sharing amounts, Beckwith said.

The MMA added that state tax collections are expected to be $2.5 billion higher this upcoming fiscal year than the tax base that was used to pass last year's budget, and $6.8 billion higher than the original fiscal 2022 projection from a year ago. The proposal uses an upgraded revenue estimate for the last fiscal year, rather than the one in the budget as enacted, leading to an artificially low growth projection, the MMA said.

The proposal would level-fund payments in lieu of taxes (PILOT), which the MMA said would create a significant hardship for many smaller, rural communities with large amounts of state-owned land.

K-12 Education

Fully funds the landmark Student Opportunity Act, adding a total of $591.4 million in new spending.

• $485 million in Chapter 70 funding, for a total Chapter 70 investment of $5.989 billion
• $41 million increase for special education circuit breaker reimbursement for local cities and towns
• $64.8 million in additional funding for charter school reimbursement

In addition to Chapter 70, provides $952.8 million for the Department of Elementary and Secondary Education, including $31.1 million to scale up proven programs that will develop and expand college and career pathways for more than 17,100 high school students, a $12 million increase above FY22 funding.

What local leaders are saying

The MMA said the proposal increases school aid by $485 million and chiefly improves the foundation budget, adding weight for low-income students, English Language Learners, special education costs and school employee health benefits.

But 136 of 318 operating districts – about 43 percent – would only receive the minimum $30 per student increase under the Student Opportunity Act, according to the MMA, and the organization is advocating for at least $100 per student to ensure that districts are on track with inflation and can maintain their school services.

The MMA said the proposal also fails to fix the "serious flaws in the charter school finance system." The proposal increases the charter school reimbursement account up to $219 million to meet the state's Student Opportunity Act commitment.

"Charter schools will continue to divert a high percentage of Chapter 70 funds away from many municipally operated school districts, and place greater strain on the districts that serve the vast majority of public school children," Beckwith said. "Major problems will continue unless a true resolution of the charter school funding problem is achieved, which is a top MMA priority."

Early Education and Childcare

$802 million for Early Education and Care (EEC), an increase of $273.9 million (52%) since FY15. The recommendation includes:

• $53.9 million to annualize the implementation of a more equitable parent fee scale that improves childcare affordability across the Commonwealth
• $9.2 million across the Department of Transitional Assistance (DTA) and EEC that would provide childcare subsidy access for individuals participating in Supplemental Nutrition Assistance Program (SNAP) Employment and Training programming
• $5.5 million across the Department of Children and Families (DCF) and EEC to increase enrollment of DCF-involved children in childcare and expand a temporary childcare program to reach more children and provide additional wraparound services

Higher Education

$1.45 billion for the Department of Higher Education, University of Massachusetts, and state universities and community colleges, which includes:

• More than $155 million in financial aid grants, including $18 million to support an expansion of the MASSGrant Plus program that will enable all low-income, in-state undergraduate students to attend public higher education without incurring debt for mandatory tuition and mandatory fees
• $22 million in financial aid for Massachusetts students attending private institutions
• $8.8 million for foster care financial aid and fee waiver programs to maintain support for over 1,400 students attending private and public campuses who are currently or were previously in DCF custody and care, or who have been adopted through DCF

Housing and Homelessness

$716.5 million for the Department of Housing and Community Development, a $132.4 million (23%) increase above FY22, including:

• $213.2 million for the Emergency Assistance family shelter system
• $145.6 million for MRVP to support more than 9,000 vouchers in FY23, an increase of 223% since FY15
• $85 million in funding for Local Housing Authorities
• $83.3 million, a $25.4 million (44%) increase above the FY22 GAA, for Homeless Individual Shelters
• $80 million for Residential Assistance for Families in Transition (RAFT), an increase of $58 million (264%) above FY2
• $56.9 million for HomeBASE Household Assistance, a $30.9 million (119%) increase above FY22
• $12.5 million for the DMH Rental Subsidy Program, a collaborative program through which DMH provides mental health services and DHCD provides rental assistance
• $8.2 million for Housing Consumer Education Centers to help renters and homeowners secure and maintain stable housing
• $5 million to continue an innovative model to create new housing opportunities with wraparound services for chronically homeless individuals

Economic Development

• $10 million for a new direct appropriation supporting the Massachusetts Life Sciences Center, a quasi-public agency tasked with building the life sciences community in Massachusetts
• $7.5 million for the Community Empowerment and Reinvestment Grant program to support development in socially and economically disadvantaged communities
• $4 million for the Small Business Technical Assistance Grant Program for entrepreneurs and small businesses, especially those owned by women, immigrants, veterans, and people of color
• $2.5 million for Advanced Manufacturing Training

Labor and Workforce Development

$440.1 million for workforce development programs and initiatives across a wide range of state agencies, a $191.3 million (77%) increase since the Administration took office.

• $16.9 million in total funding to continue transforming vocational high schools into Career Technical Institutes running three shifts per day to provides pathways to high-demand vocational trade careers, including plumbing, HVAC, manufacturing, and robotics
• $16.2 million for the YouthWorks Summer Jobs Program to subsidize summer job opportunities and provide soft job skills education for youths
• $600,000 for a new appropriation to expand research and analytics capabilities to enhance data-driven workforce development strategies

Health and Human Services

• $230 million for Chapter 257 human service provider funding under the new rate methodology that better reflects the cost of benchmarking direct care and clinical staff wages
• $115 million to expand outpatient and urgent behavioral health services
• $21 million to expand the Medicare Savings Program, reducing out-of-pocket health care spending and drug costs for approximately 34,000 low-income older adults and disabled individuals
• $10 million in grants to local health departments to support municipalities' capacity to respond to the COVID-19 pandemic
• $671.9 million for the Executive Office of Elder Affairs, a $400.1 million (147%) increase since FY15
• $84.1 million to fully fund the Turning 22 program at DDS
• $1.191 billion for the Department of Children and Families, an increase of $363.6 million (44%) since 2015, including $13.4 million to support families that are fostering children in DCF care and to encourage recruitment of new foster families
• $49.3 million for the Chelsea Soldiers’ Home, a $13.2 million (37%) increase above FY22, which supports the Fall 2022 opening of a new 154-bed state-of-the-art Community Living Center.

