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Budget Monitor:
The House Ways and Means Budget for FY 2013

April 16, 2012
  • Table of Contents
    • Overview
    • Education
    • Environment & Recreation
    • Health Care
    • Human Services
    • Infrastructure, Housing & Economic Development
    • Law & Public Safety
    • Local Aid
    • Other
    • Revenue

Overview

On April 11, the House Committee on Ways and Means (HWM) released its budget proposal for Fiscal Year 2013 (FY 2013).

To address the state's $1.3 billion budget gap, the proposal calls for:

  1. Approximately $685 million in temporary revenue—including $400 million from the state Stabilization fund (the "rainy day" fund).
  2. Cuts and savings of nearly $600 million.

The pie charts below show how this approach to filling the budget gap compares with the Governor's earlier proposal.

There are no new taxes in the HWM budget. A small amount of new, ongoing revenue (colored orange above) is made available through enhanced tax enforcement and increased fees, but unlike the Governor—who proposed increasing the cigarette tax and ending the sales tax exemption for candy and soda—the House Ways and Means Committee would not raise any revenue from new taxes.

The HWM budget does include a significant amount of temporary revenue (colored light blue). Some of that revenue was also in the Governor's plan, including $400 million from the "rainy day" fund and also the deferral of a corporate tax break worth $45 million.

There is also $140 million in temporary revenue that was not in the Governor's Budget. The bulk of that comes from cancelling a requirement that $100 million be left unused during the fiscal year (and carried over into the FY 2014 budget.)

On the spending side (colored dark blue), the HWM budget includes a few funding increases, but also some significant new cuts—on top of the $3 billion in cuts and savings which have been enacted over the last four years.1 Notably, Early Education & Care and Public Health will receive less money than they did in FY 2012.

These are clear cuts—simple reductions in the number of available dollars—but a number of other programs are being cut relative to their maintenance needs. For instance, even though MassHealth is slated to receive a 4.8% increase in funding for FY 2013, this 4.8% is not enough to cover the real growth in inflation and enrollment. MassHealth is actually receiving $300 million less than would be required for the program to continue in its present form for another year.

Among the programs receiving increased funding is respite family support, which helps the families of people with developmental disabilities. K-12 education aid is also being increased, but part of this increase has the effect of making the funding formula more regressive.

The sections that follow analyze the House Ways and Means Committee's budget in greater detail, but it is important to keep in mind the bigger fiscal story—which is not just about one year's budget deficit but about the regular deficits that the Commonwealth has been facing for many years now.

There are two basic reasons that Massachusetts continues to find itself in a fiscal crisis.

  1. The lingering effects of the Great Recession, which has sapped state revenues even as it has increased the number of people relying on core safety net services.
  2. The structural budget problems that the state has faced since cutting taxes in the late 1990s. Those tax cuts and other declines in tax receipts over the last fifteen years cost the state over $3 billion in annual revenue. 2

These are some of the broader forces that have shaped the HWM FY 2013 budget as a whole, and with it the many, specific proposals that we analyze in our various sections (available through the Table of Contents dropdown above)


1See MassBudget's, "Fiscal Fallout," available at http://www.massbudget.org/report_window.php?loc=Final_Cuts_20July_2011.html.

2For more detail, see footnote 2 of Massbudget's FY13 Budget Preview, available at: .http://massbudget.org/report_window.php?loc=fy13_budget_preview.html

Education

Under the House Ways and Means (HWM) Fiscal Year (FY) 2013 budget proposal, the broad MassBudget category of Education would see an increase of $238.6 million over current FY 2012 levels. Total funding for Education is almost identical to the total from Governor's budget, although distribution among education programs differs across these proposals. Of the HWM budget's proposed increase, $163.8 million comes as new Chapter 70 education aid, most of which is driven by state law, but part of which results from a new $40 per pupil minimum increase provision not included in the Governor's budget. The HWM proposal includes $11.3 million for a new Homeless Student Transportation line item, which is not funded by the Governor. Conversely, the HWM budget does not fund several of the Governor's proposed new K-12 grant programs for schools in Gateway Cities. The HWM budget proposes some governance reforms to the community college system that are similar to, yet not as comprehensive as, reforms proposed in the Governor's budget.

Early Education & Care

Early Education & Care

The FY 2013 House Ways and Means budget matches the Governor's proposal of $434.7 million for child care subsidies, a decrease of $8.1 million from FY 2012 levels. Most of the funding within Early Education & Care funds three separate child care programs: 1) TANF-Related Child Care for children of families served by or transitioning from Transitional Aid to Families with Dependent Children (TAFDC); 2) Supportive Child Care for children in Department of Children and Families (DCF) care; and 3) Low-Income Child Care for other children of low-income working families. For the third year running the Governor proposed consolidation of these categories, which would empower the Department of Early Education & Care (EEC) to transfer money across these accounts at will. The HWM budget keeps the categories distinct, maintaining current procedures that require EEC to provide documentation to the House and Senate Ways and Means committees 30 days before making any transfer.

The table below shows the HWM's proposed appropriation for the three programs in comparison to the Governor's proposal and FY 2012. TANF-Related Child Care receives the biggest cut, almost $7 million. EEC projects that this level of funding will be insufficient in FY 2013. Because this is an entitlement program, funds will need to be added during the year if there is a shortfall. This could be accomplished through a transfer from the Low-Income Child Care program or through a legislative increase.

Child Care Subsidy Line Items

Low-Income Child Care also suffers a reduction of $1 million. Access for new income-eligible families has been closed for most of FY 2012 and the HWM's proposal will continue to exclude new families for FY 2013. The waitlist for Low-Income Child Care, already over 30,000 families, will likely continue to grow in FY 2013.

The HWM budget also proposes a 25% ($200,000) reduction to the Reach Out and Read Program compared to FY 2012. The Governor's proposal level funded this program at $800,000. Reach Out and Read promotes early literacy and school readiness by partnering with doctors to give out free books and encourage families to read together.

The HWM budget breaks from the Governor's Gateway Cities Education Agenda by not including the new $575,000 Gateway Cities Early Literacy Programs line item. The program would target professional development to family child care providers and other family members. This program is administered by the Executive Office of Education and therefore does not show up within the MassBudget subcategory of Early Education & Care.

Most other accounts within Early Education & Care received small increases or decreases compared to current FY 2012 levels. It is worth noting that even small increases in nominal terms are often insufficient to keep pace with inflation and are tantamount to a cut.

Early Education and Care Line Items

K-12: Chapter 70 Aid

Regressive Impact

The FY 2013 HWM budget funds Chapter 70 education aid to cities, towns, and regional school districts at $4.15 billion, which is $18.5 million greater than the Governor's proposal and $163.8 million above current FY 2012 levels.

The Governor's Chapter 70 proposal, which served as the basis for the HWM proposal, roughly funded the formula outlined in state law, using updated enrollment, inflation, and municipal revenue growth factor measures, helping school districts keep up with the rising cost of providing baseline services.1 The Governor's proposal (and the HWM proposal) also partially phased in one of the reforms planned as part of the FY 2007 budget—reducing by 15 percent the gap between a district's preliminary contribution and its target for those districts that are currently above their targets.2 This partial phase-in results in a little more than $10 million in additional Chapter 70 aid for these districts. Fully phasing in effort reduction for these communities, bringing their required contributions down to their targets, would cost roughly an additional $110 million in Chapter 70 aid.

Additionally, however, the HWM budget builds onto the Governor's proposal by adding a provision that guarantees each school district a minimum $40 per pupil increase over their FY 2012 aid allocation. This added minimum increase provision results in an extra $18.5 million for Chapter 70 aid over the Governor's proposal. While increasing education aid statewide will help offset cuts of recent years, spending this additional money through a minimum increase across-the-board raises distributional concerns. The Chapter 70 formula is designed to consider varying needs of different student populations and the varying ability of cities and towns to raise local tax revenue. Across-the-board increases do not account for these wide variations in communities across the Commonwealth. For more information on how the Chapter 70 formula works, please see Demystifying the Chapter 70 Formula, available HERE.

The graph below shows the HWM distribution of this additional $18.5 million above the Governor's proposal and breaks it out based on wealth using the state's combined measure of local property and income wealth designed for calculating required contributions. For this analysis we cluster all Massachusetts districts into five wealth quintiles, with least wealthy communities on the left-hand side ("Lowest 20%") and the most wealthy communities on the right ("Highest 20%). As the graph shows, the HWM budget's minimum $40 per pupil increase provision distributes more of this money to higher-wealth districts than to lower-wealth ones.

Regressive Impact

Finally, this statewide year-to-year increase looks somewhat smaller when Education Jobs Fund revenue is built into FY 2012 and FY 2013 amounts. The Education Jobs Fund is a federal stimulus program that provided money to Massachusetts schools for use in FY 2011, FY 2012, and the first quarter of FY 2013—money that was distributed through the Chapter 70 formula. Of a total $200.5 million grant amount for these three years, $66.6 million was used in FY 2011 and $116.7 million has been claimed for FY 2012, leaving a projected $17.2 million for use during the first quarter of FY 2013. After combining this federal revenue with the HWM proposal's state contribution, the total amount available to districts for FY 2013 ($4.17 billion) represents an increase of $64.3 million over total amounts for FY 2012 ($4.11 billion).

K-12: Non-Chapter 70 Aid

K-12: Non-Chapter 70 Aid

The HWM budget funds non-Chapter 70 programs for elementary and secondary education at $533.9 million, which is very close to the Governor's proposal and $22.5 million above current FY 2012 levels. Most of the programs within the MassBudget category of K-12: Non Chapter 70 Aid are grant programs distributed to individual schools and/or school districts to advance specific priority initiatives. The HWM budget provides funding for three new programs, cuts funding for several important programs, and provides modest increases to a few others. For more detail please see the comprehensive line item table at the end of this subcategory.

The HWM budget funds a few new K-12 education programs. They are:

  • Homeless Student Transportation funded at $11.3 million. Federal law provides that homeless students living in temporary housing outside of a city or town where the family lived prior to becoming homeless may choose to remain enrolled in the school district of origin. The federal law requires that transportation be provided so that students can continue attending the school district of origin, and this new line item, not included in the Governor's budget, would help reimburse host and sending school districts for these transportation-related costs.
  • Programs for English Language Learners in Gateway Cities, for summer English learning camps for students who are not yet fluent in English, funded at $2.6 million. This funding level is $1.2 million below the Governor's proposal. The Governor's budget included funding for three other new initiatives to support schools in gateway cities, which were not funded in the HWM budget. These programs were Gateway Cities Student Support Centers, Gateway Cities Career Academies, and Gateway Cities Early Literacy Programs.
  • Financial Literacy Programs, for competitive grants that fund high school financial literacy programs, funded at $250,000. This initiative is not funded in the Governor's proposal. The program would begin with a 3 year pilot in 10 public high schools, with participation in the pilot limited to schools in gateway cities.
  • Advanced Placement (AP) STEM funded at $1.0 million to fund a competitive grant program designed to increase participation and success in high school Advanced Placement courses that prepare students for work in science, technology, engineering, and mathematics. This funding level is $1.4 million below the Governor's proposal of $2.4 million.

