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Budget Monitor Conference Preview:
Differences Between the Senate and House Budgets for FY 2019

June 6, 2018
Analyzing-the-Senate-Ways-and-Means-Committee-Budget-for-FY-2018

OVERVIEW

The House and Senate Budgets reflect similar values: expanding access to education, helping working families to make ends meet (with an expansion of the Earned Income Tax Credit), and helping families to find housing. Both budgets are also constrained by limited revenue and are not able to make progress in a number of important areas including making higher education more affordable and significantly improving our transportation systems. The list below highlights several of the substantial differences between the House and Senate budgets, and the rest of this Monitor provides more detail on differences that the Legislature's budget Conference Committee will have to reconcile.

  • Education. Both branches made targeted new investments in education: the House proposed larger investments in early education and care, focused on quality, and the Senate proposed greater funding for local K-12 public schools. Neither branch proposed significant increases in higher education funding, continuing a pattern that has led to rising student costs and debt. The Senate includes a new provision, prompted by the sudden Mount Ida College closure, that requires a college to give 120 days’ notice to the Board of Higher Education (BHE) if it plans to shut down.
  • Housing. The House proposes $5.0 million for a new program to provide flexible funding to help individuals who are homeless to move into housing and $100.0 million for the Massachusetts Rental Voucher Program (MRVP), $2.5 million more than the Senate. But the House provides significantly less funding than the Senate for the Emergency Assistance account that provides shelter for low-income homeless families. The Senate creates a new $2.7 million program to retrofit or create affordable housing for renters with disabilities. The Senate also proposes increases in Registry of Deeds fees to provide additional funding for the Community Preservation Act Trust Fund, which helps towns fund affordable housing, open space, and historic preservation. 
  • Health Care. The Senate budget includes a proposal—similar to one introduced by the Governor—to control costs of pharmaceuticals. It would allow the state to negotiate drug prices directly with manufacturers to obtain rebates for prescription drugs. The state could also impose a penalty against the manufacturer if the manufacturer were not to agree to a rebate and if the Administration were to find the manufacturer’s prices excessive. The House budget includes more funding than the Senate’s for pediatric hospitals, and for adult foster care and adult day health rates.

Both the House and Senate proposals include an increase in the state Earned Income Tax Credit (EITC). Research has shown that—in addition to encouraging people to work and helping families to make ends meet—the EITC improves health outcomes for mothers and children, and boosts children’s academic performance and lifelong earnings (see MassBudget’s “A Credit to Health: The Health Effects of the Earned Income Tax Credit” for more information).

Both branches also embrace a proposal by the Governor to increase funding for adult mental health services and to restructure and expand the primary adult services program. The goal of these reforms is to provide more coordinated, standardized, and consistent treatment that will better align with health care systems, and will be more comprehensive, particularly for people who also have substance use disorders.

The rest of this Budget Monitor describes major amendments adopted during the Senate budget debate and examines the differences between the House and Senate proposals. Links from the Table of Contents below allow readers to jump to specific sections. Each section also provides links to our online budget tools including our Budget Browser (which provides funding information for every line item in the state budget going back to FY 2001) and, where applicable, to our Children’s Budget. When the proposals track prior recommendations closely, we also provide links to the detailed descriptions of those proposals in our previous Budget Monitors.


TABLE OF CONTENTS


Overview Early Education K-12 Education Higher Education
Environment & Recreation MassHealth & Health Reform Mental Health Public Health
State Employee Health Insurance Child Welfare Disability Services Elder Services
Juvenile Justice Transitional Assistance Other Human Services Transportation
Housing Economic Development Law & Public Safety Local Aid
Libraries Additional Line Item Differences Revenue (tax & non-tax) Summary Chart


EDUCATION


Early Education

During debate on the Fiscal Year (FY) 2019 budget, the Senate added just $241,000 to early education and care accounts. The Senate amendments primarily provided targeted support to a handful of local programs. These changes bring the final Senate FY 2019 budget proposal to $597.3 million, which is $23.4 million lower than what was included in the House FY 2019 budget.

The House proposed $20.0 million in funding to increase the rates paid by the state to child care providers. This line item, Center-Based Child Care Rate Increase received no funding in the Senate budget. Salary and benefit increases, along with professional development for early educators are central to improving the quality of care available for preschool kids.

Additionally, the House proposed a new line item, Early Education and Care Provider Higher Education Opportunities, funded at $8.5 million which would also focus on teacher recruitment, training, advancement, and retention efforts. This item was not funded in the Senate Budget. For full detail on the House proposal, see Analyzing the House Ways and Means Budget for FY 2019.

Though the Senate did not provide the same level of funding as the House for early education quality efforts, it did provide $5.0 million to Commonwealth Preschool Partnership Initiative, which did not receive funding in the House budget. This funding could help providers expand access to child care for more young children, particularly three-year-olds and those with greater needs. For full detail, see Analyzing the Senate Ways and Means Budget for FY 2019.

For full details on the differences between the final House and Senate budgets for early education, that will have to be reconciled by the joint House/Senate Conference Committee, see the table below.


table: Early education line items with funding differences

For information on funding for early education programs going back to FY 2001, please see MassBudget’s Budget Browser here.


K-12 Education

During floor debate on the Fiscal Year (FY) 2019 budget, the Senate added $18.3 million for K-12 education line items. Overall, the Senate provides somewhat more funding than the House for K-12 programs including Chapter 70 aid and grants.

In its FY 2019 proposal, the Senate provides $4.92 billion for Chapter 70 Education Aid and Reserves, $23.5 million more than the House. The Senate provides $35.6 million more for K-12 grant programs.

Most of the additional funding in the Senate’s Chapter 70 allocation is used to implement more recommendations of the 2015 Foundation Budget Review Commission (FBRC). While both the Senate and the House followed an FBRC recommendation to increase the funding for employee benefits, including health care, the Senate proposal also includes extra funds for English Language Learners (ELL) another area of focus of the FBRC. For detail, see Analyzing the Senate Ways and Means Budget for FY 2019.

The Senate created two new line items through amendments on the FY 2019 budget. The first Rural School Aid, funded at $1.5 million, would provide aid to rural school districts that are facing budget challenges, largely driven by declining enrollment. The grant would also require that rural districts consider ways to regionalize and pursue other efficiencies. Another Senate amendment adds $6.4 million to Regional School Transportation, which could also assist rural districts along with others that educate students across wider regions. The final Senate budget includes $68.9 million for Regional School Transportation, 8.4 percent more than what the House approved.

The second line item added during Senate floor debate, Summer Learning, funded at $500,000, would create a competitive grant to support comprehensive evidence-based summer learning opportunities, particularly for low-income kids. The programs include academic support, college preparation, and career readiness activities. Summer learning programs can help address students backsliding on academic skills over the summer, a problem which particularly affects low-income youth who more often lack access to high-quality enrichment opportunities.

For full details on the differences between the final House and Senate budgets for K-12 education, that will have to be reconciled by the joint House/Senate Conference Committee, see the table below.


table: K-12 education line items with funiding differences

For information on funding for all education programs going back to FY 2001, please see MassBudget’s Budget Browser here


Higher Education

During budget debate, the Senate adopted amendments to the Senate Ways and Means (SWM) Committee Fiscal Year (FY) 2019 budget for higher education programs totaling $3.5 million. The final Senate budget provides $1.20 billion in total funding for higher education—about the same as the House’s FY 2019 budget proposal. It is also about the same as estimated FY 2018 spending, resulting in a decrease after accounting for inflation. While the totals in the Senate and House proposals are roughly the same, there are specific line item amounts that will have to be resolved by the budget Conference Committee. See below for a table of line items with funding differences.

The Senate also adopted a handful of amendments that, while not directly changing line item amounts in the FY 2019 budget, could nonetheless have an impact on higher education policy and spending.

