Chairwoman Karen Spilka and members of the Senate Ways and Means Committee

Ways and Means Chairwoman Karen Spilka.

State Senate Drafts $40B Budget, Focuses On Health Care, And Eyes Closing Business Loopholes

May 16, 2017

The Democratically controlled Massachusetts State Senate Tuesday released its version of a state budget for the 2018 fiscal year that tops $40 billion; aims to address the state's biggest fiscal challenge: health care; and seeks to stabilize uncertain tax streams – in part by closing or tightening special breaks granted to businesses.  

Part of the Senate's budget proposal is to evaluate the feasibility of a publicly-run health insurance option. Instead of offering coverage themselves, some employers could team with the state to insure low-wage workers.

The Baker administration has said an influx of workers who can't afford their employer's plan, but are poor enough to qualify for state subsidies, has lead to growing health care costs.

Senate Ways and Means Chairwoman Karen Spilka said a system like the one the Senate is looking at would allow employers to share the costs for their low-income employees that are on MassHealth, the state's insurance program for the poor.

"This would allow employers to share the costs of eligible low-income employees that are on MassHealth. This would be a different way of looking at it and it would be a partnership between MassHealth and the employers. They would help share the costs. The employee could potentially stay on MassHealth but it would be... sort of like a public health insurance option," Spilka said.

In the short term, the Senate and House are opting to allow Gov. Charlie Baker to formalize a way to penalize employers that don't offer affordable insurance for their poor workers.

Like the House's earlier budget proposal, the Senate's bill authorized Gov. Charlie Baker to devise a plan to collect at least $180 million next fiscal year to cover the gap left by workers foregoing employer-supplied health insurance and joining subsidized MassHealth rolls.

In his own budget, Baker had proposed penalizing employers that don't offer insurance plans $2,000 per employee. The House bill allowed Baker to pursue that goal, but the Senate's version gives Baker the option to come up with the $180 million by increasing an existing fee that funds health care programs.

The budget written by high-ranking House and Senate leaders and based on projections for how much tax money the state will take in next fiscal year. But actual revenue in March and April came in way under expectations, leading to questions about whether next year's budget is even being built on solid ground.

Plymouth Senator Vinny DeMacedo is the top-ranking Republican on the Senate budget committee:

"I'm certainly concerned and I'm mindful of the reality of what March and April look like for numbers and I'll be honest, that's something that I'm taking very seriously. Yes, we're going to have to address the revenue picture. There's really no way around it. I'm realistic in that regard."

DeMacedo says he's confident that by the end of the Legislative process, lawmakers will deliver a balanced budget.

Included in the budget plan is a move by Senate Democrats to begin exploring ways to help bolster the state's flagging revenue intake. In their proposal, Senate Democrats want to set up a task force to evaluate what the state is spending tax dollars on and what it takes in, including tax breaks for businesses that may not have had as stimulating an effect as expected.

Senate Ways and Means Chairwoman Karen Spilka says the Great Recession changed the Massachusetts economy and the state is not capturing all the tax revenue it used to.

"It probably is time to take a look at the state's tax code and modernize it and align with our economy," Spilka said.

MassBudget President Noah Berger said the task force could target "over a billion dollars of special business tax breaks that are part of our state tax code and continue from year to year without any systematic scrutiny of whether they effectively achieve any public purpose."

Even with lower than expected revenues, the Senate's budget plan does increase annual spending by over three percent and includes around $400 million in new taxes on online room rentals and changes to how sales tax is collected.

Airbnb, the leading online home-sharing website, would be taxed under the plan, but the company is supportive.
"Airbnb fully supports the Senate's measure to collect and remit taxes from our host community. This is a major step forward in our efforts to partner with the Commonwealth on fair home sharing rules," AirBNB's Will Burns wrote in a statement on the proposal.

The Senate grants the Massachusetts Creative Council $16.5 million for arts and culture programs. The House last month approved a budget of $12 million for the council. The differences between the two version will be settled when a six-member conference committee made up of top legislative officials meet to devise a final plan.

Material from the State House News Service was used in this report.

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