Several programs receive cuts under the HWM proposal. Among these are:

  • Adult Basic Education (ABE), which is cut $1.5 million from current FY 2012 levels. The Governor proposed level funding. ABE received $3.0 million a FY 2012 supplemental budget, bringing funding for these educational programs for adult learners—including GED, basic literacy, English for speakers of other languages, and citizenship classes—up to its current level of $30.7 million. The HWM proposal represents a 12.4 percent cut from FY 2009 GAA inflation-adjusted levels.
  • METCO, which is cut $1.0 million from current FY 2012 levels. The Governor proposed level funding.
  • Connecting Activities—providing summer work opportunities for high school students—which is cut $750,000 from current FY 2012 levels. The Governor proposed slightly above level funding.
  • MCAS Low-Scoring Student Support, which is cut $480,000 from current FY 2012 levels. The Governor proposed level funding.
  • Youth-Build Grants, which is cut $300,000 from current FY 2012 levels. The Governor proposed an increase of $700,000 over FY 2012 levels.

Additionally, the HWM budget shifts the $1.0 million Temporary Emergency Food Assistance line item (7051-0015) into the Emergency Food Assistance Program (2511-0105) as an earmark.

A few programs under the HWM proposal receive increases over current FY 2012 levels. These include funding:

  • The Special Education Circuit Breaker at $221.6 million, an increase of $8.5 million over FY 2012. The Governor proposed essentially level funding from FY 2012. Even with this one-year increase, the HWM proposal represents a 9.8 percent cut from the FY 2009 GAA inflation-adjusted level of $245.7 million.
  • Regional School Transportation at $45.4 million, an increase of $1.9 million over the FY 2012. The Governor proposed level funding. Even with this one-year increase, the HWM proposal represents a 30.6 percent cut from the FY 2009 GAA inflation-adjusted level of $65.5 million.
  • Kindergarten Expansion Grants at $24.9 million, an increase of $2.0 million over FY 2012 levels. The Governor proposed funding these grants at an additional $1.0 million over the HWM proposal.

The HWM budget proposes $3.9 million, level funding from the current FY 2012 budget, for three literacy-related programs—Bay State Reading Institute, Literacy Programs, and Reading Recovery. The Governor proposed rolling Bay State Reading into Literacy Programs, and total funding for all three was also level under the Governor's proposal. Without adjusting for inflation, the real value of funding for these programs continues to decline. The HWM proposals combined represent a 15 percent cut from FY 2009 GAA inflation-adjusted funding levels.

K-12: Non-Chapter 70 Aid Line Items

K-12: School Building

K-12: School Building

The HWM budget projects a contribution to the School Modernization and Reconstruction Trust (SMART) of $689.4 million, which is higher than current FY 2012 levels but below the Governor's projection. Each year the Commonwealth is required to contribute to this trust an amount equal to one out of every 6.25 cents brought in through the state sales tax. Both the HWM and the Governor's budgets project increases in sales tax receipts due to anticipated economic recovery during FY 2013. The Governor's projection is $9.8 million higher, however, because of his proposed elimination of the sales tax exemption for candy and soda.

Higher Education

Higher Education

The FY 2013 HWM proposal funds the full MassBudget category of Higher Education at $1.0 billion, an increase above the current FY 2012 funding level of $954.7 million. The additional funding in FY 2013 almost entirely reflects costs faced by the colleges and universities to pay for salary adjustments set by recent collective bargaining agreements. The HWM proposal for FY 2013 would represent an inflation-adjusted cut of 14 percent from pre-recession levels (FY 2009 GAA). Cuts are even deeper when looked at over the last decade, with proposed FY 2013 funding representing a 30 percent cut from FY 2001.

Starting in FY 2012, all campuses of public higher education began retaining tuition payments from out-of-state students, rather than remitting that revenue back to the state. MassBudget adjusts upwards the campus allocations by these projected amounts so that one can compare reasonably the level of resources available at an individual campus to that of previous years when this tuition was remitted to the state.

As with the Governor's proposal, the HWM proposal includes $49.2 million in collective bargaining accounts that cover labor costs at each of the campuses. While this spending shows up in separate reserve accounts, where possible MassBudget builds these dollars into campus totals in order to reflect more accurately the level of state budget resources being used to run these campuses ($5.7 million for line item 1599-4419 goes towards a bargaining unit covering both state universities and community colleges and cannot be broken out at the time of publication). The table below summarizes funding totals for each of these campus types.

Higher Education funding by Campus Type

The HWM and Governor's proposals for community colleges differ both in terms of overall funding levels and in terms of policy reforms advanced through the budget. The Governor proposed significant changes to the state's community college system, centralizing budget and leadership control over community colleges under the Board of Higher Education (BHE). The Governor's consolidation of funding for the state's 15 community colleges into one Massachusetts Community Colleges line item was coupled with an additional $10.4 million in funds for FY 2013 that is not included in the HWM proposal. The Governor also called for community colleges to focus more specifically on job training and sought to standardize the system statewide, easing the process of transferring credits across campuses.

While the HWM budget does not replicate the Governor's full governance consolidations, it does include language in Outside Sections that is similar in nature to the Governor's reform package. Related HWM reforms include:

  • Expanding the Board of Higher Education's role in selecting community college presidents. The Governor's proposal, by contrast, gave the BHE full authority to select presidents.
  • Giving the Governor authority to appoint each community college board chair. The Governor also proposed this reform.
  • Requiring the Commissioner of Higher Education to develop a new community college funding formula that is based in part on performance. Language instructs that workforce development goals be among the performance metrics included.
  • Increasing the Performance Management Set Aside incentive program from $2.5 million to $7.5 million. HWM budget language includes an earmark stating that no less than $5.0 million of this account be spent on community college initiatives aimed at improving completion rates, promoting the adoption of more standard course offerings, and consolidating and coordinating administrative procedures across the campuses.

The HWM and Governor's funding proposals are almost identical for UMass and the state universities, except that the HWM budget eliminates separate funding—$497,000 in FY 2012—for the Collins Center for Public Management at UMass Boston.

The HWM budget proposes $86.5 million for the State Scholarship Program, which is about $1 million below both the Governor's FY 2013 proposal and current FY 2012 levels. It is important to note, however, that line item language directs the Massachusetts Education Finance Authority (MEFA) to contribute $1.0 million in addition to the state's $86.5 million appropriation, bringing total resources for scholarships under the HWM proposal in line with the Governor's proposal. Since current FY 2012 language also includes a $1.0 million contribution from MEFA, total resources under both the HWM and Governor's proposals are about $1 million below total resources currently available for FY 2012.

Among the cuts proposed in the HWM budget is elimination of the $635,000 Nursing and Allied Health Education Workforce Development program, which helps recruit new nurses. The Governor's budget also eliminated this program.

Please see the table below for more information on Higher Education line items funded either in FY 2012 or FY 2013. This table includes tuition retention adjustments for each of the campus line items, but separates out collective bargaining accounts in the first three rows.

Higher Education line items


1For more information on the Governor's FY 2013 Chapter 70 proposal, please see the K-12: Chapter 70 Aid section of MassBudget's recent FY 2013 Governor's Budget Budget Monitor, available online at: http://www.massbudget.org/report_window.php?loc=budget_monitor_governor_fy13.php

2For more information on the 2007 reform plan, please see the November 2006 MassBudget paper Public School Funding in Massachusetts: Where We Are, What Has Changed, and Options Ahead, available here: http://www.massbudget.org/file_storage/documents/Public_School_Funding-Where_We_Are_What_Has_Changed_-_FINAL.pdf

Environment & Recreation

In its Fiscal Year (FY) 2013 budget, the House Ways and Means (HWM) Committee recommends spending $2.0 million more on Environment and Recreation than the FY 2012 budget. Its budget, however, provides $16.4 million less than the Governor's recommendation. In part the HWM budget is lower than the Governor's because it does not provide the same level of funding for recycling and redemption centers as the Governor's proposal. In his budget, the Governor proposed expanding the bottle bill to include water, juice and other drinks and to provide $5.3 million of the funds to support recycling and redemption centers. (See the Environment section for more details.) Since the onset of the state fiscal crisis in FY 2009, funding for Environment and Recreation programs has fallen by almost 28 percent in inflation-adjusted dollars.

Environment

The environment budget for the state supports programs that keep the air, water and land clean. It includes funding to clean hazardous waste sites, support recycling and redemption centers to reduce waste going to landfills and to support environmental police. Even though the HWM budget proposes spending $1.1 million (1.6 percent) more than the FY 2012 current budget, inflation increases the cost of providing the same level of services from one year to the next meaning that the HWM funding level likely represents a cut in funding. The HWM budget recommends spending $11.4 million less than the Governor's FY 2013 budget.

The HWM budget does not include the Governor's recommended $5.3 million increase in funding for recycling and redemption centers throughout the state. In his FY 2013 budget, the Governor's proposed funding this increase by using some of the $20.0 million raised with the expansion of the bottle bill to include water, coffee and juice drinks. The HWM budget, which does not include this proposal, provides $275,000 for these centers, the same amount they are expected to receive in FY 2012.

Like the Governor's proposal, the HWM Committee proposal also increases funding for hazardous waste cleanup by $1.2 million over the current budget to $13.2 million. Even with this increase, funding for cleaning up hazardous waste sites has fallen by 26 percent in inflation-adjusted dollars since the onset of the fiscal crisis.

Fish & Game

State fish and game programs oversee Massachusetts fisheries, wildlife habitats and other natural sites in the state. Much of the funding that supports fish and game programs comes from the revenues the Department of Fish and Game receives through the sale of licenses for hunting, fishing, boating and other activities.