  • The Senate adopted language requiring any institution of higher education in Massachusetts—public and private alike—to give 120 days’ notice to the Board of Higher Education (BHE) if it plans to shut down, merge with or acquire another institution, or open a branch campus. The same amendment calls for colleges and universities in Massachusetts to notify BHE within 14 days of “learning that it may not have the financial resources to sustain the quality of its education programs, support institutional improvements, or graduate its entering class.” This follows the sudden announcement in April by Mount Ida College, a private four-year non-profit, that it would be closing after the 2017-18 academic year and selling its Newton campus (and its debt) to the University of Massachusetts-Amherst. Hundreds of current and newly admitted Mount Ida students were forced to make alternate plans for the 2018-19 year. At a hearing in May, the outgoing chair of Mount Ida’s board told the Senate Post Audit and Oversight Committee that the board had known for years that the school was facing tight cash flow. Mount Ida did not announce this liquidity constraint for fear that if prospective students knew Mount Ida was on shaky financial footing, they would be less likely to enroll, which could have hastened the tuition-dependent school’s closure. (For this reason, notice required by this section would be exempt from the state’s Public Records Law.)
  • The Senate followed the House in requiring that funding for all centers and institutes at the University of Massachusetts-Boston (UMass-Boston) be maintained at FY 2018 levels. (See the Higher Education section of MassBudget’s FY 2019 HWM Budget Monitor for a discussion of UMass-Boston’s planned funding reduction for 17 research centers and institutes.) The Senate, like the House, also includes language encouraging UMass to avoid cuts in future years to these centers and institutes. There is, however, no additional funding in the Senate budget associated with this requirement.
  • The Senate adopted language creating a commission on UMass-Boston debt. UMass-Boston bears a significant debt burden—and will continue to face significant costs in the future—related to the repair, maintenance, improvement, and construction of its campus facilities. The proposed commission would consider how much of this debt “should either be reimbursed, paid off, and/or assumed by the Commonwealth instead of UMass-Boston.”
  • The Senate adopted language banning state universities and UMass campuses from increasing student charges more than every five years except as “necessary to adequately fund student education and services in rare and extraordinary circumstances.”
  • Finally, the Senate adopted language creating a commission to study debt-free and tuition- and fee-free public higher education

table: Higher education line items with funidng differences

table: Higher education line items with funding differences (continued)


For information on funding for all higher education line items going back to FY 2001, please see MassBudget’s Budget Browser here.


ENVIRONMENT & RECREATION

During floor debate, the Senate added $3.4 million in amendments to environment and recreation programs. Many of these amendments provided funding for environment and recreation projects located throughout the state. The final Senate budget of $211.4 million is $1.4 million below the amount provided in the House budget. The budget Conference Committee will meet to reconcile differences between the two budgets. A full list of differences in funding for environment and recreation programs is listed, by subcategory, in tables at the end of this section.

One notable difference between the House and Senate budgets is funding for the Department of Environmental Protection (DEP). In FY 2016, DEP lost over 100 employees as part of the state’s early retirement incentive program. The House budget provides DEP with $29.1 million, an increase of $4.4 million over FY 2018 which could allow DEP to hire additional staff to help with environmental planning, permitting, compliance and other activities. The Senate budget provides about the same level of funding for FY 2019 as DEP received for FY 2018. 

Another difference is that the Senate proposes an increase in state filing fees at the Registry of Deeds to increase funding for the Community Preservation Act (CPA) Trust Fund. The CPA Trust Fund provides a state match to help fund local initiatives including open space and outdoor recreation facilities in municipalities that have adopted the CPA. For a full discussion of this, please see the Local Aid section of this Budget Monitor.

table: Environment line items with funding differences


tables: Fish and game line items and parks and recreation line items with funding differences


For information on funding for environment & recreation programs going back to FY 2001, please see MassBudget’s Budget Browser here.


HEALTH CARE


MassHealth (Medicaid) & Health Reform

The Commonwealth provides health insurance to about 1.9 million people, including more than 650,000—close to half—of the state’s children. In addition, the state budget funds payments to health providers, such as hospitals that serve large numbers of low-income patients and nursing homes, to help pay for care for patients on publicly subsidized health insurance. During floor debate on the Senate’s Fiscal Year (FY) 2019 budget, the Senate added $5.6 million to proposed funding for MassHealth and Health Reform, which brought the Senate funding level to $17.49 billion, $97.2 million less than in the House proposal, largely due to differences in provider payments and assumptions about pharmaceutical costs. There are still many line items with funding differences that will have to be resolved by the budget Conference Committee. See table below for a list of line items with funding differences.

MassHealth Program and Administration

During floor debate, the Senate added $5.6 million to funding for the MassHealth program and its administration, with $4.8 million for the MassHealth program, and $758,000 for program administration (see table). These are gross totals, and do not reflect the impact of federal revenues on these spending proposals. (“Net costs” reflect just the state costs after subtracting federal reimbursements.) Neither the House nor the Senate followed the Governor’s recommendation to transfer the costs of some MassHealth members from the MassHealth budget to the Health Connector as funded by the Commonwealth Care Trust Fund (see discussion below).

The Senate MassHealth budget differs from the House proposal largely in two ways. The Senate and House budgets differ in their funding for supplemental payments, and the Senate budget is lower due to their anticipation of lower spending on pharmaceuticals as a result of a new strategy to control pharmaceutical costs (discussed more below.)


table: MassHealth (medicaid) and health reform

Unlike the House, the Senate budget includes a proposal—similar to one originally introduced by the Governor—that would work towards reducing the increasing costs of pharmaceuticals. The Senate proposal would allow the state to negotiate drug prices directly with manufacturers to obtain rebates for prescription drugs. The Administration could impose a penalty against the manufacturer if the manufacturer were not to agree to a rebate, and if the Administration were to find the manufacturer’s prices excessive. The Senate’s budget proposal sets an annual prescription drug spending target, aiming to reduce the state’s share of pharmaceutical spending by at least 20 percent from the previous year. Neither the House nor the Senate follow the Governor’s recommendation to create what is known as a “closed formulary,” limiting the medications MassHealth would cover.

Furthermore, neither the Senate nor the House incorporate the Governor’s proposal to shift some low-income adults from MassHealth coverage to ConnectorCare at the Health Connector. To reduce costs to the state, the Governor had proposed moving 140,000 low-income adults off MassHealth coverage and into subsidized commercial coverage funded through the Commonwealth Care Trust Fund and the Health Connector (“ConnectorCare”). The MassHealth funding table above includes funding for the Commonwealth Care Trust Fund in order to more accurately align the Governor’s funding proposal that includes this transfer with the proposals from the House and Senate that do not.

The House overall provides $10.0 million more ($365.4 million) than the Senate ($355.4 million) for nursing facility rates. However, during floor debate, the Senate added $2.8 million to increased wages for direct care workers at nursing homes, and brings this designated funding total (“earmark”) to the same amount as in the House budget, $38.3 million. The Senate budget also includes language requiring the Administration to report on the expenditure of these wage increases, and to recoup any unspent or inappropriately spent funds.

During floor debate, the Senate also added a provision requiring the preparation of a report on pediatric patients requiring continuous skilled nursing care, in order to evaluate the unmet health care needs of medically complex and fragile children.

Other differences between the Senate and House budget proposals include elements that are in the Senate budget but not in the House budget:

  • $4.0 million in funding for increased rates for outpatient and diversionary adult behavioral health. This total includes an additional $2.0 million added by the Senate during floor debate.
  • $2.0 million in additional funding for increased rates for children’s behavioral health
  • $1.0 million to cover the costs of the first month of expanding adult dental coverage to include periodontics (starting June 2019).
  • $150,000 for the Academic Detailing Program, which provides information to prescribers from unbiased academic or non-commercial educators. This program is designed to provide an alternative to the information provided by pharmaceutical salespeople about the efficacy of prescription medications. Although not a new program, there is no funding for this in the current FY 2018 budget either.

