Last week, Massachusetts state budget hawks got a look at tax numbers from January that came in much stronger than expected, thanks largely to capital gains and the millionaire's surtax. That should give the state a short-term cushion. The commonwealth collected more than $4 billion in taxes in January, which is half a billion more than expected.
Sam Drysdale with the State House News Service explained that while with revenues looking strong, lawmakers and analysts are still worried when they look ahead to next year's budget.
Sam Drysdale, SHNS: That is good news for revenue collectors, but it leans heavily on the two sources that you pointed out. They have limitations on how revenue can be used. Healthcare is the biggest section of the budget. It puts the most strain on what the state can afford to pay for, but both capital gains and the surtax are legally limited, and they can't pay for healthcare.
Additionally, those gains are heavily reliant on the stock market, and that makes future budgets a lot shakier if the economy turns. At a hearing last week, former Senate Ways and Means Committee chairman Mark Montigny warned that he thinks a recession or widespread economic downturn is on the way.
Carrie Healy, NEPM: Oh! With revenue uncertainty hanging over next year's budget, what parts of the governor's proposed budget are lawmakers expected to scrutinize most closely at this week's hearing?
Governor Healey and the state's top constitutional officers and fiscal leaders will testify on the governor's spending plan on Wednesday. Lawmakers will probably look closely at local and school aid. That's a perennially important issue for their constituents and something that's always a tense discussion at those hearings. Healthcare cost controls are probably also going to be the really big discussion. Healey is proposing funding MassHealth at $22.7 billion. That's the largest line item in the budget. That's compared to $22.1 billion last fiscal year. And that's a significantly smaller amount of growth for that largest line item than we've seen in recent years. MassHealth spending usually goes up by around $1 billion every year. So, I think we'll see a discussion about whether that's realistic.
On Thursday, lawmakers will take up a bill from the governor that responds to federal tax changes passed last summer in the Trump administration's tax and spending bill. Healey's plan partially aligns state law with federal changes protecting the budget and clarifying rules for employers. Sam, what is likely to draw the most opposition on Beacon Hill? And who are the winners and the losers?
Yeah, what Healey's trying to do with delaying these tax code changes is slowly implement relief for businesses and the One Big Beautiful Bill (OB3), which particularly benefit the state's research and innovation economy and balance the impact of that with what the impact will be on state revenues. The relief in OB3 will have an estimated $442 million impact on the state budget, according to Healey. That could be funding for schools or road and bridge repair, home and health care services for vulnerable people.
So, the Healey administration is proposing doing this five year slow phase in in the tax relief because businesses want to see this tax relief. But she wants to give the state time to catch up to mitigate those revenue impacts.
And finally, the state Senate is set to take up three consumer protection bills this week, including one from Senator Adam Gomez of Springfield aimed at cracking down on housing discrimination. That bill would require real estate agents to complete fair housing training when applying for and renewing licenses, among many other things. WMass tenant groups say housing discrimination reform is long overdue. So how likely is this bill to survive the Senate?
I'd say it's very likely that this will pass quickly and easily through the Senate. During their session on Thursday, it received a 15 to 0 favorable vote out of the Senate Ways and Means Committee last week. That's already a substantial portion of the chamber, and a big vote of confidence as it heads to the floor. And then it'll need to go to the House. And we'll see what happens there.
