House leaders are weighing the prospects of packing vetoed spending back into the state budget when they return to Beacon Hill next week, but the ongoing slump in state tax collections that resumed in August is not making for easy decisions.
House Ways and Means Committee chairman Jeffrey Sanchez said he and his office are still reviewing revenue reports for July and August, but he expects the House to take up at least some budget veto overrides when it returns to formal sessions on Wednesday.
“We’re working with the conference report and reviewing the things we could be taking up, but we are going to take some things up,” Sanchez said.
Governor Charlie Baker signed a $39.4 billion fiscal 2018 budget in July and vetoed nine of the budget’s outside sections and $320.3 million across 169 line items, including $202 million related to the MassHealth changes he proposed in June. The net impact of the vetoes, after accounting for federal revenues, is $193 million, according to a Massachusetts Taxpayers Foundation analysis.
Before breaking for the August recess, legislators said they planned to monitor summer tax collections before deciding whether to override any of Baker’s $320 million in budget vetoes. Formal sessions are expected to occur over the next ten weeks.
The revenue reports, though, have not revealed a glut of unexpected revenue to support spending that would be added back into the budget through overrides. The Department of Revenue this week reported collecting $1.712 billion in taxes in August, which was $16 million, or 0.9 percent, below the monthly benchmark. Two months into fiscal year 2018, tax collections are up 1.9 percent but $11 million below the year-to-date benchmark, the department said.
“Total revenues are slightly below actual collections from the same period last year, and are also below the monthly benchmark,” Revenue Commissioner Christopher Harding said in a statement. “The small shortfall in August collections reflects mostly lower than expected income withholding payments, partially offset by slightly better than expected performance in regular sales tax and estate tax.”
DOR cautioned that July and August, the first two months of the fiscal year, are not significant months for collections, and that “it is not advisable at this time to use year-to-date collections to formulate trends or patterns for the full fiscal year.”
Sanchez said he’s been reviewing the revenue reports, and he characterized them as “at or around benchmark.” He also said that representatives have been contacting his office throughout the August recess to keep their budget priorities atop the chairman’s list.
“The members have been talking to us continually through the summer, and at the same time we’re reviewing the numbers,” he said. “They’re all concerned about all the vetoes, and given everything we did before we went out for summer recess, there is a sense we can move forward on some of the priorities they have established either for their local districts or bigger issues they’re concerned about.”
The chairman said his priorities when it comes to determining which of the governor’s vetoes the House might override include having “an understanding of the actual numbers of where we’re at with revenue,” and understanding how representatives feel about the budget as signed by the governor. Then, he said, Ways and Means will “take them all under consideration and we’ll see which ones end up making it through.”
If the Legislature is to override the governor’s vetoes, the process must begin in the House and must be completed during this calendar year. Overrides require a two-thirds vote in each branch. The Legislature cannot hold formal sessions this year later than Nov. 15, per its own rules.
Asked if the House might consider overriding some vetoes next week and waiting to see September or October revenues before preparing a second batch of overrides, Sanchez said, “I think everything’s possible.”
The revenue commissioner, in his statement, put more weight on September tax collections. “While most economic indicators remain generally positive about the Massachusetts economy, we will continue to monitor revenue collections closely, especially for September, which is traditionally one of the largest collection months,” Harding said.
The Democrat-controlled Legislature typically restores the vast amount of vetoed spending each year.
“If history is any guide, many of these vetoes will be overridden in the months ahead, as since FY 2012 almost 90 percent of all spending vetoes have been overridden by the Legislature,” the Massachusetts Taxpayers Foundation wrote in a summary of the governor’s vetoes. “The more spending overrides, however, the greater the midyear budget cuts.”