Understanding the governor’s upcoming budget proposal
Just about every year, the biggest, most important piece of legislation passed in Massachusetts is the state budget. It’s a plan for virtually everything we are going to do through state government, from schools and roads to elder care and public health.
Building a budget takes months. But the process for next year starts tomorrow, when Governor Charlie Baker releases his proposal. Here’s what you need to know.
What’s in the budget?
Our state government does a huge variety of different things. For starters: educating kids, 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.
More generally, the state budget includes information about:
• how much money we expect to spend on hundreds of different programs
• what new investments the state hopes to make (in education or transportation, etc.)
• any cuts to programs deemed inefficient, unnecessary, or unaffordable
• tax policies that pay for these things
What are the biggest programs?
Loosely put, you can think of Massachusetts as a school system with health benefits. Around 25 percent of state spending goes to education — including K-12 schools, early education, and higher ed. Another 33 percent pays for health care, most of that in our state’s Medicaid program (MassHealth). That leaves about 40 percent for all of the other programs that help young kids, workers, veterans, seniors, people with disabilities, and beyond.
Where does the money come from?
Unlike the US government, Massachusetts has to balance its budget every year. Before we can spend a dollar, we have to raise a dollar. And we raise most of those dollars through state taxes.
Beyond taxes, though, the state gets a fair bit of funding from the federal government (notably for health care) as well as additional money from the lottery and from various fees people pay during the year, for instance when you get a driver’s license.
What happens after the governor submits his proposal?
The proposal that the governor is releasing tomorrow is not a law, just a plan for things he’d like to do.
But he’s not the only one with plans. Sometime in April, the Massachusetts House of Representatives will put together its own budget proposal. And they’re under no obligation to follow the governor’s lead. Legislators have their own priorities, and they are free to ignore the governor when they decide how best to use taxpayer dollars.
Nor does the process end with the House. The Senate will have its say in May, after which the House and Senate have to negotiate a single budget plan that both bodies can live. Then they send that joint proposal back to the governor for approval.
If all goes smoothly, the final budget will be signed in time for the new year, July 1.
Wait, the year starts on July 1?
For budget purposes, yes. The state works on what’s called a fiscal year, which runs from July 1 to June 30. Currently we are more than halfway through fiscal year 2016, and tomorrow’s proposal from the governor will cover fiscal year 2017.
What should I look for tomorrow?
For the tenth year in a row, the state is expected to face a substantial deficit, estimated to be nearly $700 million. The most basic question, then, is how the governor plans to fill that gap — and whether he can end the reign of red ink.
In trying to answer this question, you have to be careful not to get lost in the numbers.
For instance, it’s often best to look past the overall spending figures, which will probably be upwards of $38 billion. That headline number just doesn’t conveny much information. To really figure out whether the state is spending too much, or too little, you need some context, like how much we’ve spent in the past, or how fast our economy is growing.
This is actually part of a broader problem. Given all the money at stake, it’s sometimes hard to separate the small stuff from the substantial stuff. One tack is to ignore the dollars and stick with percentages. Say a program gets $200 million in new funding, is that one percent increase, or an 80 percent jump?
When the proposal comes out tomorrow, I’ll be doing my best to make sense of all these numbers, big and small. So if you want some perspective on the governor’s plans, look for something from me in the hours that follow.