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Beacon Hill’s budget balancing act: Tax revenue rises, but storm clouds loom for next year

Administration and Finance Secretary Matthew Gorzkowicz speaks about state tax revenues at an April 9, 2024 meeting of the Local Government Advisory Commission.
Sam Doran
/
State House News Service
Administration and Finance Secretary Matthew Gorzkowicz speaks about state tax revenues at an April 9, 2024 meeting of the Local Government Advisory Commission.

Beacon Hill budget writers are projecting a 2.2% increase in state tax revenue, boosted by that surtax on millionaires. Those revenue figures are crucial for Gov. Maura Healey, the House and the Senate as they craft their spending proposals for the year ahead. Budget writers are already concerned about revenue figures next year. Reporter Chris Lisinksi of the State House News Service explains what worries lawmakers.

Chris Lisinksi, SHNS: Well look, it's a little bit more muted this year. It's not dire. It's not an emergency, but it's muted. Folks are worried about softening collections in taxes. Besides that surtax that's doing really well and has generated and will continue to generate a ton of money for education and transportation, according to economists. But other tax collections are not really growing at the same kind of rapid pace that some had become accustomed to in the past 4 to 5 years, especially after the COVID-19 pandemic.

On top of that, the spending pressures are growing at a faster rate. One thing in particular that's been driving a lot of Beacon Hill spending in recent budget cycles is the end of some pandemic era federal programs that state officials, so far, have opted to keep going using state dollars. It seems like this time around, there will not be that appetite to replace every federal program as it comes to a close.

Carrie Healy, NEPM: As you say, that surtax revenue is required to be spent on only two things: education and transportation. Right now, there's a task force looking at what percentage of that revenue goes to one rather than the other. The governor is waiting for that recommendation. What is the current split and what could change mean?

It's varied from year to year. I believe that if you average up all the budget cycles with the surtax in place, it's been something like 59% of the money has gone toward education and 41% toward transportation. Maybe more like 55%-45%. Reports indicate that the Transportation Funding Task Force might suggest an even 50-50 split going forward, as a way to handle that.

Something else that's on our radar is there's about $1.3 billion in surplus surtax revenue that has already been collected, but was never budgeted, never planned to be spent before. Some Beacon Hill lawmakers have suggested they want to use most, or even all of that, for transportation as sort of a one-time go at evening the playing field.

And in large part, a lot of that would probably be… what? Funneled to the MBTA?

The MBTA, largely. But we could also see some money for regional transit authorities and roads and bridges, because obviously the needs there are pretty great as well.

This week, Governor Healey presents her annual state of the Commonwealth address. What are you listening for?

There will be a little bit of victory lap taking, especially after the legislative session just ended. And despite some upheaval that we noted at the time, lawmakers got a lot done and Healey got to sign into law a bunch of major changes, some of which she really sought.

And the fact that this is a new Legislative cycle also gives Healey a chance to outline what her priorities are for the next two years, for the second half of her first term. I would also expect a decent number of pledges about what Massachusetts is, what our values are, and how the governor, her administration, will work to uphold that in the face of an incoming Trump administration.

Meanwhile, even though they just got sworn in, state lawmakers are hitting their bill filing deadline at the end of this week. There will probably be bills that we always see filed, like seeking to bring back happy hour and some new ones too, such as a push to repeal the state's new gun law. What are you expecting?

One thing in particular that I'm expecting to see emerge and get a lot more focus this time around, is a proposal, or proposals, plural, to prevent renters from bearing the brunt of broker fees when they move into new apartments. This is something that the Senate pushed for last session but couldn't get the House to agree to. Now we know that Governor Healey supports the idea. Several cities in eastern Massachusetts are preparing to send their own home rule petitions looking to ban that practice at the local level. So, expect a lot of legislation and a lot of spotlight cast on that issue in these coming months.

Carrie Healy hosts the local broadcast of "Morning Edition" at NEPM. She also hosts the station’s weekly government and politics segment “Beacon Hill In 5” for broadcast radio and podcast syndication.
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