Massachusetts state budget
|Massachusetts state budget|
|Date signed:||July 8, 2012|
|GF expenses:||$30.9 billion|
|All funds expenses:||$32.2 billion|
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- 1 Proposed fiscal year 2014 state budget
- 2 Fiscal year 2013 state budget
- 3 Fiscal year 2012 state budget
- 4 Budget transparency
- 5 Budget background
- 6 Accounting principles
- 7 Stimulus
- 8 Public employees
- 9 See also
- 10 External links
- 11 Additional reading
- 12 References
The state operates on an annual budget cycle and is currently in FY2014. The state's fiscal year begins July 1.
As of 2012, Massachusetts had a total state debt of approximately $102,258,050,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans and the state budget gap. The 2012 total state debt was higher than the prior year's total of $97,940,986,000.
As of 2012, Massachusetts's total state debt per capita was $15,522.96.
Proposed fiscal year 2014 state budget
On January 25, 2013, Governor Patrick unveiled his $34.8 billion proposed FY2014 state budget.
The proposal represented a 6.9% increase over FY13. The proposal made no significant cuts and instead increased spending across state government. To fund the spending, the governor proposed to raise taxes by $1.9 billion and to withdraw $400 million from the state’s reserve fund. Funding increases included:
- $553 million for education, from early childhood programs through college, with elementary and secondary schools seeing at last $25 more per student;
- $269 million more for transportation; and
- $31 million in local aid for basic services.
The governor wanted to increase the income tax and cut the sales tax. The governor's tax changes would:
- Increase the income tax from 5.25% to 6.25%;
- Cut the sales tax from 6.25% to 4.5%;
- Double the personal income tax exemption;
- Eliminate 44 income tax deductions — for T passes, college scholarships and dependents under 12, among other items;
- Tie the gas tax to inflation, ensuring gradual increases; and
- Get rid of three corporate tax breaks.
Fiscal year 2013 state budget
In December 2012, just five months into the fiscal year, Governor Patrick announced that the state faced a $540 million shortfall. Revenue for those first five months was $235 million less than expected. The governor said he would use his executive powers to make $225 million in cuts to the executive branch. In addition, he would use $200 million from the state’s Rainy Day Fund and file bills to reduce the budgets of the judiciary and constitutional officers. The Rainy Day Fund was expected to have about $1.2 billion left at the end of the budget year on June 30.
Additionally, local aid was to be cut by 1%. That amounted to $9 million less in funds that paid salaries for teachers and firefighters, and local leaders vowed to fight the cuts in the legislature.
Budget as passed
The legislature passed a $32.5 billion FY2013 budget and sent it to the governor on June 28, 2012. Although FY2013 began on July 1, Governor Patrick signed the state budget into law on July 8, 2012, ten days after lawmakers sent it to him. Lawmakers approved a temporary spending plan to fund state government operations until the governor signed the budget.
The governor vetoed $32.1 million in spending in the budget and at the same time announced a sales tax holiday in August.
The budget represented an increase in spending of approximately 4% over FY2012's budget, but that increase was less than the assumed rate of growth of 4.5%.
Education spending in the FY2013 state budget totaled $6.95 billion, an increase of $302 million, and accounted for approximately 20% of the total spending.
The budget funded a new program for $2.25 million in grants to community colleges, partly to establish worker training programs specifically requested by employers.
The budget provided $5.32 billion in state funds, an increase of 3.7% over FY2012.
Under the budget as passed, health care spending for FY2013 was $15.14 billion and accounted for 43% of the overall state budget, according to a Massachusetts Budget and Policy Center analysis. One in five Massachusetts residents had their health care largely covered through the budget. The budget included a $546 million increase in spending on Medicaid and health care reform.
The budget assumed savings of about $700 million in health care costs through changes to payment and delivery models used by MassHealth, the state's version of Medicaid.
FY2013 spending by category in budget (prior to vetoes)
|Economic development, housing and transportation||$1.6 billion|
|Public safety (including courts and corrections)||$2.4 billion|
|Human services||$3.5 billion|
|Debt service||$2.42 billion|
|Public employee pensions||$1.55 billion|
|Local aid||$940 million|
|Constitutional officers (Governor, Lt. Gov., Sec. of St., Auditor, Attorney General, Treasurer)||$75.7 million|
|Environmental accounts (including state parks)||$178 million|
Projections made by the state Department of Revenue in December 2011 and used by lawmakers when drafting the budget were that tax collections for FY2013, which began July 1, 2012, were likely to grow by $560 million to $683 million, 3.2% more than FY2012.
