Massachusetts state budget (2012-2013)

Note: This article was last updated in 2013. Click here for more recent information on state budgets and finances.

This page summarizes key events in the fiscal year 2013 budget process in Massachusetts.

Budget shortfall

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 one percent. 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 fiscal year 2013 budget and sent it to the governor on June 28, 2012. Although fiscal year 2013 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 four percent over the fiscal year 2012, but that increase was less than the assumed rate of growth of 4.5 percent.

Education

Education spending in the fiscal year 2013 state budget totaled $6.95 billion, an increase of $302 million, and accounted for approximately 20 percent 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.

Local aid

The budget provided $5.32 billion in state funds, an increase of 3.7 percent over fiscal year 2012.

Healthcare

Under the budget as passed, health care spending for fiscal year 2013 was $15.14 billion and accounted for 43 percent 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)

Category	Amount spent
Healthcare	$15.14 billion
Education	$6.95 billion
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 fiscal year 2013, which began July 1, 2012, were likely to grow by $560 million to $683 million, 3.2 percent more than fiscal year 2012.

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 fiscal year 2012 by a state program related to busing and educating homeless school children,
• $10 million for community colleges,
• 5 percent 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, and
• $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.

A conference committee comprised of six members negotiated the differences before sending a compromise package to Governor Patrick prior to the start of the fiscal year on July 1, 2012.

The House approved its version of the 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 three percent 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 global payment system that rewards doctors for coordinating care.

Patrick also requested $101.5 million in the fiscal year 2013 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.

Revenue assumptions

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 fiscal year 2013. Brewer said that tax revenue growth for fiscal year 2013 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.