The House budget includes several elements that are not in the Senate budget: 

  • $14.8 million in supplemental payments for pediatric hospitals.
  • $4.0 million total in rate increases for adult foster care and adult day health.

Other Health Subsidies and Related Spending

The Senate and House budgets also include funding for other supplemental payments to health safety net providers, funding for other subsidized health programs, and other administrative and operational supports. In the table below, the totals for the Medical Assistance Trust show current budgeted appropriations. The timing of operating transfers into this trust, which are made up of provider assessments and federal revenues, do not align with the state fiscal year. The funding differences from year to year for other trusts also in part reflect timing discrepancies or changing requirements based on federal Medicaid waivers. The apparent large difference between FY 2018 and FY 2019 is simply due to the timing of the transfers. There will likely not be a significant difference in spending from this trust for FY 2019 compared to FY 2018.


table: Other health subsidies and related spending

The Senate and House budget proposals include payments to health safety net providers through a variety of trusts, funded by a combination of operating transfer appropriations, re-distributed assessments on providers, and federal reimbursements. For example, with the roll out of Accountable Care Organizations this year, funding for the Delivery Systems Transformation Trust is no longer needed, and the Senate budget includes language to dissolve this trust. The Senate and House budgets create a new trust, the Safety Net Provider Trust, funded with $167.6 million to provide supplemental payments to health care providers based on a new initiative in the most recent Medicaid waiver.

The Senate and House budgets incorporate proposals to implement expanded and improved behavioral health and expanded substance use disorder prevention and treatment. In FY 2018, the state dedicated $47.0 million to a new trust fund to support substance use treatment, supported by federal reimbursement for the MassHealth program. The Governor’s proposal noted that the Administration plans to spend $30.0 million from this FY 2018 allocation in FY 2019. The Administration also expects that with this year’s implementation of the restructuring of MassHealth into Accountable Care Organizations, care coordinators will be responsible for fully integrating and aligning behavioral health services with medical care.

To support the operations of Massachusetts’ health system, the Senate and House budgets both include $16.8 million for the state’s health insurance eligibility system at the Health Connector. There’s also $10.0 million for the Health Information Technology Trust in the Senate budget, $9.2 million less than proposed by the Governor. Earlier in May, supplemental budget legislation for FY 2018 added $15.0 million for this trust as well.

The Senate adopted an amendment to create a new tax credit (not in the House Budget) to offsets costs for businesses that are now paying both federal and state assessments to cover the costs of health insurance. These assessments were created under national and state health reform initiatives to encourage employers to provide health insurance for their employees or otherwise help support the costs of publicly-supported health insurance. The Senate also added language during floor debate that would allow a “hardship exemption” for employers encountering financial difficulty in covering the increased payment for the state assessment.


table: MassHealth (Medicaid) and health reform line items with funding differences

For information on funding for all MassHealth and Health Reform programs going back to FY 2001, please see MassBudget’s Budget Browser here.


Mental Health

The Fiscal Year (FY) 2019 Senate budget includes $876.2 million for mental health programs. During floor debate, the Senate added $3.0 million to the Senate Ways and Means Committee’s original proposal, bringing the total to $5.6 million above the House proposal. All differences between the House and Senate proposals will need to be resolved by the Legislature’s budgetary Conference Committee before the beginning of the 2019 fiscal year. A listing of the line items with funding differences is in the table below.

Strengthening the state’s supports for behavioral health services has been a priority for both the Governor and the Legislature, and there are behavioral health initiatives incorporated into funding recommendations for the Department of Mental Health, as well as funding for MassHealth, the Department of Public Health, and funding at the Department of Correction (included in the “Law Enforcement” section of this Budget Monitor) and in funding within education programs as well.

During floor debate, the Senate added $346,000 for Child and Adolescent Mental Health, bringing total funding to $92.5 million, just above FY 2018 funding levels, and $1.9 million above the House proposal. Of this total, the Senate designates $3.9 million for the Massachusetts Child Psychiatry Access Project (MCPAP)—$275,000 more than recommended by the House, and $175,000 above the current FY 2018 budget. MCPAP is an innovative program that improves access to treatment for children with behavioral health needs by making psychiatrists available to provide consultation for primary care providers across Massachusetts. Unlike the House, the Senate proposal designates (“earmarks”) $675,000 to continue the expansion of MCPAP to include consultation on services addressing mental health concerns of pregnant and postpartum women. This is an increase from $500,000 in the current FY 2018 budget. Moreover, the Senate adds language expanding these services to provide consultation on substance use disorders in pregnant and postpartum women.

The Senate budget proposal also includes $2.0 million dedicated to case management services, for enhanced services for older adolescents and young adults, for consultation with early education and care providers, and for recommendations to expand early mental health identification and prevention programming.

The Senate added $815,000 to Adult Mental Health services, including $250,000 for services for immigrants and refugees who have experienced torture or trauma (compared to the House recommendation of $150,000 for these services); and $500,000 for elder behavioral health (not in the House proposal). This brings the total to $483.7 million, 25.0 percent more than current FY 2018 funding. (This total includes an adjustment, see table below.) Although there are a number of language differences in the House and Senate budget proposals, both the Senate and the House support the Governor’s recommendation to restructure and expand the primary adult services program (formerly known as Community Based Flexible Services) into a different model called Adult Community Clinical Services (ACCS). The Administration has stated that, when implemented, this new model will provide more coordinated, standardized, and consistent treatment that will better align with health care systems, and will be more comprehensive, particularly for people who also have substance use disorders.


table: Mental health line items with funding differences or adjustments

For information on funding for all Mental Health programs going back to FY 2001, please see MassBudget’s Budget Browser here.


Public Health

The Fiscal Year (FY) 2019 Senate budget includes $646.4 million for public health programs, $4.1 million more than the $642.3 million recommended by the House. As detailed below, these totals include some new public health initiatives not administered by the Department of Public Health (DPH), but that are closely aligned with existing public health programs.

During floor debate, the Senate added $7.8 million to its proposal, mostly to support specific local public health initiatives for programs such as substance misuse and addiction treatment, youth engagement and violence prevention, community health centers, or health promotion and prevention. For a list of line items with funding differences, see table below.

Consistent with the Legislature’s continuing commitment to direct funding to address the various public health challenges associated with substance use disorders, the Senate during floor debate added $1.2 million in additional funding to DPH substance use disorder prevention and treatment programs. This total includes $1.1 million in additional funding for Substance Abuse Grants, mostly targeted to a variety of local programs, as well as $20,000 for the Nasal Narcan Pilot Expansion, and $50,000 for a new line item that would direct the Department of Elder Affairs and the University of Massachusetts Medical School to review the impact of opioid use on grandparents and other kin raising related children.

Both the House and the Senate propose transferring the funding for Recovery High Schools from DPH to the Department of Elementary and Secondary Education. MassBudget transfers this funding back to DPH in this analysis for more accurate across-year comparisons of funding. These therapeutic high schools offer specialized programming for students struggling with or recovering from substance misuse disorders. Unlike the House, the Senate budget includes language that would provide reimbursement to districts for the transportation costs of these students to school, treating them as regional schools. The Senate also increases funding for regional school transportation (see K-12 Education section of this Budget Monitor.)

Although not part of the FY 2019 budget process, the Legislature recently passed supplemental funding for FY 2018 providing $2.0 million for a marijuana public awareness campaign, run by DPH in consultation with the state’s new Cannabis Control Commission. This campaign would focus on informing the public about responsible marijuana use, in particular to reduce marijuana usage by young people.

During floor debate, the Senate added $850,000 to School-Based Health Programs, bringing the total to $12.6 million, $547,000 above FY 2018 budget totals. The Senate added $250,000 to support the development of school-based Bridge programs to help students who have had prolonged absences from school due to hospitalization for physical or mental health care keep on track to graduate, and the House includes $100,000 for these programs. The Senate also included language designating $500,000 of this total to support the opening of five new school-based health centers across the Commonwealth. The House budget does not include this specified funding or this language.

