Updated at 5 p.m.
Gov. Charlie Baker says the state can increase spending during the pandemic, even as economists worry that declining tax revenues will leave a sizable gap in the state's ability to pay for itself.
Baker is recommending a 3.8% increase in overall spending compared to last year's budget, bringing the state's bottom line to $45.5 billion for the 2021 fiscal year that began in July. The plan does not raise taxes, though fees on ride-hailing trips would go up.
"We're doing this, again, without raising taxes, especially because of the current state of the economy. And the idea of going back to the taxpayers, given their own situation, just didn't seem like the right thing to do," Baker said at a press conference Wednesday.
Instead, the new spending is buoyed by over $1.8 billion in federal COVID-19 relief that's already been passed by Congress and an up to $1.35 billion withdrawal from that state's rainy-day savings fund.
"The rainy-day fund is there to support services when it's raining, and I think most people would agree it's raining," Baker said.
Baker would also force most government departments and agencies to operate at the previous year's funding level. The budget plan calls for the modernization of how sales taxes are collected in Massachusetts, a goal Baker has had no luck getting lawmakers to sign on to in the past. Baker's new collection plan would generate a one-time infusion of $267 million.
Economists have forecast a budget deficit for the year that could range between $3 billion and $6 billion. Baker's budget proposal assumes a deficit of $3.2 billion.
Baker would increase spending on MassHealth by 2.8% during the pandemic. All other state government spending would be capped at a 0.9% increase.
All school districts would be funded at current levels according to the state's funding formula, a 2% overall increase. The Student Achievement Act, passed last year which would have pumped additional hundreds of millions of dollars into local schools, will be delayed at least one year under Baker's plan.
The MBTA would receive a 5% increase over last year, while local Regional Transit Authorities would be level-funded.
The Merit Rating Board, the dysfunctional RMV panel that was at the center of the state's failure to take away the license of a driver who then killed several motorcyclists in 2019, will receive $800,000 for new employees and reforms.
The state has been operating on interim budgets since July, when lawmakers decided to wait for the fiscal picture to clear up before pursuing a full annual plan.
House lawmakers will work from Baker's plan to draft their own budget with spending priorities favored by Democrats before reconciling with the Senate on a final version.
Democrats may disagree with Baker over how much revenues will decline and what the budget deficit would then be.
If the Legislature prefers an alternate revenue estimate or wants to use the rainy-day stabilization account differently, lawmakers could increase or decrease funding levels in their own plans.