Substance Addiction Prevention and Treatment

$543.8 million provided in FY23 across a variety of state agencies, an increase of $424.5 million (356%) since FY15. Funding includes:

• $184.1 million for a variety of treatment and prevention services at the Department of Public Health
• $260 million through a Section 1115 Substance Use Disorder (SUD) waiver from the federal government
• $31 million for inpatient treatment beds operated by the Department of Mental Health
• $65.9 million across public safety and law enforcement agencies, primarily for the provision of medication-assisted treatment

Sexual Assault and Domestic Violence

$123.4 million across the budget, a 91% increase since FY15, which includes:

• $56.1 million in funding for the Department of Public Health to carry out domestic violence and sexual assault prevention and survivor services, as well as emergency and transitional residential services for victims and their children
• $42.9 million for providing shelter, services, and housing assistance for individuals and families who are victims or at risk of domestic abuse in their current living situations
• $7.9 million for statewide sexual assault nurse examiner (SANE) programs for adults and adolescents in hospital settings and pediatric SANE programs in child advocacy centers
• $2 million to expand services for survivors of human trafficking, including $1 million through the Safe and Successful Youth program and $1 million in a new appropriation in the Executive Office of Public Safety and Security

Promoting Equality and Opportunity

More than $50 million supporting the recommendations of the Black Advisory Commission (BAC) and the Latino Advisory Commission (LAC), including:

• $23.1 million to support higher education and career pathways for high school students in underserved communities through the Early College, Innovation Pathways, and Dual Enrollment programs
• $4.8 million for the STEM Starter program across 15 community colleges
• $4.5 million to support the YouthWorks Summer Jobs program
• $5.9 M for Adult Basic Education (ABE)
• $2.5 million for the Urban Agenda program
• $1.9 million for the Workforce Competitiveness Trust Fund
• $3.9 million for the Supplier Diversity Office (SDO)

Transportation

• $1.512 billion in total budget transfers for the MBTA
• $456 million for the Massachusetts Department of Transportation (MassDOT), including $95 million for snow and ice operations and $3.4 million to support implementation of new funds provided through the Infrastructure Investment and Jobs Act
• $94 million for Regional Transit Authorities
• $11.6 million for the Merit Rating Board

What local leaders are saying

The MMA said the proposal reduces funding for transportation reimbursements in regional school districts, burdening "virtually all" communities in regional districts. Reimbursements for transportation of out-of-district vocational students remains "significantly" underfunded at $250,000.

The proposal increases reimbursements for the transportation of homeless students, the impact of which will vary from community to community. The administration has been successful in reducing the number of homeless students who have been displaced from their original district, the MMA said.

Energy and the Environment

• $4 million for the Summer Nights program, an increase of $2.7 million (208%) versus FY22 funding
• $30.5 million for the Massachusetts Emergency Food Assistance Program, which will provide more than 27.4 million nutritious meals for individuals and families
• $3.7 million for climate change and adaptation preparedness
• $1.3 million to expand the Swim Safe Massachusetts program to enhance and promote water safety

Criminal Justice and Public Safety

• $14.3 million to support for the 87th and 88th Massachusetts State Police Recruit Training Troops, which are expected to bring on 175 new troopers each
• $78.3 million in total funding for re-entry and diversion programming across the Commonwealth, a $42.6 million (120%) increase since 2015
• $12.3 million in funding for the Shannon Grant program to fund anti-gang and youth violence prevention efforts
• $10.4 million to fully fund tuition and fee waivers for National Guard members
• $8 million for the Municipal Police Training Commission to implement bridge academies, expand training capacity, and annualize training requirements such as de-escalation and school resource officer trainings

$5.8 million is also provided for new appropriations supporting the Peace Officer Standards and Training (POST) Commission and four other commissions created in the Police Reform bill.

Securing and Modernizing Government IT

$164.1 million for the Executive Office of Technology Services and Security to support:

• Management of Cyber Security Operations Center (SOC)
• Continued migration of applications and infrastructure to cloud, third-party on-premise, and Software as a Service (SaaS)
• Continuation of EOTSS customer engagement initiative to enhance IT and security service offerings across Commonwealth agencies
• IT strategy consulting services in support of priority state agency and cross-secretariat initiatives
• Business intelligence (BI) and data analytics support for state agencies
• Centralized software and IT contract compliance program

Tax Relief Proposal

The plan proposes to:

• Double the maximum Senior Circuit Breaker Credit to lower the overall tax burden for more than 100,000 lower-income homeowners aged 65+
• Increase the rental deduction cap from $3,000 to $5,000, allowing approximately 881,000 Massachusetts renters to keep approximately $77 million more annually
• Double the dependent care credit to $480 for one qualifying individual and $960 for two or more, and double the household dependent care credit rate to $360 for one qualifying individual and $720 for two or more to benefit more than 700,000 families
• Increase the Massachusetts adjusted gross income (AGI) thresholds for “no tax status” to $12,400 for single filers, $24,800 for joint filers, and $18,650 for head of households, which will provide direct relief to more than 234,000 low-income filers
• Double the estate tax threshold and eliminate the current “cliff effect” that taxes the full amount below the threshold
• Change the short-term capital gains tax rate to 5% to align the Commonwealth with most other states

Click here for more information about the budget proposal.