Massachusetts state budget

Massachusetts Gov. Deval Patrick signed the the state budget into law on July, 8, 2012, 10 days after lawmakers sent it to him on June 28, 2012.^[1] FY2013 began on July 1, 2012, and with no budget signed into law, legislators passed a temporary spending measure to keep the state government operational.^[2]

The state operates on an annual budget cycle and is currently in FY2013.^[3] The state's fiscal year begins July 1.

Massachusetts has a total state debt of approximately $102,258,050,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap.^[4] The total state debt is higher than the prior year's total of $97,940,986,000.^[5]

Massachusetts's total state debt per capita is $15,522.96.^[6]

See also: The Massachusetts State Budget on State Budget Solutions

Economic Freedom

A new Fraser Institute report on economic freedom ranks Massachusetts 24th in economic Freedom. Delaware ranks 1st and New Mexico ranks 50th. The study examines the impact of economic freedom on both the level of economic activity and the growth of economic activity. According to the study, the freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions. More governmental restrictions on those choices curbs economic freedom. The study looks at three major categories per state – size of government, taxes and regulations. ^[7]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

Figures are calculated by dividing each state’s intergovernmental revenue into its general revenue. Data is available at in U.S. Census.

Fiscal Year 2014 State Budget

On Jan. 25, 2013, Gov. Deval Patrick unveiled his $34.8 billion proposed FY2014 state budget.^[8] Find the governor's budget recommendations here.

The proposal represents a 6.9 percent increase from FY13.^[9] The proposal makes no significant cuts and instead increases spending across state government.^[8] To fund the spending, the governor wants to raise taxes by $1.9 billion and withdraw $400 million from the state’s reserve fund. Funding increases include

• $553 million for education, from early childhood programs through college, with elementary and secondary school seeing at last $25 more per student;^[8]
• $269 million more for transportation;^[8] and

$31 million in local aid for basic services.^[8]

The governor wants to increase the income tax and cut the sales tax.^[10] The governor's tax changes would

• increase the income tax from 5.25 percent to 6.25 percent; ^[8]
• cut the sales tax from 6.25 percent to 4.5 percent;^[8]
• double the personal income tax exemption;^[8]
• eliminate 44 income tax deductions — for T passes, college scholarships, and dependents under 12, among other items;^[8]
• tie the gas tax to inflation, ensuring gradual ­increases;^[8] and
• get ride of three corporate tax breaks.^[8]

Fiscal Year 2013 State Budget

Budget shortfall

On Dec., 2012, just five months into the fiscal year, Gov. Deval Patrick announced that the state faces a $540 million shortfall. Revenue for those first five months was $235 million less than expected. The governor said he would use his executive powers to make $225 million in cuts to the executive branch. In addition, he would use $200 million from the state’s Rainy Day Fund and file bills to reduce the budgets of the judiciary and constitutional officers.^[11] The Rainy Day is expected to have about $1.2 billion left at the end of the budget year on June 30.^[12]

Additionally, local aid would be cut by 1 percent.^[11] That amounts to $9 million less in funds that pay salaries for teachers and firefighters, and local leaders vowed to fight the cuts in the legislature.^[12]

Budget as passsed

The legislature passed a $32.5 billion FY2013 budget and sent it to the governor on June 28, 2012.^[13] Although FY2013 began on July 1, Gov. Patrick signed the the state budget into law on July, 8, 2012, 10 days aftr lawmakers sent him on June 28, 2012.^[1][13][2] Lawmakers approved a temporary spending plan to fund state government operations until the governor signed the budget.^[2]

The budget can be found here.

The governor vetoed $32.1 million in spending in the budget and at the same time also announced a sales tax holiday in August.^[1] The governor's vetoes can be found here.

The budget represents an increase in spending of approximately 4 percent increase over FY2012's budget, but that increase is less than the assumed rate of growth of 4.5 percent.^[14]

Education

Education spending in the FY2013 state budget of $6.95 billion in total education spending, an increase of $302 million, accounts for approximately 20 percent of the total spending.^[15]

The budget funds a new program for $2.25 million in grants to community colleges, partly to establish worker training programs specifically requested by employers.^[14]

Local Aid

The budget provides $5.32 billion state funds, an increase of 3.7 percent over FY2012.^[14]

Healthcare

Under the budget as passed, health care spending for FY2013 will be $15.14 billion and will account for 43 percent of the overall state budget, according to a Massachusetts Budget and Policy Center analysis. One in five Massachusetts residents will have their health care largely covered through the budget. The budget includes a $546 million increase in spending on Medicaid and health care reform^[15]

The budget assumes savings of about $700 million in health care costs through changes to payment and delivery models used by MassHealth, the state's version of Medicaid

