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Massachusetts state budget and finances

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Massachusetts budget and finances
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General information
Budget calendar:
Annual
Fiscal year:
2015
State credit rating:
AA+
Current governor:
Charles D. Baker
Financial figures
Total spending (state and federal funds):
$56.9 billion (estimated for 2014)
Per capita spending:
$8,433.44 (estimated for 2014)
Total state tax collections:
$23.9 billion (2013)
Per capita tax collections:
$3,562.60 (2013)
State debt:
$129.6 billion (as of 2014)
Per capita state debt:
$19,493 (as of 2014)
State budgets and finances
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Total state expendituresState debtTax policy in Massachusetts
Note: This page utilizes information from a variety of sources. As such, the currency of the information varies somewhat. The information presented on this page reflects the most recent data available as of February 2015.
Between fiscal years 2013 and 2014, total government spending in Massachusetts increased by approximately $1.1 billion, from $55.8 billion in fiscal year 2013 to an estimated $56.9 billion in 2014. This represents a 2 percent increase. The cumulative rate of inflation during the same period was 1.58 percent, calculated using the Consumer Price Indices for January 2013 and January 2014. As of 2014, financial services firm Standard and Poor's had assigned Massachusetts a credit rating of AA+.[1][2][3]
Total state debt in Massachusetts amounted to $129.6 billion in 2014. This came to $19,493 per capita, the 12th highest figure in the nation.

Spending

Definitions

The information below comes from the National Association of State Budget Officers (NASBO). These spending figures are broken into three broad categories in order to facilitate comparison between the states.[3]

  • State funds: State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."
  • Federal funds: Federal funds are "funds received directly from the federal government."
  • Total spending: Total spending is calculated by adding together the totals for state and federal funds.

These figures exclude spending from the sale of bonds.

2014 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2014 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.[3]

Estimated per capita spending in Massachusetts in fiscal year 2014 was $8,433, a higher figure than in any neighboring state.

Total estimated state spending, FY 2014 ($ in millions)
State State funds Federal funds Total spending Population Per capita spending
Massachusetts $41,752 $15,135 $56,887 6,745,408 $8,433.44
Connecticut $20,938 $5,501 $26,439 3,596,677 $7,350.95
Maine $5,330 $2,696 $8,026 1,330,089 $6,034.18
New Hampshire $3,375 $1,703 $5,078 1,326,813 $3,827.22
Rhode Island $5,259 $2,543 $7,802 1,055,173 $7,394.05
Per capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census estimates.[4]
Source: National Association of State Budget Officers

Spending by function

See also: State spending by function as a percent of total expenditures
Breakdown of spending by function in FY 2013
Source: National Association of State Budget Officers

State spending in Massachusetts can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2013 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percentages, indicating the share of the total budget spent per category.[3]

In Massachusetts in fiscal year 2013, Medicaid accounted for 18.7 percent of total state spending, a smaller share than in any neighboring state.

State spending by function as a percent of total expenditures, FY 2013
State K-12 education Higher education Public assistance Medicaid Corrections Trans-
portation
Other
Massachusetts 11.2% 10.1% 2.7% 18.7% 2.3% 6.6% 48.5%
Connecticut 14.1% 10.6% 1.4% 21.8% 2.3% 9.7% 40.2%
Maine 16.9% 3.6% 2.3% 32.7% 1.8% 8.2% 34.6%
New Hampshire 23.4% 2.2% 1.7% 25.6% 2.% 10.% 35.%
Rhode Island 14.9% 13.% 1.4% 24.8% 2.6% 6.3% 37.%
Source: National Association of State Budget Officers
Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Spending trends

Between 2009 and 2012, the share of the Massachusetts state budget spent on K-12 education decreased from 13 percent to 11.2 percent. See the table below for further details (figures are rendered as percentages, indicating the share of the total budget spent per category).[3][5][6][7][8]

Spending by function from 2009 to 2013 (as percentages)
Year K-12 education Higher education Public assistance Medicaid Corrections Transportation Other
2013 11.2% 10.1% 2.7% 18.7% 2.3% 6.6% 48.5%
2012 10.7% 9.3% 2.5% 20.7% 2.1% 6.2% 48.6%
2011 11.6% 9.9% 2.4% 19.2% 2.3% 6.2% 48.3%
2010 12.9% 7.9% 2.5% 18.8% 2.5% 6.9% 48.6%
2009 13.0% 9.3% 3.1% 17.7% 2.6% 5.4% 49.0%
Source: National Association of State Budget Officers
Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Revenues

2013 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2013 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "population" and "per capita revenue" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "population" and "per capita revenue" have not been abbreviated).[9]

In Massachusetts in 2013, total state tax collections amounted to $23.9 billion. Per capita tax collections were $3,563.

