Baker releases FY22 budget with drop in spending, no new taxes

Bill counts on money from sports betting, rainy day fund

GOV. CHARLIE BAKER on Wednesday released a $45.6 billion state budget proposal for fiscal 2022, a 0.7 percent drop in spending compared to the current year.

It is highly unusual for state spending to decrease from one year to another, but the shift is primarily due to the fact that MassHealth caseloads are not increasing as fast as expected during the pandemic, so MassHealth spending is projected to be $600 million lower next year than this year.

Baker’s budget does not include any broad-based new taxes, nor does it make any major changes to social safety benefit programs.

“We don’t believe raising taxes on residents of the Commonwealth, especially in the midst of all the things that are going on, is the right thing to do,” Baker said.

It does include a reliance on some revenue sources that remain uncertain. Baker is reintroducing a $5 million proposal to tax opioid manufacturers, which lawmakers declined to pass previously.

Baker’s budget counts on getting $35 million from sports betting – something lawmakers have pledged to consider this year. The governor on Wednesday is reintroducing his proposal to legalize sports betting on professional, though not college, sports. While the House has voted in favor of sports betting, the Senate has not yet done so, though senators have said they will consider it.

“I do think as this thing is starting to mature, it just makes sense to give our people the same chance to play as people have in other states,” Baker said.

The governor also hopes to increase Lottery sales by letting the Lottery accept debit card – though not credit card – transactions, which is projected to raise another $35 million.

The budget does not include increased fees on Uber and Lyft rides, which is something Baker has proposed in the past. Baker said he now believes there needs to be a larger study about what transportation will look like post-pandemic before new fees are imposed.

The budget includes the first year of funding for the Student Opportunity Act. The overhaul of the education funding formula has a seven-year phase in period, and the governor is proposing adding $198 million to the Chapter 70 formula, which represents one-seventh of the cost of phasing in all of the law’s changes: more money for districts with high concentrations of poverty, more money for English language learners, and more realistic costs for special education services and employee health benefits. Overall, Baker would increase education spending by $246 million compared to this year due to the Student Opportunity Act, a figure that also includes funding for special education and charter school tuition reimbursements. Total school funding would be around $5.5 billion.

The increase in Chapter 70 money is far lower than the $303.8 million in new state education aid that Baker wanted to provide to fully fund the formula’s first year in January 2021. The reason, according to the Executive Office of Administration and Finance, is that the number of students attending public schools dropped by 37,000 this year. The funding formula is based on student enrollment, so a drop in enrollment means less funding.

Administration officials note that schools have also received $1.3 billion in federal funding since the start of the pandemic through an emergency coronavirus relief fund.

The budget counts on using $1.6 billion from the state’s rainy day fund, though the withdrawal could be lower if the state gets more money from a new federal stimulus bill or if tax revenues come in higher than expected.

The budget would delay – again – the implementation of a state tax deduction for charitable giving, which was supposed to go into effect this year. Baker wants to delay implementation until the state is no longer relying on the rainy day fund to balance its budget.

There are some policy changes. Baker is proposing a new tax credit for employers who hire and retain people with disabilities.  He is attempting to revive a proposal, which lawmakers previously rejected, to require large businesses to remit sales taxes daily by 2024. He also wants to revive a proposal to let MassHealth directly negotiate rebates for more drugs.

Many line items are funded at similar rates to last year, with some targeted increases, including several focused on recovery from COVID-19.

After a year of crises, the budget doubles the budget of the Massachusetts Emergency Management Agency to $4.1 million. According to Lt. Gov. Karyn Polito, this will let MEMA hire more staff, improve training and planning, and purchase permanent warehouse space to stockpile resources like personal protective equipment.

There is a $20 million increase for the Department of Children and Families for a new network of residential group homes – treatment programs, emergency placements, medically complex care homes, homes for young parents, and others. There is a $18.6 million expenditure to create a new 75-bed facility for men recovering from addiction. There is $84 million for MassHealth to redesign behavioral health services and create a centralized place patients can call to access mental health or addiction treatment. Funding for substance abuse services would increase by $22.1 million, or 7 percent.

With evictions expected to be a major problem as people remain unemployed, the Massachusetts Rental Voucher Program, which provides rental assistance, would see a 4 percent budget increase, to $135 million. Emergency family shelters would get a $15 million, or 8 percent, boost.

Meet the Author

Shira Schoenberg

Reporter, CommonWealth

About Shira Schoenberg

Shira Schoenberg is a reporter at CommonWealth magazine. Shira previously worked for more than seven years at the Springfield Republican/MassLive.com where she covered state politics and elections, covering topics as diverse as the launch of the legal marijuana industry, problems with the state's foster care system and the elections of U.S. Sen. Elizabeth Warren and Gov. Charlie Baker. Shira won the Massachusetts Bar Association's 2018 award for Excellence in Legal Journalism and has had several stories win awards from the New England Newspaper and Press Association. Shira covered the 2012 New Hampshire presidential primary for the Boston Globe. Before that, she worked for the Concord (N.H.) Monitor, where she wrote about state government, City Hall and Barack Obama's 2008 New Hampshire primary campaign. Shira holds a master's degree from Columbia University's Graduate School of Journalism.

About Shira Schoenberg

Shira Schoenberg is a reporter at CommonWealth magazine. Shira previously worked for more than seven years at the Springfield Republican/MassLive.com where she covered state politics and elections, covering topics as diverse as the launch of the legal marijuana industry, problems with the state's foster care system and the elections of U.S. Sen. Elizabeth Warren and Gov. Charlie Baker. Shira won the Massachusetts Bar Association's 2018 award for Excellence in Legal Journalism and has had several stories win awards from the New England Newspaper and Press Association. Shira covered the 2012 New Hampshire presidential primary for the Boston Globe. Before that, she worked for the Concord (N.H.) Monitor, where she wrote about state government, City Hall and Barack Obama's 2008 New Hampshire primary campaign. Shira holds a master's degree from Columbia University's Graduate School of Journalism.

The MBTA would get $1.36 billion. That includes the required transfer from the state sales tax, the same $127 million in operating assistance it got this year, and an additional $60 million for capital investments. The MBTA has struggled with declining revenues due to a massive drop in ridership during the pandemic. According to administration officials, the MBTA is also expected to get between $250 and $300 million in federal dollars.

The governor’s proposal now goes to the House, which will develop its own version, then the Senate. The next fiscal year starts July 1, 2021.