FY2013 Spending by Category in Budget (Prior to Vetoes)^[15]

Projections made by the state Department of Revenue in Dec. 2011 and used by lawmakers when drafting the budget were that tax collections for FY2013, which begins July 1, 2012, are likely to grow by $560 million to $683 million, 3.2 percent more than FY2012.^[16]

Legislative Proposed Budget

The budget approved by the legislature contains no new taxes or fees. It does, however, rely on $516 million in one-time funds, including a $350 million withdrawal.^[13]

Highlights of spending in the budget include:

• a rainy day fund of more than $1 billion,^[13]
• $898 million in local aid for cities and towns,^[13]
• $28.5 million in new funding for housing programs, ^[13]
• $11.3 million in reimbursements to school systems that were affected in FY2012 by a state program related to busing and educating homeless school children.,^[13]
• $10 million for community colleges,^[13]
• 5 percent increases for all the state's district attorneys, ^[17]
• $6.25 million to continue anti-gang programs,^[17]
• $3 million for front-tooth fillings for MassHealth clients, ^[13]
• $750,000 for a new class of Environmental Police officers,^[13]
• $596,000 in funding for the first state police class in six years.^[17]

The passed budget also limits the use of welfare benefit cards by cracking down on what recipients can buy and where they can use the cards.^[13]

The Senate released its $32.275 billion proposed budget on May 16, 2012.^[18] It increases education funding by $180 million.^[18] The Senate proposed 694 amendments to the proposed budget, many of which would restore funding for programs that have been trimmed during the economic downturn. Senate leaders, however, warned that the state should not return to pre-recession spending levels.^[19]

A conference committee comprised of six members ^[19] negotiated the differences before sending a compromise package to Governor Deval Patrick prior to the start of the fiscal year on July 1, 2012.^[1]

House approved its version of the FY2013 state budget with a voted of 150 to 4.^[1] The House budget includes no new taxes or fees but seeks about $790 million in one-time revenues, including a $400 million withdrawal from the state's "Rainy Day" fund.^[20] It takes a very different approach from the governor's proposal to raise new revenue by increasing taxes on cigarettes and soda, among other items.^[21] The budget includes an amendment targeting abuse of Electronic Benefit Transfer (EBT) cards, which work much like debit cards for people who receive welfare assistance from the state.^[20]

Governor's Proposed Budget

Gov. Deval Patrick proposed a $32.3 billion budget in January 2012 that would increase total state spending by just under 3 percent while cutting about 400 jobs in the executive branch.^[22]

The governor discussed part of his proposed budget on Jan. 19, 2012. His plan includes raising $260 million in new revenues, including generating $73 million by raising the cigarette tax $0.50 and doubling the taxes paid on other tobacco products such as cigars and smokeless tobacco. He also proposes lifting the sales tax exemption for candy and soda was expected to generate $61.5 million. The governor also plans to add $5 million by selling advertising on some state government websites, and about $22 million by using technology enhancements to improve tax collectio^[23]

The proposed budget would give an additional $10 million to community colleges.^[24]

The governor also proposed changing the medical payment system, renewing an unsuccessful plea he made last year to end the fee-for-service model with a so-called global payment system that rewards doctors for coordinating care.^[25]

Patrick also requested $101.5 million in the FY2013 budget to pay debt service on special bonds issued for the Big Dig, although officials estimate the state's total annual debt burden related to the project at about $417 million.^[26]

Revenue Assumptions

Sen. Stephen Brewer, chair of the Senate Ways and Means Committee, said in Dec. 2011 that the state faced a $1 billion shortfall in FY2013. Sen. Brewer said that tax revenue growth for FY2013 was unlikely to be enough to compensate for cuts in federal grants and reimbursements or growth in items such as the state's $10.4 billion Medicaid program.^[16]

Fiscal Year 2012 State Budget

• See past state budgets

Supplemental Budget

On Oct. 5, 2011, the House of Representatives voted to approve a supplemental budget^[27] and on October 28, 2011, Gov. Patrick signed the bill into law.^[28] The supplemental budget provides for a deposit of $350 million into the state's "Rainy Day Fund," replenishing the reserve fund that had been tapped several times in recent years. It was $50 million more than what Gov. Deval Patrick had proposed depositing into the reserves. Massachusetts is one of only four states in the country with a Rainy Day Fund in excess of $1 billion^[27] with a balance of $1.4 billion.^[28]

The supplemental budget also provides for $169 million in spending, including giving cities and towns $65 million in promised local aid.^[28] Additional spending includes:

• nearly $20 million in aid for a series of natural disasters
• $39 million on the MassWorks Infrastructure Program
• $9 million for collective bargaining agreements
• $10 million to allowing substance abusers to be committed by the courts to a treatment program for up to 90 days
• $12 million in new assistance and $8 million in retained revenue to the trial court system
• $3 million for adult basic education programs
• $850,000 for adult immunization and vaccines.