Parks & Recreation

The state's parks and recreation budget supports state parks, urban parks, beaches, pools, spray pools and the employees who work at these facilities. It also funds parkways and dams managed by the Department of Conservation and Recreation (DCR). Even though the HWM budget recommends a slight increase in FY 2013 compared to the FY 2012 current budget, inflation increases the cost of providing the same level of services from one year to the next, meaning that the Committee's proposal likely is a cut in funding. The HWM budget is almost $4.5 million less than the Governor's FY 2013 proposal. Among its proposals the HWM Committee budget:

  • Provides $40.6 million for state parks, and urban parks and parkways which is $1.5 million below the FY 2012 current budget and $938,000 more than the Governor's proposal. While the HWM budget increases the amount of revenue that DCR can retain to pay for employees at state parks by almost $600,000, (see description below) the HWM cut in parks funding still leaves DCR $900,000 below its FY 2012 current budget. Since the onset of the fiscal crisis, funding for state parks and recreation has fallen by $36.7 million or 34 percent in inflation-adjusted dollars. The successive years of cuts to DCR has hampered the agency's ability to adequately care for and staff many parks and recreation facilities throughout the state.
  • Offsets some of the cuts that it recommends for the parks account by recommending that DCR keep more of the revenue it raises through fees to staff and maintain DCR parks, pools and other facilities. Like the Governor's, the HWM budget consolidates six retained revenue accounts into a single account. The HWM budget provides $9.0 million which is $598,000 more than the FY 2012 current budget but $5.1 million less that the Governor's proposal. (It is important to note, as mentioned above, that the HWM budget recommends providing the state parks account with $938,000 more than the Governor's proposal.) The line item chart below redistributes the funds back into each retained revenue account to allow for a better year-to-year comparison.
  • Increases funding for beaches, pools and seasonal employees working at DCR facilities by $845,000 to $12.5 million. The HWM budget requires that all beaches, pools and spray pools be open and staffed from Memorial Day through Labor Day.
  • Increases funding for DCR administrative account by almost $500,000 above the FY 2012 budget level of $3.3 million. The HWM budget is $350,000 less than the amount proposed in the Governor's FY 2013 budget.

Health Care

The House Ways and Means (HWM) budget proposes spending of $15.16 billion for health programs overall, an increase of 4.8 percent over current Fiscal Year (FY) 2012 spending. The HWM proposed spending level is about half a percentage point lower than that proposed by the Governor. While overall spending on health programs rises, the increase is not spread evenly across programs—spending on MassHealth and other health reform programs that provide health coverage to low-income people increases, largely as a result of enrollment growth and health inflation, and funding for mental health programs rises at about the rate of inflation, although the increase does not come close to restoring the funding that mental health programs have lost since FY 2009. Meanwhile, spending on health insurance for state employees declines slightly, and the HWM budget includes yet another round of cuts for public health programs.

MassHealth (Medicaid) & Health Reform

The HWM budget proposes to spend $12.7 billion on MassHealth and other health care programs in FY 2013. The bulk of spending in this category goes to pay for MassHealth programs that provide health coverage for over 1.3 million people in Massachusetts (including Medicaid, which covers nursing home and other care for the elderly). Another significant portion is transferred to the Commonwealth Care Trust Fund (CCTF) and used to support the Commonwealth Care (CommCare) program that provide coverage to about 175,000 people with incomes above the cut-off for MassHealth coverage. Enrollment in these programs has risen steadily during the recent economic crisis, and more than one in five people in Massachusetts now depend on them for health coverage. Other spending in this category supports safety net hospitals, helps elderly and disabled people pay for prescription drugs and funds activities of the Division of Health Care Finance and Policy. Most of the spending in this category is eligible for federal reimbursement, generally at a rate of 50 percent of the state's spending.

The HWM FY 2013 budget proposal for MassHealth and Health Reform programs is very similar to that proposed by the Governor. The most notable difference lies in funding for the Commonwealth Care program—while the Governor proposed to increase the tobacco tax and dedicate the new revenue to the CCTF, the HWM budget increases the transfer from the General Fund to the CCTF. A second difference has to do with funding for information technology at Health and Human Services (HHS) agencies, including MassHealth. (See below for more detail on these differences.)

MassHealth (Medicaid)

The HWM budget proposes a total of $11.0 billion for MassHealth programs and administration in FY 2013, an amount that is virtually identical to what the Governor proposed in his spending plan. While this represents an increase of $510.0 million, or 4.8 over FY 2012 current spending, it is actually well below the increase of approximately $1.1 billion that would have been required to maintain MassHealth programs in their current form in FY 2013, given expected enrollment increases and inflation. While the HWM budget provides no information on how it achieves the lower rate of spending growth, it appears to rely on the same savings strategies that the Governor's budget uses uses to realize about $600 million in savings and new revenue, or $300 million in state savings (for a discussion of these strategies, see The Governor's Health Care Budget Proposal".) The budget also assumes shifts in funding among MassHealth program line items due to changes in enrollment in various types of coverage and a plan to move some costs for the Commonhealth program into the MassHealth managed care line item (see table at the end of this section for line item details).

The HWM budget proposes a slightly higher increase to the MassHealth administrative line item, and includes an earmark within it for Hale Hospital, which previously received funding from a special reserve account. The HWM budget includes two new initiatives that were included in the Governor's budget, but funds them at lower levels. The Governor proposed $2.0 million for a new Operations line item meant to improve the timeliness and efficiency of the MassHealth enrollment and redetermination process, in response to recent enrollment growth, but the HWM budget appropriates $500,000; likewise the House provides $750,000 to help implement federal health reform legislation and payment reform strategies, such as creating infrastructure to support bundled payment models and other forms of integrated care delivery, instead of the $3.1 million the Governor proposed. In other words, the HWM budget proposes $3.9 million less in funding for these two initiatives.

Commonwealth Care Trust Fund

The CCTF receives transfers from the state's General Fund, as well as revenue from a portion of the cigarette tax, from assessments on certain employers who do not provide insurance and from penalties paid by people who can afford insurance but do not purchase it. These resources are used to pay for the CommCare insurance program for low-income people who are not eligible for MassHealth. In FY 2013 the program is expected to cover around 200,000 people in FY 2013, including certain legal immigrants who had been excluded from the program, but who will once again be eligible for CommCare following a recent state Supreme Judicial Court decision that the exclusion was unconstitutional. In addition to funding for CommCare, $30 million is transferred each year from the CCTF to the Health Safety Net Trust Fund to support care provided to uninsured patients.

The HWM projects total cost for the Commonwealth Care program at $957.0 million. Of this amount $795.0 will come from a transfer of revenue from the General Fund, and another $120.0 million will come from a portion of the tobacco tax that is dedicated to the CCTF under current law, for a total of $915.0. The remainder will come from the other revenue sources described above and from the one-time use of surplus revenue carried over from FY 2012. In contrast, the Governor's budget proposed $930.0 million in funding--a transfer of $737.1 from the General Fund and an increase in the tobacco tax expected to produce $72.9 million in addition to the $120.0 million from the existing tobacco tax. The HWM committee's lower funding level appears to be due to updated assumptions about Commonwealth Care enrollment in FY 2013. Proposed spending for FY 2013 represents an increase of $50.0 million compared to FY 2012; the rise in spending is due largely to increased enrollment since, like MassHealth, the CommCare program has implemented and plans to continue a variety of savings strategies (such as a move to more integrated care and new procurement practices).

Other Health Reform and Safety Net Spending

Also included in the HWM budget are:

  • A transfer of $186.9 million from the General Fund to a new Delivery System Transformation Initiatives (DSTI) Trust Fund that will provide incentive payments, in accordance with the state's MassHealth waiver agreement with the federal government, to providers for activities that support the development of new payment and health delivery systems, such as better management of chronic conditions and medical home infrastructures. (A similar transfer for FY 2012 is included in a supplemental budget currently before the legislature.)
  • An authorization for the Division of Health Care Finance and Policy to spend $2.0 million from federal reimbursement funds in order to move management of Health Safety Net claims for uncompensated care to MassHealth.
  • A slight decrease in funding for the Prescription Advantage program, which reflects reduced utilization of the program due to changes made by the federal health reform law that will provide increased Medicare coverage for costs that are now covered by the Prescription Advantage program.
  • Language (also included in the Governor's budget) that would allow the administration to restructure MassHealth benefits. Like the Governor's plan the HWM budget does not include restoration of adult dental benefits for MassHealth and Commonwealth Care enrollees.
  • The HWM budget provides an increase of $5.0 million for Information Technology services at HHS agencies (this funding goes to other agencies besides MassHealth and the Division of Health Care Finance). The Governor proposed an increase of $18.6 million for these services.

Mental Health

The HWM FY 2013 budget proposes an increase of around 2.0 percent over FY 2012 spending for mental health programs operated by the state's Department of Mental Health (DMH), about the expected rate of inflation. This funding level is similar to the Governor's proposed $14.9 million increase. However, funding for mental health programs remains $68.1 million, or about 9.3 percent, below what was allocated in FY 2009, after adjusting for inflation. Cuts since 2009 have affected programs that support education, employment, and clubhouse programs, as well as reducing beds at DMH facilities.

Funding for two core DMH line items—those providing treatment and support to children and adults in the community—rises by $5.8 million and $10.4 million respectively, and funding for DMH facilities rises by $6.3 million (see line item table below for detail). However, the FY 2012 budget included the one-time use of contributions from mental health trust funds to support many of these programs. Language in the FY 2012 budget specifically allowed use of the trust funds for in-patient or community services and authorized transfers of funds to the adult services and DMH facilities line items. The availability of the trust funds meant that the budget appropriations for the line items were lower in FY 2012 than they would have been if the $10 million in trust funds had flowed more directly through them, and conversely the FY 2013 increases for these programs appear larger.

The proposed HWM appropriation levels for individual line items are generally very close to those contained in the Governor's spending plan, with one exception. The Governor's budget proposed an increase of just over $1.0 million (or 13.1 percent) for a Forensic Services Program that assists mentally ill people who have recently been released from prison and other correctional facilities, while the HWM budget level funds this program at $8.1 million.

Finally, the HWM budget adds language to the DMH facilities line item that sets criteria for moving DMH clients from in-patient facilities to residential services in the community (for instance, clients must be deemed clinically suited to receive care in the community), it also includes language—apparently in response to concern over the closure of Taunton State Hospital—requiring that clients transferred to a new DMH facility due to closure of another facility receive a level of care equal to or better than that received at the closed facility.

Public Health

The HWM budget proposes to decrease funding for public health programs by $20.5 million, compared to current FY 2012 spending. The Governor provided a slight increase for these programs and used $51.2 million in new revenue from a proposed elimination of the sales tax exemption for soda and candy to help fund them.1

Massachusetts has historically provided a wide range of public health programs to protect the health of the general public in Massachusetts, for instance by responding to public health emergencies and ensuring that health professionals and facilities are properly licensed; DPH also operates several public hospitals. Beyond these basic functions, more than half of DPH state budget funding goes to programs that promote health and wellness and prevent disease in specific populations. The fiscal crisis has hit all these programs hard. Between FY 2009 and FY 2012 overall funding for public health declined by $111.3 million, or 17.5 percent, after adjusting for inflation. The funding level proposed in the HWM budget would bring that decline to 20.8 percent. Key changes included in the HWM budget are discussed below.

