In his newly appointed role as Chair of the House Ways and Means Committee, State Rep. Aaron Michlewitz of the Third Suffolk District, (North End, South End, Downtown Boston) presented the committee’s Fiscal Year 2020 House budget proposal on Wednesday, April 10th with House Speaker Robert DeLeo.
In a press briefing, the House leaders introduced a $42.7 billion budget for the fiscal year starting on July 1, 2019. The budget represents a spending increase of 3% above last year and is about the same level as Governor Baker’s recent budget plan. After running below projections earlier in the year, tax revenue increased in recent months back in line with projected levels.
Notable new taxes and revenue sources include the marijuana sales tax, estimated at $133 million, online retail sales tax at $42 million, short-term rentals (i.e., Airbnb) tax at $28 million and a dramatic increase in the gaming tax at $294 million. The proposal assumes the Encore casino in Everett opens as scheduled this June. Not included for this year are taxes from sports betting (~$35 million) or new revenue from vaping/e-cigarettes/opioids (~$20 million) as suggested by the Governor.
“We based the fiscal year 2020 budget on existing tax revenues,” said Michlewitz in explaining the how the proposal does not include additional revenue sources. As for sports betting and vaping/opioid taxes, Michlewitz added, “We’ll look more closely at those later in the year.” DeLeo added that taxes on sports betting are “not as easy as some people suspect” noting the differing views of various major sports teams and betting services.
The largest beneficiary of the budget proposal is MassHealth with an increase of $343 million. The State’s Medicaid program represents nearly 40% of the entire budget. Drug pricing reform is expected to save $28 million in FY2020 as the State is empowered to negotiated directly with drug manufacturers.
Local public school aid, known as Chapter 70, received a $237 million increase, including $16.5 million for low income students. The increase sets the stage for a later revamp in school funding. Charter school reimbursement funding was also boosted by $23 million to $113 million in hopes “to return to a fully funded system,” said Rep. Michlewitz. A new Charter School funding formula also accelerates those payments from the State. Higher education (State Universities, Community Colleges and the UMass system) would see a $56 million increase in funding over last year to $1.13 billion.
Community Preservation Act funds would benefit from a $36 million increase toward affordable housing, historic preservation and open space. Housing and homelessness funding would see $15 million in a budget increase, targeted toward support for homeless youth and families.
The House proposal also increases the State’s rainy day fund to $2.76 billion, up from $2.50 billion last year. The House Ways and Means Committee voted to approve the FY2020 budget proposal and it will now be further debated in the full House and then over to the Senate in the coming weeks.