On the final day of scheduled formal working sessions for the year, the House and Senate could not resolve differences in competing proposals to distribute portions of the state surplus from fiscal 2019 and close the books on the year.

The supplemental budget bill, which includes additional funding for local road maintenance and other municipal needs, will now need to be approved during informal sessions by the end of the calendar year.

The two branches have named members to a conference committee to work out a compromise final spending bill. An agreement could happen at any time or it could drag into December.

Similar but separate bills passed by the House and Senate would use a portion of the state’s roughly $1 billion year-end surplus to add to the state stabilization fund, cover shortfalls in a number of fiscal 2019 state budget accounts, and provide extra funding for important capital programs.

Both the House and Senate versions include $60 million to supplement the Chapter 90 roads program, $8.4 million to address local drinking water contamination and $35 million to help finance improvements to local water systems, $2 million for the special education circuit breaker program, additional funding for student transportation in regional school districts, $4 million for the Municipal Regionalization Reserve, and $5 million for spraying to reduce the risk of Eastern equine encephalitis.

Consensus revenue hearing set for Dec. 4
Looking toward fiscal 2021, the House and Senate Ways and Means committees and the governor’s budget office will convene the annual “consensus” revenue hearing on Dec. 4, when the Department of Revenue and other fiscal experts and economists will discuss the prospects for the economy and state revenues over the second half of fiscal 2020 and for fiscal 2021.

Following the hearing, legislative leaders and the administration are expected to reach agreement on a tax revenue forecast for fiscal 2021 that would be used in the governor’s budget recommendation, due in late January, and the House and Senate budget plans that will be released in April and May, respectively.

The State House hearing is important for municipal officials because it provides insights into the direction of the economy and anticipated state revenues available next year to fund municipal and school aid programs, particularly Unrestricted General Government Aid. The revenue-sharing model used by the governor and the Legislature in recent years has increased UGGA distributions at the same rate as the “consensus” projection for the growth rate of state tax collections.

The revenue hearing usually features testimony from the revenue commissioner on prospects for the state’s economy and a forecast for tax collections. The state treasurer then provides testimony on pension funding and a forecast for Lottery revenues.

The hearing usually includes testimony from fiscal experts including the Massachusetts Taxpayers Foundation, the Beacon Hill Institute, and MassBenchmarks, an initiative of the University of Massachusetts’ Donahue Institute and the Federal Reserve Bank of Boston.

Gov. Charlie Baker’s fiscal 2021 budget recommendation is expected to be filed with the Legislature by Jan. 22, the week before the MMA Annual Meeting. Gov. Baker and Lt. Gov. Karyn Polito typically attend the MMA conference to provide an overview of the budget’s local aid provisions and talk about other policy initiatives for the new year.

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