Substance Abuse and Smoking Prevention Services

The HWM budget provides a modest increase of 1.7 million, or 2.3 percent, over FY 2012 funding for the main substance abuse services line item, the same level that the Governor proposed. However the HWM budget also proposes to eliminate funding for two other substance abuse line items, one that funds a jail diversion program for non-violent offenders with addiction problems, and another that funds family intervention and young adult treatment programs. The Governor provided level funding of $2.0 and $1.5 million, respectively, for these line items. The HWM budget also proposes to cut funding for step-down recovery services nearly in half, from $4.8 million to $2.8 million. A separate Substance Abuse Services Fund that was created in order to fund an expansion of treatment facilities and case management for people who have been civilly committed and have substance abuse disorders received a $10.0 million transfer from the General Fund in FY 2012. While there is no additional transfer in FY 2013, statutory language governing the Fund allows spending from it through the end of FY 2013, at which point it will sunset. Any additional ongoing costs related to the expansion will need to be included in future budgets.

The HWM budget level funds smoking prevention and cessation programs at $4.2 million, in contrast to the Governor's proposal to increase funding by $1.7 million. This line item has been cut by $9.5 million since FY 2009, after adjusting for inflation.

HIV/AIDS and Disease Prevention

The HWM budget cuts funding for the HIV prevention and treatment line item by $500,000, a 1.6 percent cut compared to the FY 2012 current appropriation. The Governor's budget essentially level funded this program. Likewise, while the Governor proposed level funding for disease prevention programs, using revenue from a proposed elimination of the sales tax exemption for soda and candy, the HWM budget includes a cut of nearly 30 percent, from $3.4 to $2.4 million. Funding for these programs—which include cancer screening, cardiovascular risk education, and care coordination for high-risk populations—was $15.7 million in FY 2009, after adjusting for inflation. While some disease prevention activities may now be covered by health insurers, particularly as more Massachusetts residents have gained coverage under the state's health reform law, it is clear that these programs have been hit especially hard in recent years.

Early Intervention

The HWM budget includes funding of $25.7 million for Early Intervention services, an amount that is identical to what the Governor proposed. The Governor's budget assumed a shift of $4.3 million in Early Intervention costs to a MassHealth line item that will now pay for them; while the HWM budget does not provide detail, it appears to make the same assumption. Taking this into account, proposed spending for Early Intervention services is $30.0 million, a decrease of about $1.1 million compared to FY 2012. The drop in funding appears to reflect projected maintenance costs for the program.

WIC

The HWM budget follows the Governor in proposing an increase of $1.8 million, or 7.5 percent, in the amount that the Women, Infants and Children (WIC) nutrition program is authorized to retain and spend from revenue it receives from infant formula rebates and other federal measures. The increase is expected to cover the costs of maintaining the current level of services.

Youth Violence Prevention

The HWM budget proposes to increase Youth-at-Risk Matching grants from $1.7 million to $1.8 million. However it level funds the current Violence Prevention Grants line item and eliminates the "Safe and Successful Youth Initiative" (contained in a separate Health and Human Services line item) that provides youth violence prevention grants targeted to high-risk communities. The latter program received $10.0 million in funding for FY 2012 in a supplemental budget, and the same level of funding in the Governor's proposed FY 2013 budget.

State Laboratory and Communicable Disease Control

The HWM budget provides $11.7 million in funding for the State Laboratory that is operated by DPH, slightly less than the Governor's proposed appropriation of $11.8 million. The Governor's budget assumed a shift of $1.5 million in costs to the State Police Crime Laboratory line item, and while the HWM budget provides no information on such a shift, outside sections of the HWM budget indicate similar plans to consolidate DPH lab work with state police crime lab. Thus we assume a similar transfer for the purpose of comparing funding levels between the HWM and Governor's budget plans; after taking this shift into account the proposed appropriation represents level funding compared to FY 2012.

Public Health Hospitals

The HWM budget provides an increase of $4.3 million in funding for most hospitals operated by the Department of Public Health, in contrast to the Governor who proposed an increase of $9.1 million. The HWM plan proposes level funding for most public health hospitals; the exceptions are increases in the amount of revenue related to Department of Corrections patients that Shattuck Hospital can retain, and a new authorization for Tewksbury Hospital to retain revenue from services for patients who are clients of the Department of Developmental Services.

State Employee Health Insurance

The HWM budget proposes total funding of $1.3 billion for the state share of health benefits provided to active and retired state employees, as well as a group of retired municipal teachers, through the Group Insurance Commission (GIC). This figure excludes the cost of health coverage for municipalities who have joined the state's Group Insurance Commission, since they repay those costs (see table at the end of this section for details). As with the other state health insurance programs such as MassHealth and Commonwealth Care, the state has employed a number of strategies to hold down cost increases in recent years, and plans to continue these strategies in FY 2013. The difference between the HWM FY 2013 budget and the Governor's spending plan for this area is likely the result of updated enrollment projections; the HWM budget also includes language requiring an audit of beneficiaries claimed as dependents of state employees who are eligible for GIC coverage.

Most funding for state employee health costs comes in the form of an appropriation for the costs of current employees, plus a transfer from the General Fund to the State Retiree Benefits Trust Fund that supports the cost of health coverage for retired employees. As the table above shows, funding for active and retired employee health costs appears to decline substantially compared to FY 2013. However, the HWM budget follows the Governor in proposing the use of $40.0 million in existing balances in a Group Insurance trust fund to pay for state employee health costs in FY 2013; when this one-time resource is taken into account, there is a smaller decline in funding. (These one-time resources come from a fund that holds federal revenue resulting from the state's participation in an early retiree reinsurance program created by the national health care reform law.) The GIC recently announced that average premium increase for next year will be 1.4 percent, the lowest since 1999. The HWM budget does not appear to adopt the Governor's proposal to use $4.0 million from trust fund balances to pay for wellness and smoking cessation programs for state employees.

In addition to a transfer from the General Fund, the State Retiree Benefits Trust Fund will also begin to receive a portion of revenue from the annual tobacco settlement payment made to the state (in recent years this revenue has been deposited in the General Fund for use in the budget). In FY 2013 10 percent of the tobacco settlement payment, or $27.6 million, will be deposited in the Fund. The share will increase by increments of ten percentage points each year, until 2022, when 100 percent of the payment will go into the fund. In addition, 5 percent of any future capital gains revenue beyond $1 billion will also be deposited in the fund (other capital gains revenue beyond this limit will go into the Stabilization, or Rainy Day, Fund). In both cases these new revenues will help reduce the unfunded liability related to future health benefits promised to state employees.


1 MassBudget includes funding for youth violence prevention programs under the Executive Office of Health and Human Services along with other Department of Public Health programs. We also adjust for certain transfers of funding to other departments (see line item chart for more detail); without these adjustments the decrease compared to FY 2012 is $26.3 million.

Human Services

Even though human services programs form a crucial part of the Commonwealth's "safety net" for the state's most vulnerable residents, the House Ways and Means (HWM) Committee has had to create a budget significantly limited by financial constraints. In most instances, FY 2013 funding is essentially level with FY 2012, with several important programs experiencing significant cuts, and others barely staying level with FY 2012 when considering the impacts of inflation. Moreover, looking over the longer term and comparing funding in the HWM proposal with pre-recession levels, funding for services for vulnerable children and their families has been cut substantially over time.

Children, Youth & Families

Children, Youth & Families

The Department of Children and Families (DCF, formerly DSS) receives $751.7 million in the HWM budget, compared to $744.3 million in FY 2012 and $770.9 million recommended by the Governor. The most significant decrease is in the funding for regional and central administration. HWM, as it has recommended in past years, completely eliminates funding for DCF regional administration. This line item, funded at $9.3 million in FY 2012, and funded at $10.2 million by the Governor, funds contracts for "lead agencies" across the state that have specific oversight and service coordination responsibilities within the social service system. The HWM budget also funds DCF central administration at $65.7 million, essentially level with FY 2012 funding and $3.7 million less than in the Governor's proposal.

HWM also funds group care at $197.7 million, $2.5 million less than in the Governor's proposal and $1.6 million more than FY 2012 current funding. Similarly, social workers are funded at $166.2 million in the HWM proposal, $2.7 million less than in the Governor's proposal and $4.1 million more than FY 2012 funding. In these two accounts, the difference between the HWM proposal and the Governor's proposal is the amount added in FY 2012 by supplemental funding added in October that was intended to restore funding for positions for social workers that were cut in FY 2011. The Governor's budget had included these amounts in order to fully-fund these restored positions for the full year. Even though these line items are funded less than in the Governor's proposal, the increase over FY 2012 funding should allow the department to begin implementing a statewide initiative to standardize and increase human service provider rates across various departments, including a rate increase for foster care providers.

Family support and stabilization services receive $44.6 million in both the HWM and Governor's budget proposals, which is a 12.1 percent increase over FY 2012 current funding levels, and the relatively largest increase throughout the department. Even though there are more children receiving kinship-based care and support than those in out-of-home placements, family support funding has historically lagged well behind funding for out-of-home care.

Dept Children and Families

The Department of Youth Services (DYS) in the HWM budget receives a total of $154.7 million, a 6.1 percent increase over FY 2012 current funding levels. This total includes an increase in funding for residential services for the detained population, from $18.3 million in FY 2012 to $20.8 million ($556,000 less than recommended by the Governor), and an increase in residential services for the committed population, from $98.7 million in FY 2012 to $102.6 million ($227,000 less than recommended by the Governor). The Administration does not anticipate a significant change in departmental caseload in FY 2013, but these increases over FY 2012 funding levels will support an across-agency initiative to standardize provider rates for the various human service agencies.

Like the Governor, HWM includes $2.1 million in a new line item to provide state funding in the Department of Youth Services for an alternative lock up program. This program—which up until now had been funded only with limited federal dollars—is designed to provide a safe (non-police) environment for alleged juvenile offenders awaiting court appearance. Current federal law restricts police departments from holding juveniles for more than six hours, and in any case many police department facilities do not have appropriate holding areas for children. This funding will allow for the Department to manage funding for the four existing community-based secure and appropriate placements for children awaiting arraignment. Previously, these federal grants had been managed by the Executive Office of Public Safety.

The HWM budget proposal does not follow the Governor's recommendation to fund a data-sharing initiative among the agencies providing services to children, youth and families. The Governor had proposed $3.0 million for this initiative within the Executive Office of Health and Human Services, but HWM did not include this funding.

Children, Youth & Families

Disability Services

Disability Services

Funding for services for individuals with disabilities fares slightly better in the HWM budget than funding for other human services programs. Nevertheless, even with the HWM proposed funding levels, there is concern that the Commonwealth's budget for persons with disabilities is not able to keep pace with the anticipated need for services felt by the growing numbers of young adults leaving special education and needing extensive support services in the community. The Administration has repeatedly stated a commitment to community-based services, but some of the line items funding community-based supports for persons with disabilities have been cut substantially over the past few years, even with a shift in funding away from the state-run institutions. Adults with disabilities seeking employment are particularly hard hit by ongoing funding reductions in the Departments of Developmental Services and the Mass. Rehabilitation Commission.