FY2012 Budget

Massachusetts Gov. Deval Patrick signed the FY2012 $30.6 billion state budget on July 11, 2012,^[29] after the state operated under a 10-day stopgap budget.^[30] The legislature reached a $30.6 billion budget agreement on June 30, 2012 and voted to approve that plan on July 1.^[31]

The budget does not raise taxes and instead relies primarily on cuts to balance the state's $1.9 billion shortfall. Cuts include:^[32]

• A cut in direct benefits to poor people, which will reduce the clothing allowance given to children on welfare from $150 to $40.^[32][29]
• A $4 million cut in the Department of Developmental Services, cutting services to 1,000 people.:^[32]
• $800 million from MassHealth, the state's Medicaid program that will require the poor and the elderly to pay more for prescription drugs and other medical services^[29]
• $70 million cut to higher education, which has prompted some public colleges and universities to raise tuition and fee rates.^[29]
• The budget only funds services for adult day care for half the year^[29]

The budget also includes cuts to the judiciary branch, and Roderick L. Ireland, the chief justice of the Supreme Judicial Court, and Robert A. Mulligan, the chief justice for administration and management, said the cuts jeopardized the right of every person, guaranteed by the Massachusetts Constitution, to swift justice. The Justices also asked the governor to refrain from appointing additional trial judges and magistrates because there would be insufficient staff to support them.^[33]

The budget save cities and towns at least $100 million annually in health insurance costs.^[32]

The budget increases public school funding by $80 million, bringing funding to $3.99 billion, and offsetting $100 million cuts in previous years. It also includes grants of $2.5 million for higher education that are awarded on merit and just not number of students enrolled.^[34]

The governor's budget officials said that he hoped to achieve savings through stricter pension controls and limits on the rising cost of health care.^[35] Lawmakers are expected to confront the rising Medicare costs in FY2012.^[36]

Unions and Collective Bargaining

Personnel costs, including salaries and benefits, account for 75% of local Massachusetts budgets. The House passed an amendment to the state budget bill on April 26, 2011, which divestspolicemen, firefighters, teachers and other municipal employees of their ability to collectively bargain for most health-care benefits. It is expected to save cities and towns an estimated $100 million in FY2012 alone. Democrats, including the Speaker of the House, spearheaded passage of the bill. The governor has not said if he will sign the bill. The bill creates a 30-day negotiating window between city and town leaders and unions to work out disagreements. If no agreement is reached, municipalities would be allowed to impose changes in co-payments, deductibles and other aspects of health care plans.^[37]

Legislative Proposed Budgets

With both the House and Senate budgets complete, a conference committee will try to reconcile them and send them to the governor.

The Senate passed its $30.5 billion state budget on May 26, 2011. The Senate passed amendments adding $11 million in special education funding and also $3 million for summer jobs for at-risk youth while rejecting proposed cuts in the state sales and income taxes. The plan dips into the state's one-time savings accounts for $440 million to help close an estimated $1.9 billion spending gap without additional federal stimulus dollars.^[38]

The Massachusetts House approved a $30.4 billion budget for the FY2012 on April 28, 2011,^[39] which is $94 million less than Gov. Patrick's proposal.^[40] The House's budget uses on $103 million that otherwise would be transferred into the rainy day fund, in addition to the $200 million they propose withdrawing from the fund.^[41] It cuts $800 million from MassHealth, the state's Medicaid program.^[39]

The House budget agrees with the governor's proposal to cut $65 million in local aid.^[39] The House plan includes $337 million in revenue initiatives, such as postponing for one year a tax deduction for certain businesses.^[40]

Governor's Proposed Budget

Overall the governor's proposed budget relies on cuts and savings to close $1.3 billion of the budget gap, and also relies on $360 million in temporary revenues such as using $200 million from the state stabilization fund, and anticipates $244 million from modest tax reforms and other revenue initiatives.^[42]

Patrick's spending plan for the fiscal year starting July 1 withdraws $200 million from the rainy day fund, leaving $569 million in cash reserves. ^[43] The proposed budget also reduces the state work force by as many as 900 jobs.^[43]

Reductions in Patrick's proposed budget include a $23 million cut to emergency homeless shelters, a $16 million cut to the Department of Mental Health hospital and a $45 million reduction in spending by using salaried lawyers instead of private attorneys to represent the state's indigent criminal defendants.^[43]

To raise revenue, Patrick proposes a surcharge of $2.50 to $2.75 per year on the state's 3.1 million private auto insurance policies to generate funds for training police as well as the expansion of the state's 5 cent bottle deposit law to containers of water, flavored water, coffee-based drinks, juices and sports drinks to generate $20 million per year.^[44] However, House Speaker Robert A. DeLeo has said he opposes any new tax or fees.^[44]

Budget transparency

See also: Evaluation of Massachusetts state website

see sample transparency legislation at the Sunshine Standard

The Massachusetts Budget and Policy Center, which "provides independent research and analysis of state budget and tax policies,"^[45] tracks actual spending in real and nominal terms using a "Budget Browser," available here.

