The Massachusetts House on Wednesday unveiled a nearly $50 billion state budget plan that would hike spending by billions next year — including sending more money to schools and criminal justice efforts — but omits a series of tax breaks Governor Charlie Baker sought at a time of soaring inflation and flush state coffers.
The House’s $49.6 billion proposal does not include any broad-based tax or fee increases for the fiscal year that begins in July, the chamber’s leaders said Wednesday. At the same time, it would add $2 billion in spending — and $1.4 billion more than Baker proposed — to help fund what House Democrats framed as investments into struggling or long-ignored areas.
That includes a proposed $110 million to extend a free school meals initiative currently covered by an expiring federal program; tens of millions more dollars to bolster childcare worker salaries; and $20 million to cover a new proposal requiring all jails and prisons make phone calls free for prisoners and their families, something only one other state currently mandates.
“We chose to use the opportunities that we have here to make investments into the middle class that we feel were extremely necessary, to stabilize the economy while the economy is doing relatively well from a revenue standpoint,” said state Representative Aaron Michlewitz, the House budget chairman and a North End Democrat.
State coffers are currently flush with cash. Revenues for the fiscal year ending in June are trending $1.5 billion above projections, and the state still has more than $2 billion in federal stimulus aid at its disposal. Its emergency savings account is also expected to reach a record $5.76 billion by the summer, and under the House’s plan, would grow further by hundreds of millions more.
But the chamber, for now, is not seeking to ease residents’ own tax burden. House Speaker Ronald Mariano said the budget does not include any of the $700 million in tax breaks Baker proposed in an effort to “give back” to residents who were shouldering rising costs.
Mariano on Wednesday left the door open to considering tax relief proposals later in the Legislature’s formal session, which ends on July 31, citing the state’s potential budget surplus. But when or in what form that could emerge is unclear.
“We felt they weren’t necessary at the time. We have money, we have a surplus,” Mariano said, arguing that lawmakers face demands to put the money to work elsewhere. He cited a legislative commission’s study of the state’s early-education system that estimated it would cost $1.5 billion annually to put a raft of recommendations into place.
“There are many things that we can spend our money on, and we chose to do that,” he said. “These programs in early childhood and [the state’s] daycare support system are the underpinning of our middle and lower class workforce.”
Baker’s tax break plan, which he filed separate from but simultaneously with his budget proposal, included raising the income threshold for residents to qualify for “no-tax status” and doubling a pair of refundable tax credits people can claim for dependents or child care.
He also is seeking dramatic changes to the Massachusetts estate tax by doubling the tax threshold to $2 million, and taxing only those dollars above it. Mariano said last month that House leaders have also been discussing potential changes to the estate tax.
“As inflation continues to rip around here . . . we should do these,” Baker told reporters Tuesday before the House released its plan. “This is exactly when you should do it.”
Eileen P. McAnneny, president of the business-backed Massachusetts Taxpayers Foundation, said Wednesday that the state’s financial picture can support both increasing spending and easing the tax burden.
“My hope and expectation is that they’ll do [a tax relief bill] separately,” she said of lawmakers.
The House is expected to debate its budget proposal later this month, when more spending is likely to be added. The Senate will then release its own spending plan next month, and lawmakers will have to reconcile the differences before sending it to Baker’s desk. Among the governor’s options: signing it, suggesting changes, or vetoing some or all of it.
The House’s initial budget plan includes other large pockets of spending. It dedicates nearly $500 million more to direct local school aid, largely matching what Baker proposed. It pushes total spending there to nearly $6 billion in an effort to keep pace with the sweeping changes to the school funding formula the Legislature passed in 2019.
It also carves out $18.4 billion for the state’s Medicaid program, which exceeded Baker’s proposal but is driven largely by the federal government’s extension of the COVID-19 public health emergency.
House leaders said they’re also seeking to lift criminal justice efforts with new policies and financial support. They embraced a Baker proposal to end the monthly fees Massachusetts charges those on probation and parole. Their budget plan would also make Massachusetts the second state, following Connecticut, to require “no cost calls” for jail and prison inmates and their families, who currently pay more than $14 million a year, House officials said.
To supplement funds jails and prisons would lose from collecting those fees, the House is also seeking to create separate trust fund, seeded with $20 million.
Suffolk County Sheriff Steven Tompkins, who serves as president of the Massachusetts Sheriffs’ Association, said he supports efforts to make the calls free; most, if not all, sheriffs currently charge 14 cents a minute, he said. But “at first blush,” he said, he doesn’t believe the $20 million would be enough, including to cover the portion of what departments collect to help fund inmate programs.
“I think this is a start.” he said. “Moms and grandmoms are paying for these calls. Who wants to tax moms and grandmoms? I certainly don’t. But we also have to make sure the system works.”
House leaders said they are mindful of the impact rising inflation is having on the state. Prices in March, for example, rose 8.5 percent compared with a year ago, making it the largest annual increase in more than 40 years.
Mariano argued that, too, cuts into any increases lawmakers seek for state programs and entities. “It shrinks the rate of expansion,” he said.
The squeeze it has put on consumers, combined with rising gas prices, prompted GOP lawmakers to seek to suspend the state’s gas tax in recent weeks. House and Senate Democrats both rejected those proposals, arguing, in part, that it could have wider financial ramifications for the state’s ability to borrow money for road projects.
S&P Global Ratings said on Tuesday that the temporary state gas tax suspensions being passed or considered by several states “are unlikely to lead to rating changes on highway user tax-supported debt.” But Mariano said he wasn’t convinced, and indicated he would oppose suspending the gas tax should it surface again in the chamber’s budget debate.
“I thought it was a very bizarre statement for a bond rating agency to make,” said Mariano, pointing specifically to the use of the word “unlikely.”