Disability Services2

The HWM budget directs new funding to the Department of Developmental Services, increasing funding above both the FY 2012 current funding total and the Governor's budget recommendation. The HWM budget included $10.0 million more than the Governor for the respite (family supports) program, bringing funding up to $51.0 million, an increase of $4.5 million over FY 2012 current funding levels. For many families with disabled children, the respite program is the only source of support for afterschool recreational programming or for specialized caregiving. Although this is a significant increase in funding for these community-based supports, funding in the HWM budget still does not restore the respite program to pre-recession funding levels.

HWM also increases funding for services for young developmentally disabled adults Turning 22 in FY 2013. This line item receives $6.0 million, compared to $5.0 million in the FY 2012 budget and in the Governor's proposal. Even with this increase, however, funding is still 27 percent below pre-recession funding levels. The Turning 22 line item supports the entry of young developmentally disabled adults into the adult service system from the special education system, and constraints on this funding limit the number of adults who will receive services as well as the services that they will receive in the future.

The budget proposal from the House for community day and work services is $2.5 million less than the Governor's proposal. The House does not follow the Governor's recommendation to incorporate funding for transportation for the developmentally disabled into the community day and work services line item. Like in previous years, the House funds a distinct line item, and increases the funding by $2.0 million over the FY 2012 total to $13.6 million. The availability of transportation is one of the key determinants of whether a disabled adult is able to maintain employment or take part in community activities. (The line item breakdown below adjusts for this type of transfer in order to allow for more accurate year-to-year comparisons.)

The House follows the Governor's funding proposal for community residential supports for developmentally disabled adults, funding them at $788.1 million, a $31.3 million increase over FY 2012 funding levels. However, the House includes a separate line item for $400,000 in funding for the final year of the Rolland Court Monitor. According to the Administration, funding for community residential supports is sufficient to provide full residential funding for the young adults entering into the developmental services system, meaning that it should be sufficient to maintain current services for the anticipated FY 2013 caseload.

For adults with other types of disabilities, the HWM budget essentially maintains current funding levels, but these levels do not necessarily keep pace with inflation or anticipated need. (We adjust funding for the central office for the Mass. Commission for the Blind to reflect a shift of funding for the administration of SSI benefits for the blind from that office to the Department of Transitional Assistance—see discussion below.)

Disability Services line items

Elder Services

Elder Services

The HWM budget increases funding for community-based long term care services for elders compared to both the FY 2012 current funding levels and to the Governor's budget proposal. These home care services, which include a wide variety of supports such as homemakers and transportation assistance help keep the Commonwealth's frail elders in their homes as long as possible. Even with the increases, however, because of anticipated increasing need, the Commonwealth will still need to maintain wait lists for services. (For information on nursing home funding or the Prescription Advantage program, see the MassHealth & Health Reform section of this Budget Monitor.)

Community-based long term care services include:

  • $133.5 million for home care case management and services (same as the Governor's proposal)
  • $47.3 million for enhanced home care for the frailest and most vulnerable elders ($828,000 more than the Governor's proposal)
  • $17.3 million for elder protective services, which investigate elder abuse and neglect, and provide money management supports to prevent financial exploitation (compared to $16.6 million in the Governor's proposal)

The HWM put back in $1.5 million that had been cut by the Governor's budget proposal from the elder nutrition program, preventing what could have resulted in the loss of 240,000 free or reduced-price meals for elders. For some elders, the elder lunch programs—which are often run by local councils on aging—are the only guaranteed healthy meal or opportunity for socialization.

Elder Services Line Items

Transitional Assistance

Transitional Assistance

For entitlement programs like transitional assistance, funding levels are significantly affected by anticipated caseload levels. The HWM budget for Transitional Assistance for Families with Dependent Children (TAFDC) grants, and for the other cash assistance programs assumes a slight drop in caseload in FY 2013. Grants are funded at $322.8 million in the HWM budget, compared to $318.9 million in the Governor's budget and $324.2 million in the FY 2012 current budget. The HWM budget reduces the amount allowed for a clothing allowance, a one-time payment made in September to help pay for back-to-school clothing. In FY 2012, the budget allowed for a clothing allowance of up to $150. The Governor's budget did not identify a specific amount for the clothing allowance, but the Administration claimed that an allowance of $150 would be made available, although the appropriated amount did not seem sufficient to account for that. The HWM budget specifies a one-time clothing allowance of $75. The HWM budget also removes language providing for a $40 per month rent allowance.

The HWM follows the Governor's funding proposal with a drop in funding for Emergency Aid to Elders, Disabled and Children (EAEDC) from $89.0 million in the FY 2012 budget to $88.3 million in FY 2013. This funding level is based on an assumed drop in caseload.

The HWM budget includes language in its budget that would restrict how recipients of TAFDC or EAEDC could use their benefits as paid through the electronic benefits transfer (EBT) system. Although the intent of limitations on the use of EBT cards appears to be to protect the system from inappropriate use, the language in the HWM budget could be overly-restrictive and prohibit the use of these benefits for such basics as personal care items and other necessities.

Funding for the state supplement to Social Security Income (SSI) increases from $222.2 million in FY 2012 to an equivalent of $229.1 million in the HWM budget proposal. Like the Governor, HWM also includes in its funding a $8.1 million transfer of funding for the SSI supplement for clients of the Mass. Commission for the Blind (MCB), which in past years was separately accounted for within MCB. In FY 2013, HWM follows the Governor's recommendation to consolidate the funding for these two groups of people, shifting the administration of the program from the Social Security Administration to the University of Massachusetts Medical Center. The University already contracts with the state to handle substantial administrative responsibilities for various health and human service programs, and the state anticipates that it will recognize some administrative savings from this consolidation. (The line item breakdown below adjusts for this type of transfer in order to allow for more accurate year-to-year comparisons.)

Unlike the TAFDC or EAEDC caseloads, the Administration anticipates that the SNAP (Food Stamp) caseload will continue to rise as it has over the past years. The Administration projects being able to fund additional caseworkers, but caseloads for SNAP are still very high, delaying the ability of low income families and individuals in Massachusetts from getting access to these essential safety net benefits. HWM proposes $3.1 million for efforts to increase food stamp participation ($111,000 less than proposed by the Governor), as well as $1.2 million (level with the Governor's proposal) for a small state supplement to SNAP benefits for certain working families.

Transitional Assistance line items

Other Human Services

Other Human Services

Like the Governor, HWM increased funding for services for veterans compared to FY 2012 current budget levels, but the HWM funding is not as much as in the Governor's proposal. HWM includes an increase in the benefits provided to veterans of $5.0 million compared to FY 2012 ($1.9 million less than proposed by the Governor). HWM does not follow the Governor's recommendation to consolidate funding for services for homeless veterans.

Funding for the Emergency Food Assistance Program in the HWM budget is $12.5 million. This appears to be a $1.0 million increase over the Governor's budget proposal and FY 2012 current budget totals, but is actually just a transfer of funds for food pantries previously administered by the Department of Elementary and Secondary Education. Without a real increase in purchasing power, the state's food pantries will be challenged in addressing the continuing demand for emergency food assistance. Based on regional consumer price index analyses, food prices have risen by more than 4 percent over the past year.

Other Human Services Line Items

Infrastructure, Housing & Economic Development

Overall, the House Ways and Means (HWM) budget for Fiscal Year (FY) 2013 proposes a decrease of $49.3 million from current FY 2012 levels to programs within the MassBudget category of Infrastructure, Housing & Economic Development. Much of this reduction is driven by a one-time deposit of $38.0 million into the Infrastructure Development Fund in FY 2012 that is not replicated in the HWM budget for FY 2013. This HWM proposal is $12.4 million below the Governor's, with much of this difference flowing from lower spending proposals within Economic Development.

The HWM budget maintains a broad reorganization of the state's economic development agencies initiated in FY 2012.

The FY 2013 HWM budget, much like the Governor's proposal, limits low-income families' access to the Emergency Assistance (EA) and to HomeBase programs but provides additional funding for some housing programs, particularly the Massachusetts Rental Voucher Program (MRVP) and Residential Assistance to Families in Transition (RAFT).

The HWM budget proposes near level funding overall for transportation related line-items, with the vast majority funding operations and debt service costs at the MBTA.

Economic Development

The FY 2013 HWM budget for Economic Development reflects a reduction of $42.0 million from current FY 2012 levels, although this reduction is driven mostly by a one-time deposit of $38.0 million into the Infrastructure Development Fund in FY 2012. If it weren't for this one-time increase to the FY 2012 budget, the HWM proposal would only show a decrease of $4.0 million decrease from current FY 2012 levels. The HWM budget also funds several programs at levels below what was proposed by the Governor. Please see the comprehensive line item table at the end of this section for specific detail.

The HWM budget maintains a reorganization of economic development programs that was initiated through the FY 2012 budget.1 A new agency, the Massachusetts Marketing Partnership (MMP), now coordinates efforts to promote the state domestically and internationally as an attractive, competitive, and innovative state in which to do businesses. The HWM proposal cuts total funding for the MMP by $2.2 million, and the HWM proposal is $3.1 million below the Governor's. For detail on related line items, please see the note "MMP" in the table at the end of this subcategory.

This year's economic development reorganization also identified the Massachusetts Office of Business Development (MOBD) as the lead business development agency, and the HWM budget continues this arraignment, increasing funding by $87,000. The Governor proposed increasing funding by $131,000.

The FY 2012 budget also reassigned line item numbers for programs administered by the Executive Office of Labor and Workforce Development. The HWM budget continues the new line item structure and proposes to fund these programs in total at $23.1 million, a decrease of $1.2 million from current FY 2012 levels. The Governor proposed an increase of $674,000. For detail on related line items, please see the note "LWD" in the table at the end of this subcategory.

Finally, the HWM budget does not follow the Governor's proposal to direct up to $10.0 million of FY 2012 surplus funds to help recapitalize the Workforce Competitiveness Trust Fund (WSTF). Since this Governor's proposal would have still been contingent upon the existence of sufficient surplus money at the end of FY 2012, it does not show up in MassBudget totals for the Governor's FY 2013 budget. The WCTF was created by the Workforce Solutions Act/Economic Stimulus Bill of 2006 and funds workforce training programs in a range of employer, nonprofit, and vocational settings.