State tax collections by source ($ in thousands)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes Total 2013 population Per capita collections
Massachusetts $4,795 $7,455,326 $945,922 $12,876,192 $1,888,449 $730,363 $23,901,047 6,708,874 $3,562.6
Connecticut N/A $6,746,968 $453,112 $7,811,949 $572,628 $551,859 $16,136,516 3,599,341 $4,483.19
Maine $38,636 $1,779,873 $260,918 $1,531,504 $171,987 $101,532 $3,884,450 1,328,702 $2,923.49
New Hampshire $400,369 $945,290 $272,852 $99,027 $553,197 $99,368 $2,370,103 1,322,616 $1,791.98
Rhode Island $2,331 $1,516,423 $138,518 $1,088,992 $144,310 $49,859 $2,940,433 1,053,354 $2,791.5
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
Massachusetts tax collections by source in 2013
Source: Tax Policy Center

The table below lists 2013 tax collections by source as percentages of total collections. In Massachusetts, sales taxes and gross receipts accounted for 31.2 percent of total state tax collections, a smaller share than in any neighboring state..[9]

State tax collections by source (as percentages)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes
Massachusetts .02% 31.19% 3.96% 53.87% 7.9% 3.06%
Connecticut N/A 41.81% 2.81% 48.41% 3.55% 3.42%
Maine .99% 45.82% 6.72% 39.43% 4.43% 2.61%
New Hampshire 16.89% 39.88% 11.51% 4.18% 23.34% 4.19%
Rhode Island .08% 51.57% 4.71% 37.04% 4.91% 1.7%
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014

Current fiscal year budget

See also: Historic Massachusetts budget and finance information

Fiscal year 2015

DocumentIcon.jpg See budget bill: HB 4001

Governor Deval Patrick announced his fiscal year 2015 budget proposal on January 22, 2014. Under the governor's proposal, total state spending for fiscal year 2015 would have equaled approximately $36.4 billion.[10]

On July 11, 2014, Patrick signed into law the fiscal year 2015 budget. The enacted budget totaled $36.5 billion. The budget included several education initiatives, including an additional $100 million for local education, an additional $24 million for early education and funding to allow state colleges to freeze tuition.[10]

State debt

See also: State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Massachusetts had a state debt of approximately $129.6 billion. Its state debt per capita was $19,493. The report revealed that state governments faced a combined $5.1 trillion in debt. The obligation amounted to $16,178 per capita in the nation.[11]

Total state debt, 2014
State Total state debt State debt per capita Per capita debt ranking
Massachusetts $129,550,263,000 $19,493 12
Connecticut $112,372,072,000 $31,298 3
Maine $16,717,250,000 $12,577 35
New Hampshire $18,425,567,000 $13,951 27
Rhode Island $18,863,153,000 $17,960 16
Sources: State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014

Public pensions

See also: Massachusetts public pensions and Massachusetts public employee salaries

A 2012 report from the Pew Center on the States noted that the commonwealth's pension system was funded at 71 percent at the close of fiscal year 2010, below the 80 precent funding level experts recommend. Consequently, Pew designated the state's pension system as cause for "serious concern."[12]

The funding ratio for the state's pension system decreased from 77.00 percent in fiscal year 2007 to 66.72 percent in fiscal year 2012, a decrease of 10.28 percentage points, or 13.4 percent. Likewise, unfunded liabilities increased from over $11.7 billion in fiscal year 2007 to more than $21 billion in fiscal year 2012.[13]

Credit ratings

See also: State credit ratings

Credit rating agencies, such as Standard and Poor's, assign grades to states that take into account a state's ability to pay debts and the general health of the state's economy. Generally speaking, a higher credit rating indicates lower interest costs on the general obligation bonds states sometimes sell to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). This in turn results in lower interest costs, thereby lowering the cost to taxpayers.[14][15]

The table below lists the Standard and Poor's credit ratings for Massachusetts and surrounding states from 2004 to 2014. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest.[16]

