The state Senate on Thursday night approved a $40.8 billion state spending plan that includes several types of new taxes and fees. But amid significant uncertainty about state revenue, lawmakers could be forced to alter that plan soon.
The Senate’s fiscal 2018 budget includes a tax on short-term room rentals, like Airbnb, that lawmakers believe would raise $18 million in new revenue. It also includes a new assessment on businesses designed to help pay for the state’s sharply increasing health care costs, a measure the governor as well as House lawmakers have also called for.
The House passed its own version of the budget earlier this year with its own version of those two levies. A conference committee will now hammer out differences before a final version heads to Governor Charlie Baker, who can sign it or veto all or portions of it.
Baker also proposed a more narrow version of the short-term room rental tax, extending the state’s occupancy tax only to people who provide rentals 150 days or more. The House is developing a plan to tax and regulate that industry.
But looming over budget debate is the fact that the state is woefully behind in revenue collection for the current fiscal year, which ends in June. As of April, the state had collected $462 million below what lawmakers anticipated.
That means the plan the Senate passed for next year could be based on unrealistic projections and might have to soon be downsized. Lawmakers are expected to deal with that potential shortfall during the conference committee.
“It’s going to be a rough budget conference,” said Senate President Stanley C. Rosenberg, as he exited the chamber around 9:30 Thursday night. “We’re going to have to figure out and hope that the revenues reported at the end of May are continuing to head in the right direction.”
Senate minority leader Bruce Tarr gave a speech on the Senate floor praising the bipartisan cooperation of the chamber. In the hall after the vote, he said the budget made “significant steps” toward improving government oversight and controlling spending but will likely have to do more to address the shortfall.
“This is about trying to find ways to slow the rate of growth in state spending so that we match the revenue that we can reasonably expect to get,” Tarr said.
As the budget debate neared an end Thursday night, Eileen P. McAnneny, president of the Massachusetts Taxpayers Foundation, noted how much the disappointing revenue collections influenced budget crafting.
“The more important questions is what adjustments, if any, will budget writers make in conference committee to deal with the anticipated revenue shortfalls,” said McAnneny, who leads the state budget watchdog group.
As they finalized the spending plan this week, senators whizzed through hundreds of amendments, many of which earmarked small pots of money for pet projects in their districts.
The Senate added $50.67 million in spending to the budget during the three days of floor debate, including at least $24.7 million for earmarks, according to the Massachusetts Taxpayers Foundation.
Amendments they passed include money for the Dr. Seuss museum in Springfield, downtown revitalization in Framingham, the Cranberry Health Research Center at UMass Dartmouth, and an expansion to the Brockton senior center.
The spending plan includes more for the University of Massachusetts system than the House and governor’s budgets and also funnels more money to services for terminally ill children and their families.Material from the State House News Service was used in this report. Laura Krantz can be reached at firstname.lastname@example.org. Follow her on Twitter @laurakrantz.