The Senate also added a total of just over $3.9 million to funding for grants to support youth engagement and violence prevention programs, including $45,000 for the Safe and Successful Youth Initiative and just under $3.9 million for the Youth-at-Risk Matching Grants. Even with these amendments, total funding for these programs is 2.5 percent less than in the House proposal.

Another notable difference is that the Senate provides $37.3 million for Domestic Violence and Sexual Assault Prevention Services, $2.7 million more than the House. This total includes $175,000 added on the floor to support programming in southeastern Massachusetts to prevent relationship violence. Overall, funding in the line item supports the state’s network of 17 regional rape crisis centers, as well as intimate partner abuse prevention services, and support for victims of and witnesses to domestic violence.

A new Senate initiative (not included in the House proposal) creates a Newborn Health and Safe Sleep Pilot Program to help reduce infant mortality rates in the Commonwealth. This initiative would provide “baby boxes”—a box lined with a firm mattress and fitted sheet that would be a safe sleeping space for a newborn, and that would contain other newborn infant care essentials. This program would also include a parent education component on the accepted rules for infant “safe sleep.”


table: Public health line items with funding differences and adjustments

For information on funding for all Public Health programs going back to FY 2001, please see MassBudget’s Budget Browser here.


State Employee Health Insurance

The Senate’s Fiscal Year (FY) 2019 budget proposal includes a total of $1.59 billion to cover the costs of health insurance for state employees. The total includes coverage for current employees as well as retirees (discussed more below). There are only minor funding differences between the Senate and House budget proposals, shown in the table below The Legislature’s budgetary Conference Committee will need to resolve these differences before the beginning of the fiscal year on July 1.

During floor debate, the Senate added an amendment reforming the composition and conduct of the Group Insurance Commission. The Senate’s language notably adds a requirement that the commission include members with expertise in behavioral health care delivery, and also requires that the commission provide a report on changes to public procurement and open meeting procedures in the context of its own deliberations. The House budget did not include such language.


table: State employee health insurance line items with funding differences

State Retiree Benefits

The state has adopted a schedule to move towards full funding of health and other (non-pension) post-employment benefits (“OPEB”) for retirees. The Commonwealth funds the current and future costs of OPEB through a variety of transfers to the State Retiree Benefits Trust. The Senate and House proposals both include $441.2 million in an operating transfer directed to the State Rpiree Benefits Trust.

Moreover, in order to fully fund the cost of future retirees’ benefits, in FY 2012 the state decided to dedicate an increasing share of its annual Master Tobacco Settlement award to the State Retiree Benefits Trust. The intent was to use 70 percent of the award in FY 2019, which would be $175.9 million. However, instead of transferring $175.9 million, the Senate budget, like the House budget, proposes transferring an amount equivalent to just 10 percent of the Tobacco Settlement award—$25.1 million—into the State Retiree Benefits Trust to fund OPEB. Language in the budget states that this transfer would come from unexpended debt payments reverted to the General Fund or, if those reversions are insufficient, the proposals make the transfer from the Master Tobacco Settlement money deposited into the General Fund. This total is $150.7 million less than the amount indicated for FY 2019 in the statute.

The House budget also transfers an additional $4.4 million from excess capital gains tax revenue initially transferred into the Stabilization Fund to support the State Retiree Benefits Trust, bringing the transfer total to $29.5 million. The Senate budget also appears to count on putting $4.4 million into the Trust, but does not specify the mechanism for that transfer.

For information on funding for State Employee Health Insurance going back to FY 2001, please see MassBudget’s Budget Browser here.


HUMAN SERVICES


Child Welfare

The Fiscal Year (FY) 2019 Senate budget includes $1.01 billion for child welfare programs, $15.9 million more than the House proposal. During its debate, the Senate added $660,000 to its FY 2019 proposal. For a full list of differences between the House and Senate proposals that will have to be reconciled by the joint House/Senate Conference Committee, see the table below.

The Senate adopted an amendment providing $660,000 more for the foster care and adoption line item, bringing this account to $297.7 million, essentially the same as the House proposal and $7.7 million more than current FY 2018 levels.

Other accounts related to child welfare programs remain the same following Senate debate. Read more about the Senate’s budget proposal for child welfare programs in our Budget Monitor on the Senate Ways and Means Committee budget here.


table: Child welfare line items with funding differences

For information on funding for child welfare programs going back to FY 2001, please see MassBudget’s Budget Browser here.


Disability Services

The Fiscal Year (FY) 2019 Senate budget includes $2.00 billion for disability services, essentially the same as the House proposal. During floor debate, the Senate added $1.0 million for disability services to its proposal. For a full list of differences between the House and Senate proposals, that will have to be reconciled by the joint House/Senate Conference Committee, see the table below.

Disability services include job training programs and community-based supports for people with disabilities and their families.


The Senate adopted a proposal for $500,000 more in the Transportation Services account. This brings the total proposed funding to $24.3 million, which is $500,000 more than the House proposal.

table: Disability services line items with funding differences

For more information on funding for all disability services going back to FY 2001, please see MassBudget’s Budget Browser here.


Elder Services

The Fiscal Year (FY) 2019 Senate budget includes $299.2 million for elder services, $1.3 million less than the House proposal. During its debate, the Senate added $500,000 to its FY 2019 proposal. For a full list of differences between the House and Senate proposals, which will have to be reconciled by the joint House/Senate Conference Committee, see the table below.

The Senate also adopted an amendment for $500,000 more to the Grants to Councils on Aging, which brings the total proposal to $16.2 million, $1.1 million less than the House FY 2019 proposal.

The Senate adopted a proposal for $500,000 in dedicated funding for behavioral health services for those aged 60 and older. (This is in account 5046-0000, which is housed under the Department of Mental Health and not included in the table below.) For more information about mental health services, see the “Mental Health” section of this Budget Browser.


table: Elder services line items with funding differences

For information on funding for all elder services going back to FY 2001, please see MassBudget’s Budget Browser here.


Juvenile Justice

The Fiscal Year (FY) 2019 Senate budget includes $178.3 million for juvenile justice programs, $1.3 million more than the House proposal. The Senate debate yielded no funding changes to the Senate Ways and Means (SWM) Committee’s FY 2019 proposal for juvenile justice line items under the Department of Youth Services (DYS). For more information on those accounts, see the Juvenile Justice section of MassBudget’s SWM Committee Budget Monitor.

For a full list of differences between the House and Senate proposals that will have to be reconciled by the joint House/Senate Conference Committee, see the table below.

The Senate adopted a proposal providing $1.0 million more for court-appointed special advocates. Of this, $17,000 would be dedicated to programs in Worcester, Franklin, Hampshire, Hampden, Essex, and Berkshire counties, as well as in Boston. The Senate proposes funding this line item at $21.3 million in FY 2019, $1.9 million more than the House proposal. (This funding is in the Juvenile Court account, 0337-0002, which is housed under the Trial Court and is not included in the table below. For more information on courts and probation-related line items, see the “Law and Public Safety” section of this Budget Monitor.)


table: Juvenile justice line items with funding differences

For information on funding for all juvenile justice programs going back to FY 2001, please see MassBudget’s Budget Browser here.


Transitional Assistance

The Fiscal Year (FY) 2019 Senate budget includes $666.3 million for transitional assistance, $7.8 million more than the House proposal. During floor debate the Senate added $1.0 million to its FY 2019 proposal. Transitional assistance programs help low-income individuals and families meet their basic needs. For a full list of differences between the House and Senate proposals, that will have to be reconciled by the joint House/Senate Conference Committee, see the table below.