Housing

The HWM budget recommends providing $371.6 million for housing programs in FY 2013. This amount is about $500,000 more than the current FY 2012 budget but $3.5 million less than the Governor's FY 2013 budget proposal. The HWM budget is also $76.2 million higher than the FY 2009 General Appropriations Act (GAA) in inflation-adjusted dollars. With the onset of the Great Recession, as many low-income families lost their jobs and homes and sought help from the state-support family shelter system, state spending on housing has increased dramatically.

The FY 2013 HWM budget, much like the Governor's proposal, limits low-income families' access to the Emergency Assistance (EA) and HomeBase programs but provides additional funding for some housing programs, particularly the Massachusetts Rental Voucher Program (MRVP) and Residential Assistance to Families in Transition (RAFT). The HWM budget differs from the Governor's budget in that it creates a new line-item to support families served through EA who have to stay in hotels and motels because the state's family shelters are full, it level-funds support for state public housing authorities and it does not provide funds for the regional network of organizations that support homeless families and individuals.

Since the onset of the economic crisis in late 2008, demand for shelters funded through EA has increased substantially as many families have lost their jobs and their housing. The FY 2010 GAA limited access to EA by lowering eligibility from families living at or below 130 percent of poverty to the current threshold of 115 percent of poverty. The FY 2012 budget lowered eligibility further by requiring that most families eligible for EA be served by the newly-created HomeBase program that provides rental assistance and one-time housing supports for homeless families served by EA. Many of these families would no longer be able to stay in EA shelters unless they were unable to immediately find housing through HomeBase. Early into FY 2012 demand for HomeBase far exceeded the $38.6 million appropriated in the GAA. Even with mid-year increases of $19.1 million, the Department of Housing and Community Development (DHCD) closed HomeBase to new families seeking rental assistance.

In its 2013 budget the HWM Committee recommends reorganizing funding for EA by separating funding for the state-run family shelters from the funding that the state pays to hotels and motels who are housing homeless families. The HMW budget provides:

  • $88.9 million for EA family shelters. The HWM budget states that families served by EA 'shall include' families who lose housing due to domestic abuse, fire or other natural disaster, those who are evicted through no fault of their own, or because the housing in which they are living is unhealthy or unsanitary. While the HWM budget seems to allow EA to serve other low-income homeless families that do not fall into these categories, the Governor's proposal restricts EA only to this subset of families. The HWM budget, like the Governor's, limits these families' stay in shelter to 8 months. Low-income families, who have been unable to find permanent housing but have received services from EA for 8 months, will no longer have access to shelter.
  • $16.6 million for a new EA hotels and motels account that supports families who are living in hotels and motels because the family shelters are full. In documents accompanying its budget, the HWM Committee stated that the new line item will help the state keep track of homeless families living in these alternative shelters as it works to reduce this population. 2 As noted below, the HWM budget requires that additional funding for MRVP be used for vouchers to help homeless families move out of hotels and motels that have been serving as shelters.
  • The HWM budget, when combining funding for both EA and the EA hotels and motels accounts, provides a total of $105.6 million for EA shelter to eligible homeless families. This is $5.2 million higher than the Governor's FY 2013 proposal for EA but $13.2 million less than the FY 2012 current budget. Like previous budgets, the HWM proposal hopes that by increasing supports for housing (described below) the demand among low-income families for shelter will fall and the state will have to appropriate fewer funds to EA. It is important to note however, that despite the state's best efforts to provide housing assistance to low-income families and reduce demand for shelters, each year since the onset of the economic crisis, the Legislature has had to supplement funding for EA.

Like the Governor, the HWM Committee provides $83.4 million in FY 2013 to the HomeBase program which was created in the FY 2012 GAA to help families eligible for EA to find permanent housing. The HWM level is $25.4 million more than the FY 2012 current budget though it is likely that much of this funding will be used to support families who are already enrolled in the program. Because of the high demand for rental assistance when HomeBase first opened, DCHD closed it to new families in late October 2012. Like the Governor's proposal, the HWM budget seems to restrict HomeBase rental assistance to families who are already enrolled. It also drops the number of years they can receive this assistance from 3 to 2 years. HomeBase will still provide one year's worth of housing assistance, of no more than $4,000, to families who are moving out of EA shelters and into permanent housing. There is some question whether the $4,000 will be sufficient to help many of these families, who are extremely poor, stay in housing over the long term.

As the HWM 2013 budget restricts services under both EA and HomeBase, it does increase funding for two key housing support programs including:

  • $10.0 million in additional funds for MRVP to $46.0 million. The HWM budget requires that DHCD create at least 923 vouchers with this additional funding and provide these vouchers to homeless families living in hotels and motels funded through EA.
  • $8.5 million in additional funds for RAFT for a total of $8.8 million. The HWM budget requires that the bulk of RAFT funds be used much like HomeBase housing assistance to provide one-time funds of no more than $4,000 to prevent low-income families from becoming homeless or to help them secure permanent housing. As with the HomeBase program, there is question whether this one-time assistance will be sufficient to help many families, who are living close to poverty, to stay in housing over the long term.

In his budget proposal, the Governor also recommended providing state public housing authorities with an additional $4.0 million to help renovate additional units to provide permanent housing for homeless families. The HWM budget recommends providing these authorities with level funding at $62.5 million and it includes language directing housing authorities to renovate family units if the renovations cost less than $20,000. Given that the housing authorities have received the same level of funding since FY 2010, while costs for providing services have increased with inflation, it is unlikely they will have the additional funds necessary to renovate units to bring on line for homeless families.

Transportation

The House Ways and Means FY 2013 budget mirrors the Governor's budget proposal providing $1.13 billion for transportation lines items and operating transfers. This represents a small decrease (0.7 percent) from current FY 2012 funding levels, though when cost inflation is taken into consideration, we can assume the result is a somewhat larger decline in actual purchasing power.

The large majority ($946.8 million) of the budgeted amount goes to fund the Massachusetts Bay Transit Authority (MBTA), both for debt service costs and to help support annual operating costs (see line item details, below), while a much smaller amount ($15.0 million) is provided to the state's 14 non-MBTA Regional Transit Authorities.

The remaining portion of the total ($165.2 million) is provided to the Massachusetts Transportation Trust Fund (MTTF). This amount is equivalent to the Governor's proposal and represents a decrease of $14.9 million from current FY 2012 funding levels. The MTTF helps to fund Massachusetts Department of Transportation (MassDOT) functions. These functions include maintaining and improving state roads, highways and bridges; maintaining and improving airports, rail and transit lines; administering the Registry of Motor Vehicles (RMV); and covering specific transportation-related debt service costs. This annual transfer of funds to MassDOT through the MTTF represents only a portion of the total MassDOT budget, which receives additional funds from highway and bridge tolls, gas and sales tax revenues, RMV fees, and other sources.

Commercial Regulatory Entities


1For more detail on the FY 2012 reorganizations please see MassBudget's Budget Monitor: The Fiscal Year 2012 General Appropriations Act available online at: http://www.massbudget.org/report_window.php?loc=FY12_GAA.html

2For The HWM Committee's Executive Summary accompanying its budget is available at: http://www.malegislature.gov/Budget/FY2013/House/WaysAndMeans/ExecutiveSummary

Law & Public Safety

The HWM FY13 budget provides $2.34 billion in funding for Law& Public Safety programs.1 This total is less than one percent above the amount provided in the current FY12 budget, a percent increase that does not keep pace with inflation, indicating that in real terms these programs will be funded at lower levels than in the current fiscal year.

The HWM total for these programs falls 2.1 percent below the Governor's FY13 budget proposal and 14.2 percent or $387.2 million below the amount provided in the 2009 GAA (adjusted for inflation), the last state budget to be enacted before the Great Recession took hold here in Massachusetts. The most notable elements of the HWM FY13 budget include the following:

  1. HWM maintains the effort undertaken in the FY12 budget to shift indigent defense funding toward public defenders and away from the use of private bar attorneys, with a goal of decreasing and controlling overall indigent defense costs. The Governor, by contrast, proposed pushing these changes beyond the FY12 reforms, shifting still more dollars toward public defenders and away from private bar attorneys.
  2. As in past years, HWM does not adopt the Governor's recommendations to consolidate parole and probation functions within a new Department of Re-entry and Community Supervision.
  3. Similarly, HWM again chooses not to adopt the Governor's recurring proposal to consolidate funding for the seven trial courts into the Office of the Chief Justice for Administration and Management (CJAM).

Courts & Legal Assistance

Adjusting to allow for an apples-to-apples comparison with current FY 2012 spending, the HWM budget provides $618.0 million for Courts & Legal Assistance. This amount is 3.4 percent more than current FY12 funding levels. HWM provides slightly less (1.5 percent less) than the Governor's FY 2013 budget proposal of $627.5 million.

The HWM budget does not adopt the Governor's recurring proposal to consolidate most funding for the seven trial courts into the Office of the Chief Justice for Administration and Management (CJAM), instead providing an independent appropriation to each court. The HWM budget provides $189.8 million for the seven trial courts, an increase of $15.9 million or 9.2 percent over current FY12 funding levels.2 Within this overall increase, HWM shifts funding for individual court accounts considerably, with increases for the Juvenile Court, Housing Court, and Probate & Family Court, and decreases for the Superior Court, District Court, Land Court, and Boston Municipal Court. The HWM budget provides $203.8 million for the CJAM in FY13. After taking general price inflation into consideration, however, this 3.2 percent increase for the CJAM represents something closer to level-funding with the current FY12 amount.

The HWM FY13 budget maintains the changes made in FY12 that moved indigent defense funding in the Commonwealth toward a greater reliance on salaried public defenders (PDs) employed by the state and away from the use of independently employed private bar attorneys (PBAs). The FY12 GAA stipulated that 25 percent of the indigent defense caseload would be handled by public defenders (the figure in FY11, prior to the funding shift, was just ten percent), and allocated funding for PDs and PBAs accordingly. The HWM FY13 budget provides a similar allocation between PDs and PBAs: $63.7 million to PDs (through the Committee for Public Counsel Services) and $98.9 million to PBAs (through the Private Counsel Services account). These amounts are little changed from current FY12 funding levels, a 0.8 percent increase and 2.1 percent decrease respectively. By contrast, in his FY13 budget, the Governor proposed a further push toward reliance on PDs, advocating for a 50/50 split of the indigent caseload between PDs and PBAs. The Governor proposed increasing PD funding by $25.4 million over current FY12 levels and reducing funding for PBAs by a similar amount.

Overall, spending on indigent defense is little changed (1.0 percent less) under the HWM FY13 budget relative to current FY12 levels, and is just 1.2 percent less than the Governor's proposed amount. Compared to the 2009 GAA, however, funding for indigent defense in the HWM budget is reduced by 16.3 percent, adjusted for inflation.

