Mass Fiscal Stability
2018-2022 State Fiscal Stability Priority – Moving Massachusetts Forward
The Massachusetts High Technology Council is leading a collaborative and sustained advocacy effort to strengthen the long-term fiscal stability of the Commonwealth. This initiative is a natural outgrowth of the Council’s success in 2018 leading a multi-year coalition effort and litigation strategy opposing an unconstitutional proposal to impose a permanent $2 billion per year personal income surtax surcharge. That debate laid bare the underlying fiscal drivers behind efforts that have focused purely on raising additional revenues through increased taxes on business and individual taxpayers without regard for the obvious negative fiscal and competitive consequences on the Massachusetts economy.
During the past 10 years, the Commonwealth has weathered and outperformed a crippling national recession and experienced a rarely seen explosion of capital investment, wealth creation and employment growth. Despite this extended period of private sector economic growth in Massachusetts, the health and stability of the Commonwealth’s public finances are poor. Several well-respected independent sources have recently ranked Massachusetts among the least fiscally stable and healthy states overall in the country.
Specifically, the state’s Medicaid program which makes up 40% of the budget has been the driver for increased revenue, ultimately eroding the state’s ability to invest in other key discretionary state programs. While double-digit annual growth in Medicaid spending has been subdued, the state’s current fiscal health presents a significant risk to several key components of the state’s private economic foundation including business costs, the availability of a talented workforce, and public infrastructure.
- State spending exceeds $41B annually which is among the highest per capita levels in the country.
- Annual state revenues are $7B higher than in 2010.
- MassHealth, the state’s Medicaid program, consumes more than 40% of the state budget – up from 28% in 2006.
- While MassHealth has increased by over 43%, spending on transportation, local aid, education and environmental programs has increased just 21%.
- Recent government solutions have been to place the burden of increased revenue requirements on employers.
The Path Forward
For decades, the process for establishing annual operating and capital budgets for the Commonwealth have lacked sufficient fiscal stability objectives and benchmarks to ensure prudent management of the expenditure and debt obligations policymakers choose to take on. As a result, the High Tech Council is encouraging the Commonwealth to change its budgeting process and prioritize solutions to the state fiscal stability challenges that have begun to crowd out discretionary public funding for economic development, workforce preparation, and infrastructure investments. This includes preserving and enhancing the conditions for investment and job growth in Massachusetts-with a focus on the evolving economy and workforce requirements.
Central to this effort, is working to avoid future public policy solutions that discourage investment and job creation in Massachusetts. This will require implementing new fiscal objectives and performance benchmarks to ensure the state’s fiscal stability and address the primary cost drivers in the state budget that threaten that stability, particularly MassHealth, the state’s Medicaid program.
In February 2019, we introduced a State Fiscal Stability Index within MATTERS, the Council’s 50-state competitiveness data dashboard. The index features a dynamic data set which will facilitate efforts to measure and monitor progress and allow for clear comparisons of Massachusetts with other states.
Over the past 41 years, the Council has developed an unmatched record of success unifying CEO and senior executive decision makers to advance strategies that impact the most critical public policy decisions facing the Commonwealth of Massachusetts, its job creators and its citizens. Our technology-focused member organizations are playing an increasingly important role driving Massachusetts’ economic success and the Council is uniquely positioned to lead this important long-term agenda to secure the fiscal foundations of our Commonwealth’s quality of life and economic success.
Read our “Statement Before the Joint Committee on Revenue In Opposition to: Senate Bill 16 and House Bill 86” here.