Lawmakers watchful as FY18 gets underway

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The extensively reworked state budget for fiscal 2018, which took final shape in early August, is based on a revised state tax collection estimate that will need watching over the course of the year and an expectation that the Legislature will look at ways to better manage the $16 billion MassHealth program to make it more fiscally sustainable.
 
State tax collections for fiscal 2018 are now expected to reach $26.5 billion, an increase of 3.4 percent over collections last year. This is lower than the projection used when the budget bill was first developed, but higher than the 1.4 percent increase experienced in  fiscal 2017.
 
Collections through the end of July were on target, but the first month of the year is not a bellwether. Collections through the first quarter, which will be reported in early October, will provide the first good look at any developing revenue trends for the year and serve as a starting point for projections for fiscal 2019.
 
Legislative leaders have said that they will monitor tax collections before making any decisions on overriding the $320 million in spending vetoes made by the governor when he signed the budget in July.
 
After a fair amount of summertime back and forth between Gov. Charlie Baker and the Legislature, the final fiscal 2018 budget includes $200 million in temporary revenue from fees and fines imposed on businesses to help fund the MassHealth program. The revenue comes from an increase in the existing fee paid by employers for each employee and from a fine of up to $750 per employee when a person enrolls in MassHealth rather than the employer’s health insurance plan. The impact is offset by a reduction in unemployment insurance rates over the next two years.
 
The governor had pushed to couple the added charges on businesses with changes to the MassHealth program to better control costs and ensure long-term sustainability. Legislators weren’t ready to make changes over the summer without more discussion, which is expected to start after Labor Day.