Finally, the HWM FY13 budget provides $11.0 million for the Massachusetts Legal Assistance Corporation (MLAC) , $500,000 more than current FY12 levels, but less than the $12.0 million proposed by the Governor. MLAC provides low-income people with legal information, advice and representation on critical, non-criminal legal problems.

Law Enforcement

After adjusting FY 2013 funding amounts to align with FY 2012 line item structures and making adjustments for any related collective bargaining agreements (which together allow us to make a proper apples-to-apples comparison between the two years), the HWM FY13 budget provides $6.6 million or 2.0 percent more than current FY12 funding levels. Given general year-to-year price inflation, this represents roughly flat-funding relative to FY12. The HWM proposal falls $12.3 million or 3.6 percent below the Governor's FY13 recommendation for these programs, and is $112.5 million or 25.3 percent below 2009 GAA levels. Among the notable elements of the HWM budget are the following:

  1. Shannon Grants are funded at $2.0 million, a very substantial drop from the $8 million of funding the program received in FY12 and the $8 million proposed in the Governor's FY13 budget. Shannon Grants help fund anti-gang and youth violence prevention efforts undertaken by law enforcement, community-based organizations, and government agencies in communities throughout the Commonwealth.
  2. The Department of State Police Operations receives an increase of $9.2 million or 3.5 percent over current FY12 funding levels, perhaps slightly outpacing likely cost increases due to inflation.
  3. Similar to a proposal in the Governor's FY 13 budget, in the HWM budget funding for various types of drug testing are consolidated from the Department of Health, the UMass Medical School and the District Attorney's Office into the State Police Crime Laboratory. Adjusting to take these changes into account, HWM provides an increase for the lab of $142,000 above current FY12 funding levels3, a 1.1 percent increase, which likely falls below general price inflation.

Prisons, Probation & Parole

The HWM budget provides $1.20 billion for prison, probation and parole functions, a decrease of 0.3 percent from current FY 2012 funding levels.4 Given general year-to-year price inflation, the actual percent decrease in real funding for these programs would be more substantial. The HWM total for these programs is 2.1 percent less than recommended by the Governor and is a $164.0 million or 12.0 percent less than was provided in the FY 2009 GAA, adjusted for inflation.

The HWM budget does not adopt the Governor's renewed call to consolidate probation and parole functions within a new Department of Re-entry and Community Supervision (the Governor made a similar proposal in his FY 2012 budget, which the Legislature chose not to adopt). 5 Instead, HWM continues to provide funding directly for each of these functions, with probation services accounts receiving $135.5 million and parole programs receiving $17.8 million. These amounts represent cuts of 2.4 percent and 1.6 percent respectively, relative to current FY12 funding levels. Compared to the FY 2009 GAA, the HWM FY13 budget represents a decline in funding of 24.1 percent for probation and parole services, adjusted for inflation.

The HWM budget provides $537.5 million for the Department of Corrections and related accounts (including funding for the Massachusetts Alcohol and Substance Abuse Centers included in the Department of Correction Facility Operations account), 6 a 1.1 percent increase over current FY12 funding levels. This amount is $11.5 million or 2.1 percent less than the amount recommended by the Governor and $33.6 million or 5.9 percent less than appropriated in the FY 2009 GAA (adjusted for inflation).

For the fourteen County Sheriffs' Departments (CSDs) and related accounts, HWM provides $500.3 million, or 1.0 percent less than current FY12 funding levels. HWM provides $13.9 million or 2.7 percent less than the Governor provides in his FY13 budget recommendations, the result being that all of the CSDs (with the exception of Essex and Nantucket) receive reduced funding.

Prosecutors

The HWM FY13 budget provides $139.8 million for prosecutors, a 1.3 percent increase from current FY 2012 levels.7 When inflation is taken into account, this translates into a modest decrease for these programs overall. The amount provided by HWM is 1.0 percent more than was recommended by the Governor in his FY13 budget proposal, but is $16.2 million or 10.4 percent less than was appropriated in the FY 2009 GAA, the last budget to be enacted before the full effects of the Great Recession became evident here in Massachusetts.

Most of the eleven District Attorneys' offices see modest increases of one to two percent over FY12 funding levels. Several, including the Eastern and the Middlesex District Attorney Offices, receive larger increases of four to five percent. The Hampden and the Northwestern DA offices each receive small reductions of one to two percent.

The Office of the Attorney General (AG) would receive $22.3 million, a modest decrease in funding of 2.9 percent and an amount equivalent to that proposed by the Governor. HWM follows the Governor in proposing a new initiative within the AG's office for Litigation and Enhanced Recoveries. According to the Governor's budget documents, this initiative would fund "existing and future litigation devoted to obtaining significant recoveries for the Commonwealth." 8 HWM provides $1.0 million for this initiative while the Governor recommended $1.8 million.

Other special units within the AG's office (e.g., Medicaid Fraud Control Unit, Wage Enforcement Program, Worker's Compensation Fraud Unit, etc.) are either level-funded or very close to their current FY12 funding levels. Given general year-to-year price inflation, in actuality these amounts likely represent a small decline in real funding for these programs.

Other Law & Public Safety

This subcategory covers an array of departments and programs including the Executive Office of Public Safety; the Department of Fire Services; the Massachusetts Emergency Management Agency, elevator and boiler inspections; nuclear safety; and the state's Military Division. Overall, HWM provides $47.9 million for these functions in FY 2013, a $4.3 million or 8.3 percent decline in funding from current FY2012 levels, and a 17 percent decline relative to the FY 2009 GAA, the last budget to be enacted before the full effects of the Great Recession became evident here in Massachusetts.

Looking at individual departments and program areas, there is good deal of variation, with some receiving significant increases while others are cut heavily. For example, HWM provides $10.0 million for the state's Military Division an increase of 6.7 percent over current FY12 levels. For the Massachusetts Emergency Management Agency, HWM provides $2.4 million or 7.1 percent more than current FY12 levels. For Fire Fighting Services, by contrast, HWM makes a reduction in funding of $4.2 million or 24.0 percent relative to current FY12 levels, a cut more than twice the size of the cut proposed by the Governor. HWM also cuts funding for the Executive Office of Public Safety and Security (EOPSS), providing $1.9 million compared to the $2.2 million currently appropriated for FY12, a 12.4 percent reduction.


1This total includes adjustments to FY 2013 funding amounts to align with FY 2012 line item structures in order to make a proper apples-to-apples comparison between the two years.

2This total includes trial court justices' salaries, funding for the Office of the Jury Commissioner, and two related retained revenue accounts.

3HWM provides $15,074,646 to the State Police Crime Lab account. To allow for proper apples-to-apples comparisons among years, however, MassBudget shifts $1,939,139 million (the amount identified by ANF as the actual cost shift associated with this consolidation in the Governor's FY budget) out of the State Police Crime Lab account and back into corresponding public health and UMass Medical School accounts. Taking these adjustments into account, the HWM FY13 budget still provides an additional $142,000 to the State Police Crime Lab.

4This total includes adjustments to FY 2013 funding amounts to align with FY 2012 line item structures in order to make a proper apples-to-apples comparison between the two years.

5To maintain the ability to make apples-to-apples comparisons between years, where appropriate MassBudget adjusts account figures to conform to prior year line-item structures. Here, based on information from the Governor's budget office, for the Governor's FY13 budget MassBudget reallocates funding from the proposed Department of Re-entry and Community Supervision (8940-0100) and other related accounts back to the primary probation (0339-1001) and parole (0339-1003) accounts.

6To maintain the ability to make apples-to-apples comparisons between years, where appropriate MassBudget adjusts account figures to conform to prior year line-item structures. Here, based on HWM FY13 budget language included in the DOC line-item and ANF estimates, MassBudget reduces the DOC account (8900-0001) by $10.0 and assigns $5.0 million to the Massachusetts Alcohol and Substance Abuse Centers account (8900-0002) and $5.0 million to the DOC retained revenue account (8900-0050).

7This total includes adjustments to FY 2013 funding amounts to align with FY 2012 line item structures in order to make a proper apples-to-apples comparison between the two years.

8Governor's FY 2013 Budget website: http://www.mass.gov/bb/h1/fy13h1/brec_13/act_13/h08100061.htm?q=0810-0061

Local Aid

The Fiscal Year (FY) 2013 House Ways and Means (HWM) budget proposes to fund MassBudget category of Local Aid at $931.4 million, a cut of $5.1 million from current FY 2012 levels. The vast majority of MassBudget's Local Aid category funds general local aid provided to cities and towns, helping them fund vital local services such as police and fire protection, parks, and public works. General local aid has been cut dramatically over the last several years, and while the HWM proposal funds general local aid at the same $899.0 million level as the FY 2011 and current FY 2012 budgets, this would represent the third year in a row of not making inflation adjustments that correct for the rising cost of providing local services. MassBudget treats education aid separately in our Education section, although cities and towns often use a portion of their general local aid to help fund education as well.

General Local Aid

General Local Aid

The FY 2013 HWM budget funds Unrestricted General Government Aid (UGGA) at $899.0 million, which is $65.0 million above the amount guaranteed in the Governor's proposal and equal to current FY 2012 levels.

Both the FY 2012 GAA and the Governor's FY 2013 proposal fund UGGA at a baseline level of $834.0 million. On top of this, the FY 2012 budget directed 50 percent of all unexpended balances from general fund spending coming out of FY 2011 (up to $65.0 million) to supplement UGGA appropriations for FY 2012. Unexpended FY 2011 fund balances proved sufficient to fund the full $65.0 million amount, meaning that cities and towns in FY 2012 will receive the same total UGGA appropriation of $899.0 million that they received in FY 2011. Similarly, the Governor's FY 2013 proposal directs $65.0 million of any FY 2012 budget surplus to supplement its baseline $834.0 million appropriation. It is possible, yet far from certain, that under the Governor's FY 2013 proposal surplus funds would prove sufficient to provide this additional $65.0 million once again. Under the HWM proposal, however, this amount would be guaranteed.

It should be noted that even if UGGA is funded at the full $899.0 million in FY 2013, this nominal level funding is tantamount to a cut since no inflation adjustment would have been made over the last two years to keep up with rising costs. Furthermore, general local aid has been cut dramatically since FY 2001. Over the last four years from FY 2008 to FY 2012, general local aid has been cut 37 percent. For more information on the history of general local aid, please see MassBudget's recent paper Demystifying General Local Aid in Massachusetts, available here.