Legislative proposed budget
The budget approved by the legislature contained no new taxes or fees. It did, however, rely on $516 million in one-time funds, including a $350 million withdrawal.
Highlights of spending in the budget included:
- A Rainy Day Fund of more than $1 billion,
- $898 million in local aid for cities and towns,
- $28.5 million in new funding for housing programs,
- $11.3 million in reimbursements to school systems that were affected in FY2012 by a state program related to busing and educating homeless school children.,
- $10 million for community colleges,
- 5% increases for all the state's district attorneys,
- $6.25 million to continue anti-gang programs,
- $3 million for front-tooth fillings for MassHealth clients,
- $750,000 for a new class of Environmental Police officers,
- $596,000 in funding for the first state police class in six years.
The passed budget also limited the use of welfare benefit cards by cracking down on what recipients could buy and where they could use the cards.
The Senate released its $32.275 billion proposed budget on May 16, 2012. It increased education funding by $180 million. The Senate proposed 694 amendments to the proposed budget, many of which would restore funding for programs that had been trimmed during the economic downturn. Senate leaders, however, warned that the state should not return to pre-recession spending levels.
The House approved its version of the FY2013 state budget with a vote of 150 to 4. The House budget included no new taxes or fees, but sought about $790 million in one-time revenues, including a $400 million withdrawal from the state's Rainy Day Fund. It took a very different approach from the governor's proposal to raise new revenue by increasing taxes on cigarettes and soda, among other items. The budget included an amendment targeting abuse of Electronic Benefit Transfer (EBT) cards, which work much like debit cards for people who receive welfare assistance from the state.
Governor's proposed budget
Governor Patrick proposed a $32.3 billion budget in January 2012 that would increase total state spending by just under 3% while cutting about 400 jobs in the executive branch.
The governor discussed part of his proposed budget on January 19, 2012. His plan included raising $260 million in new revenues, including generating $73 million by raising the cigarette tax $0.50 and doubling the taxes paid on other tobacco products, such as cigars and smokeless tobacco. He also proposed lifting the sales tax exemption for candy and soda, which was expected to generate $61.5 million. The governor also planned to add $5 million by selling advertising on some state government websites and about $22 million by using technology enhancements to improve tax collection.
The proposed budget would have given an additional $10 million to community colleges.
The governor also proposed changing the medical payment system, renewing an unsuccessful plea he made in 2011 to replace the fee-for-service model with a so-called global payment system that rewards doctors for coordinating care.
Patrick also requested $101.5 million in the FY2013 budget to pay debt service on special bonds issued for the Big Dig, although officials estimated the state's total annual debt burden related to the project at about $417 million.
State Senator Stephen Brewer, chair of the Senate Ways and Means Committee, said in December 2011 that the state faced a $1 billion shortfall in FY2013. Senator Brewer said that tax revenue growth for FY2013 was unlikely to be enough to compensate for cuts in federal grants and reimbursements or growth in items such as the state's $10.4 billion Medicaid program.
Fiscal year 2012 state budget
- See also: Archived Massachusetts state budgets
On October 5, 2011, the House of Representatives voted to approve a supplemental budget and on October 28, 2011, Governor Patrick signed the bill into law. The supplemental budget provided for a deposit of $350 million into the state's Rainy Day Fund, replenishing the reserve fund that had been tapped several times in recent years. It was $50 million more than what Patrick had proposed depositing into the reserves. Massachusetts is one of only four states in the country with a Rainy Day Fund in excess of $1 billion, with a balance of $1.4 billion as of 2011.
The supplemental budget also provided for $169 million in spending, including giving cities and towns $65 million in promised local aid. Additional spending included:
- Nearly $20 million in aid for a series of natural disasters
- $39 million on the MassWorks Infrastructure Program
- $9 million for collective bargaining agreements
- $10 million to allowing substance abusers to be committed by the courts to a treatment program for up to 90 days
- $12 million in new assistance and $8 million in retained revenue to the trial court system
- $3 million for adult basic education programs
- $850,000 for adult immunization and vaccines.
Governor Patrick signed the FY2012 $30.6 billion state budget into law on July 11, 2012, after the state operated under a stopgap budget for ten days. The legislature reached a $30.6 billion budget agreement on June 30, 2012 and voted to approve that plan on July 1.
