The Governor’s FY 2015 budget is a balanced, responsible budget that supports the Administration’s growth strategy of investing in education, innovation and infrastructure to create jobs and opportunity in the near term and strengthen our Commonwealth in the long term.
Governor Patrick is committed to investing in education because it is our calling card to the world and is one of the best investments we can make in the future of our Commonwealth. As a result of the Administration’s strategic investments in education and innovation to date, the Commonwealth’s students perform at the top in national and international assessments of academic achievement. However, persistent achievement gaps remain, leaving too many young people behind. The FY 2015 budget proposes $204.9 M in increased education funding designed to make progress in closing achievement gaps and expand education access at all levels, from birth through higher education.
Governor Patrick is proposing to further strengthen the critical social safety net provided by state government. In the face of the toughest economic times in a generation, the Governor has protected services for our most vulnerable residents. Governor Patrick continues to prioritize these necessary services in FY 2015.
The Governor’s FY 2015 budget furthers the commitments enacted in the 2013 transportation finance legislation by increasing operating funding for the Department of Transportation (MassDOT) and the Massachusetts Bay Transportation Authority (MBTA) by $141 M. This investment comes in addition to the $12.4 B included in the MassDOT Capital Investment Plan over the next five years to improve Massachusetts transportation assets.
The Governor’s FY 2015 budget includes funding for other key priorities that are consistent with the Governor’s desire to change the way government does business – and effectuate positive results for the citizens of the Commonwealth.
Governor Patrick has proactively and responsibly managed the state’s finances in the wake of a global recession to ensure balanced and sustainable budgets. The Governor’s FY 2015 budget continues his Administration’s commitment to strong fiscal and economic stewardship.
|dollars in millions|
|FY 2013 Resources Used to Support Ongoing FY 2014 Costs||31.0|
|Stabilization Fund Withdrawal||350.0||175.0|
|Stabilization Fund Interest||5.8||10.7|
|Delay FAS 109 Deduction||45.9||45.9|
|Medicaid Payment Schedule Changes||41.0||13.0|
|Gaming Licensing Funds Supporting Ongoing Costs||14.7||53.5|
|Sale of Assets||30.0|
|OPEB funded through Debt Service Reversions||50.6|
|Trust Fund Sweeps||61.0||4.0|
|Quasi Public Contributions||7.0|
|TOTAL ONE TIME RESOURCES||667.0||334.4||-50%|
|Less: Stabilization Fund Deposits||(57.8)||(109.8)|
|NET ONE TIME RESOURCES||609.2||224.6||-63%|
|*Revised since the Governor signed the FY 2014 budget on July 12, 2013.|
The table below outlines changes in major spending categories in the Governor’s FY 2015 budget proposal.
|dollars in millions|
|Investments in Education:|
|Early Education and K-12 Programs||5,430.0||5,566.5||136.5|
|Investments in Transportation:||764.4||905.4||141.0|
|Safety Net (non Health Care):||4,497.0||4,669.0||172.0|
|All Other Spending:||4,487.8||4,369.8||(118.1)|
|TOTAL ANNUAL SPENDING CHANGES||36,312.3||38,166.5||1,854.2|
|TOTAL ANNUAL SPENDING CHANGES (EXCLUDING PENSIONS)||34,682.3||36,373.5||1,691.2|
|*Health care cost estimates represent gross cost, without accounting for federal revenue or offsetting municipality or authority contributions.|
75% of the state budget is dedicated to health care, human services, education and aid to cities and towns. All other areas of the budget, including the state’s obligations for debt service and employee pensions, decrease next year by $118.1 M combined.
|dollars in millions|
|Projected Baseline Tax Collections*||23,154.4||24,337.0||1,182.6|
|Transfer of Capital Gains in Excess of Statutory Maximum||(37.0)||(122.0)||(85.0)|
|Transfer for Annual Pension Contribution||(1,630.0)||(1,793.0)||(163.0)|
|Transfer for OPEB Liabilities**||-||(75.0)||(75.0)|
|Transfers of Tax Revenue to MBTA, SBA and Workforce Training Fund||(1,549.8)||(1,605.0)||(55.2)|
|Transfers from Non-Budgeted Sources||1,844.0||1,744.5||(99.5)|
|Stabilization Fund Withdrawal***||350.0||175.0||(175.0)|
|Prior Year Funds Used to Support Current Year Budgetary Spending||245.2||13.9||(231.3)|
|Delay of FAS 109||45.6||45.6||-|
|Other New Revenues Supporting the Budget:|
|Aligning Settlements with Capital Gains Stabilization Fund Policy****||-||203.5||203.5|
|Closing Tax Loopholes||-||40.3||40.3|
|Taxing Candy and Soda to Support Public Health Programs||-||57.0||57.0|
|Revenue from Category 2 Gaming Establishment Operation||-||20.0||20.0|
|Modernize Bottle Redemption||-||24.1||24.1|
|CHANGE IN BUDGETARY RESOURCES (INCLUSIVE OF RESOURCES FOR PENSIONS):||1,691.2|
|*FY 2014 tax figure
reflects revised estimate after excluding FAS 109
delay, separately categorized below. |
**In FY 2014, $50.6 M is dedicated to OPEB from debt service savings.
****In FY 2014, $184 M in settlements in excess of $10 M included in Projected Baseline Tax Collections.
Tax revenue is forecasted to grow from $23.2 B in FY 2014 to $24.34 B in FY 2015, a 4.9% or $1.14 B increase. A portion of the tax revenues are not available for the budget ($122 M) corresponding to the state’s fiscal policy to limit the amount of capital gains revenue included within the state budget. Finally, transfers of tax revenues for pension and other dedicated purposes, such as the Massachusetts School Building Authority (SBA) and the Massachusetts Bay Transportation Authority (MBTA) are expected to increase by $55 M in FY 2015.
The Governor’s FY 2015 budget calls for $57 M in new tax revenue derived from applying the sales tax to candy and soda purchases. This revenue will be dedicated to supporting public health services and infrastructure in the Commonwealth. In addition, the Governor’s FY 2015 budget includes $40 M in tax revenues by proposing to close loopholes that the Governor has supported closing in previous fiscal years, including imposing the room occupancy tax on the mark-up that room resellers like online travel websites receive as well as applying the room occupancy tax on transient rentals, and applying the corporate tax rate to pass-through entities owned by insurance companies and security corporations.
Non-tax revenues in FY 2015 are expected to total $15.18 B, up from $14.6 B in FY 2014. Growth in these revenues is mostly due to the increased federal revenues the state receives for operating the federal Medicaid program (in Massachusetts known as MassHealth). In addition, modest increases are proposed in departmental revenues and other budgetary transfers from non-budgeted sources, such as the State Lottery Fund.
Other revenues in FY 2015 include: approximately $203.5 M more from refining our policy on settlements or judgments in excess of $10 M to more closely align with our capital gains provision, which sets a threshold above which capital gains collections are unavailable to support budgetary expenditures and instead must be dedicated to the Commonwealth’s Stabilization Fund; $20 M of operating tax revenue collections from the launch of the first Massachusetts gaming establishment at the end of calendar year 2014; and $24.2 M from modernizing the state’s existing bottle redemption law to include bottled water and sports drinks.