Healey releases budget plan: 3.7% spending increase from current year (2024)

BOSTON ― Fiscal challenges centered around slower-than-anticipated growth in tax revenue that forced budget cuts earlier this month were reflected in the new spending document for the coming fiscal year filed Wednesday by Gov. Maura T. Healey.

The governor proposes total spending of $58.1 billion for the fiscal year, which starts July 1, and an increase of $2.1 billion, or 3.7% from her proposal for the current fiscal year including an expected $1.3 billion from the so-called "millionaire's tax," which was approved by voters in 2022.

In presenting the spending document, Healey called the budget proposal “balanced, responsible and forward-looking, protecting taxpayer dollars while also making crucial investments to lower costs for people and improve quality of life.

“There will be some tightening of belts,” Healey said at an afternoon press conference. “The economy remains strong, but the revenue picture has changed,” she said, noting that pandemic-era funding from the federal government has dried up while the overall economy has recovered.

Healey said the state was "living within available resources." However, she did not specify which line items were being trimmed or programs flat-funded, beyond pointing to the $16 million in savings the state expects to realize from the proposed closure of MCI Concord and the possible repurposing of the structures on the campus of the state's oldest prison.

The administration, Healey said, has made "smart choices, strategic choices, strategic investments," to ensure the impact of every dollar spent stretches as far as it can go, to be smart in spending decisions to deliver a transformative impact and to protect the advances and changes already under way.

Who is critical of proposed spending plan?

House Minority Leader Bradley Jones, R-North Andover, issued a release criticizing the spending document.

“Governor Healey has filed a fiscal year 2025 budget that calls for significantly increased spending across state government, but those aspirations need to be tempered by the fiscal realities facing the commonwealth," said Jones. "After six-plus months of tax revenues coming in lower than expected, Governor Healey has already implemented hundreds of millions of dollars in midyear cuts and downgraded projected revenues by $1 billion for fiscal year 2024."

He was critical of the increasing amounts of state spending on the migrant crisis that he said "continues to drain much-needed revenues that would otherwise have been spent on other programs and services, with no end in sight."

The governor's plan to use the $863 million from the transitional escrow fund, detailed several times in the last few months, would drain the fund and leave a $91 million shortfall.

"The members of the Republican Caucus look forward to reading through the governor’s budget, participating in the hearing process, and learning more about her specific spending plans to ensure that the interests of the state’s taxpayers are protected," Jones said.

Senate Minority Leader Bruce Tarr, R-Gloucester, also was critical of the spending proposal, pointing to the "gathering fiscal storm clouds swirling above our state."

He believes the state faces a "turbulent economic future that demands spending restraint, protecting reserve accounts and vigorously pursuing reforms to ensure fiscal stability.

"The spendingproposed in this budget comes in the context of declining state revenues that recently triggered a $1 billion reduction in available funds for this year's budget, resulting in significant cuts," Tarr said. "Yet the budget filed today would increase spending for the coming fiscal year by 2.9%, an amount that swells to 3.7%, totaling approximately $2.07 billion, when expenditures from the income surtax are taken into account, and without considering the $900 million to $1 billion being sought to meet the cost of the ongoing migrant crisis.

"Now is the time to tighten our belt and prevent avoidable, unsustainable spending," Tarr said.

The conservative-leaning Massachusetts Fiscal Alliance was also critical of the governor's proposals.

“What Governor Maura Healey is proposing is an irresponsible budget, coming in higher than last year which was already too high, while missing the much-needed reforms to curtail our immigration problems along with making our state more competitive," said Paul Diego Craney, a spokesman for the alliance. "The governor is continuing to spend taxpayer money on immigrants, while cutting spending on taxpayers, closing a state jail, and shifting money away from dedicated savings. The governor describes this budget as fiscally responsible, but this budget reflects a state that is fiscally crumbling from the top down.”

Budget proposal echoes State of Commonwealth speech

Overall, the budget continues investments in programs launched during Healey’s first year in office: Programs designed to address the housing crisis, climate change and transportation challenges throughout the state. It supports investments in education and child care from birth through adulthood, while also supporting the state’s veterans and creating a disaster relief fund to help communities hard-hit by natural and man-made crisis.

The proposed budget pays for the tax relief package signed into law last year that was designed to put more money into the pockets of low- and middle-income earners. That relief package increases the dependent and child tax credit while also eliminating the two-dependent cap, increases rental deductions, doubles the senior circuit breaker and also allows deductions for commuting costs using public transportation.

