Executive Summary A Message from the Governor

To the Honorable Senate and House of Representatives,

Today, we submit to you our Fiscal Year 2022 (FY22) House 1 budget recommendation which protects core government services, provides significant support for local cities and towns, and encourages economic growth and development without raising taxes on residents, as we promote a strong, equitable recovery from the COVID-19 public health emergency.

This balanced budget proposal includes substantial investments and maintains financial discipline as the Commonwealth begins to transition away from one-time revenue and spending needed to combat the pandemic. These one-time initiatives have utilized various state and federal resources, both on and off-budget, to help ensure public health and address a variety of needs. The proposal also keeps the Administration’s promise to the Commonwealth’s cities and towns by ensuring unrestricted local aid increases at the same rate as consensus tax revenue growth.

Through this proposal, the Administration is recommending fully funding the first year of the landmark Student Opportunity Act with $246.3 million in new funding added for initiatives laid out in this legislation. This includes an increase of $197.7 million in Chapter 70 funding, with a particular focus on school districts serving low-income students. The Administration’s proposal also provides increased funding for charter schools and special education circuit breaker reimbursement. Additionally, the Administration is proposing to allow municipalities to count federal dollars towards their Chapter 70 required local contribution increases, a commonsense measure to provide important flexibility and needed fiscal relief to cities and towns.

House 1 recommends $45.6 billion in gross spending, a decrease of 0.7% over the Fiscal Year 2021 (FY21) projected spending, (excluding transfer to the Medical Assistance Trust Fund). This year-over-year decrease accounts for current tax projections and is primarily driven by caseload and cost decreases at MassHealth which previously experienced significant cost increases in FY21 due to the pandemic.

This budget recommendation authorizes a withdrawal of up to $1.6 billion from the Stabilization Fund to help ensure the continuation of essential government services and responsibly preserve financial reserves for Fiscal Year 2023 and beyond. Working together, the Legislature and this Administration have been able to grow the Stabilization Fund since 2015, which now enables us to face the budget challenges associated with COVID-19 while still making substantial investments in education, economic development, and our communities – all without raising taxes on our residents.

Improvements in tax collections or new federal revenue will allow the amount of this withdrawal to be reduced. This current Stabilization Fund withdrawal accounts for less than 3.5% of the total proposed FY22 budget and would leave the fund with a balance of approximately $1.11 billion.

Consistent with previous budget proposals, House 1 maintains the Administration’s commitment to being a reliable partner for municipalities. This Administration is proposing an increase in the Unrestricted General Governmental Aid (UGGA) investment that is equivalent to the expected 3.5% tax revenue growth in the consensus revenue forecast announced on January 15, 2021. This translates to a $39.5 million increase and a $1.168 billion total investment, which would be $222 million (23.5%) more than the Fiscal Year 2015 investment. House 1 also includes $4 million for Community Compact-related programs including best practices and regionalization and efficiency grants, as well as $3 million for district local technical assistance and $4.8 million for the Public Safety Staffing Grant Program. These programs provide all 351 cities and towns with access to grant funding and resources to ensure quality services for their residents.

This proposal preserves pre-COVID-19 pandemic eligibility and benefit levels for social safety net programs such as MassHealth, Transitional Aid to Families with Dependent Children (TAFDC), child-care vouchers, Prescription Advantage, Homecare, Chapter 115 veteran benefits, and the Turning 22 program.

To continue promoting racial equality and opportunity, this proposal includes over $30 million to support the recommendations of the Black Advisory Commission and Latino Advisory Commission. This includes investments in teacher diversity, small business development, financial literacy, job placement programming, and workforce training. The recommendation provides $2.5 million in funding to support the newly created Supplier Diversity Office’s work to increase and improve state contracting opportunities for minority-owned businesses.

House 1 invests substantial funding towards critical priorities including $96 million to address sexual assault and domestic violence and $357.3 million for substance misuse treatment and prevention, an increase of $22.1 million (7%) above the FY21 budget. With this recommendation, the Administration is also continuing strong support for transportation, early and higher education, housing, workforce development, behavioral health, the environment, and economic development.

This budget includes a total investment of $16.9 million in additional funding for transforming vocational high schools into Career Technical Institutes and training 20,000 new workers in skilled trades and technical fields over four years. This initiative will increase student demand, involve businesses in program development and credentials, reduce barriers to licensure, and create incentives for completion and post-graduate employment.

The Commonwealth continues to benefit from the strong partnership between our Administration and the House and Senate. We look forward to developing a final spending plan for Fiscal Year 2022 that invests in essential government services and critical priorities while ensuring fiscal discipline and stability for current and future budgets. We appreciate your prompt consideration of these recommendations.

Sincerely,