House releases FY24 state budget proposal

The House Committee on Ways and Means today released a $56.2 billion state budget plan for fiscal 2024 that will be taken up by the full House later this month.

The budget bill would increase Unrestricted General Government Aid by 1.6% ($19.7 million over the current fiscal year), which is slightly less than the 2% increase proposed by the Gov. Maura Healey in her budget, filed on March 1.

The House bill (H. 3900) would increase overall state expenditures by 7.1% over the current year, and is $700 million higher than the budget plan filed by the governor (known as House 1).

The House plan accounts for the branch’s phased-in tax relief proposal, which is estimated to reduce revenues by $587 million in fiscal 2024, growing to $1.1 billion by the third year of implementation.

House members have until 5 p.m. on Friday to file budget amendments, and the House is scheduled to begin its budget debate on Monday, April 24. The House typically considers more than 1,000 amendments during its budget week.

The Division of Local Services will be updating preliminary Cherry Sheet numbers for cities, towns and regional school districts based on the House Ways and Means budget proposal.

Unrestricted General Government Aid
The House Ways and Means proposal links the percentage increase in UGGA to the consensus projection for the rate of growth in state tax collections for fiscal 2024. The House’s $1.25 billion proposal for UGGA is approximately $5 million less than the governor’s proposal.

The MMA has testified and explained that the proposed increase does not reflect the actual — and far higher — growth in state tax collections in recent years, nor the fiscal realities facing cities and towns in the current economic climate. The MMA will continue to advocate for larger increases as the budget process continues.

Chapter 70
In line with House 1, the House Ways and Means proposal would increase Chapter 70 education aid by $596 million over the current fiscal year, for a total of $6.58 billion, which would continue to fund the Student Opportunity Act on the intended schedule. An additional $7.8 million line item in the House budget committee plan would raise the minimum new aid amount from $30 per student to $60, a recognition of the challenges faced by 119 minimum-aid-only school districts, which account for 37% of all districts. The MMA and education stakeholders will be looking to build on this progress, with a target of $100 per student in minimum aid.

Charter school reimbursements
The House Ways and Means Committee proposes a total of $230 million for Charter School Mitigation Payments, which would cover 100% of the state’s statutory obligation for charter school mitigation payments as outlined in the Student Opportunity Act.

Special Education Circuit Breaker
The House Ways and Means proposal includes $506 million for the Special Education Circuit Breaker account, a $65 million increase over fiscal 2023. The Student Opportunity Act expanded the circuit breaker by including out-of-district transportation, the cost of which is reflected in this increase.

Rural school aid
The House Ways and Means proposal includes $10 million for rural school aid for eligible towns and regional school districts, representing a 45% increase over the current year. The grant program helps districts facing declining enrollment identify ways to form regional school districts or regionalize certain school services to create efficiencies.

The MMA will continue to advocate for fulfilling the recommendation last July of the Commission on the Fiscal Health of Rural School Districts to fund this account at $60 million.

Regional school transportation
The House Ways and Means proposal would increase regional school transportation to $107 million, a 30% increase ($25 million) over the current year, which would fully fund the important account.

McKinney-Vento and vocational school transportation
The House Ways and Means proposal would fully fund reimbursements for the transportation of homeless students under the federal McKinney-Vento Act, increasing the account to $28.7 million in fiscal 2024. The impact of this funding level would vary from community to community, depending on the number of homeless families that remain sheltered in local hotels and motels.

The House Ways and Means budget does not have a line item for out-of-district vocational transportation, which was funded at $250,000 in fiscal 2023.

PILOT
Matching the governor’s recommendation, the House Ways and Means proposal would increase payments-in-lieu-of-taxes by 14%, to $51.5 million, which would benefit communities with large amounts of state-owned land. The increase is intended to ensure that no municipality would see a decrease in its PILOT payments due to recent valuation changes.

Electronic Lottery
An outside section of the House Ways and Means proposal would authorize an online Lottery (iLottery), with $200 million of the resulting new revenue targeted to early education funding. The MMA is very concerned that an expansion to online platforms would reduce revenue raised by traditional in-person Lottery products. For this reason, the MMA argues that online Lottery proceeds should be used for the Lottery’s intended focus, which is to fund Unrestricted General Government Aid. This is consistent with the Lottery’s mission and necessary to protect a vital revenue stream that accounts for the overwhelming amount of discretionary local aid that cities, towns, and taxpayers rely on to fund essential municipal and school services and balance local budgets.

Tax relief
The House’s spending plan includes a tax relief package designed to be phased in over several years. The full price tag for the package is $1.1 billion, which would fund several categories of tax credits.

Once fully implemented, the package would result in the following budget impacts:
• Child and family tax credit: $487 million
• Estate tax: $231 million
• Renter deduction: $40 million
• Senior circuit breaker credit: $60 million
• Short-term capital gains: $130 million
• Single Sales Factor Apportionment: $79 million
• Earned Income Tax Credit: $91 million

Fair Share revenue
The House Ways and Means proposal includes $1 billion in anticipated revenue from the Fair Share amendment, a surtax on annual incomes over $1 million that will provide a new revenue stream for investments in education and transportation. Surtax revenue would go into a separate Education and Transportation Fund, with the money constitutionally required to be spent on education and transportation initiatives.

The House plan would evenly split the $1 billion between education and transportation as follows:
Education:
• $161 million for universal school meals
• $100 million for Green School Works
• $84 million for financial aid expansions
• $50 million for high-demand targeted scholarships
• $40 million for child care grants to providers
• $25 million for Early Education and Care’s income-eligible waitlist
• $20 million for MassReconnect
• $20 million for endowment matching grants
Transportation:
• $250 million for MBTA capital investments
• $100 million for highway and bridge repair
• $70 million for regional transit funding and grants
• $65 million for MBTA workforce safety reserve
• $10 million for water transportation services
• $5 million for MBTA means-tested fares

Process
During the budget debate ahead, the MMA will work to build on the House proposal by advocating for a further increase in Unrestricted General Government Aid and protecting local aid.

The House is expected to finish its budget deliberations by the end of April, with the Senate crafting its own bill in May. The Legislature will work to get a final budget bill to the governor by the beginning of the fiscal year on July 1.