The budget did not raise taxes and instead relied primarily on cuts to balance the state's $1.9 billion shortfall. Cuts included:
- A cut in direct benefits to poor people, which will reduce the clothing allowance given to children on welfare from $150 to $40
- A $4 million cut in the Department of Developmental Services, cutting services to 1,000 people
- $800 million from MassHealth, the state's Medicaid program, that required the poor and the elderly to pay more for prescription drugs and other medical services
- $70 million cut to higher education, which has prompted some public colleges and universities to raise tuition and fee rates.
- The budget only funded services for adult day care for half the year
The budget also included cuts to the judiciary branch, and Roderick L. Ireland, the chief justice of the Supreme Judicial Court, and Robert A. Mulligan, the chief justice for administration and management, said the cuts jeopardized the right of every person, guaranteed by the Massachusetts Constitution, to swift justice. The justices also asked the governor to refrain from appointing additional trial judges and magistrates because there would be insufficient staff to support them.
The budget saved cities and towns at least $100 million annually in health insurance costs.
The budget increased public school funding by $80 million, bringing funding to $3.99 billion, and offsetting $100 million in cuts from previous years. It also included grants of $2.5 million for higher education that were awarded on merit and just not number of students enrolled.
The governor's budget officials said that he hoped to achieve savings through stricter pension controls and limits on the rising cost of health care. Lawmakers were expected to confront rising Medicare costs in FY2012.
Unions and collective bargaining
Personnel costs, including salaries and benefits, account for 75% of local Massachusetts budgets. The House passed an amendment to the state budget bill on April 26, 2011, which divests policemen, firefighters, teachers and other municipal employees of their ability to collectively bargain for most health-care benefits. It was expected to save cities and towns an estimated $100 million in FY2012 alone. Democrats, including the Speaker of the House, spearheaded passage of the bill. The bill created a 30-day negotiating window between city and town leaders and unions to work out disagreements. If no agreement was reached, municipalities were allowed to impose changes in co-payments, deductibles and other aspects of health care plans.
Legislative proposed budgets
With both the House and Senate budgets complete, a conference committee worked to reconcile them and send them to the governor.
The Senate passed its $30.5 billion state budget on May 26, 2011. The Senate passed amendments adding $11 million in special education funding and $3 million for summer jobs for at-risk youth while rejecting proposed cuts in the state sales and income taxes. The plan dipped into the state's one-time savings accounts for $440 million to help close an estimated $1.9 billion spending gap without additional federal stimulus dollars.
The Massachusetts House approved a $30.4 billion budget for FY2012 on April 28, 2011, which was $94 million less than Patrick's proposal. The House's budget used $103 million that otherwise would be transferred into the Rainy Day Fund, in addition to the $200 million they proposed withdrawing from the fund. It also cut $800 million from MassHealth, the state's Medicaid program.
The House budget agreed with the governor's proposal to cut $65 million in local aid. The House plan included $337 million in revenue initiatives, such as postponing for one year a tax deduction for certain businesses.
Governor's proposed budget
Overall, the governor's proposed budget relied on cuts and savings to close $1.3 billion of the budget gap, and also relied on $360 million in temporary revenues, such as using $200 million from the state stabilization fund, and anticipated $244 million from modest tax reforms and other revenue initiatives.
Patrick's spending plan for the fiscal year starting July 1 withdrew $200 million from the Rainy Day Fund, leaving $569 million in cash reserves.  The proposed budget also reduced the state work force by as many as 900 jobs.
Reductions in Patrick's proposed budget included a $23 million cut to emergency homeless shelters, a $16 million cut to the Department of Mental Health hospital and a $45 million reduction in spending by using salaried lawyers instead of private attorneys to represent the state's indigent criminal defendants.
To raise revenue, Patrick proposed a surcharge of $2.50 to $2.75 per year on the state's 3.1 million private auto insurance policies to generate funds for training police as well as the expansion of the state's $0.05 bottle deposit law to containers of water, flavored water, coffee-based drinks, juices and sports drinks to generate $20 million per year. However, House Speaker Robert A. DeLeo said he opposed any new taxes or fees.
The Massachusetts Budget and Policy Center, which "provides independent research and analysis of state budget and tax policies," tracks actual spending in real and nominal terms using a "Budget Browser."
The state maintains the Massachusetts Transparency website.
|State database||Searchability||Grants||Contracts||Line item expenditures||Dept./agency budgets||Public employee salary|
- Vendor contracts are listed in the checkbook.
- Employee salaries are listed.
