Governor Charlie Baker on Friday signed a $47.6 billion state budget for fiscal year 2022, cementing a plan based on a solid fiscal outlook in a year many feared would require deep cuts.
Baker vetoed just $7.9 million in spending and two policy proposals from the Legislature, including a provision that would have delayed the implementation of the charitable tax deduction. He also amended dozens of policies included in the budget.
“The [fiscal year 2022] budget makes historic investments in our communities, schools, economy, and workers as Massachusetts emerges from the pandemic,” Baker said in a statement. “We are able to responsibly grow our reserves without raising taxes, while continuing to make historic investments in our schools, job training programs and downtown economies.”
Among the key items from the governor’s action on Friday:
- He moved to implement the charitable tax deduction, which has been delayed for decades even after voters approved it in 2000. It would allow taxpayers to take a 5 percent deduction on donations on their state taxes in an effort to spur charitable contributions — an option they have been able to take advantage of only once, after state leaders delayed its implementation time and again. Baker wrote that the deduction should go into effect given “the combination of strong state revenues and serious needs facing non-profits and charitable organizations.”
- Baker vetoed a proposed study on the impact of COVID-19 on children’s behavioral health, saying that an existing administration plan called the Behavioral Health Roadmap “is the most comprehensive approach to identifying behavioral health needs and implementing services.”
- He made the state’s controversial film tax credit permanent. The tax break, which is meant to bring film jobs to the state and costs between $56 and $80 million annually, has been in some budget hawks’ crosshairs for years, with critics saying its payoff does not justify its expense. The House and Senate came to an agreement to extend the tax credit permanently while tightening it in some ways. Baker signed off on that plan, though he has been critical of the incentive program in the past. Teamsters Local 25 President Sean M. O’Brien praised the decision, saying “while workers across the country are under siege by greedy corporations and uncaring politicians, workers can thrive in Massachusetts thanks to a governor who listens to the concerns of working families and is always there to support them.”
- Baker vetoed $2.9 million in funding for a charter school reimbursement program that he said was “not recommended.”
- He reduced by $1 million a $4.6 million allocation for municipal police training committee operations.
- Where the Legislature had sought to end an eligibility test for the state cash benefit program Transitional Aid to Families with Dependent Children and eliminate an asset test for the program Emergency Assistance to Elderly, Disabled and Children, Baker maintained versions of them.
- Baker kept alive two tax breaks that the Legislature had voted to end: the harbor maintenance credit, a $1.4 million to $1.5 million annual benefit — which he said benefits shippers, importers, and exporters — and the medical device user fee tax credit, which costs the state $400,000 to $600,000 annually.
- He approved about $90 million that lawmakers had earmarked for one-time local projects throughout the state.
- Baker signed off on $571 million for the University of Massachusetts system, support which President Marty Meehan said helped position “the university to serve as a central pillar in the Commonwealth’s post-pandemic economic recovery.”
The budget rests on strong forecasted tax revenue, which came in billions higher than was anticipated in January. That’s good news, Baker wrote, but officials “must remain alert to the risk that economic activity has been bolstered by ultimately unsustainable levels of federal spending, and that our currently high tax revenue growth might slow down as federal emergency spending phases out.”
The budget does not contain the broad-based cuts that some forecasters feared would be necessary amid the COVID-19 economic downturn, nor does it carry broad-based tax hikes. Instead, the budget Baker signed is a 3.6 percent increase over the fiscal year 2021 budget.
Baker’s signature and vetoes bring the lengthy budgeting process ever closer to its end. Massachusetts, as has become typical, started its fiscal year July 1 without a budget in place, instead funding the government through July with a temporary $5.4 billion budget.
State lawmakers unanimously approved the budget July 9. Now, the Democratic-dominated state House and Senate have the opportunity to override Baker’s vetoes or reject his policy amendments. Overriding a veto requires a two-thirds vote.
Senate President Karen E. Spilka said in a statement that she was proud the budget would “go a long way towards getting us all ‘back to better’ as we recover from the pandemic.”
“The Senate will continue to review the rest of the Governor’s actions in the days to come,” she said.
A spokesperson for House Speaker Ronald Mariano did not immediately return a request for comment on Baker’s budget actions.
The state’s annual budget funds everything from salaries and pensions for state employees to direct local aid. Among its largest expenditures are health insurance for low-income residents and investments in education.