Governor signs FY21 closeout budget, with state surplus spending plan still to come

Gov. Charlie Baker signed a $333 million supplemental budget bill yesterday to officially close the books on fiscal 2021.

The scaled-back spending bill delays decisions on how to spend much of a $5 billion state surplus. In announcing the compromise bill on Oct. 13, House Ways and Means Chair Aaron Michlewitz and Senate Ways and Means Chair Michael Rodrigues referred to it as a “bill-paying” budget and said unobligated fiscal 2021 surplus funds would be considered “later in the fall.”

Comptroller William McNamara can now close the books on fiscal 2021 in advance of an end-of-October reporting deadline.

During the public health emergency, the administration and the Legislature used revenue estimates that reflected the uncertainty of the times to create the fiscal 2021 budget. Subsequently, state revenues far exceeded expectations, leading to a higher-than-usual budget surplus.

The surplus is enabling the state to avoid a $1.1 billion withdrawal from the state’s stabilization account that had originally been anticipated as necessary to balance the fiscal 2021 budget. The surplus is also adding $1.1 billion from above-benchmark capital gains tax revenue to the fund. At the close of fiscal 2021, the stabilization fund balance stood at a record $4.63 billion, according to the administration.

In August, Baker filed a year-end spending proposal that would have used $1 billion of the surplus to bolster the state’s Unemployment Trust Fund and $568 million for relief programs, mostly targeted at housing insecurity and human services.

Legislative leaders did not address the governor’s proposal or any new spending of the surplus, instead opting to place the surplus in a special fund for further deliberation.

An outside section of the budget bill increases the allowable number of hours a retired public employee can work per calendar year from 960 to 1200, a provision for which the MMA has advocated.

The MMA continues to make a case for the state to use part of its surplus for a one-time, additional $200 million appropriation for the Chapter 90 local roads program, as well as a $10 million allocation for the Community Preservation Trust Fund, which provides matching funds to cities and towns that have adopted the Community Preservation Act.