House Bumps Up Local Aid In $41 Billion Budget, Drops Baker's MassHealth Plan

House leadership detailed a nearly $41 billion state budget proposal on Wednesday that goes above Gov. Charlie Baker's recommended spending on local aid, housing assistance and MassHealth.

The recommendation also would impose new oversight of the embattled state police, which has been under fire for hiring and potential overtime abuse scandals.

House Speaker Robert DeLeo, moving into his 10th budget cycle as the top House Democrat, told the State House News Service in an earlier interview that the $40.98 billion spending plan stays "true to our values" of supporting vulnerable residents, making "key investments" and living within the state's "fiscal realities."

The budget bill proposes to spend about $83 million more than Baker recommended in his budget filed in January, including $54 million in additional spending through a variety of local aid programs that House leaders say would increase total support to cities, towns and schools next year by 3.5 percent.

The House Ways and Means Committee approved the spending plan on a voice vote without debate at about 11:45 a.m.

Responding to scandals that have tarnished the image of the state police, House leaders included policy sections in its budget to try to shine a light on management issues — subjecting the department to greater oversight in the form of an internal audit unit and a special legislative commission.

The House budget anticipates a $96 million deposit into the state's "rainy day" fund, equivalent to what Baker proposed to sock away into the reserve account in his budget. Fiscal watchdogs have cautioned Beacon Hill that its inadequate reserve levels could easily be drained in a recession.

The House spending plan also counts on $63 million in new revenue from marijuana sales but no new money from taxing short-term rentals, as lawmakers continue to discuss legislation to regulate and tax that growing industry.

The release of the House budget, which will be debated the week of April 23, comes at a point when it appears the state is flush with cash. Since the passage of federal tax reform in November, tax collections have spiked, leaving the state with $892 million more this fiscal year than it had anticipated.

House leaders, however, said they believe that the increase has more to do with timing than economic output, and estimate that the state is actually only currently $142 million above benchmark for the year.

Tax revenues in the last two fiscal years have tanked in the spring, creating major budget problems. This year, however, collections over the first nine months have fueled speculation about a sizeable surplus, and ways to spend it.

While the budget includes no new broad-based tax increases, it does make one significant tax policy change adopting the governor's recommendations to increase the earned income tax credit from 23 percent to 30 percent of the federal credit, which will help many low-to-middle income families.

Ways and Means Chairman Jeffrey Sanchez, a Jamaica Plain Democrat who took over the powerful budget-writing committee last year from former Rep. Brian Dempsey, said his travels across the state helped inform this first budget that he put together.

"Working on this budget, I could see the faces of the people of my community and throughout the commonwealth," Sanchez said. "The speaker and I cover a lot of ground across the state, from that DCR park ranger working the box over at Mount Greylock, the sous cook at a small diner in the South End, in my own district in Mission Hill. All of our neighbors across the state. For me, this budget is all about people."

The budget bill matches Baker's recommendation of $1.1 billion in unrestricted local aid, but exceeds the governor's Chapter 70 budget for local schools by $20.9 million, a $124.6 million, or 2.6 percent, increase for fiscal 2019.

Sanchez's budget also allocates an additional $9.5 million for charter school reimbursements and $1 million for homeless student transportation, for which the governor proposed no increases, and $8.8 million more than the governor for the special education circuit breaker.

House leaders once again scrapped the governor's proposal to shift 140,000 non-disabled adults between 100 percent and 138 percent of the federal poverty line to comparable plans at the Massachusetts Health Connector, despite what the administration described as efforts taken to tweak the proposal so that people who are transferred could receive zero-copay, zero-premium coverage.

"We felt that the governor's proposal didn't guarantee the protection of benefits and affordability and we had concerns with ensuring the continuity of care and we heard that over and over and over, from the elderly folks that are receiving services at the adult day health centers to the larger providers themselves," Sanchez said.

The $16 billion MassHealth budget — which accounts for 41 percent of state spending — represents a 3 percent increase in the Medicaid budget to cover 1.9 million residents.

While House leaders touted areas of investment, the Massachusetts Taxpayers Foundation recently cautioned that a growing portion of state revenues are being consumed by a few priorities, leaving a lot less money for lawmakers to invest in programs important to their constituents.

Fixed obligations to non-discretionary spending in areas like MassHealth, debt service and pensions accounted for 55 percent of tax revenues in fiscal 2007, but accounted for 73 percent in fiscal 2017, the foundation said.

In his first budget as Ways and Means chair, Sanchez proposes to create a health equity office within the Executive Office of Health and Human Services.

The new office, which both branches agreed in 2016 to create but which was derailed by a disagreement over its scope, would be tasked with addressing the health issues that disproportionately affect black and Latino communities and other ethnic groups whose needs are not represented by existing state agencies and programs.

"It's a proven fact that an African-American or Latino that walks into any emergency room or is treated at any health care institutions, there are defined disparities that exist in terms of health care outcomes," Sanchez said. "This office will look at factors, the social determinants of health in community and culture, to coordinate and figure out how we eliminate health disparities."

DeLeo over the past several years has made early education a priority in his budgets, and this year is no different. The House Ways and Means budget adds an additional $20 million to a rate reserve account to pay early educators and proposes a new $8.5 million initiative to provide professional development and a talent pipeline through community colleges to fill early education workforce shortages.

As part of a three-tiered policy approach to the scandal-plagued State Police, the House proposes creating a special audit unit within the State Police but "not subject to the department's control" that would "monitor the quality, efficiency and integrity of the department's operations and prevent the abuse of public funds," Sanchez said.

The audit unit, described as being similar to an internal audit unit created at the Department of Transportation in 2015, would be run by a full-time director appointed by the inspector general.

To dig into the State Police's hiring and promotion practices, the House budget recommends having the House and Senate leaders of the Committee on Public Service convene a special legislative commission of stakeholders to "examine the relevance of testing requirements, preferential treatment given on competitive exams and other areas to secure and ensure that the State Police is reflective of the people who they serve," Sanchez said.

The group would be charged with meeting at least monthly and must make recommendations by the end of the calendar year. The same deadline would be in place for the Collins Center for Public Management at the University of Massachusetts-Boston, which is provided funding to study and make suggestions for reforms of the overall management structure of the State Police.

The House also reins in the State Police's main budget account — proposing to fund the agency with about $281.4 million, less than the $287.8 million in the current budget and the $284.9 million proposed by Baker.

Following up on the passage of a sweeping criminal justice reform bill that legislative Democrats are already pointing to as a key accomplishment of this session, the House budget includes funding "to make sure that we have the financing to implement" the bill, if it is signed into law, DeLeo said.

The spending plan includes $8 million for diversion programs, $2.5 million for the expansion of specialty courts, and proposes $3 million for new community-based re-entry programs, which seek to keep people from continually cycling through the justice system.

"Recidivism is a major issue and more than half the people released from state prison return within three years," Sanchez said. "Recently released inmates are 120 times more likely to die from overdoses than non-inmates. So we invest $3 million in new money into evidence-based solutions to help people return to communities through initiatives like workforce development, supportive housing, behavioral health and treatment."

The House budget would also increase the salary for assistant district attorneys, a plan prosecutors pushed in recent meetings with House leaders, and provide for a rate increase for public defenders and private counsel at the Committee for Public Counsel Services. The budget would also boost funding for Massachusetts Legal Assistance Corporation, Prisoners' Legal Services and Mental Health Legal Advisors Committee.