Baker: Budget covers schools, other goals
Governor says it should fund education, transit and workforce training
The governor says his $44.6B budget will cover all the bases.
With the $44.6 billion fiscal 2021 budget his administration unveiled Wednesday, Gov. Charlie Baker said Massachusetts would be able to fully fund both the letter and spirit of the new education funding law, make sizeable investments in public transit and workforce training, and still stash more money away for an eventual economic downturn.
“Every year, we’re tasked with filing a budget to balance the books and make smart fiscal decisions but our budgets are far more than just a list of dollar amounts and line items,” Baker said. “It is a body of work that reflects the priorities and needs of the people of this great commonwealth. It is designed to help our residents in every corner of the state find the support that they need to access a quality education, secure a good-paying job, and find a safe and strong community to live and raise their family in.”
The central themes of the Baker administration’s sixth budget (H 2) are education and transportation, Administration and Finance Secretary Michael Heffernan said. Public schools would see $355 million in new spending -the first payment towards a $1.5 billion, seven-year overhaul of the state’s public education funding formula -- and the budget newly directs $216.7 million to the MBTA and other transportation agencies to address safety and infrastructure issues.
Baker’s budget was built on the consensus agreement of his administration and lawmakers that the state will collect an estimated $31.15 billion in tax revenue during fiscal 2021 — 2.8 percent growth, modest compared to recent years of higher-thanexpected collections that resulted in large surpluses.
The governor’s budget would increase overall state spending by 2.3 percent above the current fiscal year, according to the administration, and accounts for a $96 million reduction in tax revenue associated with the income tax rate having dropped to 5 percent, a reduction of $95 million because of the state’s new restrictions on the sales of vaping products, and another $64 million reduction from the scheduled re-emergence of a charitable giving tax deduction.
Baker’s spending plan assumes the state will pull in $282.7 million in revenue from casino gaming, $146 million in marijuana taxes and another $14 million from Cannabis Control Commission license payments and fines.
It also assumes $35 million in revenue from an activity that is still illegal in Massachusetts — sports betting — another $16 million from an opioid tax the governor has asked the Legislature to approve, and the $237 million in one-time revenue that would materialize if the Legislature goes along with the governor’s sales tax modernization plan.
The budget plan includes $237 million in onetime revenues associated with a two-phase plan to begin collecting sales taxes from certain companies in real-time or at least on an accelerated basis, similar to a plan the administration has previously attempted to get the Legislature to adopt.
Currently, sales taxes paid by consumers at the point of sale are held by businesses and remitted to the state on a monthly basis by the 20th day of the month after the taxes were collected. Heffernan said the system stems from “the days of paper checks and manual cash registers.”
In the first phase of the Baker administration’s plan, the largest 10 percent of businesses — those with at least $100,000 in sales or room occupancy and meals tax collections — would be required to remit taxes from the first three weeks of each month in the final week of that same month. The final week’s remittance and reconciliation of any discrepancy would take place the following month. Heffernan said phase one would affect 10 percent of businesses but account for 80 percent of sales tax revenue. The second phase would take effect in mid-2023 and require “all retailers and credit card processors (to) capture sales tax from electronic transactions at the moment of purchase and remit daily.”