- All line item expenditures are not listed in the checkbook.
Multi-measure budget transparency profile
The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for Massachusetts, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.
In addition to the individual state profile, IGPA offers a 50-state comparison.
Massachusetts's fiscal year runs from July 1 to June 30 of the following year. According to the Massachusetts Constitution, the governor must propose a budget for the next fiscal year within three weeks after the legislature convenes, which translates into the fourth Wednesday of January.
Step 1 : Governor’s Budget
- The budget begins as a bill that the Governor submits in January (or February if at the start of a new term) to the House of Representatives.
Step 2 : House Ways & Means Budget
- The House Ways and Means Committee reviews this budget and then develops its own recommendation.
Step 3 : House Budget
- Once debated, amended and voted on by the full House, it becomes the House budget bill.
Step 4 : Senate Ways & Means Budget
- At this point, the House passes its bill to the Senate. The Senate Ways & Means Committee reviews that bill and develops its own recommendation.
Step 5 : Senate Budget
- Once debated, amended and voted on, it becomes the Senate's budget bill.
Step 6 : Conference Committee Budget
- House and Senate leadership then assign members to a joint "conference committee" to negotiate the differences between the House and Senate bills. Once that work is completed, the conference committee returns its bill to the House for a vote. If the House makes any changes to the bill, it must return the bill to the conference committee to be renegotiated. Once approved by the House, the budget passes to the Senate, which then votes its approval.
Step 7 : Vetoes
- From there, the Senate passes the bill to the Governor who has ten days to review and approve it, or make vetoes or reductions. The Governor may approve or veto the entire budget, or may veto or reduce certain line items or sections, but may not add anything.
Step 8 : Overrides
- The House and Senate may vote to override the Governor's vetoes. Overrides require a two-thirds majority in each chamber.
Step 9 : Final Budget
- The final budget is also known as the General Appropriations Act. The final budget consists of the Conference Committee version, minus any vetoes, plus any overrides.
The following table presents Massachusetts's spending history. The figures used are in millions of dollars:
|Fiscal year||Nominal government spending||Real government spending||Real change from prior year|
Historic General Appropriation Act (GAA) Budget Levels:
|FY 2010||$27.0 billion|
|FY 2009||$28.2 billion|
|FY 2008||$26.8 billion|
|FY 2007||$25.7 billion|
Joseph DeNucci has been the Auditor of the Commonwealth of Massachusetts since 1987. The Office of the Auditor of the Commonwealth publishes its audit reports online and is responsible for:
- Determining whether the Commonwealth's resources are properly safeguarded;
- Determining whether such resources are properly and prudently used;
- Evaluating internal controls to help insure integrity in financial management systems;
- Determines whether computer systems and technology environment meet control objectives regarding security, integrity, and availability;
- Evaluating management's economy and efficiency in it use of resources;
- Determining and evaluating a program's results, benefits, or accomplishments; and
- Ensuring that all audit results are fully disclosed to the public and the auditees.
The Institute for Truth in Accounting (IFTA) rates Massachusetts “timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – the annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Massachusetts' CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care. Massachusetts's CAFRs are published online by the Comptroller of the Commonwealth of Massachusetts.
As of 2013, Massachusetts has received over $7 billion in federal funding.
According to 2011 U.S. Census data, the state of Massachusetts employed a total of 114,104 people. Of those employees, 81,246 were full-time employees receiving net pay of $415,142,357 per month and 32,858 were part-time employees paid $46,329,996 per month. More than 46% of those employees, or 52,489 employees, were in education or higher education.
