What you need to know about tomorrow’s budget proposal

Tomorrow, the Massachusetts House Ways and Means Committee is scheduled to release its budget proposal for next year. Their proposal is hardly the final word in this process — that takes some time — but it’s a crucial step and also the first indication of the Legislature’s spending priorities for the coming year. Here’s what you need to know.

Disclosure: The numbers I’m using are drawn from the Massachusetts Budget and Policy Center, a nonpartisan research center where I used to work.

What’s the House Ways and Means Committee? A lot of the work in the Massachusetts Legislature is handled by committees. There is a committee on education, a committee on housing, a committee on transportation — and many others. Among those others are the committees that write budgets and oversee state finances. They get the name “Ways and Means.”

Why is the House Ways and Means Committee releasing a budget proposal? It’s their turn. Putting together a state budget is a multi-step process. First, the governor issues a proposal (in January). Then the House (now). Then the Senate (next month). And after that, they all negotiate their way to a final bill.

Why now? True, next January is a long way out, but as far as the state is concerned, the new year actually begins on July 1. That’s when the next state budget will go into effect. Sometimes, to make this distinction clear, people refer to the state’s calendar as a fiscal year. This budget is not really for 2015 but for fiscal year 2015, which runs from July 1, 2014, to June 30, 2015.

What kinds of things are included in a state budget? Just about everything we want to do through government in the coming year, including detailed plans about:

- new investments (in education or transportation, etc.)

- ongoing support for programs that help young kids, workers, veterans, seniors, people with disabilities — all of us, really.

- cuts to programs deemed inefficient, unnecessary, or unaffordable

- tax policies that pay for these things

Can you be more specific? There are lots of things that we do through government. For starters: building roads, repairing bridges, maintaining state parks, helping cities pay for police and fire departments, and ensuring that all residents have access to shelter or housing.

The bulk of state spending, however, goes to just two areas: education and health care. A common refrain among policy experts is that the federal government is basically an insurance company with an army. At the national level, at least, that’s where the money goes — to Social Security, Medicare, Medicaid, and defense.

By contrast, Massachusetts is more like a school system with health benefits. More than 25 percent of state spending goes to education — including K-12 schools, early education, and higher ed. Another 30 percent goes to health care, most of that in our state’s Medicaid program (MassHealth). That leaves about 45 percent for the other stuff like roads, bridges, etc.

What should I look for tomorrow? Last year’s proposals were full of big, ambitious plans, particularly from Governor Deval Patrick. Among other things, the governor recommended a $2 billion tax package that would have supported major investments in early education, higher education, and transportation. Ultimately, though, the Legislature didn’t embrace his ideas.

The governor’s proposal this year is far more modest than the budget he proposed last year. Given that the House led the effort to rein in the governor’s budget last year, it seems unlikely they’ll push for anything really dramatic this time around. Still, the smaller things matter and there are a lot of choices to be made.

For instance, how to close the deficit. This is the sixth year in a row that the state faces a deficit, and unlike the federal government we have to eliminate it (balancing the budget is a constitutional requirement). There are a few ways to do this: raise new taxes, cut spending, borrow from the “rainy day” fund, or try to scrape together money from other, smaller sources. The governor’s proposal included a mix: about $130 million in new revenue initiatives, $185 million from the rainy day fund, and another $150 million cobbled together from here and there. It will be interesting to see what the House Ways and Means Committee recommends.

Any pitfalls to avoid? There are lots of numbers in a budget, and it’s easy to get lost in those numbers. But it’s important to emphasize that a budget isn’t really about numbers, or even dollars; it’s about which programs we think our state government should support and how we pay for them.

What’s Next?Since budget releases usually come with a fair dose of political spin, I’ll be providing an analysis later this week of what the Ways and Means Committee proposed, and how it affects the commonwealth.

Source: Budget Info, Revenue Info

Data: Overall budget data reflects net state costs, which excludes federal reimbursements and departmental fees