Gov. releases $40.9B FY19 state budget plan

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On Jan. 24, Gov. Charlie Baker filed a $40.9 billion state budget bill for fiscal 2019, proposing a spending blueprint that would increase overall state expenditures by 2.6 percent while seeking to close an ongoing structural budget deficit by restraining spending across the board and placing an estimated $96 million into the state’s rainy day fund.
 
As Gov. Baker pledged to local officials on Jan. 19 at the MMA Annual Meeting, his budget includes a $37.2 million increase in Unrestricted General Government Aid and $104 million more for Chapter 70 school aid.
 
The $1.1 billion proposal for the UGGA account would fulfill one of the governor’s major promises, to increase the main municipal aid account by the same rate as the projected growth in state tax revenues, which is 3.5 percent for fiscal 2019. Every city and town would see its UGGA funding increase by 3.5 percent.
 
The governor’s budget would increase Chapter 70 education aid by 2.2 percent to $4.9 billion to ensure that every municipal and regional school district can reach the basic “foundation” level of spending and to continue to implement the “target share” equity provisions. The majority of districts would continue to receive the minimum increase of $20 per student.
 
The governor’s proposal would continue the modest progress started in fiscal 2018 to implement the Foundation Budget Review Commission’s recommendations to use a more realistic factor for the cost of school employee health insurance when calculating the “foundation” spending standard and local contribution and school aid amounts.
 
The Legislature is expected to take up the budget bill in April and May and send a final spending plan back to the governor by the end of June.
 
The House and Senate Ways and Means committees are expected to hold their usual joint public hearings on the governor’s budget, including a hearing dedicated to municipal and school aid accounts. Last year, the hearing was held in Amherst in late March and featured testimony by MMA leaders.
 
A schedule of hearings for the fiscal 2019 budget has not yet been set, but the MMA is planning testimony to support the governor’s main municipal aid proposal and to seek additional funds for other municipal and school aid accounts, including the special education “circuit breaker,” charter school mitigation, and school transportation accounts that are substantially underfunded. The MMA will also continue to support full implementation of recommendations of the Foundation Budget Review Commission for special education and employee health insurance, and to add to the spending standard a measure of recognition for the cost of services for low-income, English Language Learner and other students who would benefit from more intensive services.
 
Most other municipal and education aid accounts in the governor’s budget proposal would remain at fiscal 2018 levels.
 
Link to Division of Local Services for preliminary fiscal 2019 Cherry Sheet aid amounts for each community based on governor’s proposed budget
Link to the Department of Elementary and Secondary Education for calculations of fiscal 2019 Chapter 70 aid and net school spending requirements for each city, town and regional school district based on governor’s proposed budget
Link to the governor’s budget website
 
Special education
The special education circuit breaker account would increase by $9.9 million to $291 million. Because special education costs are expected to rise next, however, the account would remain underfunded by about $20 million. This is a vital account that every city, town and school district relies on to fund state-mandated services.
 
Charter school mitigation payments​
The governor would level-fund charter school mitigation payments at $80.5 million, approximately $85 million below the amount needed to fully fund the schedule in state law, which is designed to temporarily mitigate the impact of charter school tuition assessments on funding for local public schools. Level-funding this account would lead to the continued and growing diversion of Chapter 70 funds away from local public school districts, and would place greater strain on the districts that serve 96 percent of public schoolchildren. The charter school assessments on the preliminary Cherry Sheets released by the Division of Local Services show total tuition assessments growing by $66 million in fiscal 2019 (11 percent) to more than $660 million.
 
School transportation
Gov. Baker’s budget submission would level-fund regional school student transportation reimbursements at $61.5 million, which would create a hardship for virtually all communities in regional districts. Reimbursements for transportation of out-of-district vocational students remains significantly underfunded at $242,000.
 
The governor’s budget would level-fund reimbursements for the transportation of homeless students under the federal McKinney-Vento law at $8.1 million. The impact of this funding level will vary from community to community, depending on the number of homeless families that remain sheltered in local hotels and motels.​
 
PILOT, Shannon grants, METCO, library aid
The governor’s budget would level-fund payments in lieu of taxes at $26.8 million. Shannon anti-gang grants would be level-funded at $6 million, and METCO would be level-funded at $20.6 million.
 
Library grant programs would receive $19.3 million, an increase of $191,000.
 
Short-term rentals
The governor’s budget bill includes an outside section (Section 32) that would subject Airbnb and other short-term rentals to the local room occupancy excise tax. This would only apply, however, in cases where the property is rented for 150 days or more. The MMA strongly supports extending the room occupancy excise to all short-term rentals. The association argues that the 150-day threshold would continue to shield a large percentage of seasonal and short-term rentals from taxation, and would not close the existing loophole.