State budget agreement reached, final bill to be released soon

Legislative leaders announced on July 17 that they have an “agreement in principle” on a compromise fiscal 2025 state spending plan, though the bill had not been released as of today.

The MMA is closely following these developments and will post updates here as soon as possible. The state’s fiscal year began on July 1, but the state has been operating on an interim budget for July.

Budget bills passed this spring by the House (H. 4601) and Senate (S. 2800), each totalling roughly $58 billion, reflect a commitment to a fiscal partnership with municipalities, but there are a series of differences on some accounts affecting cities and towns, and the MMA weighed in to support the higher appropriation in each case.

Here’s a review of key municipal budget issues:

Appropriations
UGGA: The Senate appropriated $1.3 billion for Unrestricted General Government Aid, an increase of $38.1 million, or 3%, over the fiscal 2024 level of funding, while the House approved a 1% increase. With property taxes tightly capped by Proposition 2½, the MMA has been pointing out that cities and towns rely on adequate state revenue sharing — particularly through UGGA — to provide essential municipal and school services, ensure safe streets and neighborhoods, and maintain vital infrastructure. The MMA has asked the conference committee to support the Senate’s UGGA proposal.

Chapter 70: Both the House and Senate bills would fund Chapter 70 aid at more than $6.8 billion, representing a commitment to fund the Student Opportunity Act in line with the originally intended schedule. Both chambers also recognized the challenges facing “minimum aid” districts — nearly three-quarters of all school districts — and proposed a significant increase in minimum aid above the $30 per student proposed by the governor in January. The House budget bill calls for minimum new aid of $104 per student, while the Senate proposes $110. The MMA has asked the conference committee to support the Senate’s proposal.

Special education: Both the House and Senate budget bills would fully fund the state’s commitment to the Special Education Circuit Breaker, which reimburses school districts for the high cost of educating students with learning disabilities.

Charter schools: Both the House and Senate budgets would fully fund the state’s statutory obligation for charter school mitigation payments as outlined in the Student Opportunity Act.

Rural schools: The Senate bill would appropriate $17.5 million for Rural School Aid to provide assistance to eligible towns and regional school districts facing the challenge of declining enrollments. Grants would help districts identify efficiencies in school services or opportunities for regional collaboration. The MMA has stated its support for this proposal.

Regional school transportation: Both budget bills would appropriate $99.4 million for Regional School District Transportation, which represents an 84% reimbursement rate according to the full funding estimate of fiscal 2025 claims from the Department of Elementary and Secondary Education.

Vocational student transportation: The Senate bill would fund out-of-district vocational transportation at $1 million, which represents a 17% reimbursement rate according to DESE’s full funding estimate of fiscal 2025 claims.

McKinney-Vento: The House and Senate both included $28.6 million toward the state’s mandate to fund school transportation for homeless students. This amount reflects approximately 70% of DESE’s anticipated claims for fiscal 2025.

PILOT: The Senate bill would appropriate $53 million for payments-in-lieu-of taxes to cities and towns with state-owned land. The MMA supports this $1.5 million increase over the current fiscal year.

Surtax revenue programs
Fiscal 2025 will be the second fiscal year to realize revenue from a voter-approved income surtax called the Fair Share Amendment, with funds dedicated to education and transportation-related programs.

The Senate bill would use $125 million for supplemental funding for local roads and bridges. Municipalities are responsible for more than 30,000 miles of roadway, or nearly 90% of all road miles in Massachusetts. The Senate’s proposed funding would help communities quickly address immediate safety needs. The House bill utilized $25 million for supplemental road and bridge funding.

The Senate also included $15 million to upgrade municipally owned small bridges and culverts in order to protect public safety, improve climate resiliency, and restore ecosystem connectivity.

The House included $10 million for Green School Works, a new grant program to support public school districts with the installation or maintenance of clean energy infrastructure.

The House also included $190 million for Universal School Meals, which allows all Massachusetts students to eat for free at school, regardless of household income.

Outside Sections
Disaster relief fund: The House budget bill would establish a permanent Disaster Relief and Resiliency Fund to provide relief to municipalities impacted by extreme weather events. This section would also direct the state’s comptroller to transfer $14 million from any consolidated net budget surplus for fiscal 2025 to the Disaster Relief and Resiliency Fund. The MMA strongly supports the creation of the fund and a dedicated revenue for this fund, which would support rapid-response efforts by cities and towns as they incur emergency response costs from extreme weather.

Chapter 70 Task Force: In recognition of local school funding challenges, the Senate budget would create a Chapter 70 Task Force, including a designee from the MMA, to study and make recommendations on various aspects of the Chapter 70 formula, including issues related to required local contribution calculations, impacts on minimum aid districts, and issues of low and declining student enrollment.

MSBA commission: The Senate budget would establish a special commission, including a designee from the MMA, tasked with studying and making recommendations regarding the Massachusetts School Building Authority’s capacity to meet the needs of current and future school facility projects.

Tax title: The Senate included an outside section related to the tax title foreclosure process, which would impact liens on properties due to nonpayment of property taxes. The MMA favors standalone legislation passed in the House on June 26 that adheres to the relevant recent U.S. Supreme Court decision while providing important protections for taxpayers and municipalities.

Electronic Lottery: An outside section in the House bill would authorize an online state Lottery (iLottery), with $200 million of anticipated new revenue targeted to early education programs. The MMA continues to advocate for online Lottery proceeds to be used solely for the Lottery’s intended purpose — supporting the Commonwealth’s revenue sharing through Unrestricted General Government Aid. This is consistent with the Lottery’s mission and is necessary to protect a vital revenue stream that accounts for the overwhelming amount of discretionary local aid that cities, towns and taxpayers rely on to fund essential municipal and school services and balance local budgets. The Senate budget bill did not include a provision to expand the Lottery platform.