General Local Aid is Down 37 percent

While the HWM budget assumes that no casino-related revenue will be available to fund programs in FY 2013, the November 2011 casino law is expected to generate new general local aid revenue once casino licenses have been sold and facilities are up and running. While legalized casino gambling facilities will provide some new tax revenue, the state also expects lottery revenues to decrease somewhat as some gambling activity shifts from lottery sales to casinos. For both of these reasons, the new gambling law distributes a portion of future gambling tax revenue to cities and towns in the form of new general local aid. All tax revenue from the slots-only facility and 20 percent of tax revenue from the three full-scale casinos will go into a new Gaming Local Aid Fund and into a related Local Aid Stabilization Fund. Revenue distributed from these funds will be distributed to cities and towns as Unrestricted General Government Aid, but since UGGA funds have never been distributed using a formula, a policy decision will need to be made for distributing any of this new aid.

Other Local Aid

Other Local Aid

The HWM budget continues funding for the second year of a Municipal Grants reserve account. The HWM proposal is $2.0 million below the Governor's and is less than half of the current FY 2012 funding level of $10.1 million, although current line item language includes earmarks redirecting some of this total. The Governor's $7.0 million proposal assumes that all funding would go towards municipal regionalization and efficiency efforts, whereas HWM line item language includes a $1.0 million earmark for a narrowly-tailored Department of Elementary and Secondary Education grant program. This money would be available only to K-12 school districts whose Chapter 70 aid in FY 2012 as a percentage of their foundation budgets is less than their target Chapter 70 aid share.

For the program's first year, the state received 100 applications for projects that involved 285 cities or towns. In March, the state ended up awarding 28 grants to fund projects that will involve 138 communities.

Local and Line Items

Other

Constitutional Officers

This subcategory includes funding for the Secretary of State, the State Auditor, the Registrar of Deeds as well as various other offices and commissions. The, HWM budget includes a proposal in the Governor's FY 2013 budget to create a new account within the Special Investigations Unit at the Auditors Office. The FY 2013 HWM budget provides $469,000 for the new account, the same amount proposed by the Governor, to ensure that the public benefits programs supported by the state are distributed properly. The Election Division Administration, also received an increase of $3.6 million above the FY 2012 current budget to pay for the primary and general elections in the fall of 2012.

Debt Service

The House Ways and Means FY 2013 budget provides $2.42 billion for debt service lines items, an increase of $164.2 million or 7.3 percent over current FY 2012 levels, but slightly less than the Governor's FY 2013 proposal of $2.43 billion. The increase is driven by a $127.9 million (6.8 percent) increase in Consolidated Long-Term Debt Service. The HWM proposal for the Accelerated Bridge Program Debt Service, identical to the Governor's at $49.4 million, nearly doubles the current FY 2012 funding level of $25.2 million. (This debt service moves from line item 0699-0014 in FY 2012 to 0699-0016 in FY 2013. Also of note, funding provided for Central Artery/Tunnel debt service shifts from account 0699-2005 in FY12 to 0699-2004 in FY13.)

Executive & Legislative

The HWM budget for FY 2013 budget recommends level funding for all but two accounts within the Executive and Legislative subcategory. The HWM budget recommends a small increase in funding for the Office of Child Advocate bringing its total funding to $300,000. Also, now that redistricting is complete, the HWM budget does not provide funding for those accounts in FY 2013.

Libraries

The state supports public libraries in Massachusetts through a number of programs. The two largest are the Public Libraries Local Aid account which provides direct state aid to local libraries and the Regional Libraries account which supports regional library networks including the inter-library loan and electronic references resources. The state also provides funding for the Talking Book program which is housed in the Perkins School for the Blind serving the eastern part of the Massachusetts and the Worcester Public Library in the western part of the state.

While most of the library accounts are kept at FY 2012 levels in its budget, the HWM Committee provides increases to two accounts including an additional:

  • $84,300 for the Board of Library Commissioners for a total of $999,000.
  • $159,000 for the Talking Book Program at the Perkins School for the Blind for a total of $2.4 million.

Even with these increases in funding for libraries, since the onset of the fiscal crisis in FY 2009, has fallen $14.7 million or 40.4 percent in inflation-adjusted dollars.

Pensions

The HWM spending plan for FY 2013 assumes, as did the Governor's proposal, an off-budget transfer of 1.55 billion dollars to the Pension Liability Fund. Annual pension funding is governed by state law (Chapter 32§22C of the Massachusetts General Laws), which requires an annual transfer to the state Pension Liability Fund and sets out a funding schedule, which is periodically updated. The most recent update was contained in a section of the FY 2012 budget that extended the timeframe for paying down the state's pension liability to 2040 and set out a schedule of specific payments through FY 2017. The increase in funding compared to FY 2012 is in accordance with that schedule.

The budget also contains outside section language specifying that the FY 2013 pension transfer is intended to cover the cost of providing retirees with a 3 percent cost-of-living in FY 2013. This provision, which is regularly included in the state budget, is calculated on a base that is defined in state statute. In FY 2012 the base was $12,000 per year, meaning that retirees could receive an increase of up to $360 per year. Recent pension reform legislation increased that base to $13,000 (an increase of $30 to $390 per year).

Other Administrative

The Other Administrative subcategory includes accounts that cover a wide range of government activities. This subcategory includes one-time funding to help communities recover from major storms or floods, provides funding for various state commissions as well as for the Executive Office of Administration and Finance (A&F).

The FY 2012 General Appropriations Act (GAA) created a new office of Commonwealth Performance, Accountability and Transparency (CPAT) within A&F. The HWM budget includes the Governor's FY 2013 budget recommendation to provide this office with an additional $150,000 to continue its efforts to enhance the functioning of state government. Last year CPAT was charged with improving the way that state agencies coordinate similar activities such as information technology, maximizing the grants from the federal government and assuring that the state delivers services in the most effective and efficient matter possible. CPAT was also charged with improving transparency. In 2011 it launched its new Open Checkbook program to give the public a better understanding of how the state spends its resources. In FY 2013 CPAT will continue to coordinate and improve government services by working with state agencies to develop strategic plans and goals that align with the Governor's priorities including lowering the achievement gap, creating jobs, and reducing state spending on health care.

The HWM budget does not include the Governor's FY 2013 budget estimation of $30.0 million in savings from reducing 400 positions within the Executive Branch.

The HWM budget also recommends consolidating funding for state offices buildings into two accounts. The Office of Facilities Management, with $10.4 million in funding, would oversee all state office buildings but the State House. The HWM funding recommendation is $650,000 less that the Governor's recommendation. The HWM budget then consolidates State House operations, into two accounts and provides the same level of total funding for these accounts as the Governor's budget proposal. The larger, Bureau of the State House would receive $2.0 million in funding while the smaller State House Accessibility account would receive $138,000. In the chart below, MassBudget has redistributed funding from these consolidated line items into their original accounts in order to allow for year to year comparisons.

Both the Governor and the HWM budget proposals provide $6.0 for a particular salary reserve account within the Executive Branch. This reserve account has been set aside for collective bargaining agreements for several groups of state employees whose contracts have not yet been negotiated. In the chart below, MassBudget redistributes funding from this consolidated line item into their original accounts in order to allow for year to year comparisons.

Revenue

Unlike the Governor's budget, the House Ways and Means (HWM) FY 2013 budget does not include revenues from new taxes on tobacco products or from the lifting of tax exemptions for candy and soda.

The HWM budget assumes $33.1 million in new ongoing revenue (in other words, revenue that will continue beyond FY 2013), and $686.0 in new temporary revenue (that is, available only in FY 2013). Temporary revenues are useful for balancing the budget only in the current fiscal year.

Tax Revenues

The HWM FY 2013 budget includes only two tax initiatives. The larger of the two is the delay (for another year) of the "FAS 109" tax break provided to certain publically-traded companies as part of the 2008 combined reporting corporate tax reform package. Delaying this tax break will offer the Commonwealth one-time savings of $45.9 million in FY 2013.

The other tax initiative improves the Department of Revenue's enforcement abilities (through use of more powerful data-review software), bringing in an additional $22.3 million in revenue in FY 2013, revenue that is owed to the Commonwealth but that currently goes uncollected. This represents a new and ongoing revenue stream for the state.

Both of these initiatives were proposed by the Governor in his FY13 budget, as were other tax initiatives that HWM did not adopt. For a more detailed review of the Governor's tax revenue proposals, please see MassBudget's updated Governor's Budget Monitor, available on our website: http://www.massbudget.org/report_window.php?loc=budget_monitor_governor_fy13.php

Apart from the two initiatives outlined above, HWM proposes no other sources for new or enhanced tax revenues in its FY13 budget. To bring its budget into balance, HWM instead relies more heavily on other, temporary revenues.

Non-Tax Revenues

The HWM budget includes a total of $13.4 billion in non-tax revenues: $8.0 billion in federal revenues, $3.2 billion in departmental revenues such as fees and assessments and $2.2 billion in revenues from other sources, such as transfers from lottery receipts and from various trust funds. The HWM budget specifies $650.9 million new non-tax revenues—$10.8 million in ongoing revenue and $640.1 million in temporary revenues. Most notably, however, HWM did not include the Governor's initiatives to expand and modernize bottle redemption, which would have brought in approximately $22.3 million in new departmental revenues.

The major non-tax components of the HWM revenue proposal include the following items:

Agency Revenue Initiatives

HWM seems to follow the Governor's proposals to increase a number of permitting and licensing fees charged by a various departments, changes that together would raise an estimated $10.8 million in ongoing revenue annually. Approximately half ($5 million) of the total would derive from selling advertising space on a limited number of state owned assets, such as vehicles.

Stabilization Fund

Like the Governor, the HWM budget relies on $400 million in one-time funding from the state's Stabilization Fund (the "Rainy Day Fund"), and proposes transferring into the General Fund an estimated $9.1 million in anticipated interest earned by the Stabilization Fund. The Governor and HWM also both make a required $100 million deposit into the Stabilization Fund which is the estimated amount of FY 2013 capital gains revenues in excess of $1 billion. Both the Governor's budget and the HWM budget also forego a statutory deposit from the "consolidated net surplus" of approximately $100 million into the Stabilization Fund.

Unused Balances

Finally, both the HWM and Governor's budgets rely on the use of unused balances in existing trust funds to pay for FY 2013 costs. While the Governor's budget identified $6.0 million in unused funds from various trusts, the HWM budget counts on $37.0 million. Both the Governor and HWM use $40.0 million to support the costs of the state employee health insurance from the Group Insurance trust; this one-time source of funds is, in essence, a source for one-time savings for the Commonwealth. Both budget proposals also count on $44.0 million from the existing balance in the Commonwealth Care Trust Fund that would be used towards the costs of the Commonwealth Care program and the Health Safety Net this year. These are all one-time resources that, if used in FY 2013, will help fill the budget gap in the current year, but once used will no longer be available to balance the budget in future years.

Finally, HWM also foregoes the statutory "carry forward" from FY 2013 into FY 2014 of approximately $110 million from the consolidated net surplus. By not reserving these funds for the next year's budget, they become a one-time revenue source in the current year.