House spending plan prioritizes investments, ignores tax relief

HOUSE LEADERS ON Wednesday laid out a budget proposal that would spend significantly more than Gov. Charlie Baker proposed, swapping out Baker’s tax cut plan in favor of more investments in early education, housing, services for people with disabilities, and criminal justice reform.

In a major policy shift, the House budget would require jails and prisons to allow inmates free phone calls. It would also continue for another year providing free school meals to all students.

Asked why the House chose greater investment in services rather than tax breaks, Speaker Ron Mariano said Baker’s tax cuts “weren’t necessary at the time,” though he did not close the door on passing tax reform in the future.

Baker had proposed tax breaks for seniors, renters, low-income taxpayers, and parents of dependent children, as well as adjustments to the estate tax and short-term capital gains tax.

House Ways and Means Chair Aaron Michlewitz said lawmakers’ priorities are investing in the middle class and helping sectors of the economy that are still struggling, while making sure that the economy is stable and balanced, should revenues later decline. “While the economy is doing relatively well from a revenue standpoint, there are still sectors of the economy that are struggling,” Michlewitz said. “We feel the opportunity we had in front of us was a chance to invest into those sectors and try to stabilize those sectors.”

Michlewitz also cautioned that high inflation will lead to rising costs for state agencies. Inflation “definitely takes a chunk out of what we’re trying to accomplish,” he said.

The House Ways and Means budget would spend $49.63 billion, which is an increase of 4.2 percent over the current fiscal year, and 2.9 percent higher than the $48.23 billion budget Baker proposed in January.

A portion of the increase compared to Baker’s budget – $595 million – is due to a change in federal policy that means the state cannot redetermine people’s eligibility for MassHealth until July 2022, rather than in April. But the state’s actual spending will decrease because the federal government will pay the additional costs.

One of the biggest areas of investment was one Mariano announced Monday, which is an increase in the money available for early education programs and particularly for staff salaries. Mariano reiterated, at a budget briefing with reporters on Wednesday, that he made early education a priority because a lack of childcare is one of the major reasons people are not returning to work. “These programs in the early childhood and daycare support systems are the underpinning of our middle and lower class workforce,” Mariano said. “No one wants to go to work if half your money is going to go to daycare.”

The budget also includes other major initiatives, both in spending and policy.

For the past two years during the pandemic, the federal government paid for universal free school meals for all children, regardless of income. The federal government is phasing that out, but the House leaders want to spend $110 million to extend universal free school meals through next year. Overall school funding in the House budget is similar to what the governor proposed, fully funding the second of the now six-year implementation cycle of the Student Opportunity Act, which overhauled the education funding formula.

Like Baker’s budget, the House budget would eliminate probation and parole fees. It would also require the Department of Correction, Department of Youth Services, and county sheriffs to provide free phone calls to people who are confined. Currently, incarcerated people and their families are paying $14.4 million annually for phone calls. Prisoners’ rights advocates have long complained about the exorbitant cost of prison phone calls. A case is pending before the Supreme Judicial Court that could limit the commissions sheriffs can collect from calls. The House bill would create a $20 million state fund to reimburse the sheriffs and state prisons for the cost of calls, while requiring the agencies to maximize their purchasing power and consolidate contracts to limit their costs.

If the policy becomes law, Massachusetts would become the second state in the nation, after Connecticut, to make prison phone calls free.

The bill also adds additional money compared to the governor’s budget for reentry programs, including a new $2 million pilot program to provide rent subsidies to prisoners returning to the community and the creation of a new $2.2 million Employment Services Division in the Probation Department.

On education and job training, the bill would add $25.5 million more for higher education scholarship money, compared to this year’s budget. It would increase the governor’s proposed spending on a range of job training programs, including adult education, at-risk youth summer jobs, career technical institutes, career centers, and other workforce supports. It would also create new loan forgiveness programs for mental health workers, teachers of color, and homeless shelter workers.

The bill would increase Baker’s budget by $73.6 million in a variety of programs helping people with disabilities.

On health care, many people who got MassHealth coverage during the pandemic are expected to lose it because they are now earning more income so are ineligible. The House proposal would create a pilot program to let people enroll in state-subsidized health insurance through the Health Connector if they earn up to 500 percent of the federal poverty level ($115,150 for a family of three), up from 300 percent ($69,09 for a family of three) today. This would cost an estimated $50 million to cover people until May 31, 2025.

A number of pandemic-era housing assistance programs are also winding down, leaving advocates worried that there will be a spate of evictions if people cannot pay back rent that accumulated during months without income. The House budget would spend $150 million on a rental voucher program, $20 million more than what Baker proposed, and $140 million for RAFT, the state’s rental assistance program for low-income families. Thr $140 million is $60 million more than Baker proposed.

The state has benefited from a massive influx of federal COVID recovery money along with higher-than-expected tax revenue collections. As a result, the rainy day fund is expected to reach an unprecedented $6.55 billion by fiscal 2023. Mariano said having a buffer against an unexpected economic downturn is vital, especially given the war in Ukraine and the disruption in global oil production. “If I was an economic prognosticator, I’d think we were in for some tough times,” Mariano said. “Obviously we wanted to strengthen our ability to pivot if revenues do take a downward plunge.”

The House will debate the budget the week of April 25. It will then go to the Senate.