Despite Revenue Challenges, Fiscal Year 2025 House Budget Proposal Strives to Meet Current Needs

The House finalized its Fiscal Year 2025 (FY 2025) state budget proposal on Friday, April 26 after considering amendments to the House Ways and Means (HWM) proposal. The approved amendments would add about $100 million in spending over the HWM proposal, less than two-tenths of one percent of the total. These small increases are possible due to slightly higher estimates for anticipated federal reimbursements and departmental revenues than the Governor’s budget proposal in January. The House budget introduces new practices for spending Fair Share revenue, with regard to how the money can be used specifically for public education or transportation.

The House budget proposal balances its revenue and spending through several initiatives that were also proposed by the Governor and HWM. These initiatives, none of which raise tax rates, would together make available $185 million. More importantly, all three budget proposals to date would make up to $375 million available to the budget by forgoing a portion of the deposit to the rainy day fund that would otherwise automatically occur due to high collections (also called “above threshold”) of capital gains. Redirecting these funds to budget investments does not draw down on the rainy day fund itself. It only limits additional growth of the fund at a time when it has become unprecedentedly large. In fact, the Commonwealth could prudently support additional FY 2025 expenditures by forgoing the full projected deposit of $513 million in above threshold capital gains collections. Doing so would enable other important investments in areas such as housing and cash assistance.

Early Education and Care

The House proposes $475 million, the same amount as last year, for the Commonwealth Cares for Children (C3) program, which supports operational grants for child care providers. The C3 program is a pandemic-era program that has been essential to stabilizing our critical and precarious child care system. While the federal funds to support this program have ended, the Legislature and the Governor have been national leaders in continuing to support C3 through state funds. The House has now set the stage for this program to operate permanently by also proposing to put the program into law. Solidifying this essential program in statute demonstrates our shared value of supporting children and families across the Commonwealth.

While additional funding will be needed in the future to sustain the success of the C3 program and make longer-term improvements, the House additionally helped ensure the long-term viability of the program by proposing to limit the grant amounts that can go to certain multisite, for-profit child care providers.

Fair Share surtax revenue is an important component in the House proposal to support the early education and care sector. The House proposes $30 million in Fair Share surtax revenue be used to decrease the waitlist for income-based Child Care Financial Assistance (CCFA), $65 million to stabilize and increase reimbursement rates for providers accepting CCFA, and $175 million toward supporting the C3 program. However, the way this $175 million for C3 would be used does less to address the charge of the Fair Share amendment to specifically fund public education (along with transportation).  The House does not include language to ensure the majority of these surtax dollars would fund publicly-supported child care. By contrast, the Governor’s budget proposal would direct Fair Share funds for C3 toward families and children with the highest needs by stipulating that Fair Share dollars go to providers who have at least 50 percent of enrolled children receiving a state subsidy.

Like the Governor’s proposal, the House would also increase funding for two programs that support child care subsidies for low-income children – Income-Eligible and Supportive Child Care (DCF and DTA-related) – each by $10 million in comparison to FY 2024. However, while the Governor proposed $75 million of Fair Share revenue to support expanding eligibility for income-based CCFA, the House does not.

K-12

The House budget would provide an increase of $309 million to Chapter 70 aid to municipalities for K-12 education. This includes an update that better supports districts serving low-income students and using Fair Share funds to provide $37 million more in minimum aid to districts that would otherwise not get added support. However, while we are on track with the stipulations of the 2019 Student Opportunity Act (SOA), the House budget proposal does not address the unexpected and historically high levels of inflation in recent years, nor did it adopt amendments to address or study the issue in the year ahead. Until it is addressed, the failure to fully adjust education aid to high inflation will continue to depress the value of K-12 aid because support each year is built on the prior year’s amount. To fully fund SOA in a way that would reflect inflation over the past three years, the legislature would need to provide an additional $465 million to districts across the state for FY 2025. Alternatively, the gap could be settled over multiple years.

Higher Education

The House budget proposal provides increased funding to several higher education initiatives to help improve affordability, access, services, and support at public campuses. It provides an additional $14 million to expand support services from the SUCCESS grant program to state universities in addition to the prior support for community college students from this initiative. Looking toward the future, the House proposes a commission to ensure the public higher education system is affordable, competitive, and accessible over the long term. One effort that would receive significantly less funding is the support for higher education capital and building projects, which received only $10 million in the proposal, down from $50 million in FY 2024 and $125 million in the Governor’s proposal. Unless higher education facilities are provided for through other new capital spending, this reduction could limit our state’s ability to offer top quality classrooms and facilities for students and staff.

Shelter and Housing

The House budget proposed welcome increases to programs which help families move into safe and affordable housing or stabilize families in their current housing. These include a 22 percent increase to the Massachusetts Rental Voucher Program (MRVP), a 4 percent increase to Residential Assistance for Families in Transition (RAFT), and a 55 percent increase to HomeBASE. However, these programs will need significantly more funding to meet the widespread needs of families across the Commonwealth.

While the House finalized their own FY 2025 budget proposal, they simultaneously passed a supplement to the current FY 2024 budget which adds additional funding to the Emergency Assistance (EA) Family Shelter program and creates a significant policy change. The Senate followed suit and the Governor signed the supplemental budget into law. The supplemental budget includes an additional $251 million from a Transitional Escrow Account to support the Emergency Assistance (EA) program in FY 2024 with another $175 million from the fund in FY 2025. These funds are in addition to the $325 million proposed through the House’s FY 2025 proposal.

The supplemental budget also included a new nine-month time limit for families in shelter. While lawmakers did include opportunities for some to seek extensions, this new limit will force families to leave shelter. In order to not push families into homelessness, significantly more investment is required for the programs necessary to transition to safe and affordable housing. Up until now, lawmakers have found resources to shelter all families, but Massachusetts is in a challenging situation without more federal support. It remains unclear where families will go when their time limit is up if they don’t yet have access to safe and affordable housing.

Many Efforts to Advance Racial Equity Came Up Short

There were numerous unsuccessful budget amendment efforts that would have advanced racial equity in the Commonwealth, including efforts to enhance or extend programs that disproportionately benefit people of color. These include:

  • Fully restoring cash assistance increases for individuals and families living in deep poverty. The House proposed restoring 9C cuts made to cash grant increases for Transitional Aid to Families with Dependent Children (TAFDC) in April 2025, but not the accompanying cuts made to  Emergency Aid to the Elderly, Disabled and Children (EAEDC).
  • Restoring the SNAP benefits for legally present immigrants. Approximately 4,400 immigrant-led households lost these benefits at the end of April 2024.
  • Extending access to the state Earned Income Tax Credit (EITC) to immigrant families that include a member filing taxes with an Individual Taxpayer Identification Number (ITIN). About 76,000 individuals, the majority of whom are US citizens, are left out of receiving this vital tax credit.

These are missed opportunities to ensure our neighbors, including immigrant families, have the resources they need to provide for themselves.

Next Steps

The process moves to the Senate with the Senate Ways and Means Committee releasing its own budget proposal in early May.

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