In her most significant legislative action since taking office in January, Gov. Maura Healey on Wednesday signed into law her first annual state budget.
Healey approved a $56 billion budget for fiscal year 2024 that increases spending roughly 6.2% over the budget enacted last summer, distributes newly available revenue from a surtax on high earners, and implements a slew of major policy changes, including permanently offering all students free school meals.
The first-term Democrat used her veto pen to slash a total of $272 million in spending, and she also spiked an outside section that would have pumped $205 million of one-time funding into the budget.
Healey sent back eight outside sections with proposed amendments and approved the other 103, including measures that will expand access to subsidized health care, and allow high school graduates without legal immigration status to tap into in-state tuition rates and financial aid at public colleges and universities.
Flanked by Lt. Gov. Kim Driscoll, cabinet secretaries and legislative leaders for a bill-signing ceremony in her office, Healey had nothing but praise to offer for the budget despite the delay in getting it to her desk. Fiscal year 2024 began July 1.
"This budget makes our state more affordable, competitive and equitable," Healey said. "It will make a real and meaningful difference in the lives of people across Massachusetts, lowering their costs, expanding access to opportunity, improving the quality of their life."
For the first time, the spending plan makes use of revenue newly available from a 4% surtax on annual personal income above $1 million that voters approved in November, which must be earmarked for education and transportation uses.
The budget divides an expected $1 billion in surtax money into $524 million for education and $477 for transportation. Investments include the launch of a "MassReconnect" program that supports free community college for students ages 25 and older, MBTA infrastructure improvements and a permanent universal school meals option.
Limited changes head back to Legislature
Altogether, Healey vetoed $272.4 million in spending from 35 different line items. She wrote in a signing letter that the net spending reduction totaled $205 million "after revenue offsets." The Massachusetts Taxpayers Foundation said $71 million in federal reimbursement for a MassHealth reduction offsets the total figure.
More than half of the dollars Healey vetoed came from a single cut. Healey slashed $142.8 million from a "MassHealth Fee for Service Payments" line item, reducing it to about $3.6 billion total. She described that in her veto summary as "the amount projected to be necessary."
Healey also trimmed $35 million from a center-based child care rate increase, $18 million in emergency aid for elderly, disabled and children, $5.9 million from Department of Children and Families family resource centers, $5.6 million from the special education circuit breaker reimbursement fund, $3.75 million for adult mental health and support services, and more. Many areas she cut are still set to receive tens or hundreds of millions of dollars, or funding from other line items and programs.
The governor returned eight policy riders with proposed amendments on topics including pyrite and pyrrhotite in concrete, alcohol sales in gaming establishments, and MassHealth ambulance services.
Two Healey amendments would alter the timing of a pair of programs she said she supports: allowing employees to supplement paid family and medical leave benefits with accrued time off, and eliminating communication costs for incarcerated individuals and their families.
The free phone calls measure — which lawmakers approved as part of the fiscal year 2023 budget but could not get across the finish line after Gov. Charlie Baker tied it to an unrelated policy fight — would launch on Dec. 1, 2023 under Healey's proposal instead of being retroactive to July 1.
"It was just good, collective common sense from all involved that we needed a little bit more time to be able to get it done," Healey said.
Lawmakers have until Nov. 15, the final day for formal sessions this year, to take up any veto overrides unless they suspend their rules. Healey's amendments do not face a strict timeline for legislative action and could remain in limbo into 2024.
Spending increases up and down the bill
K-12 schools are in line to receive a $594 million, or 9.9%, increase in Chapter 70 funding as the budget continues to move toward full implementation of the 2019 school funding law known as the Student Opportunity Act.
One percent of the total funding, about $558 million, will go toward the Executive Office of Energy and Environmental Affairs, which Healey lauded as a major milestone reflecting the state's commitment to softening the impacts of climate change and moving to a clean-energy future.
The budget calls for a major increase in funding for the emergency assistance family shelter program, pushing that line item to $325 million or 48% more than the FY23 budget as enacted last summer.
Massachusetts shelters have been overwhelmed by a sharp increase in families seeking assistance, many of them immigrants, prompting Healey on Tuesday to declare a state of emergency.