The Senate adopted an amendment for $1.0 million more in the SNAP Participation Rate account. This brings the Senate proposal to $7.2 million, which is $1.4 million more than the House proposal. The House had recommended removing dedicated funding from the SNAP Participation Rate account into a new Healthy Incentives Program (HIP) account, but the Senate had not recommended removing this dedicated funding in a new account. (The HIP funding is included in the SNAP Participation Rate line item in the table below, for simpler comparison.)


table: Transitional assistance line items with funding differences

For information on funding for all transitional assistance programs going back to FY 2001, please see MassBudget’s Budget Browser here.


Other Human Services

The Senate’s Fiscal Year (FY) 2019 budget proposal for other human services totals $206.6 million essentially equal to the House proposal. This total includes allocations for veterans’ services, food banks, and some cross-agency initiatives such as the rate increases held in a reserve account for a variety of health and human services providers that we include in this subcategory of this Budget Monitor (see discussion below). The Senate added $2.0 million to these programs during floor debate, mostly to support specific local programs and initiatives. For a listing of line items with funding differences that will have to be reconciled by the budget Conference Committee, see table below.

During floor debate, the Senate added $1.7 million to funding for the Emergency Food Assistance Program, which supplements federal funding to support the statewide network of food banks that provide food to families struggling to make ends meet. These amendments bring the Senate total to $18.2 million, which is just $101,000 more than the House funding level.

Unlike the House, the Senate funds Family Resource Centers in the Executive Office of Health and Human Services, proposing $500,000 primarily to support oversight of the state’s network of resource centers. Both the House and Senate fund the family resource centers overseen by the Department of Children and Families (see Child Welfare section of this Budget Monitor.)

As shown in the table below, the House and Senate budgets have many small funding differences in the line items funding veterans’ services. These differences are largely due to differences in targeted funding (“earmarks”) for various local programs supporting veterans in the community.


table: Other human services line items with funding differences

For information on funding for all Other Human Services programs going back to FY 2001, please see MassBudget’s Budget Browser here.


INFRASTRUCTURE, HOUSING & ECONOMIC DEVELOPMENT


Transportation

The Fiscal Year (FY) 2019 Senate budget proposes $1.58 billion for transportation programs, $20.5 million below the amount proposed by the House. The amount is lower because the Senate, unlike the House, does not propose additional operating funds to enable the Massachusetts Bay Transportation Authority (MBTA) to comply with existing requirements to stop paying full-time workers through its capital budget. During floor debate, the Senate added $567,000 to its proposal for specific local transportation projects and introduced several proposed policy changes.

The Senate proposes $6.0 million more than the House for the Commonwealth’s 15 Regional Transit Authorities (RTAs) in FY 2019. Several RTAs are proposing to cut bus routes and raise fares in response to the funding amounts previously proposed by the House and Governor. The Senate would set aside $4.0 million of the amount to be distributed to RTAs conditioned upon their agreement to a memorandum of understanding with the Department of Transportation about adhering to best practices and filing information reports, whereas the House would set aside $2.0 million for similar purposes. The Senate, but not the House, proposes that future distributions to the RTAs be tied to the inflation index. Both budgets proposals would create a task force to establish best practices for RTAs.

Senate debate added $567,000 proposed for the Massachusetts Transportation Trust Fund (MTTF), bringing the total transfer from the General Fund to $323.2 million, basically the same level proposed by the House. The MTTF contributes to highways, transit, intercity rail, small airports, the Massachusetts Turnpike, and Motor Vehicle Registry. The MTTF receives funds from tolls, federal transportation sources, and the state’s Commonwealth Transportation Trust Fund. Both the Senate and House budget proposals continue the longstanding practice of funding snow and ice control below anticipated amounts, and then providing supplemental funding to the MTTF later in the year for clean-up from winter storms. By contrast, the Governor’s budget had recommended $45.0 million more for snow and ice control, accomplished through creation of a new, separate snow and ice control fund with $83.0 million for FY 2019. The funding added to the Senate budget during debate would provide targeted support for specific local projects, such as a rural improvement project in Pittsfield, warning sirens at the Grafton and Upton railroad propane facility, and assorted pedestrian improvements.

The Senate budget proposes a transfer of $127.0 million in FY 2019 to support operation of the MBTA, which is $27.0 million less than proposed by the House. Like the Governor, the Senate proposes instead to allow the MBTA to continue paying certain long-term employees from the capital budget rather than fully comply with laws requiring the authority to shift these employees to the operating budget in order to free up capital funds for repairs and improvements. The House budget instead proposed to provide $27.0 million in additional operating funds to offset the additional cost of covering these workers through the operating budget. (For a more detailed description, see the “Transportation” section of the Senate Ways and Means Committee Budget Monitor.

The Senate also adopted several policy amendments that were not in the House budget:

  • A temporary tolling pilot program intended to test the technological feasibility of reducing traffic congestion by charging different toll rates at different times of the day. The program would create off-peak time discounts of at least 25 percent for motorists using a transponder to pay tolls and would mandate a report on the results. 
  • A new subcommittee to the currently established Berkshire Flyer working group, which is tasked with examining possible seasonal rail service between Pittsfield and New York City, via Springfield. The new subcommittee would explore improvements for ground transportation once riders arrive in Pittsfield, as well as marketing possibilities, and identification of potential private partners to support future service. The Senate would distribute an increase of $100,000 in the MTTF budget to the Berkshire Regional Planning Commission to support this work.
  • Senate debate approved an amendment for changes to the Motorcycle Safety Fund, which is supported through a $2 fee on motorcycle registrations, such that partial rebates can be given to registrants under 21 years of age who complete a safety course.

Other policy changes will also need to be reconciled between the House and Senate versions of the budget. The Senate budget would require the Secretary of Transportation and the MBTA Control Board to develop a detailed plan (but does not allocate funds) for the full electrification of the Providence and Fairmount Lines on the commuter rail. Likewise, the House but not the Senate proposes to enable municipalities to enter into agreements with the Secretary of Transportation for a “Supplemental Infrastructure Financing for Transportation” (SIFT) agreement to allow municipalities to designate taxes from future increases in the value of real estate in a designated district to finance a specific infrastructure project that is expected to boost those values. For instance, construction of a new transit station or ferry service could be financed with the increased property tax collections set aside from increased property values anticipated nearby those improvements.


table: Transportation line items with funding differences

For information on funding for all transportation funding going back to FY 2001, please see MassBudget’s Budget Browser here.


Housing

During its debate on the Fiscal Year (FY) 2019 budget the Senate added $3.9 million in amendments for affordable housing and homelessness assistance. The Senate budget is slightly below ($442,000) the FY 2018 current budget and is $6.3 million above the House budget. For a full list of differences between the House and Senate budget that will have to be reconciled by the joint House/Senate Conference Committee, please see the table below.

One of the significant differences between the House and Senate budget is funding for the Emergency Assistance (EA) program which provides shelter to very low-income families who are homeless and have children. The Senate budget provides $155.9 million which is $6.8 million more than the House. The Senate budget is $19.2 million below the FY 2018 current budget. The Senate estimates that its budget could be sufficient to fund the program in FY 2019. EA provides a right to shelter, so the Department of Housing and Community Development (DHCD) will need enough funding to provide shelter to low-income homeless families who are eligible. DHCD is estimating that demand for shelter will decrease in FY 2019 as the Department helps homeless families obtain housing. However, if the final budget proposed by the Legislature and signed by the Governor is insufficient to meet need, the Legislature may have to provide supplemental funding over the course of FY 2019. The Senate budget also differs from the House in that it includes language requiring DHCD to provide EA shelter to families who would otherwise have to live in a place not fit for human habitation, like an emergency room, car, or public park. Under current law, and in the House budget, many families are not eligible for EA shelter until they have lived in such places.

