House Ways and Means proposed a $46 billion budget to close out the fiscal year, about $188 million more than what the governor proposed last month and $2.4 billion higher than what was spent the last fiscal year. The budget proposes draining nearly half of the state’s “rainy day” fund.
“During last major recessions, it’s been the practice to make the biggest withdrawal from the rainy day fund in the first year of a downturn,” said House Ways and Means Chairman Aaron Michlewitz.
The Boston Democrat said the bill will be taken up by the House on Tuesday. “Today has been a long-awaited and highly anticipated day since we tabled the initial process for FY21 back in March as a result of COVID-19,” he said. “In what seems like a lifetime ago, the decision to put things on pause was certainly not an easy one.”
The state has relied on partial budgets to keep the lights as budget writers assessed the economic impact of the coronavirus pandemic. Massachusetts is no longer the state with the highest unemployment levels, but the number of jobless people is still far higher than it was before late March.
Businesses across the state have closed, and those trying to stay open are operating at lower capacity and with more costs to abide by COVID-19 safety requirements set by the state.
The House proposal comes weeks after Gov. Charlie Baker filed $45.5 billion budget plan for the rest of fiscal 2021. Both Baker’s and the House’s plans rely on federal money and the “rainy day” fund to make up an estimated $3.2 billion net spending gap for this fiscal year.
Baker said he’d like to see a budget plan land on his desk by Thanksgiving. House Speaker Robert DeLeo said he’d like to get a budget to the governor by the end of the month.
The House plan includes a $1.8 billion increase for MassHealth, which Michlewitz said was due to the increase in enrollment. The proposal kept Chapter 70 funding harmless, increasing $108 million to keep up with inflation.
This time last year, lawmakers were preparing significant increases in Chapter 70 funding to comply with the landmark education law that increases funding over seven years and tweaks the formula to send more money to school districts with more pockets of poverty and other needs.
“We were all very eager to make a large investment in the first year. Unfortunately, the pandemic has complicated those plans,” Michlewitz said.
The House plan does include $50 million in COVID student support funds.
“There’s a funding formula that will allow the commonwealth to distribute the funds to municipalities based on their enrollment piece with low-income students taking first priority,” Michlewitz said.
According to Michlewitz’s office, eligible expenses include personal protective equipment, remote learning costs, support for low-income and other vulnerable students, technology assistance, and assistance with social services and behavioral health.
While the Legislature did not move on a bill to expand the eviction moratorium, which expired last month, lawmakers were not satisfied with the housing assistance funding laid out by Baker in his budget. The House budget proposes a $33.7 million more in RAFT funding than the governor’s budget does and language that would restrict evictions from being executed if a tenant has a pending application for RAFT or another assistance program.
“We felt it was necessary to put in place to make sure that people who were applying for the RAFT program were getting a full vetting before they qualified or didn’t qualify,” Michlewitz said.
Michlewitz said he believes the courts are handling the eviction cases well, but he wanted to offer another option.
Like Baker’s budget plan, the House proposes accelerating sales tax remittances. Baker has repeatedly proposed accelerating sales taxes so certain businesses pay their taxes from the first three weeks by the end of the same month, instead of paying the month after. This year’s proposal suggests the state would get $267 million in one-time revenue through sales tax modernization.
The House plan projects the state could get $267 million by requiring same-month tax collections from businesses that collect more than $150,000 in sales, meals or occupancy taxes. The House plan, however, doesn’t include a phase-in for all businesses by 2024. The governor’s plan does, predicting payment processors would capture sales tax for electronic payments at the time of purchase.
The House budget plan doesn’t include revenue from sports betting, like the governor’s plan does, suggesting the proposal won’t make it to the finalized jobs bill and likely won’t get taken up as a standalone bill this session.
The House budget plan doesn’t include the governor’s $100.7 million small business recovery plan, but does set aside $6.3 million for small business technical assistance and grants. The House budget also proposes $10 million in matching grants for capital investments for businesses with 20 or fewer employees.
The House plan also includes a $5 million increase in adult education funding and $3.3 million more for the YouthWorks summer jobs program.
Another $20 million would cover the costs of increasing provider rates among childcare providers. The House budget also would allot $39.5 million in early education and childcare initiatives, including $10 million for a “sliding fee scale reserve" that would help lower-income parents pay fees.
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