The state maintains the Massachusetts Transparency website.

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Massachusetts Transparency	Y	N	Y	N	Y	Y

• Vendor contracts are listed in the checkbook.^[46]
• Employee salaries are listed.^[47]
• All line item expenditures are not listed in the checkbook.

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for Massachusetts, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.

Budget Background

Massachusetts' fiscal year runs from July 1 to June 30 of the following year. According to the Massachusetts Constitution, the Governor must propose a budget for the next fiscal year within 3 weeks after the Legislature convenes, which translates into the 4th Wednesday of January. This year, that date fell on Wednesday, January 28, 2009.^[48]

Step 1 : Governor’s Budget

• The budget begins as a bill that the Governor submits in January (or February if at the start of a new term) to the House of Representatives.

Step 2 : House Ways & Means Budget

• The House Ways and Means Committee reviews this budget and then develops its own recommendation.

Step 3 : House Budget

• Once debated, amended and voted on by the full House, it becomes the House budget bill.

Step 4 : Senate Ways & Means Budget

• At this point, the House passes its bill to the Senate. The Senate Ways & Means Committee reviews that bill and develops its own recommendation.

Step 5 : Senate Budget

• Once debated, amended and voted on, it becomes the Senate's budget bill.

Step 6 : Conference Committee Budget

• House and Senate leadership then assign members to a joint "conference committee" to negotiate the differences between the House and Senate bills. Once that work is completed, the conference committee returns its bill to the House for a vote. If the House makes any changes to the bill, it must return the bill to the conference committee to be renegotiated. Once approved by the House, the budget passes to the Senate, which then votes its approval.

Step 7 : Vetoes

• From there, the Senate passes the bill to the Governor who has ten days to review and approve it, or make vetoes or reductions. The Governor may approve or veto the entire budget, or may veto or reduce certain line items or sections, but may not add anything.

Step 8 : Overrides

• The House and Senate may vote to override the Governor's vetoes. Overrides require a two-thirds majority in each chamber.

Step 9 : Final Budget

• The final budget is also known as the General Appropriations Act. The final budget consists of the Conference Committee version, minus any vetoes, plus any overrides.^[49]

Budget figures

Massachusetts FY2011 state budget summary and comparison^[50]

The following table presents Massachusetts's spending history. The figures used are in millions of dollars:^[51]

Historic General Appropriation Act (GAA) Budget Levels:^[52]

Accounting Principles

Mr. Joseph DeNucci has been the Auditor of the Commonwealth of Massachusetts since 1987. The Office of the Auditor of the Commonwealth publishes their audit reports online and is responsible for:^[53]

• Determining whether the Commonwealth's resources are properly safeguarded;
• Determining whether such resources are properly and prudently used;
• Evaluating internal controls to help insure integrity in financial management systems;
• Determines whether computer systems and technology environment meet control objectives regarding security, integrity, and availability;
• Evaluating management's economy and efficiency in it use of resources;
• Determining and evaluating a program's results, benefits, or accomplishments; and
• Ensuring that all audit results are fully disclosed to the public and the auditees.

The Institute for Truth in Accounting (IFTA) rates Massachusetts “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Massachusetts' CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[54] Massachusetts' CAFRs are published online by the Comptroller of the Commonwealth of Massachusetts Martin J. Benison has been Comptroller of the Commonwealth of Massachusetts since 1999.^[55]

Stimulus

Massachusetts has received $7 billion in federal funding.^[56]

Public Employees

According to 2008 Census data, the state of Massachusetts and local governments in the state employed a total of 403,808 people.^[57] Of those employees, 305,924 were full-time employees receiving a net pay of $1,408,423,479 per month and 97,884 were part-time employees paid $121,702,932 per month.^[57] More than 54% of those employees, or 221,115 employees, were in education or higher education.^[57]

Recently, Massport chief Thomas Kinton is one of the highest paid public employees in the state. Kinton earned $312,000 in 2010. When he retires in June, he will collect $459,616.01 from the state's sick day buy back program and collect a pension of about $200,000 a year.^[58]

See Also

• Massachusetts government sector lobbying
• Massachusetts public pensions

External links

Additional reading

• Gov. Deval L. Patrick,"2010 State of the Commonwealth Address," January 21, 2010
• Governor's budget, Fiscal Year 2009
• Detailed Budget, FY 2009

References

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