The House and Senate budgets have some notable differences in other housing and homelessness assistance programs including:

  • The House and Senate budgets vary in how they fund assistance to individuals who are homeless. During debate, the Senate added $2.0 million to the account that provides shelter and assistance to individuals who are homeless bringing the total to $48.2 million. This is $2.7 million more than the House. The House budget creates a new line item with $5.0 million, not included in the Senate budget, to help homeless individuals move out of shelter and into housing. The two budgets have only a slight difference ($40,000) in funding for the Home and Healthy for Good program which provides housing and assistance to chronically homeless individuals.
  • The two budgets also differ in how they fund programs that help low-income renters with disabilities. The House provides the Alternative Housing Voucher Program (AHVP), which provides subsidies for renters with disabilities, with $6.2 million. This is $1.2 million more than the Senate budget. The Senate budget creates a new line item, with $2.7 million, to improve or create accessible affordable housing units for renters with disabilities. The Senate budget directs DHCD to prioritize improvements for units that can accommodate renters who qualify for AHVP.  The House budget does not include this initiative.
  • The House provides $100.0 million for the Massachusetts Rental Voucher Program (MRVP) which is $2.5 million more than the Senate. MRVP provides subsidies to help low-income renters pay for permanent housing. In recent years, DHCD has provided these rental vouchers to help families move out of EA shelters and into housing.
  • The House provides $65.7 million for subsidies to local housing authorities which is $1.2 million more than the Senate budget. The Senate level funds the program at $64.5 million which is the amount the authorities have received over the last few years.
  • The Senate provides $18.5 million for Residential Assistance for Families in Transition (RAFT) which is $1.5 million more than the House. The Senate budget also allows at least $3.0 million of RAFT funds to be used to help elders, persons with disabilities, and unaccompanied youth. The House budget does not include this provision.
  • The Senate provides $3.3 million for shelter and assistance for homeless youth up to age 24 who are homeless and not in the care of a parent or legal guardian. This is $2.3 million more than the House budget.
  • The Senate provides $2.6 million to expand Housing Courts to all regions of the state which is $1.1 million above the House budget. Funding for FY 2019 will pay for increased personnel working at these courts. (Note: This amount is not included in the total for housing funding, since MassBudget includes it in the Courts & Legal Assistance subcategory of the Law & Public Safety Category.)

table: Housing line items with funding differences

For information on funding for housing programs going back to FY 2001, please see MassBudget’s Budget Browser here.


Economic Development

During budget debate, the Senate adopted amendments to the Senate Ways and Means (SWM) Committee’s Fiscal Year (FY) 2019 budget for economic development programs totaling $8.2 million. The final Senate budget provides $148.1 million in total funding for economic development—3.8 percent less than the House’s FY 2019 budget proposal, but 3.4 percent above the current FY 2018 budget.

Differences between the Senate and House budgets will be resolved by a joint Conference Committee.

  • The Senate adopted $3.6 million in additional funding for the Massachusetts Office of Travel and Tourism (MOTT). After statutory transfers from the Massachusetts Tourism Trust Fund, total funding for MOTT in the Senate budget would come to $8.6 million—35.5 percent less than the current FY 2018 appropriation. The House chose to directly fund local tourism promotion via discreet earmarks in a separate new line item (7008-1116). Because of the chambers’ differing approaches, it is unclear how exactly the Senate’s proposed funding of local tourism promotion compares with the House’s.
  • The Senate also adopted $2.0 million in additional funding for the Massachusetts Cultural Council, which would bring total funding (across two line items) to $17.3 million—9.9 percent more than the House proposal, and 23.7 percent more than current FY 2018 appropriation.
  • The Senate’s proposal includes an additional $50,000 to restart the Massachusetts Office for Employee Involvement and Ownership (MASSEIO). This item is not included in the House budget. From 1989 to 2008, MASSEIO’s mission was to help “expand and enhance employee involvement and ownership” in the state, but in October 2008 it was shut down “due to the fiscal crisis confronting state government.” A recent report issued by the Massachusetts Senate Task Force on Strengthening Local Retail included employee ownership as one option for bolstering the state’s small retail businesses and noted that “[m]any retailers advocated that the state re-establish the Massachusetts Office for Employee Involvement and Ownership to provide technical assistance for companies that wish to convert to this model.”
  • The Senate also adopted language creating a task force to study the classification and misclassification of independent contractors in Massachusetts, “due to the burgeoning shared and on-demand economy.”

For information on other proposals in the Senate FY 2019 budget, see the economic development section of MassBudget’s SWM Budget Monitor here.


table: Economic development line items with funding differences

For information on funding for all economic development programs going back to FY 2001, please see MassBudget’s Budget Browser here.


LAW & PUBLIC SAFETY

During budget debate, the Senate adopted amendments to the Senate Ways and Means (SWM) Committee Fiscal Year (FY) 2019 budget for law and public safety programs totaling $11.8 million. The final Senate budget provides $2.81 billion in total funding for law and public safety—about the same as the House’s FY 2019 budget proposal. It is also about the same as estimated FY 2018 spending. (The law and public safety budget includes a number of underfunded accounts that have generally received significant supplemental funding in the middle of the fiscal year. Best budgeting practices would encourage including the full, anticipated cost for all programs as part of the annual budget, rather than assuming mid-year supplemental appropriations.)

While the totals in the Senate and House proposals are roughly the same, there are specific line item amounts that will have to be resolved by the budget Conference Committee. See the tables below for complete lists of line items with funding differences.

The Senate adopted language that would create a new $2 surcharge on car rentals. The proposal would direct up to $10.0 million of the revenues generated from this fee to the Municipal Police Training Fund (MPTF) created in the new criminal justice reform law. This fee would go into effect on January 1, 2019—halfway through FY 2019. The Senate estimates that it would generate $8.0 million in revenue during the second half of FY 2019, all of which would go to the MPTF.

The Senate also adopted a handful of amendments that, while not directly changing line item amounts in the FY 2019 budget, could nonetheless have an impact on law and public safety policy and spending.

  • The Senate adopted language prohibiting law enforcement officers in Massachusetts from asking people about their immigration status.
  • The same amendment would strictly limit the cooperation of law enforcement with federal immigration and customs enforcement programs.
  • The Senate adopted language creating a special commission on funding for the department of correction and the county sheriffs.

For information on other proposals in the Senate FY 2019 budget, see the law and public safety section of MassBudget’s SWM Budget Monitor here.


table: Courts and legal assistance line items with funding differences


table: Law enforcement line items with funding differences


table: Prisons, probation and parole line items with funding differences


table: Other law and public safety line items with funding differences


table: Prosecutors line items with funding differences

For information on funding for all Law and Public Safety programs going back to FY 2001, please see MassBudget’s Budget Browser here.

LOCAL AID

Unrestricted Local Aid

The House and Senate propose the same amount for Unrestricted General Government Aid (UGGA), $1.10 billion, the same amount proposed by the Governor.

Other Local Aid

The Commonwealth provides other sources of local aid to cities and towns for more specific purposes. The largest form of local aid is for K-12 education, which is discussed separately in the K-12 Education section. Aid for libraries is also discussed in its own section in this Budget Monitor.

During Senate debate, the Senate also approved an amendment to buttress funding for the Community Preservation Act (CPA) Trust Fund. The CPA Trust Fund provides state matching funds to municipalities that vote for a targeted property tax increment to fund their own local account dedicated to preserving open space, restoring historical buildings, creating affordable housing, or developing outdoor recreation facilities. State Registry of Deeds filing fees fund the CPA Trust Fund. During the first years of the CPA, the state fund matched 100 percent of the revenue that municipalities raised themselves, but that portion has fallen sharply in recent years, reportedly to 17.2 percent in FY 2018, and reportedly to an anticipated 11 percent for FY 2019. The fund faces additional strains because 11 new municipalities, including Boston, last year adopted the CPA. The Senate proposes to increase Registry of Deeds fees that support the Fund to increase the state match, though the amount would still be a fraction of the original 100 percent match. The House budget did not include this proposal.