- State Budget Solutions, Massachusetts
- Budget Browser from the Massachusetts Budget and Policy Center
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Pioneer Institute for Public Policy Research
- Citizens for Limited Taxation
- Massachusetts Executive Office for Administration and Finance
- Fiscal Year 2009 Budget Summary
- Massachusetts state and local spending
- Massachusetts General Court
- Official Website of the Commonwealth of Massachusetts
- Office of the Comptroller
- Gov. Deval L. Patrick,"2010 State of the Commonwealth Address," January 21, 2010
- Governor's budget, Fiscal Year 2009
- Detailed Budget, FY 2009
- The Boston Globe "Patrick signs $32.5b state budget bill" July 8, 2012
- FY2013 Final Budget
- Boston.com "Mass. Gov. Patrick, aides study state budget plan" July 3, 2012
- National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting" April 2011
- State Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
- State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
- State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
- The Boston Globe "Patrick proposes $34.8b budget" Jan. 25, 2013
- Press Release by Gov. Patrick "Patrick-Murray Administration files Fiscal Year 2014 Budget" Jan. 23, 2013
- The Hartford Courant "States Taking Different Approaches On Taxes, With Malloy Offering Few Clues" Jan. 28, 2013
- The Boston Herald "Gov to cut $225M, blames ‘fiscal cliff’ deadlock" Dec. 4, 2012
- The Boston Globe "Mass. Governor Deval Patrick warns of revenue decline, plans cuts; decries ‘fiscal cliff’ uncertainty" Dec. 4, 2012
- Boston.com "Mass. lawmakers approve final state budget" June 29, 2012
- Reuters.com "Massachusetts governor signs $32.5 billion budget" July 8, 2012
- The Boston Herald "Healthcare, education consume 63 percent of planned state budget" July 5, 2012
- MassLive.com "Top legislator in Massachusetts says state government is facing $1 billion shortfall for next fiscal year" Dec. 12, 2011
- The South Coast Today "Legislature's budget includes increases for DAs, anti-gang programs" July 5, 2012
- MassLive.com "Massachusetts Senate leaders unveil $32.2 billion state budget with record amount of education aid, measures to increase oversight of community colleges" May 16, 2012
- CBSNews.com "Mass. Senate to weigh nearly 700 budget amendments" May 23, 2012
- CBSNews.com "House backs $32.3B Mass. budget; Senate is next" April 27, 2012
- The Boston Globe "Speaker: No new taxes in Mass. budget" Feb. 8, 2012
- WCVB "Budget Panel To Unveil State Spending Plan" April 8, 2012
- The Boston Globe "Mass. Gov. to seek hike in cigarette tax" Jan. 20, 2012
- Boston.com "Patrick seeks broad changes for community colleges" Jan. 22, 2012
- Boston.com "Patrick seeks broad changes for community colleges" Jan. 22, 2012
- Businessweek "Debt from Big Dig hampers Mass. transportation" April 8, 2012
- The Boston Globe "Mass. House boosts state reserves" Oct. 5, 2011
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- The Boston Globe "Mass. Gov. Patrick signs new state budget" July 11, 2011
- CNNMoney.com "It's D-day for state budgets" June 30, 2011
- The Boston Globe "Legislature approves $30.6 billion state budget" July 1, 2011
- The Boston Globe "Accord reached on state budget" July 1, 2011
- The Boston Globe "Top judges warn Patrick new state budget will lead to layoffs, courthouse closings" July 13, 2011
- The Boston Herald "Massachusetts hands out college grants" Sept. 6, 2011
- The Boston Globe "Patrick asks state to cut even more" Dec. 15, 2010
- The Boston Globe "Medicaid cost crisis looms for Bay State" Jan. 3, 2011
- The Wall Street Journal "Union Busting, Massachusetts Style" April 29, 2011
- The Boston Globe Mass. Senate OKs $30.5 billion state budget" May 27, 2011
- The Boston Globe "Mass. House approves $30.4B state budget proposal" April 28, 2011
- The Boston Globe "Mass. House releases $30.4B 2012 state budget plan" April 13, 2011
- Businessweek "Mass. House releases $30.4B 2012 state budget plan" April 13, 2011
- Massachusetts Budget and Policy Center "Budget Monitor: The Governor’s Fiscal Year 2012 Budget" Feb. 3, 2011
- ABC News "Gov. Patrick Unveils $30.5B Mass. Budget" Jan. 26, 2011
- The Republican "Patrick proposes new tax, fees" Feb. 4, 2011
- Massachusetts Budget Browser
- Massachusetts Budget and Policy Center
- Institute of Government and Public Affairs at the University of Illinois - Multi-measure Transparency Profile for Massachusetts
- IGPA 50-state Transparency Comparison
- The Official Web site of the Commonwealth of Massachusetts, retrieved October 26, 2009
- The Official Web site of the Commonwealth of Massachusetts, retrieved October 26, 2009
- Massachusetts Budget and Policy Center, Online Budget Database, results derived when searching for "Select All Items" between the years 2001 and 2008
- Massachusetts Office of Administration and Finance, "Historical Budget Summary," retrieved October 26, 2009
- Office of the Auditor of the Commonwealth, "Authority/Responsibility," retrieved October 26, 2009
- Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
- Recovery, "Stimulus Spending by State"
- Massachusetts Public Employment U.S. Census Data