House and Senate Pass Balanced FY12 Budget
The Massachusetts legislature passed a $30.59 billion spending plan for fiscal year 2012 aimed at increasing government efficiency, cutting costs and shielding essential services. The budget reduces the state’s FY12 Stabilization Fund draw by $15 million and closes a $1.9 billion budget gap with funding reductions, ongoing revenue initiatives and one-time revenues.
“Faced with a sizeable budget gap and limited resources, we have produced a balanced budget that improves government efficiency and preserves essential services,” House Speaker Robert A. DeLeo said. “Through needed reforms, this responsible budget protects our neediest residents and brings cost savings to state government.”
“We have completed a difficult, but responsible budget that reflects the priorities of the Commonwealth and includes unfortunate, but necessary savings,” said Senate President Therese Murray. “Our economy is no longer in freefall but we are still challenged to do more with less at all levels of state government and this budget is realistic for our current fiscal situation. We faced some important policy issues this year and I am proud of the hard work and collaboration that went into producing a final budget for the 2012 fiscal year.”
“Lacking federal resources to trim the budget gap, this compromise budget efficiently provides necessary services to folks across the Commonwealth,” said Representative Brian S. Dempsey, Chairman of the House Committee on Ways & Means. “Through the implementation of innovative reforms, the budget cuts costs while maintaining services that our residents rely on.”
“Although we are seeing a rise in monthly revenue numbers and a decrease in the Massachusetts unemployment rate, we are not out of the woods yet. This compromise spending plan provides assistance to some of our neediest residents while implementing cost saving measures. Members of both branches have worked painstakingly hard to come up with a smart and efficient spending plan,” said Senator Stephen M. Brewer (D-Barre), who chairs the Senate Committees on Ways and Means.
The budget increases Chapter 70 funding by $140 million and SPED Circuit Breaker funding by $80 million over their FY11 appropriations.
The budget includes a plan to reform municipal health insurance that provides savings for cities and towns while ensuring that employees and retirees have a strong voice without a veto. The conference report allows municipalities to alter co-payments, deductibles and other plan design features so long as such features are no greater in dollar amount that those offered by the Group Insurance Commission (GIC) plan with the largest subscriber enrollment. The GIC provides health insurance to state workers and legislators.
The municipal employee health reform plan does not alter collective bargaining rights associated with premium splits. Furthermore, as a local option proposal, cities and towns will not be required to implement plan design changes for employees. Rather, municipalities will have the option to implement or abstain from plan design changes.
The spending plan also includes no new taxes while preserving services for some of the neediest residents of the Commonwealth by focusing limited resources for the Department of Mental Health, early intervention services and public safety initiatives.
Selected highlights of the budget agreement include:
--$213 million for special education circuit breaker funding, an increase of $80 million over FY11;
--Full funding for the state’s inpatient mental health beds, club houses and mental health community services;
--Full funding for the Early Intervention program that addresses developmental delays in children ages 0-3;
--A $4.5 million increase in funding from FY11 for District Attorneys;
--Increased funding for the State’s Veteran Outreach Centers and Veterans homeless shelters by 10% at $1.91 million and $2.29 million, respectively;
--Regional School Transportation was funded at $43.52 million, an increase of $3 million from FY11, allowing school districts to receive a reimbursement rate of 61%;
--$2 million in funding for a new State Police Class;
--$525 million to the Department of Correction, which will prevent any facility closures;
--$6 million in funding for Regional Tourism Councils;
Policy Initiatives included in the report include:
--A municipal health care proposal that provides strong incentives for municipalities and employees to come to a mutually agreed upon solution on health care benefits. The language builds on the plan adopted by the House of Representatives by adding protections to ensure the integrity of the negotiation process while protecting retirees, specifying that any cost-savings proposal from a municipality must also include a plan to mitigate or cap the impact of changes on subscribers, specifically retirees, low-wage workers, and heavy users of health care;
--A requirement that 25% of indigent defense be provided by public defenders by the end of FY11. The substantial increase in the number of public defenders will help control costs, while maintaining the quality of the existing indigent defense system;
--The establishment of a new Office of Commonwealth Performance, Accountability and Transparency that will evaluate programs, coordinate grant activity and allow greater transparency. The office will also have a specific focus on projecting caseloads for a number of state programs;
--Includes three new initiatives that will provide state agencies with resources necessary to aggressively pursue and recoup unnecessary expenditure of funds and instances of fraud or overpayment. A new auditing and program integrity grant program for state agencies; a line item to support MassHealth auditing and recoveries; and a new unit within the Operational Services Division to conduct vendor audits. The investments will generate revenue and protect government resources;
--The Conference Committee Report also includes a provision that would return up to $65 million in FY11 Budgetary Reversions for use as onetime, non-recurring local aid payments to close the gap left by painful but necessary cuts;
House and Senate negotiators assigned to resolving differences between the branches’ versions of the budget were faced with the most difficult budget since the economy collapsed in 2008. Moving forward without the aid of $1.5 billion in federal stimulus funds that has provided relief in past years, legislators relied on funding reductions, ongoing revenue initiatives and one-time revenues to find a balanced approach of cuts and revenues. This balanced approach preserved services for the neediest citizens and targeted programs aimed to provide financial assistance to education initiatives, municipalities and families.
The Conference Report ends the year with a stabilization fund balance that exceeds $800 million, an amount greater than the stabilization fund balance entering FY11. The budget plan also marks the smallest year to year spending increase in the past decade, creating a spending plan based on transparency, accountability, and performance.