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Budget Monitor:
The Legislature's Budget for FY 2013

July 3, 2012
  • Table of Contents
    • Overview
    • Education
    • Environment & Recreation
    • Health Care
    • Human Services
    • Infrastructure, Housing & Economic Development
    • Law & Public Safety
    • Local Aid
    • Other
    • Revenue

Overview

Most of the pieces of the FY 2013 budget are now in place. The House and Senate have joined in support of a single Legislative budget—parts of which may be vetoed by the Governor but the bulk of which will remain as the spending blueprint for the year.

There will be no revenue from new taxes. Of all the proposals in this budget process, only the Governor included new taxes—among them an increase in the cigarette tax and an end to the sales tax exemption for candy and soda. None of these taxes will be included in the final FY 2013 budget.

Instead, Massachusetts will fill its roughly $1.3 billion budget gap through a combination of temporary revenue, cuts, and savings. In particular, the Legislature's budget calls for $615 million in temporary revenue, which will be used for FY 2013 but won't help with future budget shortfalls.

Much of the rest of the deficit is filled with cuts and savings—on top of the $3 billion in cuts and savings which have been enacted over the last four years. For example:

  • Funding for Emergency Assistance homeless shelters, for instance, has been cut by $40.8 million.
  • Child care subsidies have been cut by roughly $8 million.

The largest share of savings comes from Health Care. Even though MassHealth is slated to receive a 5.3 percent increase in funding for FY 2013, this is nearly $500 million less in total and $250 million less in state money than would be required for the program to continue as is. The FY 2013 budget relies on new savings initiatives to fill this gap without cutting MassHealth services.

There are a few areas which will receive increased funding in FY 2013, most notably K-12 Education. The Legislature raises reimbursement levels for districts with high-needs special education students by $28.8 million, which should ease pressure on school budgets. It also increases funding for Chapter 70 Education aid by $180 million—although part of this increase is being distributed in a way that disproportionately benefits wealthier districts.

Even with this additional funding, moreover, overall spending on K-12 education is down 3.5% since FY 2009. Indeed, the big fiscal story is about more than the FY 2013 budget deficit; it's about the regular deficits that the Commonwealth has been facing for many years now—including before the recession even began.

There are two basic reasons that Massachusetts continues to find itself in a fiscal crisis.

  1. The lingering effects of the Great Recession, which has sapped state revenues even as it has increased the number of people relying on core safety net services.
  2. The structural budget problems that the state has faced since cutting taxes in the late 1990s. Those tax cuts and other declines in tax receipts over the last fifteen years cost the state over $3 billion in annual revenue.1

These are some of the broader forces that have shaped the FY 2013 budget as a whole, and with it the many, specific proposals that we analyze in our various sections (available through the Table of Contents dropdown above).

Breakdown by Category

The table below shows how the FY 2013 budget compares to other recent budgets and budget proposals, including the House and Senate budget proposals, the FY 2012 budget, and the initial budget for FY 2009. We have adjusted the numbers where relevant to allow for more accurate comparisons among the budgets shown. In particular, the House had included the costs of collective bargaining agreements for state workers in special reserve (temporary holding) accounts, whereas the Senate and Legislature's final proposal included those costs in the various line items from which the affected workers would be paid. To allow more accurate comparisons, we re-allocate the reserve totals to match the final proposed budget structure. As a result, some of the totals for some subcategories are higher in this Budget Monitor than in our earlier Monitors, and the totals associated with those collective bargaining reserve accounts (usually included in the "Other Administrative" subcategory total) are less.


Note: The FY 2012 Current total includes funding in the GAA plus any supplemental budgets passed during the year. The FY 2013 budgets include adjustments to allow for accurate comparisons among the proposals and for year-to-year comparisons. All numbers use the Consumer Price Index (CPI-U) to adjust for inflation.

* In order to make an accurate comparison across fiscal years, this total includes an adjustment to account for the increased use of the Group Insurance Commission by municipalities for their employees' health benefits.

1For more detail, see footnote 2 of Massbudget's FY13 Budget Preview