The biggest spending difference between the House and Senate budgets for Other Local aid is the Municipal Regionalization and Efficiencies Incentive Reserve. During debate, the Senate added $3.1 million in funding to this reserve, bringing the total to $7.5 million, $2.6 million more than in the House proposal. The Senate proposes $4.0 million of the funds be directed to a competitive public safety grants program for populous communities with low per-capita police funding, $2.0 million for the Community Compact program to incentivize local best practices, $0.5 million for a grant program to support localities with the transition costs of regionalization, and the remainder for targeted local projects and programs. The House specifies that $2.8 million shall be expended for the District Local Technical Assistance Fund administered by the Division of Local Services, with a sum of $1.5 million is targeted to specific local projects.

Some cities and towns receive other forms of non-education local aid from smaller programs that provide aid only to a subset of qualifying cities and towns. For example, the Senate budget would provide $28.5 million for local payments in lieu of taxes to communities with state-owned land that is not subject to local property taxes. This amount is $1.7 million more than the House proposal, which would be the same amount that has been distributed each year since FY 2014.


table: Other local aid line items with funding differences

For information on funding for Local Aid programs going back to FY 2001, please see MassBudget’s Budget Browser here.


OTHER


Libraries

During its debate on the Fiscal Year (FY) 2019 budget the Senate added a $200,000 amendment to the libraries technology account, bringing total proposed funding to support public libraries to $26.8 million. The Senate’s final budget is slightly above the amount proposed by the House, and is $1.2 million more than FY 2018 current funding. Now that the Senate budget is approved, the budget Conference Committee will iron out differences between the House and Senate budgets. The differences between the two budgets for library funding are listed in the table below.


table: Library line items with funding differences

For information on funding for all libraries line items going back to FY 2001, please see MassBudget’s Budget Browser here.


Additional Line Item Differences

In addition to the spending accounts discussed above in this Budget Monitor, the Legislature’s budget Conference Committee will also need to reconcile spending differences detailed in the tables below. These tables are organized in the following MassBudget subcategories: Commercial & Regulatory Entities, Constitutional Officers, Executive & Legislative, and Other Administrative.

table: Commercial and regulatory entities line items with funding differences

tables: Constitutional officers and executive and legislative line itmes with funding differences

table: Other administrative line items with funding differences


REVENUE

Overall, the Senate budget proposal is similar to that of the Governor and House in terms of underlying revenue assumptions and specific tax policy proposals. As is typically the case, the Senate budget is based on the same Consensus Revenue Estimate (CRE) used by the Governor and House.

Both chambers’ budget proposals contain identical new sources of revenue from casinos and marijuana, as well as a new temporary source of federally-induced corporate income tax. Both budgets would increase the state match to the federal Earned Income Tax Credit (EITC) that would provide additional funds to low-income working families when they file their 2019 taxes in 2020.

Nevertheless, there are important differences between the House and Senate budget proposals discussed below.

Tax Revenue

The starting point for every state budget is the CRE. The Administration, the House, and the Senate agreed to the same FY 2019 revenue figure (See discussion in Senate Ways and Means Budget Monitor). Likewise, both chambers make similar assumptions about decisions and policies affecting the amount of available tax revenue – including the personal income tax rate trigger, revenue from marijuana sales and casino openings, temporary corporate dividend repatriation, and anticipated tax settlements. The Senate, but not the House, relies on $20.0 million in new revenue from an anticipated extension of the occupancy tax to short-term rentals such as those booked online through Airbnb.

During debate, the Senate proposed a new tax credit to offset the cost to businesses who pay both a federal and state assessment for not covering employees’ health care costs. Businesses that pay both the state Employer Medical Assistance Contribution (EMAC) and the recently-implemented federal Employer Shared Responsibility Payment would receive a state tax credit equal to the lesser of those costs. There is no current estimate for how much this credit, if approved, would reduce state revenue. The House does not propose such a tax credit.

Likewise, the Senate budget would establish a standing tax expenditure review commission that was not included in the House proposal. “Tax expenditures” are special tax exemptions, deductions, credits, or other rules that result in forgone revenue with the intention of advancing other policy goals. For instance, the Commonwealth foregoes over $1 billion annually in special business tax breaks meant to spur economic development (See MassBudget’s report, The Growing Cost of Special Business Tax Spending). The commission would evaluate the administration, effectiveness, and fiscal impact of the Commonwealth’s tax expenditures and make recommendations as to whether each tax expenditure should be repealed, allowed to sunset, or amended to better achieve its policy goals. The proposed commission would regularly review all tax expenditures on a rotating schedule.

During debate, the Senate adopted an amendment that would prevent state tax subsidies for college savings from being extended to private school tuition for kindergarten to 12th grade. So-called 529 savings plans were created to encourage families to save for college by providing a small state tax deduction for contributions to these savings plans and exempting the growth of these funds from income taxes so long as withdrawals are used solely for higher-education-related expenses. The new federal tax law changes the plans so that they can also be used to pay for private schools from kindergarten through high school. The Senate proposes to restrict the state’s tax advantages for these accounts to their current purpose: saving for college and university. Without a change in law, this federal change will cost the Commonwealth several million dollars in foregone revenue annually, according to an analysis by the Institute on Taxation and Economic Policy, “New Tax Subsidy for K-12 Tuition in Massachusetts Creates a Host of Problems.”

The House budget similarly contains revenue proposals that do not appear in the Senate budget. The House includes a $2 million increase to the total amount of Dairy Farmer tax credits the state could issue, and an increase in the total amount of credits awarded annually by the Commonwealth’s Conservation Land Tax Credit from its current $2 million cap by an additional $1 million annually up to $5 million in 2021 (For more detail, see “Revenue” section of  House Budget Monitor HERE).

While it will not impact this year’s budget, the Senate and the House both propose to expand the state’s Earned Income Tax Credit (EITC) by increasing the state match of the federal EITC from 23 percent to 30 percent. This is a refundable tax credit for low-income workers to increase the after-tax rewards from work. It is available only to tax filers with earned income and provides benefits primarily to workers with children. The new federal tax law erodes the value of the EITC over time by using a slower adjustment for inflation. A body of research has shown that — in addition to encouraging people to work and helping families to make ends meet — the EITC improves health outcomes for mothers and children, and boosts children’s academic performance and lifelong earnings (see MassBudget’s “A Credit to Health: The Health Effects of the Earned Income Tax Credit for more information). By increasing Massachusetts’ state match rate to 30 percent, the Commonwealth would be on par with New York’s match, below some states such as Vermont and New Jersey, and more generous than several other states, such as Maine or Rhode Island. The proposed increase would begin January 1, 2019, meaning the higher credits would be paid when workers file their taxes in 2020. The annual cost for the increase will be about $65 million when fully implemented. The last time the Governor’s budget proposed increasing the EITC, it proposed cuts to the state’s Film Tax Credit to pay for the change. This year, the Governor, House, and Senate FY 2019 budgets do not propose a funding source for the cost of this initiative when the state begins paying for it in FY 2020.


table: FY 2019 temporary and ongoing tax proposals

Department of Revenue Administration

The House and Senate propose virtually the same funding levels to the Department of Revenue’s Office of Tax Administration to make sure that taxpayers are paying taxes they legally owe to the state. The only difference is the House includes an additional $20,000 to support a local volunteer income tax assistance (VITA) program. VITA sites provide free tax preparation assistance using volunteers who have been certified by the IRS. The programs can bring additional federal funds to the Commonwealth by boosting the number of eligible taxpayers who apply for the federal Earned Income Tax Credit and the Child Tax Credit.

You can see historical funding levels for administration of the DOR at MassBudget’s Budget Browser here.

Non-Tax Revenue

As in every state budget, the Senate’s FY 2019 budget proposal relies on a variety of non-tax revenues: federal revenues, which are mostly reimbursements from the federal government for state spending on Medicaid (MassHealth and related costs); departmental revenues, which are fees, assessments, fines, tuition, and similar receipts; and what are known as “transfer” revenues, which include lottery receipts, revenues from the newly-licensed gambling facilities, and funds that the state draws from an assortment of non-budgeted trusts.

