Administration and Finance Secretary Michael Heffernan provides an update on fiscal 2019 state tax collections during the Local Government Advisory Commission meeting at the State House on Feb. 12. Heffernan said revenue is running a bit behind benchmarks, but “the economy is very strong.”

With legislative committee appointments completed, including new chairs for the influential budget-writing committees, the House and Senate now turn to reviewing the fiscal 2020 state budget plan that the governor filed in January and beginning to draft their own plans.

The House and Senate Ways and Means committees are expected to hold hearings around the state, mainly in March, on various parts of the state budget for fiscal 2020. Last year, the hearing on municipal and school aid accounts was held on March 19 in Peabody, where MMA leadership testified in support of local government priorities.

The MMA’s testimony this year will be guided by the fiscal 2020 budget resolution approved at the MMA Annual Business Meeting in January. Priorities endorsed by the MMA membership include growth in the main municipal aid account tied to projected growth in state tax collections, and a comprehensive overhaul of Chapter 70 school aid and charter school finance. Other priority aid accounts include the special education circuit breaker, student transportation accounts, and the payment-in-lieu-of-taxes program.

The House is expected to take up the fiscal 2020 budget in mid-April, with the Senate to follow in May. Last year, the Legislature enacted a final state budget on July 18 after working out differences between House and Senate versions.

The $42.7 billion state spending plan for next year filed by Gov. Charlie Baker on Jan. 23 includes $1.1 billion for the main municipal aid account and $5.1 billion for Chapter 70 school aid. The budget is mainly funded by a tax forecast of $29.3 billion reached in agreement with legislative leaders.

The governor’s main municipal aid proposal is consistent with revenue-sharing practice in place since fiscal 2015, which calls for the Cherry Sheet Unrestricted General Government Aid account to increase at the same rate as the projected growth in state tax collections. The governor’s proposed 2.7 percent UGGA increase for fiscal 2020, based on the consensus state tax forecast adopted in December, would add about $30 million.

The governor’s budget (known as House 1) also proposes major changes in school finance, including modification to how Chapter 70 school aid and required local contribution amounts are calculated and a reworking of charter school finance law. The governor’s Chapter 70 recommendation for next year would increase aid by $200 million, based on a seven-year plan that would update the basic spending standards based on the recommendations of the Foundation Budget Review Commission and other initiatives. Most cities, towns and regional school districts, however, would receive just the minimum new aid amount next year, pegged at $20 per student.

The governor’s budget would increase the charter school impact mitigation account by $16 million, to $106 million, although it would still fall far short of the statutory full funding amount. According to charter school assessments on the preliminary Cherry Sheets released by the Division of Local Services for fiscal 2020, assessments on municipalities and regional school districts next year to fund tuition payments to charter schools are expected to increase by $53 million (almost 8 percent) to $716 million.

The governor’s proposed changes to Chapter 70 and charter school finance law are based on legislation (H. 70) that accompanied his budget bill.

The Legislature is expected to take up school finance legislation this year. Sen. Sonia Chang-Diaz has filed a comprehensive school finance modernization bill in the Senate (Senate docket 101), and a companion bill was filed in the House (House docket 343) by Rep. Aaron Vega and Rep. Mary Keefe. In addition, a comprehensive House bill (docket 3195) by Rep. Paul Tucker and several rural school bills were filed in the House and Senate. Rep. Paul Broduer and Rep. Antonio Cabral have filed legislation (House docket 2763), drafted by the MMA, that would amend charter school finance law to cap assessments on municipalities and school districts.

House and Senate Ways and Means committee budget hearing schedule (119K PDF)

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