Overview
During its budget debate, the Senate added about two-tenths of 1 percent to the budget’s bottom line. The Senate did not adopt any new taxes or appropriate money from the stabilization fund. The modest increases approved were paid for by identifying revenues that are expected to be available but were not counted on in the Senate Ways & Means proposal (for example, the final Senate budget, relying on recent trends, assumes that revenue from the lottery will be approximately $21 million higher in Fiscal Year 2011 than had been anticipated).
The largest amendments approved by the Senate were in education and health care. The Senate adopted a $6.7 million amendment for full-day kindergarten (bringing the total spending on that initiative back up to the FY 2010 level) and a $13.3 million amendment for the special education circuit breaker program that provides reimbursements to districts with very high special education costs for particular students. In health care, the Senate adopted an amendment to provide $10 million to acute-care hospitals that are facing “extreme financial distress.” The Senate also adopted an amendment that addresses a number of issues regarding eligibility for state programs and hiring by various businesses, primarily relating to undocumented immigrants. Provisions of that amendment are discussed in the relevant program sections of this Monitor.
On tax policy, the Senate did not adopt any tax increases or decreases, but did adopt an amendment that will make it easier for the state to examine the effectiveness of a number of tax credits. The amendment requires the recipients of specific tax credits to report on jobs created and other benefits. It also requires the state to publish reports describing which firms receive the credits, how much they receive, and how well the overall objectives of each credit are being met. These published reports would include overall jobs data, but not specific data on how many jobs may have been created by each firm.
As the Senate was debating the budget, news from Washington threatened to create a significant new set of challenges for state budget writers. In the stimulus law (the American Recovery and Reinvestment Act, or ARRA), the federal government temporarily increased the share of Medicaid costs it would pay. For Massachusetts, ARRA increased the Medicaid reimbursement rate (FMAP) from 50 percent to about 62 percent, providing the state with about $1.3 billion a year. This provision had been scheduled to end in December 2010 -- half way through state fiscal year 2011.
Recognizing that this sharp reduction in state fiscal relief would be harmful to the national economy (it has been estimated that if states are required to close their FY 2011 budget gaps with only budget cuts and tax increases those actions could cost the nation 900,000 jobs), the U.S. House and Senate approved separate legislation extending the enhanced FMAP rates to the end of fiscal year 2011. That provision has not, however, been included in legislation that has passed both houses of Congress. During the week before Memorial Day, Congress was expected to enact legislation with this extension, but failed to do so. There is now a significant danger that this funding may not be approved - which would create a new FY 2011 budget gap of $600 million to $700 million for the Commonwealth, requiring additional cuts, new taxes, or the spending down of remaining reserves.
| HOW TO READ THE TABLES |
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The tables included at the beginning of each section provide an overview of the funding for each category and how it compares to funding in FY 2010. Here is an explanation of each item presented in these tables.
FY 2010 GAA: The level of funding that was approved in the enacted budget for FY 2010.
FY 2010 Current: This amount includes any subsequent additions or reductions to the approved funding level in the GAA, including supplemental budgets and any cuts that were made by the Governor in October of 2009 through the 9C process. (For more information on 9C cuts, see here.)
FY 2011 Senate Final: This is the funding amount proposed by the Senate for FY 2011.
FY 2011 Senate Final(Adjusted):In order to allow for accurate comparisons of FY 2011 budget proposals to FY 2010 budget totals, MassBudget “adjusts” budget totals when the FY 2011 proposal recommends departmental reorganizations. These adjustments allow the user to differentiate between changes in funding due to proposed cuts or expansions in funding, rather than due to organizational shifts.
Specifically, in this Budget Monitor, the FY 2011 totals reflect the following adjustments (a detailed explanation is provided at the end of this report):
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| ACCOUNT | ACCOUNT NAME | Senate Adjustment |
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| 1108-5200 | Group Insurance Premium and Plan Costs | (68,334,380) |
| 8910-0000 | County Correctional Programs | 36,623,886 |
| Off-budget adjustment | 31,710,494 |
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| 1599-1970 | Mass. Turnpike Authority Contract Assistance | (100,000,000) |
| 1595-6368 | Mass. Transportation Trust Fund | 100,000,000 |
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| 2210-0105 | Toxics Use Retained Revenue | (1,657,449) |
| 7100-0200 | University of Massachusetts | 1,657,449 |
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| 4590-0915 | Public Health Hospitals | 1,011,168 |
| 7004-0102 | Homeless Individuals Assistance | (1,011,168) |
| 2001-1001 | Environmental Affairs Data Processing Service Fee Retained Revenue | 55,000 |
| 1790-0151 | Data Processing Service Fee Retained Revenue | (55,000) |
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| 2000-1700 | Energy and Environment Technology Costs | 70,000 |
| 1790-0150 | Geographic and Environmental Information | (70,000) |
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Staff
