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With Revenue Slowdown In Forecast, Baker To Release Plan For 'Much Tougher Budget Year'

Massachusetts Gov. Charlie Baker delivering a State of the Commonwealth address on Jan. 23, 2018.
Sam Doran
/
State House News Service
Massachusetts Gov. Charlie Baker delivering a State of the Commonwealth address on Jan. 23, 2018.

Massachusetts Governor Charlie Baker lifts the curtain on his budget plan this week. Some tough decisions are expected this time around, with a slowdown in the forecast for tax revenues and big spending on pensions and schools.

Baker delivers his State of the Commonwealth Address on Tuesday, and then releases his budget proposal a day later.

Matt Murphy of the State House News Service joins us to talk about the plan and other goings-on this week in state government.

Jill Kaufman, NEPR: Analysts are saying this budget cycle will differ significantly from the last two. Can you explain why that is?

Matt Murphy, State House News Service: Some groups, including the Mass. Taxpayers Foundation, are projecting a much tougher budget year in fiscal 2021, which starts in July.

[The foundation is] looking at perhaps a $900 million gap between the new revenues expected to come in and what it's going to cost to just maintain services, and cover some of the state's new expenses, like the brand new education funding reform law.

This is all predicated on the fact that economists are expecting the state's economy to slow down a bit.

The administration, along with the House and Senate leaders, agreed last week to a revenue estimate for these budgets of about 2.8% growth, which would give them a little under $1 billion in new revenue to spend. And a lot of that is already accounted for by things like the brand new education law, which means they're going to have to make choices elsewhere in the budget.

But I should caveat all of this and point out the fact that in the past, they've also picked conservative estimates thinking that perhaps the economy would slow down. And it just hasn't happened yet.

We've seen 6.7% growth in 2019. The state projected similar 2.7% in growth for FY20, but we're currently well above that. So they are being cautious, but it's something that they have to plan for.

In terms of the state's MassHealth program — the state's Medicaid program — that will cost significantly more next fiscal year, according to analysts. Why is that?

Yeah, that is just the biggest piece of the state budget, and it goes up every year. They are trying to get a handle on things like pharmaceutical prescription drug costs and other areas.

But with the growing cost of health care, and the fact that Medicaid and the MassHealth program accounts for nearly 40% of total state spending, this is just a significant driver of the budget that continues to eat up new revenue.

The state's Housing and Economic Development Secretary, Mike Kennealy, declined to give a preview of what the governor might say in his State of the State on Tuesday. You wrote about that, and said it would come as no surprise if the governor tried to nudge lawmakers to act on his housing bill.

Yeah, [Kennealy] didn't want to big-foot his boss ahead of the big speech. But Governor Baker has frequently used this occasion to highlight things that his administration and the legislature have worked well together on to accomplish, as well as kind of poke them on some of his goals for the coming year.

And we know that there is no bigger goal for the Baker administration than getting this housing bill done. They repeatedly talk about the housing crisis and what it could potentially do to the economy — nevermind the squeeze it's putting on families who are struggling to buy homes and live close to where they work. And this is a bill that would make it easier for local cities and towns to zone housing projects. He really wants to get it done.

U.S. Senator Ed Markey only has one Democratic challenger to worry about this year after Shannon Liss-Riordan dropped out of the Senate race last week. So that leaves just U.S. Rep. Joe Kennedy III. Is this better news for Kennedy or Markey?

I think if you look at this, you have to think it's better news for Kennedy.

Markey was really looking at this — and not that he doesn't think he can beat Joe Kennedy — but the more people that were in this race, the better for him. I think he was hoping to carve up that anti-incumbent vote between Kennedy and as many challenges as he could. 

We had Steve Pemberton drop out, and now Shannon Liss-Riordan getting out of the way, for this one-on-one matchup with Kennedy — which polling suggests Kennedy has a good chance of defeating Senator Markey.

Keep up here with Beacon Hill In 5.

Jill Kaufman has been a reporter and host at NEPM since 2005. Before that she spent 10 years at WBUR in Boston, producing "The Connection" with Christopher Lydon and on "Morning Edition" reporting and hosting. She's also hosted NHPR's daily talk show "The Exhange" and was an editor at PRX's "The World."
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