Healey budget raises spending by $2.1B for FY25

By CHRIS LISINSKI

State House News Service

Published: 01-24-2024 6:19 PM

BOSTON — The second annual state budget bill from Gov. Maura Healey proposes $58.15 billion in total spending, suggesting comparably modest growth over prior years, and a bevy of cost-control maneuvers in an attempt to navigate an increasingly uncertain financial environment.

Healey’s fiscal year 2025 budget calls for about $2.07 billion or 3.7% more in spending compared to the fiscal year 2024 budget she signed in August. A combination of expanded and new investments are among the measures driving up the bottom line.

Amid a forecast for little to no tax revenue growth, Healey’s team balanced their plan by trimming $450 million from various line items, proposing to prevent about half a billion dollars in other spending growth and deploying $1.25 billion in other available state resources.

Cost controls include closure of the MCI-Concord medium security prison and changes at MassHealth, which typically reflects the largest share of the budget. The budget will propose “flat spending” for MassHealth’s personal care attendant (PCA) program, reflecting a cap on hours authorized for meal preparation and some eligibility changes related to Activities of Daily Living (ADL) support.

The bill does not propose any new tax increases to generate additional revenue, nor does it recommend tapping into the state’s more than $8 billion “rainy day” savings account.

Instead, it calls for spending more than $500 million that lawmakers had set aside for K-12 public schools and early education and care, and allowing the administration to use $375 million that would normally be stashed into the stabilization fund as part of the annual budget.

“These recommendations establish a responsible glidepath into future fiscal years, as tax revenues improve and our economy steadily grows,” officials wrote in a budget brief.

The budget would fully fund another year of the K-12 education funding law known as Student Opportunity Act in part by drawing down $300 million from an investment fund specially designed to cover the costs of the law. Beacon Hill built up that fund in past years when the state was more flush with cash, and the withdrawal would leave about $200 million for future use.

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Healey’s plan would also pull $265 million from a similar early education and care affordability fund, fully depleting its balance.

Other new funding sources the budget targets include $100 million in redirected casino gaming revenue, $75 million in projected revenue from authorizing online Lottery sales and a one-time “tax amnesty” program that officials say could generate $75 million.

Excluding the use of income surtax revenues that are specifically earmarked for education and transportation, the budget proposes about $56.1 billion in spending, an increase of 2.9% over last year. Administration and Finance Secretary Matthew Gorzkowicz said the non-surtax spending growth rate is about half as much as the typical increase over the past five years and is slightly less than inflation.

The administration proposes another $682 million in spending on the Medical Assistance Trust Fund and $1.3 billion in surtax spending, an increase of $300 million over the FY24 budget that marked the first use of the voter-approved revenue source.

Surtax dollars drive many of the most noteworthy spending increases in Healey’s latest plan, with about 55% of the stream directed toward education and 45% toward transportation.

Healey’s budget proposes another year of funding free school meals for all students, using $170 million in surtax revenue, and $475 million in Commonwealth Cares for Children grants to early education and care providers funded partly via the additional levy on high-earning households.

MassReconnect, the program covering unmet community college costs for certain eligible adults that the state launched last year, would get $24 million, representing a $4 million increase.

Cities and towns could be in line for another boost in local road funding, too. Healey, who on Monday filed a bill calling for $400 million in Chapter 90 funds over two years, also proposes in her budget to supplement the program with $100 million in surtax revenue.

The budget calls for increasing unrestricted general government aid to municipalities by 3% and Chapter 70 aid for public education by 4%.

While her administration continues to navigate an emergency shelter crisis, Healey will look to a separate legislative vehicle to cover unmet costs for the system.

Her annual state budget proposes level-funding the emergency assistance shelter system at $325 million in FY25, which officials said could fund service for about 4,100 families — just a bit more than half of the 7,500-family cap the administration implemented in response to unprecedented demand. The administration has estimated in recent reports to the Legislature it will need more than $900 million annually this year and next year to cover costs.

With an eye on the increasingly common extreme weather that hammered residents, especially farmers, in 2023, Healey’s budget calls for creating a standalone disaster relief fund. The bill does not include seed money for the fund, instead proposing to automatically deposit 10% of excess capital gains tax revenues each year in addition to other sources like federal grants.