House and Senate leaders agreed to a $40.2 billion budget that avoids tax increases and mostly holds spending flat at state agencies for fiscal 2018, according to two sources close to the negotiations, including one of the legislators involved in the talks.
The bill, filed Friday at 9:40 a.m., and scheduled for passage Friday afternoon reflects a new forecast of fiscal 2018 tax revenues that is roughly $700 million below the projection the House and Senate used to build their budget bills this spring, according to Sen. Vinny deMacedo, a Plymouth Republican.
A separate source close the negotiations said the conference committee agreed to $733 million in budget fixes, including about $400 million in direct cuts from the bills the House and Senate approved this spring. Further explanations about the budget fixes and the 327-page bill, which includes 153 outside sections and was crafted behind closed doors of the past month, were not available as lawmakers who crafted the spending plan were not available to discuss it.
Fiscal 2017 spending is projected to be $40.183 billion, according to the most recent information statement made public by the state.
It does not appear that budget negotiators cut local aid level that cities and towns had been anticipating, with $4.75 billion scheduled to be delivered to local schools and $1.06 billion appropriated in unrestricted local aid.
The compromise budget, according to the same official, does not include the specific MassHealth reforms that Gov. Charlie Baker presented to the conference committee last month for inclusion in the budget, but does incorporate an increase in the Employer Medical Assistance Contribution paid by employers to help cover the cost of Medicaid. That measure marks a new strategy to help the state pay its rising MassHealth tab.
Departmental budgets often increase year-to-year to keep pace with rising salaries and others costs. The fiscal 2018 budget generally keeps spending flat from fiscal 2017, according to deMacedo.
“There’s going to be a lot of disappointment in that reality, but we have a responsibility to put together a budget that’s going to be balanced, and we’ve done that,” deMacedo said.
Unemployment is low and the state’s economy continues to grow, but Beacon Hill officials have been miffed by the slow growth rate of tax collections.
The budget agreement nixes the Senate’s plans to hike taxes on flavored cigars, which would have provided continued funding for prevention and wellness programs around the state. The deal also excludes a Senate-backed provision to tax short-term rentals such as those booked through Airbnb. House leaders are counting on Rep. Aaron Michlewitz to put together a standalone bill addressing that issue.
The conference report includes House-backed language that would allow the Gaming Commission to issue beverage licenses permitting casinos to serve alcohol to patrons “who are actively engaged in gambling” as late as 4 a.m. Senate President Stan Rosenberg said in April that he worried extending alcohol-serving hours at casinos beyond the current 2 a.m. cutoff could open the door to other changes to the state’s gambling law.
Arriving seven days into the fiscal year, the compromise was the work of a six-member conference committee that worked in secret over more than a month.
Aides to House Ways and Means Committee Chairman Brian Dempsey and Senate Ways and Means Committee Chairwoman Karen Spilka declined to answer any questions about the bill right after dropping it off in the House clerk’s office Friday morning. The bill began circulating online at about 10:40 a.m.
All six members of the conference committee signed off on the document, according to the House clerk’s office.
Its passage appears a foregone conclusion. Not only is the budget late, but dissent among legislators appears to have lessened in recent years and bills worked out by conference committee are routinely approved.
The chief budget negotiators, Rep. Brian Dempsey (D- Haverhill) and Sen. Karen Spilka (D-Ashland) indicated Thursday night that a deal was imminent and expressed confidence that the branches would act on it Friday.
“On behalf of our fellow conferee’s we would like to announce that the Conference Committee working on the FY2018 Budget, has reached an agreement to resolve all differences between the House and Senate versions,” Dempsey and Spilka said in a short statement. “The Conference Report will be filed tomorrow morning and the branches will act on the Conference Report in session tomorrow.”