Following her State of the Commonwealth address last week, Massachusetts Gov. Maura Healey has begun offering a sketch of areas where she feels the state still has enough money to deliver critical improvements. She will file her budget with the Legislature by this Wednesday.
Healey on Friday told a gathering of local officials from across the state that they'll see 3% more local aid coming back to them in their next budget.
Chris Lisinksi from the State House News Service explains whether that 3% is enough to keep up with rising costs.
Chris Lisinski, SHNS: It depends on how you look at it. Three percent is right around the inflation rate over the past year — maybe a hair below the inflation rate of the past year. So, it's not a dramatically lower than inflation proposal. But, for years, municipal leaders have been arguing that in a longer term, broader sense, local aid they get has come nowhere near close enough to keeping up with inflation or with the increase in state tax collections over that span.
So, I would say the cleanest synthesis there is, it's probably about as good as municipal officials might expect for a single-year increase, but many of them are going to point to history and say that this gap still exists, and it needs to get closed.
Carrie Healy, NEPM: Potentially helping the bottom lines for city and town officials — but maybe not for residents and visitors — are some new options for local taxes. Healey unveiled those last week, too. She's calling it her Municipal Empowerment Act. So, what are the details?
There's effectively three tax pieces of this. Cities and towns could charge a higher tax rate on hotels, motels and other rental stays. Currently, they can charge 6% the price of a room. Healey would raise that to 7% the price of a room. They could also charge a higher meals tax. Currently, that's three quarters of a percentage point. The governor's proposed raising that to a full percentage point.
And the governor is also rolling out what she's calling a local option motor vehicle excise surcharge, which appears to be an additional 5% surcharge on the excise taxes that motor vehicle owners pay to their cities and towns to keep them registered in those communities.
And this week, the governor will formally submit her spending plan for the state's next fiscal year. So, apart from what she's already told cities and towns, are there other new priorities expected in her budget?
Yeah, we know that we are expecting what the governor described as "record" levels of local road and bridge funding, in addition to basic local aid. She's going to be proposing significantly more money for the MBTA, money for education. The budget will fund another year of the Student Opportunity Act. It will fund the first year of a new early literacy program. And we know that she wants to make some pretty significant changes to the early education and childcare sector through the budget as well, basically funding a program to offer universal pre-K in every single Gateway City across Massachusetts, rather than in just, I believe, a dozen of them currently.
OK, but the challenge is that the state's economic outlook is kind of depressing. So, since the governor has committed to no new state taxes, how is Healey paying for the spending increases that she is talking up?
Well, that's the million-dollar question. Or, if you want to use state budget terms, more like a $58 billion question, give or take.
We're still waiting to see the details. I wouldn't be all that surprised at this point if some state spending initiatives are trimmed compared to last year, and that those details are just kind of being obscured until the entire budget plan becomes available.
You know, keep in mind, in fairness, the state also has the voter-approved income surtax. I believe that budget writers are expecting $1.3 billion from that available to be spent on education and transportation in the upcoming fiscal year. That's more than the year before, so that could at least account for some of the increases.
