The House and Senate today unanimously passed a $52.7 billion state budget bill for fiscal 2023.

Both chambers took quick action on a compromise bill (H. 5050) that was released by a six-member House-Senate conference committee yesterday evening.

Gov. Charlie Baker has 10 days to approve the spending appropriations and proposed law changes, veto certain items, or return items with amendments. Lawmakers will then have several days to take up any vetoes before formal sessions end on July 31.

On all key local aid accounts, the compromise bill would provide the higher funding level wherever there were differences in the budget bills passed by the Senate and House, respectively.

In a major win for cities and towns, the Legislature’s budget bill increases Unrestricted General Government Aid by 5.4% ($63 million), a major priority pushed by the MMA throughout budget deliberations. The increase doubles the municipal aid increase originally proposed by the governor in January.

The budget significantly increases Chapter 70 school aid over fiscal 2022, bringing the total to $5.99 billion. There’s also a $67 million increase for the Special Education Circuit Breaker account, an additional $89 million for charter school mitigation payments, and an increase of $10 million for Payments-in-Lieu-of-Taxes for state-owned land.

Following months of state tax collections exceeding expectations, the budget bill reflects an agreement between Senate and House leaders to increase tax collection estimates for fiscal 2023 by $2.66 billion, with $1.9 billion available for the general budget after statutorily required transfers.

The Division of Local Services will be posting preliminary Cherry Sheet estimates for each city, town and school district based on the Legislature’s budget.

The Legislature’s budget includes $1.23 billion for Unrestricted General Government Aid (line item 1233-2350 and Section 3). UGGA is the state revenue-sharing program that cities and towns receive to fund essential municipal services. With property taxes tightly capped by Proposition 2½, cities and towns rely on state revenue sharing to provide municipal and school services, ensure safe streets and neighborhoods, and maintain vital infrastructure — services that are fundamental to the state’s economic recovery and competitiveness.

Chapter 70
The Legislature’s budget would fund Chapter 70 aid at nearly $6 billion, representing a commitment to fund the Student Opportunity Act according to the original intended schedule, an important achievement given the initial disruption caused by COVID-19.

The Legislature also recognized the challenge facing 135 “minimum aid” districts, which would have received just $30 per student in new aid over the previous year in the budget filed by the governor in January. The Legislature’s budget would double the minimum aid increase to $60 per student.

Special Education Circuit Breaker
H. 5050 would provide $441 million for the Special Education Circuit Breaker (7061-0012), which reimburses school districts for the high cost of educating students with disabilities. The Student Opportunity Act expanded the circuit breaker by including out-of-district transportation, to be phased in over three years. The fiscal 2023 budget bill reflects years two and three of the schedule in the Student Opportunity Act, achieving full funding one year ahead of schedule.

Charter school mitigation payments
H. 5050 includes $243 million for charter school mitigation payments (7061-9010), which would fund the state’s statutory obligation as outlined in the Student Opportunity Act, pushing the state to phase in the plan by fiscal 2023, a full year ahead of schedule.

School transportation
The Legislature’s budget would level-fund regional school transportation at $82.1 million, representing a reimbursement rate of 85% of estimated costs for fiscal 2023 as estimated by the Department of Elementary and Secondary Education.

H. 5050 would fully fund the McKinney-Vento account for transportation of homeless students at $22.9 million, and level-fund out-of-district vocational transportation at $250,000.

H. 5050 would increase Payments-in-Lieu-of-Taxes for state-owned land by 29% to $45 million. Inadequate PILOT funding has created a significant hardship for smaller communities with large amounts of state-owned property, so the proposed increase would provide an important boost.

Rural School Aid
H. 5050 would provide $5.5 million for Rural School Aid (line item 7061-9813), providing assistance to eligible towns and regional school districts. The grant program helps districts facing the challenge of declining enrollment to identify ways to form regional school districts or regionalize certain school services to create efficiencies.

Retiree COLAs
Outside Section 134 of the budget would allow retirement boards that have accepted Section 103 of Chapter 32 to award a cost-of-living-adjustment of up to 5% to retirees, rather than the current limit of up to 3%. Due to the potential negative impact on unfunded pension liabilities, the MMA opposed this section.

Community Preservation Act
Outside Section 174 would direct the state comptroller to transfer $20 million of the fiscal 2022 budget surplus to the Massachusetts Community Preservation Trust Fund. This provision would increase the state’s match percentage from an estimated 35% to 43%, approximately the same match rate as fiscal 2022. The number of CPA communities has reached 187, and this budget item would benefit cities and towns that have adopted higher local property taxes to address environmental and housing challenges.

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