The State’s FY18 Budget

We’re less than halfway through the Fiscal Year (FY18), and, as I was re-reading MassBudget’s FY18 budget analysis, I thought it worth noting a few of their key points.

Early Education: Quality early education and care helps prepare our young children for success in K-12 education and allows them to thrive more generally. Early education and care is also a critical work support for parents with young children, by offering safe and reliable care for kids while parents provide for their families. Funding for early education is -22% since 2001.

K-12 Education: Providing an excellent education to all children in Massachusetts supports future generations in the Commonwealth while contributing to our economy over the long term. Chapter 70 education aid is the main program for delivering state support to local districts across Massachusetts, and ensuring that schools have sufficient resources to provide the necessary services to all students.* The current (FY18) budget increased Chapter 70 Aid by $118.9 million (2.6%) to $4.75 billion.^ The FY18 Chapter 70 budget also includes a modest step to implement recommendations made by the Foundation Budget Review Commission (FBRC) in 2015.** The FBRC noted that current underfunding reduces the capacity of schools across the state to provide services to help all children succeed.

Higher Education: Higher education helps the people of our state contribute to their communities and gain the skills to succeed in a knowledge-driven economy. Our public higher education institutions – including the University of Massachusetts (UMass), the state universities, and our community colleges – educate a majority of Massachusetts high school graduates who go on to college. Graduates from public higher education are also more likely to stay in-state after graduation, contributing to our economy over the long term. Higher education funding is -15% since 2001, which has contributed to a doubling of tuition and fees between 2001-2016.

Environment & Recreation: The state budget funds programs that keep our air, water, and land clean, maintain fish and wildlife habitats, and staff and maintain our parks, beaches, pools, and other recreational facilities. The current FY18 budget provides $200.0 million for environment and recreation programs, which is $6.8 million more than in FY 2017. The Governor vetoed $4.8 million from the Legislature’s budget, largely by eliminating funding for specific environment and recreation projects located throughout the state. The Legislature overrode all of these vetoes. Even with this slight increase in funding in FY18, the environment and recreation budget is 35% below FY01 after adjusting for inflation.

Libraries: The state budget supports local libraries; the Boston Public Library, which serves as the primary research and reference service for the Commonwealth; and other library programs in Massachusetts. The current FY18 budget provides $25.5 million for libraries, which is slightly above the FY17 budget. The Governor vetoed $250,000 in funding for libraries, which the Legislature overrode. Even with a slight increase over FY17, funding for public libraries has fallen by 48 percent since FY 2001 after adjusting for inflation.

Unrestricted Local Aid: General local aid helps cities and towns fund vital local services such as police and fire protection, parks, and public works.^^ The current FY18 budget allots $1.06 billion for Unrestricted General Government Local Aid. Also known as UGGA or “general local aid,” the amount is an increase of $39.9 million over FY17 levels. The Commonwealth’s capacity to fund general local aid has been hindered by a series of significant state-level tax cuts during the 1990s and 2000s combined with the Great Recession. While over the past several years, general local aid funding has increased in step with or slightly above inflation, it still remains 40.5 percent below FY 2001 levels, when adjusted for inflation.

Tax Revenue: The budget adopted several “tax modernization” changes that would deliver a mix of both one-time and ongoing revenue. The Legislature did not adopt a number of proposals for additional revenues: higher taxes on flavored cigars, tighter eligibility and salary caps for Film Tax Credits, and extending the room occupancy tax to short-term rentals such as those made through Airbnb. Nor did the Legislature include an earlier proposal for a Tax Expenditure Review Commission to systematically review and make recommendations about many of the tax breaks provided by the Commonwealth. The budget expands the Earned Income Tax Credit (EITC) by making it easier for married victims of domestic abuse to claim the credit without filing a joint return with their spouses. Along with this change, the budget limits the size of state EITC benefits for part-time residents and eliminates access to the credit for nonresidents. The Legislature also agreed to create a new business tax credit for employers that hire qualified, Massachusetts-based veterans.

– – –

* For further background on the state’s education funding system, see MassBudget’s Demystifying the Chapter 70 Formula.

^ This increase is close to the 2.5% ($113.0 million total) increase from FY16 to FY17.

** Wherein the Commission found that according to the state’s estimate of what it takes to educate children (called the “foundation budget”), school districts are significantly under-resourced.

^^ For more information on general local aid, please see MassBudget’s Demystifying General Local Aid in Massachusetts.

Photo credit: MassBudget and Policy Center