State credit ratings, 2004 to 2014
State 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Massachusetts AA+ AA+ AA+ AA AA AA AA AA AA AA AA-
Connecticut AA AA AA AA AA AA AA AA AA AA AA
Maine AA AA AA AA AA AA AA AA AA- AA- AA
New Hampshire AA AA AA AA AA AA AA AA AA AA AA
Rhode Island AA AA AA AA AA AA AA AA AA AA AA-
Source: Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014

Federal aid to state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[17]

The table below notes what share of Massachusetts’s general revenues came from the federal government in 2012. That year, Massachusetts received approximately $12.9 billion in federal aid, 28.8 percent of the state's total general revenues. Figures from surrounding states are provided for additional context.[17]

Federal aid to state budgets, 2012
State Total federal aid ($ in thousands) Federal aid as a % of general revenue Ranking
Massachusetts $12,920,153 28.8% 36
Connecticut $5,781,844 23.59% 47
Maine $2,883,526 36.15% 12
New Hampshire $1,693,289 29.02% 34
Rhode Island $2,310,656 33.76% 23
Source: United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014

Stimulus

As of 2013, Massachusetts had received over $7 billion in federal stimulus funding.[18]

Budget process

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:[19][20]

  1. Budget instruction guidelines are sent to state agencies in July of the year preceding the start of the new fiscal year.
  2. State agencies submit their budget requests in September.
  3. Agency hearings are held in August and September.
  4. The governor submits his or her proposed budget to the state legislature on the fourth Wednesday in January.
  5. The legislature typically adopts a budget in June. A simple majority is required to pass a budget. The fiscal year begins July 1.

Massachusetts is one of 44 states in which the governor has line item veto authority.[20]

The governor is legally required to submit a balanced budget proposal. Likewise, the legislature is legally required to pass a balanced budget.[20]

Agencies, offices and committees

The following standing committees in the Massachusetts State Legislature deal with budget and finance matters:[21][22][23]

  1. Revenue Joint Committee, Massachusetts State Legislature
  2. Ways and Means Committee, Massachusetts House of Representatives
  3. Ways and Means Committee, Massachusetts State Senate

Studies and reports

U.S. PIRG "Following the Money" report

See also: "Following the Money" report, 2014

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[24] According to the report, Massachusetts received a grade of A- and a numerical score of 90.5, indicating that Massachusetts was "leading" in terms of transparency regarding state spending.[24]

Budget and finance ballot measures

See also: Spending and finance on the ballot and List of Massachusetts ballot measures

Ballotpedia has tracked 8 ballot measures relating to state and local budget and financial matters in Massachusetts.

  1. Massachusetts Biennial Legislative Sessions and Budgets, Question 1 (1938)
  2. Massachusetts Restoration of Annual Legislative Sessions and Budgets, Question 3 (1944)
  3. Massachusetts Restriction on State Allocating Certain Costs to Cities, Question 5 (1980)
  4. Massachusetts Revenues for Highway Purposes, Question 2 (1948)
  5. Massachusetts State Budget Deadline, Question 2 (1978)
  6. Massachusetts State Highway Revenues Question (1974)
  7. Massachusetts State Student Loans, Question 4 (1972)
  8. Massachusetts Temporary Tax for Local Aid Fund, Question 6 (1966)

Recent news

This section displays the most recent stories in a Google news search for the term "Massachusetts + budget"

All stories may not be relevant to this page due to the nature of the search engine.

Massachusetts state budget news feed

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See also

External links

Additional reading

References

  1. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  2. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 National Association of State Budget Officers, "State Expenditure Report: 2012-2014," accessed February 18, 2015
  4. United States Census Bureau, "State and County QuickFacts," accessed February 23, 2014
  5. National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  6. National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  7. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  8. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  9. 9.0 9.1 Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
  11. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  12. Pew Center on the States, "Widening Gap Update: Massachusetts," June 18, 2012
  13. Commonwealth of Massachusetts, "Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012," accessed November 13, 2013
  14. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  15. Bankrate, "The 6 states with the worst credit ratings," September 27, 2012
  16. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014
  17. 17.0 17.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  18. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  19. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  20. 20.0 20.1 20.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  21. The Commonwealth of Massachusetts, "Joint Committees," accessed March 19, 2015
  22. The Commonwealth of Massachusetts, "Senate Committees," accessed March 19, 2015
  23. The Commonwealth of Massachusetts, "House Committees," accessed March 19, 2015
  24. 24.0 24.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014