Legislature restarts FY21 budget process

With first quarter revenue numbers in hand and a new forecast for the year, the House and Senate Ways and Means committees on Oct. 21 held a joint hearing on the revised fiscal 2021 budget submitted by the governor earlier in the month.

Legislative leaders have not announced a schedule for taking up a budget bill for the year that started on July 1. Gov. Charlie Baker asked that a final spending plan be sent to him by Thanksgiving.

So far this fiscal year, the state has been operating under a series of interim budgets approved by the Legislature, with the most recent providing funding through the end of November.

The governor sent a revised $45.5 billion revenue and spending plan to the Legislature on Oct. 14. The plan updates the recommendations he had filed in January (H. 2), before the onset of the COVID-19 pandemic and the related recession.

The updated tax forecast of $27.6 billion takes into account recent economic activity and state tax collection data through the first quarter of the fiscal year. The forecast was revised following a revenue hearing held by state budget officials on Oct. 7 at which the Department of Revenue, the Massachusetts Taxpayers Foundation and other fiscal experts offered up-to-date outlooks for the economy and state finances.

The governor’s revised budget is based on a projection that state tax revenues will be $3.6 billion lower than originally estimated, due to the economic slowdown caused by the pandemic. Overall, the updated budget would be balanced through a combination of increased federal assistance, use of $1.35 billion from the state’s $3.5 billion stabilization fund, and changes to a range of appropriation recommendations.

The governor’s revised budget would fully fund the commitments made by the governor and legislative leaders in July to protect the two main municipal and school aid programs. The budget would fund Unrestricted General Government Aid at $1.13 billion and allocate to individual cities and towns the same amount paid in fiscal 2020.

Chapter 70 school aid would be funded at $5.28 billion, ensuring that all municipalities and school districts would receive at least the same amount as was paid last year. Some school districts would receive aid increases due to inflation and enrollment under the current formula. In total, Chapter 70 school aid would increase by $107 million.

The Division of Local Services posted revised Cherry Sheet estimates for cities and towns and for regional school districts based on the new budget recommendation to help municipalities move forward with setting tax rates for fiscal 2021.