Baker budget aims to wring out $750M from MassHealth
Gov. Charlie Baker will file a $38.1 billion budget proposal Wednesday that recommends increased spending on local aid, higher education and transportation while also squeezing more than $750 million in savings from MassHealth to close a $1.8 billion gap between projected revenues and expenses.
Baker, in his first budget, says he inherited a yawning shortfall in the available sources of revenue needed to continue funding state government at level service. The gap, officials said, was driven by 8 percent spending growth in the current budget year and the reliance on $1.2 billion in one-time sources of funding.
The governor's budget proposes to limit growth in spending in fiscal 2016 to $1.1 billion, or 3 percent, and reduce by half the reliance on one-time revenue sources without taking a nickel from the state's rainy-day fund, raises taxes or increasing fees.
Baker also plans to file two pieces of companion legislation with the budget, including a bill to establish an early retirement program, plus a second bill including his proposals for a tax amnesty program for first-time filers, an expansion of the earned income tax credit to 30 percent of the federal credit and the phased out elimination of the film tax credit program.
MassHealth, one of the largest spending drivers in the state budget, will grow by $950 million, a 5.6-percent increase in the nearly $14 billion Medicaid program that provides health coverage to 1.7 million low- and moderate-income residents.
Projected growth at MassHealth had been anticipated to reach 16 percent in fiscal 2016, but Baker administration officials have budgeted $761 million in net savings to the state, including $400 million from trimming the rolls at MassHealth after going through a redetermination process for 1.2 million subscribers.
Though the Republican governor has not proposed to change eligibility criteria, budget officials said chiropractic benefits would no longer be covered, while adult dental coverage and coverage of autism services for 10,000 children would be extended.
The Baker administration also plans to direct all capital gains taxes into the general fund in fiscal 2016, withholding as much as $300 million that would otherwise have been earmarked for the stabilization accountm which now holds $1.2 billion.
Other solutions to the budget gap include:
- $100 million from a tax amnesty program;
- $30 million from the sale of the Sullivan courthouse in Cambridge;
- $125 million for actions like the state hiring freeze and the annualization of emergency cuts, and;
- A minimum $17 million in federal emergency snow disaster money expected to arrive in July.
Early retirement plan savings target: $178M
In addition to savings at MassHealth, the Baker team has budgeted $178 million in savings from an early retirement program, $125 million from the Group Insurance Commission by increasing deductibles and premium co-pays and increasing the employee health insurance contribution rate to 25 percent for employees hired after 2003.
Outside of major spending increases on MassHealth, health and human service agencies like the Department of Children and Families, a $34 million increase in unrestricted local aid and $105 million for Chapter 70 school aid, most budgets by secretariat were level-funded. The majority of agencies that faced emergency budget cuts in fiscal 2015 to solve for a mid-year deficit were also level-funded at post-cut levels, with some exceptions like the METCO program.
Baker's budget also includes a 3 percent increase for higher education campuses, additional funding for police training and increases to the Safe and Successful School and summer jobs programs. Officials said the administration was in discussions with the leaders of the University of Massachusetts, state universities and community colleges, but did not yet have an agreement to freeze tuition and fee rates for another year.
With Plainridge Park Casino due to open this summer, officials said the governor has budgeted $87 million in revenues that will be used, along with Lottery profits, to fund unrestricted local aid to cities and towns. The administration also eliminated roughly $70 million in legislative earmarks that had been baked into the fiscal 2015 state budget.
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