Senate debates budget

The Senate Ways and Means Committee released its version of the FY10 budget on May 13. The budget is being debated on the floor this week. One of the first issues taken up was a vote by the Senate to increase the sales tax to 6.25 percent to help fill in some of the budget cuts. Other tax provisions are still under consideration.

The Massachusetts Budget and Policy Center (www.massbudget.org) has put out a clear analysis of the fiscal situation the state is facing as the budget is developed. Below is MBPC’s overview.

The Senate Ways and Means (SWM) budget seeks to close a budget gap of approximately $5 billion. This gap is $1.5 billion larger than the gap the House and Governor confronted. The budget gap has grown because the national economic crisis has led to larger declines in state revenue than had been anticipated when the original revenue estimates for the upcoming fiscal year were developed in January.

The SWM proposal relies on close to $1.5 billion in federal stimulus funds and about $500 million in reserves (including both withdrawals and a forgone deposit into the Stabilization Fund). This budget does not include new broad-based taxes and instead imposes over $2.5 billion in cuts and spending reductions, affecting almost everything government does, including public safety, education, health care and human services, environmental protection, libraries and parks, and our infrastructure.

The SWM budget recommends cutting local aid, for example, by $487 million (37 percent) from the amounts originally appropriated in the General Appropriation Act (GAA) for Fiscal Year 2009.

The following is a summary of the impact of the SWM proposal on public education.

PreK-12 Education Funding

The FY10 SWM budget proposal cuts Chapter 70 for all school districts by 2 percent from FY09 levels, a total cut of $79 million.

Other, non-Chapter 70 local aid (now combined and called “General Government Aid”) was drastically cut, down $487 million from FY09, a cut of almost 37 percent. This cut puts the amount of aid at $264 million below the final House budget. In some communities, over half of local aid funds schools. This proposed cut in local aid will affect our schools, as well as local services such as public safety.

Virtually no education grant program is spared from severe cuts, a total of $225 million in cuts from FY09. The Senate plan is $125 million less than the House final budget, including the following:

  • Kindergarten Development Grants – $26.7 million, down $7 million from FY09 and down $1 million from the House.
  • Regional School Transportation – $30.5 million, down $31 million from FY09 and down $20 million from the House.
  • Special Education Circuit Breaker - $105 million, down $125 million from FY09 and down $80 million from the House.
  • Expanded Learning Time – $14 million, down $3.5 million from both FY09 and the House .
  • Alternative Education, Bullying Prevention programs and Leadership Academies for Principals and Superintendents are not funded at all in the Senate Ways and Means proposal.

Funds from the American Recovery and Reinvestment Act (ARRA) may make up for a portion of these cuts, especially increased IDEA and Title I funds going directly to local school districts.

Higher Education Funding

The FY10 SWM budget proposal level funds the University of Massachusetts and all state and community colleges at their FY09 levels:

  • $493 million for the University of Massachusetts
  • $223 million for state colleges
  • $245 for community colleges.

Like the governor’s recent proposal, the Ways and Means proposal relies on ARRA funding to make up the difference between the state appropriation and level funding for FY10.

Compared to the House plan, the SWM proposal makes additional cuts to other higher education line items, including over $10 million from scholarship accounts. The governor had level funded this line item at $96 million, while the House funded it at $92.8 million. Some relief may be available for this cut, as ARRA funding includes increases to Pell Grants and to work-study programs.

Higher Education Health Insurance Premiums

State employees would see substantial increases in their health insurance premium shares under the Senate Ways and Means budget proposal. All employees would pay 30 percent instead of the current 15 or 20 percent, depending on the date of hire. For those hired before 7/1/05, that amounts to a 100 percent increase in what they are currently paying, while those hired after 6/30/05 would see an increase of 67 percent. Depending on one’s date of retirement, health insurance premium splits for retired state employees remain at the same levels as in current law.