Mass. Democrats unveil $700M spending plan
Courtesy | Flickr/Massachusetts Office of Travel and Tourism
The Massachusetts State House
House Democrats rolled out a major new spending initiative Wednesday, outlining a $693 million supplemental budget packed with funding for hospitals, collective bargaining agreements, special education and workers in the state's safety net system.
The wide-ranging bill also features a five-year extension to the simulcasting wagering law, language to update the hiring process for school nurses, and a section that House Speaker Ron Mariano's office says will allow state energy regulators to update contracts related to a hydroelectric transmission project in Quebec.
The supplemental budget bill is expected to clear the House on Thursday, when the House will hold its first formal session since approving an annual state budget proposal in late April. House and Senate Democrats were unable to pass a timely annual budget this year, and talks continue on that legislation.
The House Ways and Means Committee on Wednesday unanimously recommended the supplemental budget, which would add more spending bookmarked for fiscal 2023, a year when state tax revenues plummeted from previous record highs.
The legislation calls for $180 million to support "fiscally strained hospitals" as many acute care centers face ongoing impacts from the COVID-19 pandemic.
Mariano's office said up to $91.4 million of that money would go to hospitals eligible for a Medicaid supplemental payment the administration initiated in the spring. Another $58.5 million would be earmarked for nonprofit or municipal acute care hospitals with a high share of Medicaid patients, and $30 million would be distributed to hospitals that meet state criteria for "significant financial need."
The bill also seeks to create a $75 million reserve account to reimburse school districts who are facing increased special education costs after pandemic-era federal grant dollars expired.
Districts would be ineligible to tap into that money if they still have unobligated Elementary and Secondary School Emergency Relief, or ESSER, funds. The federal government provided Massachusetts with about $2.6 billion in emergency education aid during the pandemic, and in March, a Healey administration official said more than half had not yet been spent.
Gov. Maura Healey proposed the $75 million reserve account to mitigate special education costs as part of a spending bill she filed in March.
Other components of the new House bill date back to Healey's March supplemental budget, including $60 million to support caseworkers and staff at the Department of Transitional Assistance and a $100 million transfer to the state's pension fund related to a 2015 early retirement incentive program.
The largest chunk of the newly proposed House spending, about $226 million, would cover nearly three dozen collective bargaining agreements with public-sector employees across a range of agencies and departments.
Also included in the bill is $40 million to cover a settlement reached in April resolving a decade-old lawsuit alleging discrimination in a police promotional exam.
House Democrats wove several policy sections into the legislation as well.
One section, according to Mariano's office, would give the Department of Public Utilities the flexibility to approve amended transmission contracts related to the New England Clean Energy Connect (NECEC) project, which would carry hydroelectric power generated in Quebec through Maine to end points including Massachusetts.
Bay State officials have viewed that project as important to meeting clean energy goals, but it hovered in legal limbo for years after Maine voters approved a ballot question that would have limited its progress. A Maine jury ruled in April that the project can proceed.
After repeated one-year extensions to the state law allowing simulcast wagering -- some of which were so overdue that the practice temporarily became illegal -- the bill would continue the authorization until July 31, 2028.
The bill also includes language a committee aide said is aimed at "streamlining the hiring process for school nurses," which are reportedly in short supply across Massachusetts. It would allow the state to issue temporary certification in 2023 and 2024 to registered nurses who have been employed for at least three years, but have not fulfilled the specific testing requirements for a school position.
Healey has signed one mid-year spending bill so far, a roughly $1.1 billion package she approved in March. Her predecessor, Gov. Charlie Baker, did not sign into law any supplemental budgets for fiscal year 2023 before his term ended, though he did authorize a $52.7 billion FY23 annual budget that increased spending more than 10 percent.
With state tax revenues below benchmarks through the first 11 months of fiscal year 2023, all of the spending in the proposal would come not from the General Fund but instead a "transitional escrow" account officials built using unspent surplus dollars from prior years and federal pandemic relief money.
A Healey administration official said the escrow account has a balance of about $1.4 billion, and another Coronavirus State Fiscal Recovery Fund (CSFRF) has about $300 million available.
After a nosedive in April, tax collections rebounded slightly in May but remained about $1 billion less than officials anticipated through that part of fiscal 2023, or $600 million when accounting for a pass-through entity excise. Much of the dropoff was attributed to capital gains taxes, and state budget officials are anticipating a significantly smaller fiscal 2023 deposit into the state's rainy day fund as a result of that.
Legislative and administration budget-writers have said they remain confident Massachusetts can balance its budget and stick with a planned spending increase in FY24, pointing to the escrow fund as a way to close any gaps. The Healey administration did not order any spending freezes in the wake of April's revenue report, an official said.
The House Ways and Means Committee crafted the $693 million bill by rewriting a supplemental budget Healey filed in May (H 3869), which only sought $26 million to cover a collective bargaining agreement with the Massachusetts Community College Council.
As for the fiscal 2024 budget, which could end up in the $56 billion range and is tied to an also unresolved tax relief proposal, one House Democrat recently signaled that he does not expect a conference committee resolution any time soon.
"My belief is that we have to -- meaning the Senate and the House -- we have to conclude our conference committee on the budget before we can actually conclude the work that's being done simultaneously on the revenue package, because I think you need to know what your budget is," Rep. Jim O'Day, who serves as fourth division chair in Mariano's leadership team, said in a televised interview with former Sen. Harriette Chandler that aired July 1.
Chandler pointed out that the branches "have gone into the end of July in the past" and said "this could be that kind of year."
"Given what you and I are talking about right now, I'd be shocked if we're finished by the end of July with the conference committee, unless both sides just decide that, alright, there's a few things here that we're never going to agree on, and we're going to have to revisit them," O'Day replied.
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