Mass. Senate Leaders Unveil $47.6 Billion Budget Plan

Massachusetts Senate Democrats on Tuesday unveiled a $47.6 billion spending plan for fiscal year 2022 that aims to repair economic damage from the pandemic.

The Senate Ways and Means Committee's budget calls for increasing state spending by $1.2 billion, or about 2.6% above the fiscal year that ends June 30. It includes spending $1.8 billion more than the version Governor Charlie Baker proposed in January and $64 million less than the spending bill the House approved last month.

Senate President Karen Spilka said the budget bill "seeks to put us on a stable fiscal footing and build a more inclusive and resilient commonwealth for all of us."

"If the COVID-19 pandemic and its economic aftershocks have frayed the fabric of our commonwealth, this budget takes on the important but sometimes invisible work of stitching that fabric back together," Spilka told reporters during a briefing.

Senators will kick off their annual debate of the bill on May 25 and will likely file hundreds of amendments by the 2 p.m. deadline on Friday.

Like the House budget, the proposed Senate budget does not include any of the $4.5 billion Massachusetts is expected to receive from the American Rescue Plan a relied on a conservative revenue estimate of $30.12 billion that Massachusetts is already on pace to surpass by hundreds of millions of dollars in the current fiscal year.

The Senate's budget bill proposes a maximum withdrawal from the state's "rainy day" stabilization fund of $1.55 billion, $50 million less than Baker proposed and $325 million less than the House proposed.

Senate Ways and Means Committee Chair Michael Rodrigues said the proposed drawdown would leave that fund, which had more than $3 billion in it before the pandemic, with more than $1.15 billion.

The Senate budget includes a handful of new revenue sources not considered by the House, such as authorization of debit card lottery payments that could bring in $30 million, but it does not call for any broad-based tax increases on individuals.

One provision would alter state and local taxes for pass-through entities. Rodrigues said Senate Democrats modified language on the topic that Baker included in his budget to make it "revenue-positive" for Massachusetts. The change, he said, would net $90 million in revenue for Massachusetts while saving those tax filers $1.18 billion at the federal level.

Senate leaders also targeted several policy issues in their spending bill, including an overhaul of the state's film tax credit program that contrasts from the House's approach.

The tax credit is set to expire at the end of 2022 under current law. The Senate bill would push the sunset date to Jan. 1, 2027 while implementing several changes to how it functions, such as increasing the minimum amount of in-state spending or in-state principal photography days from 50% to 75%, capping salaries eligible for the credit at $1 million, and eliminating transferability of credits.

Rodrigues said those reforms are based on the recommendations of the Tax Expenditure Review Commission.

"The critique of the existing film tax credit is too much of the money, the tax credits and the benefits of the tax credit go to out-of-state individuals and out-of-state companies," Rodrigues said. "We want to see more of the benefit be realized by Massachusetts residents and Massachusetts companies."

The House unanimously approved an amendment to its budget that enshrines the film tax credit permanently by eliminating the sunset date.

Another $16.3 million proposal in the Senate's bill would convert a child care and dependent tax deduction into a refundable credit, which Rodrigues said would offer an average credit of $190 to about 85,000 low-income families.

Like the House's budget, the Senate proposal increases Chapter 70 education aid by about $220 million and calls for implementing one-sixth of the 2019 school finance reform law known as the Student Opportunity Act after the pandemic disrupted its original seven-year timeline.

Senators also called for creating a $40 million reserve fund to assist school districts whose enrollment estimates —and therefore state aid projections — were affected by COVID-19.