The spending document strengthens the state/municipal partnership, supporting full Chapter 90 funding and directs a portion of Fair Share tax collections, estimated at $1.3 billion, into municipal infrastructure projects.

The state will use 55% of the fair share tax revenue, also called the millionaire’s tax, to support education and 45% of the revenue to support transportation including the Massachusetts Bay Transportation Authority and regional transit authorities.

A big portion of Massachusetts’ spending is allocated to MassHealth and the 2 million residents that rely on the service for health care coverage, with new investments in community-based behavioral health initiatives, skilled nursing care and even $5 million for wheelchair repairs.

Many of the state’s health and human service providers will see revisions upwards to their reimbursem*nt rates, while the state proposes $27 million in new investments in services for young people, community-based services and services for at-risk people.

Child care, education, launch of free pre-K first in Gateway Cities

The governor’s proposal continues the state’s investment in child care, from increases in salaries for providers of care and early childhood educators, invests in education for providers, reimbursing costs and increasing access to affordable child care for many more Massachusetts families. The document also supports the launch of universal pre-K for children throughout the Bay State, starting with the state’s 26 Gateway Cities, which include Worcester, Fitchburg and Leominster.

The new MassReconnect project, offering tuition-free community college to residents 25 and older who have not earned a prior degree, will see a $4 million increase in its current $20 million budget. The success of the program was made clear, administration officials said, through the increase in enrollment at the state’s community colleges, the first in the last five years.

One percent of the budget spending is dedicated strictly to address climate change and energy issues, funding for the Clean Energy Center and for climate emergency mitigation work that would also create employment opportunities in the field. Spending initiatives, including $140 million for economic development programs and $40 million for workforce development, would help meet the demands of a 21st-century economy.

Healey embraced the creation of a Disaster Relief and Resiliency Fund through its inclusion in her budget, an idea launched by legislators following the weather-related disasters that hit farmers, businesses and communities throughout the year.

Healey proposes to use revenue from the state’s excess capital gains tax to pay for the disaster relief fund, skimming off 10% of the revenue, which also supports the state’s pension system, before funneling the remainder to the stabilization fund.

Healey has filed legislation that would take interest revenue generated by the $8 billion in the stabilization or rainy day fund and use it to chase federal money, to support grants and provided matching funds if projects need it to qualify for federal dollars.

The budget supports the governor’s initiatives in addressing the state’s housing crisis including $219 million for the rental voucher program, a 22% increase; $112 million in subsidies for local housing authorities; $197 million for the Residential Assistance for Families in Transition and $57 million for HomeBASe, a program designed to connect families with sustainable housing options.

Transitional Escrow Funds tapped for emergency shelter system

The governor doubled down on her proposal to use of the state’s transitional escrow fund, established by former Gov. Charlie Baker, to fund the Emergency Shelter System, despite legislator grumblings. The former governor directed some $1.8 billion from American Rescue Plan Act money and other revenue sources into the fund, which now stands around $800 million.

Officials expected that it will be completely depleted by the end of fiscal 2025 as it supports the shelter system. The budget reflects $325 million in base funding, included in the fiscal 2024 budget and extended into the fiscal 2025 budget. The escrow fund would plug expected gaps through the end of fiscal 2025, June 30, 2025.

At her afternoon conference, Healey hinted at coming changes to the emergency shelter system.

“It is now overburdened; we want to focus on moving families out of the system, to help them get to where they want to be,” Healey said, declining to discuss any possible changes to the system.

The shelter system, budgeted to house 4,100 families, was strained by the influx of migrants, which Healey continually points out is a federal problem, one foisted upon Massachusetts and other states by the lack of action in Washington. While her administration continues to press the state’s federal delegation to take action, the administration is not anticipating or including any federal money into its budget calculations.

The document fully funds year four of the six-year Student Opportunity Act at $263 million and increases funds for student financial aid and C3 grants for early childhood education at $475 million, a critical investment expected to stabilize the child care system in Massachusetts, one of the most expensive in the nation.

Rate revisions for providers in health and human services accounts are included in the budget. New initiatives include $10 million for treating high-needs youth, $3.1 million for postpartum care services for Department of Children and Families clients and $2.1 million for delinquency prevention.