Budget stalemate ends, plan ups spending

ABOUT THREE WEEKS into the fiscal year, House and Senate budget negotiators have produced a compromise budget bill that takes some steps toward reducing pharmaceutical costs for Medicaid, nixes proposed taxes on e-cigarettes and opioid medication, and finds ways to spend or store away more than a half billion dollars in revenue above earlier expectations.

As lawmakers assembled the spending plan for fiscal 2020 this spring and summer, it became increasingly clear that revenues for fiscal 2019 were far outpacing expectations, and the final $43.1 billion conference committee report reflects a more optimistic view about state finances than lawmakers held several months ago.

The annual spending plan is based on an expectation that the state will take in an additional $594 million in tax revenue above the amount that that state budget-writers had agreed to over the winter. Of that, $317 million would be available for budgetary spending, according to the House Committee on Ways and Means.

On several different line items where the House and Senate disagreed on whether to provide any funding at all, the conference committee – a team of three senators and three state reps – chose to include the full funding amount.

The report filed sometime over the weekend provides $1.5 million for civics education, $1.1 million for sewer rate relief funding, and $5 million to reduce the harm from opioids, including carrying out the recommendations of a commission that controversially recommended trying out supervised drug use sites as a way to reduce overdose deaths and the spread of disease.

The conference committee also adopted the Senate’s higher recommendation for nearly $5.18 billion in Chapter 70 public school aid, an increase of $269 million from last year.

One line-item included in the final budget that doesn’t appear in the earlier budgets passed by either the House and Senate would create a $90 million reserve “to fund necessary costs” in fiscal 2020. The state’s stabilization fund, which can be drawn down during periods of economic distress, would receive $476 million, under the plan, rising to a total of $3.3 billion – or more than 7 percent of the fiscal 2020 annual budget.

On the issue of pharmaceutical cost controls, which appears to have been a sticking point in the weeks-overdue budget, the conference committee adopted a plan similar to that passed by the House, according to a Ways and Means aide. Both the House and Senate had sought to create a process to bring down the cost of prescription drugs for MassHealth, the state’s Medicaid program. The Senate plan, following the lead of the governor, included some stricter transparency requirements, which were vociferously opposed by the pharmaceutical lobby, which favored the House plan.

On Sunday night, after this story was first posted, Massachusetts Biotechnology Council President Robert Coughlin said, “This policy is the most severe Medicaid drug pricing reform in the country and is not a win for the life sciences industry. However, we thank and credit the House and Senate negotiators for carefully considering the real-world impact and omitting the most radical language proposed by the Baker Administration.”

The conference report includes no new taxes, and does not include a freeze on tuition or fees at the University of Massachusetts, as the Senate had proposed.

More about the budget will likely become clear before after it is voted on by lawmakers. The House and Senate both have sessions scheduled for Monday. Once the conference report is endorsed and enacted by the Legislature it will go to Gov. Charlie Baker, who will have 10 days to decide which parts to sign into law, which items to veto, and which provisions to send back with proposed amendments.