Massachusetts Fiscal Year (FY23) Budget Summary
July 27, 2022 | Massachusetts High Technology Council
On July 17, the House and Senate came to a consensus on a $52.7 billion budget for Fiscal Year 2023 (FY23). After a vote the following day, legislative leadership sent it to Governor Baker, who has until July 28 to review and amend or veto sections he disagrees with.
The FY23 budget conference total exceeds both the House and Senate versions by approximately $3 billion. Line-item spending is budgeted to be a $4.4 billion (8.3%) increase over FY22 (not including an additional $1.7 billion supplemental budget that Governor Baker filed in May).
Enabling the significant year-to-year budget increase is sustained tax collections over revenue assumptions. The FY23 conference budget assumes annual tax revenue at $39.6 billion. For comparison, tax revenue for FY22 (through the month of May) is $37.0 billion, which is $5.9 billion above benchmark. FY21 actual tax collections were $34.2 billion, or $5.1 billion over benchmark.
|House Final Appropriation||Senate Final Appropriation||Conference Appropriation|
|Total Line-Item Spending||$50,334,054,512||$50,498,384,366||$52,444,707,817|
The unprecedented revenue glut has been a boon to the Commonwealth’s reserves. Massachusetts’ Rainy Day Fund balance is $6.6 billion as of June 21, 2022—the highest balance ever—and the budget conference committee projects a balance of $8.1 billion by the end of FY23.
The bottom line: the Commonwealth is equipped to weather challenging economic conditions better than arguably anytime in modern history, with ample resources leftover for public spending priorities.
Other Highlights from the Final FY23 Budget:
Tax Relief Pursued on a Separate Track
House and Senate leadership decided not to include their tax relief proposals in their respective budget reports and opted instead to make tax relief part of the large economic development legislation. House and Senate appointments to the economic development conference committee were announced Monday, July 26, and the six conferees aim to iron out a compromise by end of session on July 31.
Significant Resources for Education Spending
Budgeted state education aid to municipalities (Chapter 70) is $6.0 billion, which is a $485.3 million (8.8%) increase over FY22. The FY23 budget puts Massachusetts on track to fully fund the Student Opportunity Act (SOA) on schedule. Between the fully funded schedule for SOA and $2.9 billion in federal assistance through the Elementary and Secondary School Emergency Relief Fund, there are more resources than ever to meet the Commonwealth’s K-12 education needs.
Early Education gets a Big Boost
Both chambers advanced new spending proposals to boost early education funding. In conference, negotiators opted to retain the highest funding amount for every early education-related item in the House and Senate budget versions. This includes $250 million for stabilization grants for early education workforce support and $60 million to fund reimbursement rate increases and professional development for early educators.
Health Care Continues to Gobble Up Budget on Percentage Basis
Approximately 40 percent of the FY23 budget is for health care, with Massachusetts’ Medicaid and Children’s Health Insurance Program (CHIP) programs (MassHealth) alone making up $20 billion of the budget.