Governor Presents $45.5B Budget to For Fiscal 2021
BOSTON — Nearly four months past the end of the fiscal year, Gov. Charlie Baker unveiled a $45.5 billion budget for fiscal 2021 that will not change funding allocations to education and cities and towns and that will not raise taxes.
Baker felt that the revised House 2 budget should be able to make its way through the Legislature with some alacrity.
"There have been ongoing conversations all the way through this process with the Legislature and the fact that we're filing this, once we all have an understanding about what fiscal '21 revenue looks like, is not going to be a surprise to them," he said at Wednesday afternoon's press conference. "It's our hope that we'll get this back before Thanksgiving."
The state abandoned its initial budget versions as the novel coronavirus pandemic hit and it was apparent that there would be no assurances in either the spending or revenue figures it had been built on. The state has been operating on continuing appropriations, as have many municipalities that followed suit. Last month, the leaders agreed that unrestricted local aid and Chapter 70 education aid would be level funded for this year, giving towns and cities some security in setting budgets for the balance of the fiscal year.
"It was pretty obvious early on that the drop in revenues and other factors would significantly impact the budget picture, which is one of the reasons why we and the Legislature decided to issue a series of one-month budgets until the smoke cleared with respect to what fiscal 2021 would look like," said Baker.
The budget is a 3.8 percent increase over last year and is built on an estimated $27.6 billion in revenue, down $3.8 billion from the agreed-upon number in January. It will also use about a third of the state's rainy day fund at $1.35 billion. Should revenues come in higher, the amount taken from the stabilization account will drop.
The budget includes a $100 million investment in economic development and small-business support for COVID-19 recovery, a $108 million increase in Chapter 70 with $442 million in federal supplemental aid for K-12 schools.
The governor said the administration's "fiscally disciplined approach" to budgeting provided it a number of financial tools to respond to the challenges.
"The biggest and most significant benefit of that fiscal discipline is the fact that we've managed to triple the size of the state's Rainy Day Fund, which today stands at an all time high of $3.5 billion," he said. "We've also worked to find budget savings over the past few years, and we've worked particularly hard to rein in the growth of the big cost drivers associated with the MassHealth program.
"That careful approach to budgeting has allowed us to build up reserves and to deal directly with the difficult times we're now facing without going back to the taxpayers."
Secretary Heffernan said the budget is being driven by costs of MassHealth related to the pandemic and the drop in revenues.
"Our revised budget optimizes the use of federal and state revenue to minimize the risk to core government services during the COVID-19 pandemic," he said. Heffernan also pointed to modernizing sales tax processing that should improve collection.
"Today, retail vendors can hold sales tax that is paid by a consumer for as many as 50 days after purchase," he said. "The initial phase of sales tax acceleration will consist of the commonwealth's largest businesses remitting sales tax collections from the first three weeks of each month in the final week of that same month."
Baker said a November budget would be approved and then he believed that the Legislature could get back to the administration before Thanksgiving to get full fiscal-year budget in place. The holiday usually marks the beginning of budgeting for the next fiscal year, as the administration usually presents its budget in January.
"The theory here is that the Legislature would then work their way through our budget and produce their budget by around Thanksgiving, and then we take that budget, and it would be kind of the baseline for the work that we would need to do to file a '22 budget January," he said.
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