There are several non-tax revenue issues where the Senate and House budgets differ, and that will need to be resolved by the Legislature’s Conference Committee. Both the Senate and the House count on $259.9 million in revenue from an assessment on employers to offset increased MassHealth costs. This assessment was put into place in response to a growing number of private sector employees not getting employer-sponsored insurance and instead enrolling in MassHealth. This revenue source is scheduled to end after FY 2019. However, the Senate budget includes a tax credit (discussed in the Tax Revenue section above) that would offset the costs of this assessment on employers who pay this assessment and also pay what is known as the “Employer Share Responsibility Payment” under the federal Affordable Care Act. (See also MassHealth (Medicaid) and Health Reform section of this Budget Monitor.)

The expansion of gambling in Massachusetts has generated some new revenues for the Commonwealth. The Senate and House budgets both include $14.7 million in gambling revenue as “pre-budget” transfers to support a variety of specific programs described in relevant sections of this Budget Monitor. The Senate uses an additional $1.5 million in gambling revenue to pay for general appropriations throughout the budget, while the House dedicated those funds to the off-budget Race Horse Development Fund instead. Moreover, the Senate budget counts on an additional $15.0 million transferred from the Race Horse Development Fund to support budgeted agricultural and environmental expenses. The House did not include this additional transfer.

During floor debate the Senate added budget language that would create a new $2.00 fee on every “vehicular rental transaction contract” (such as car, truck, or van rentals). The Senate estimates that this new fee, which would not apply to ride-sharing companies such as Uber or Lyft or to short-term car-share rentals, would bring in about $8.0 million with implementation starting January 1, 2019. This new revenue would support municipal police training initiatives. The House does not include this language in their budget, but separately passed a bill that would have this same effect.

Similarly, during debate, the Senate approved an amendment to buttress funding for the Community Preservation Act (CPA) Trust Fund, as described in this Budget Monitor’s section on Local Aid.

Temporary Budget-Balancing Strategies

Both the House and Senate budgets rely on temporary budget-balancing strategies. A budget-balancing strategy is “temporary” when it is a change that does not permanently affect the balance between revenues funding the budget and spending from the budget. These can be revenue initiatives that have a short-term impact, or one-time spending changes that don’t permanently change spending totals. Using temporary revenue strategies to balance the budget can lead to long-term fiscal problems because temporary revenue sources are useful for balancing the budget only in the current fiscal year, and their use most often adds to the challenge of balancing the budget in future years. (See table and details below.)


table: FY 2019 temporary budget-balancing measures

The Stabilization (“Rainy Day”) Fund

The Senate and House budgets both propose making the full statutorily-required $88.5 million deposit of capital gains taxes to the state’s Stabilization (“Rainy Day”) Fund. The House budget proposal includes language that directs $4.4 million of that total into the state pension fund, and $4.4 million into the State Retiree Benefits Trust (see discussion in “State Employee Health Insurance” section of this Budget Monitor). The Senate budget does not include language transferring these amounts, although the Senate budget totals for pension funding and for state employee health insurance appear to incorporate these same amounts.

In addition, both the Senate and the House deposit $6.0 million from gambling revenues and $3.7 million from the liquidation of state property into the Stabilization Fund. Dollars set aside in the Stabilization Fund are particularly important to the state when the current long economic recovery period comes to an end and the state needs to support increased costs associated with unemployment benefits and to fill other shortfalls when revenues are reduced.

The Senate budget proposal includes new language authorizing a comprehensive study evaluating the fiscal management of the Stabilization Fund. This study would review investment strategies, and consider dividing the fund into higher and lower yield investments, to protect the long-term purchasing power of the fund, and to consider the use of Stabilization Fund as a source of short-term borrowing funds for the Commonwealth. The House budget does not include this language.


TOTAL BUDGET BY CATEGORY & SUBCATEGORY

FY 2019 Senate, FY 2019 House, and FY 2019 Governor columns show funding in the structure of the FY 2018 budget in order to allow for more accurate across-year comparisons. For example, if the FY 2019 budget proposal consolidates several line items, MassBudget “un-consolidates” the total and re-distributes the amounts back into their prior year’s line items, based on information provided by the Administration or the Legislature.

FY 2018 Current column shows the budgeted General Appropriation Act as enacted in July 2017, and as amended by supplemental budget legislation.

For other explanatory information, see details below the chart.

table: Budget by category and subcategory

  • MassBudget’s totals include the “pre-budget transfers” of funds. Statutes require certain automatic appropriations of revenue to support certain functions independent of the annual budget. Although these transfers function no differently from other appropriations, the Governor and Legislature do not reflect these expenditures in their budget totals; instead, they are shown as amounts deducted or transferred from revenue prior to the budgeting process. To better reflect total state funding, MassBudget includes these pre-budget transfers in appropriation totals. In FY 2019, these transfers add $4.70 billion to the total. These transfers are: tax revenues dedicated to the Massachusetts Bay Transit Authority (MBTA) and school building assistance, cigarette excises dedicated to the Commonwealth Care Trust Fund, state contributions to the pension system, transfers to the State Retiree Benefits Trust, transfers to the Workforce Training Trust, and statutory allocations of gambling revenues.
  • MassBudget’s totals include annual appropriations into non-budgeted (“off-budget”) trusts. The transfer of funds from the General Fund or another budgeted fund into a non-budgeted trust is a form of appropriation, and should be treated as any other appropriation. Prior to FY 2011, the budget authorized these transfers in Outside Section budget language. Starting in FY 2011, a new section of the budget, Section 2E, systematically accounted for the transfer of funds into off-budgeted trusts. MassBudget’s totals include these operating transfers in all budget years.
  • When spending that is now included in the budget was previously “off-budget,” MassBudget’s totals include the prior years’ “off-budget” spending totals in order to reflect more accurate year-to-year comparisons. For example, funding directed to health care providers as partial reimbursement for uncompensated care was previously funded by a transfer of federal revenue directly into the off-budget Uncompensated Care Trust Fund. This spending was brought on-budget in FY 2009, and incorporated into the state’s budgeted health care appropriations. MassBudget’s health care budget totals include the off-budget spending for these services in order to reflect a more accurate across-year comparison.
  • MassBudget reduces State Employee Health Insurance totals to exclude spending on health insurance for municipal employees and retired teachers for which the state is fully-reimbursed by participating municipal governments.
  • MassBudget reduces funding for the community colleges, state universities, and University of Massachusetts campuses by the amount of tuition that these campuses remit to the state treasury each year. These adjusted totals more accurately reflect the “net” appropriations available to the campuses to support operations, and allow for more consistent comparisons across the years, since the policies about tuition remission have varied from year to year and from campus to campus. For example, until FY 2003, all of the University of Massachusetts (UMass) campuses were required to remit to the state treasury all tuition from all students. From FY 2004 – FY 2011, UMass Amherst (only) remitted only in-state tuition, and retained tuition from out-of-state students. Starting in FY 2012, the remaining UMass campuses were also allowed to retain tuition from out-of-state students. Starting in FY 2017, all of the UMass campuses retained all tuition revenue, remitting none. The MassBudget adjustments make it possible to make meaningful comparisons of appropriations to these campuses even with these policy changes.
  • MassBudget’s totals reflect legislatively-approved “prior appropriation continued” (PAC) amounts. In most instances, MassBudget shifts the PAC amount from the year in which the funding was first appropriated into the year in which the Administration expects to spend the totals.
  • Because MassBudget totals reflect budgeted appropriations and not actual spending, there can be apparent fluctuations in the MassHealth and Health Reform totals that are simply due to the timing of payments to certain off-budget trusts. These budget variations may not reflect real differences in spending.