Baker Signs First Budget As Governor, A $38B Spending Plan
Massachusetts Governor Charlie Baker signed his first state budget into law this afternoon. The Republican is touting it as a product of campaign promises.In signing the fiscal 2016 budget, Governor Baker noted that working with the Democratic-controlled legislature, his administration closed deficits totaling $2.5 billion inherited from Deval Patrick’s time as governor.
“This $38.1 billion budget responsibly keeps spending growth to about three percent, below the growth in tax revenue,” Baker said. “This amount is reasonably within our tax revenue projections and ensures that state government will live within its means. The budget contains no new taxes and ensures the anticipated reduction for the people of Massachusetts in the state income tax to 5.1 percent on January 1, 2016.”
Baker vetoed $162 million worth of line items including $38 million in earmarks sent to him by a legislative conference committee. He says the vetoes and using surplus money from fiscal 2015 close an $83 million spending shortfall and a nontax revenue shortfall. Lawmakers do have a chance to review the vetoes. Baker is keeping a $10,000 pay raise for the governor’s council suggested by the legislature. The eight members who meet weekly will now be paid $36,000 a year.
“We took a look at that and the last significant increase for the governor’s council was in 2000, they got a modest increase in 2003, and we felt given the amount of work they’ll be doing over the course of the next several years with respect to the number of judges who will be retiring and need to be replaced that it was something we should sign,” said Baker.
The budget increases local education funding by $111 million to its highest level ever and includes a 3.6 percent hike for unrestricted municipal aid. The spending plan also increases the earned income tax credit from roughly 15 percent to 23 percent of the federal tax credit. Representative Stephen Kulik, vice chair of the Legislature’s Joint Committee on Ways and Means, was one of six lawmakers on a budget conference committee that offered a way to pay for the increase.
“Eliminating a corporate tax credit that had been on the books, but never really implemented,” Kulik explained. “It had been delayed for a number of years. We’re taking that off the books so to speak and that roughly will pay for the increased cost of the earned income tax credit, which should benefit many lower and middle-income workers in the commonwealth.”
On Friday, Baker announced that he and leaders in the House and Senate reached a compromise that delays implementing the corporate tax deduction by five years instead of eliminating it, which business groups opposed.
“Because we wanted to preserve the earned income tax credit and not send a message that the commonwealth is a difficult place to do business with, we managed to structure a solution on this that works for those businesses, maintains the integrity of the original compromise that was made several years ago and still managed to do the most important thing from our point of view which is to preserve the 50 percent increase in the earned income tax credit for those 400,000 families here in the commonwealth.”
Under the compromise, businesses will be given 30 years, instead of seven, to claim the deduction.
The budget increases Department of Children and Families’ funding by 4.3 percent. It includes $111 million for substance abuse treatment along with $28 million in a supplemental budget filed by Baker to enact the findings of an opioid task force. Baker also swore in five members of a volunteer fiscal control board to oversee the MBTA following its failures during the brutal winter. Baker and transportation secretary Stephanie Pollack were pressed on whether the MBTA reforms and investments will work.
“We are putting all the pieces in place that we believe are necessary to ensure that the commute is much better next winter than it was last winter,” said Pollack.
Click here to view the 2016 fiscal budget Gov. Baker signed.