Baker budget cuts state spending
Governor plans no tax hike and cuts spending by about $300 million.
Eyeing the state’s post-pandemic future, Gov. Charlie Baker on Wednesday proposed a $45.6 billion state budget for the fiscal year that starts July 1 that he said would make key investments and support the ongoing public health response to COVID-19, but would actually cut total state spending.
The proposed fiscal 2022 budget does not include any tax increases on residents and would trim state spending by about $300 million or 0.7% while state tax revenue is expected to rise 3.5% over the current budget year.
“The budget fully funds the first year of the landmark Student Opportunity Act, provides substantial resources to promote economic growth and development as we work to recover, and helps ensure that public health during a pandemic continues to be there for us, all without raising taxes,” Baker said. “We don’t believe raising taxes on the residents of the commonwealth, especially in the midst of all that’s going on, is the right thing to do.”
The budget bill is built on a base of $30.12 billion in state revenue (roughly 3.5% growth over fiscal 2021), supplemented by an estimated $12.47 billion in federal revenue (down from $13.77 billion estimated for the current budget year), revenue generated by state departments and agencies, fees and other sources.
As Baker and Lt. Gov. Karyn Polito had previously announced, the fiscal 2022 spending plan (H 1) recommends increasing the state’s $1.13 billion general local aid account by $39.5 million and seeks to fully fund the 2019 school finance reform law that aims to steer $1.5 billion to K-12 schools over seven years.
The proposed reduction in overall state spending is due largely to slower-than-expected growth in MassHealth enrollment, officials at the Executive Office of Administration and Finance said. The administration had been expecting MassHealth enrollment to grow by about 1.5% each month during the pandemic, but it has actually come in at just under 1% growth per month.
Gross MassHealth spending is budgeted to fall from $18.2 billion this year to $17.6 billion in fiscal 2022, a 3.4% reduction, while all non-MassHealth spending in the governor’s proposed fiscal 2022 budget is slated to increase by 1%, from $27.7 billion to $28 billion, the administration said.
“With the exception of savings due to MassHealth utilization and savings from the elimination of a number of line-items, the Governor’s budget proposes modest budget growth, with new spending targeted for implementation of the Student Opportunity Act ($246.3 million in new spending), expansion of behavioral health services, increased costs for [the Department of Developmental Services] and [the Department of Mental Health] ($201.8 million) and increased local aid ($39.5 million),” the Massachusetts Taxpayers Foundation wrote in its analysis of the governor’s proposal. “House 1 focuses on level funding many programs and increasing spending where necessary to protect and maintain existing services as opposed to a focus on new initiatives.”