In a letter appealing to federal officials for action, Healey estimated the state is spending more than $45 million per month on programs for the affected families. If the spending keeps up at that pace for a full year, it would total $540 million, significantly more than the budget appropriates.
"When it comes to what we're experiencing as a state, particularly with regard to the influx of newly arrived migrants, no amount of state resources [or] infrastructure is adequate to deal with what is really a humanitarian crisis, a geopolitical issue, that has no immediate timeline of abating," Healey said at her budget event Wednesday. "That is why I issued the emergency declaration, and we will certainly collectively use all means necessary, but we do need federal assistance in the form of funding as well as work authorizations."
The budget also includes $475 million in Commonwealth Cares for Children (C3) grants to early education providers, a 3.2% increase in unrestricted general government aid (UGGA), and $173 million in so-called Chapter 257 rate increases for human service providers.
One outside section Healey approved will revive and make permanent a lapsed pandemic-era eviction diversion program, which requires courts to pause eviction proceedings for failure to pay rent if a tenant has a pending application for rental aid.
Another launches a pilot program increasing eligibility for ConnectorCare health insurance, which the Massachusetts Health Connector advertises as offering "$0 or low monthly premiums, low out-of-pocket costs, and no deductibles." The threshold for eligibility will shift from 300% of the federal poverty level to 500%.
The pilot could provide a new option for some Bay Staters who lose MassHealth coverage amid a massive, year-long campaign to trim enrollment for the first time since the pandemic began. Officials have estimated the redetermination process could shrink the MassHealth rolls by up to 400,000 people and free up $1.9 billion in FY24 state spending to be directed elsewhere.
House Speaker Ron Mariano said he is "especially proud" of the ConnectorCare expansion, forecasting it would allow at least 50,000 more people to acquire health insurance, which is required under state law.
"These are transformative decisions. You're talking about people who don't have health care, who have to worry about getting a flu shot, have to worry about getting a vaccine shot, let alone a physical," Mariano said. "These people now will have an opportunity to get access to health care."
The budget also calls for adding two seats to the MBTA's Board of Directors, one of which would be appointed by the mayor of Boston.
Still waiting for tax relief
Healey agreed with the Legislature's proposal to place a $581 million hold in the budget designed to cover the expected impact of a tax relief package, which remains mired in Democrat-led negotiations more than a year after lawmakers first began debating the idea.
"We must not, however, lose sight of the need for tax relief," Healey wrote in her signing letter. She added, "The people of Massachusetts are relying on us to get tax relief done as soon as possible."
Asked Wednesday if she gave legislative leaders a deadline to achieve consensus, Healey demurred and struck a softer tone than her signing letter.
"The important thing is, I think, we all recognize that tax relief is something we want to accomplish for purposes of making life more affordable for residents, more competitive for our state," she said. "There are a lot of good ideas already out there and on the table, and this is the work of government and policymaking. So I know people will be hard at work in the days and weeks ahead and look forward to that process."
Senate President Karen Spilka then interjected, telling reporters that "so much of what's in the budget is a form of relief for individuals and working families." The free school meals program will save participating families up to $1,200 per student per year, she said. Spilka also argued that a $100 million investment in school construction will ensure that 30 communities facing higher project costs "do not have to put that on the backs of property taxpayers."
Healey's budget signature came on the 40th day of the fiscal year it funds after Democrat negotiators who chair each branch's Ways and Means Committee struggled for weeks to achieve consensus on a final bill.
Lawmakers approved the final measure on July 31, a month into the fiscal year and the second-latest of any annual budget in the last 22 years. Healey had no criticism to offer Wednesday — she said "policymaking takes time" and that the budget "got it right" — while Mariano voiced a defense of the Legislature's slow pace.
"We read a lot about how late this budget was, but I think I'd just like to remind everyone that the two committees on Ways and Means, in the Senate and the House, were negotiating some tax cuts, a major budget, and spending of the millionaire's tax. All three required negotiations between the two bodies, with different priorities in each body," Mariano said. "So we weren't surprised that it went a little long, but I'm constantly surprised that everyone seems to have forgotten what was at stake here and what we were trying to accomplish."
